G.R. No.

81561 January 18, 1991

PEOPLE OF THE PHILIPPINES, plaintiff-appellee

vs.
ANDRE MARTI, accused-appellant.

The Solicitor General for plaintiff-appellee.

Reynaldo B. Tatoy and Abelardo E. Rogacion for accused-appellant.

BIDIN, J.:

This is an appeal from a decision * rendered by the Special Criminal Court of Manila (Regional Trial
Court, Branch XLIX) convicting accused-appellant of violation of Section 21 (b), Article IV in relation
to Section 4, Article 11 and Section 2 (e) (i), Article 1 of Republic Act 6425, as amended, otherwise
known as the Dangerous Drugs Act.

The facts as summarized in the brief of the prosecution are as follows:

On August 14, 1987, between 10:00 and 11:00 a.m., the appellant and his common-law wife,
Shirley Reyes, went to the booth of the "Manila Packing and Export Forwarders" in the
Pistang Pilipino Complex, Ermita, Manila, carrying with them four (4) gift wrapped packages.
Anita Reyes (the proprietress and no relation to Shirley Reyes) attended to them. The
appellant informed Anita Reyes that he was sending the packages to a friend in Zurich,
Switzerland. Appellant filled up the contract necessary for the transaction, writing therein his
name, passport number, the date of shipment and the name and address of the consignee,
namely, "WALTER FIERZ, Mattacketr II, 8052 Zurich, Switzerland" (Decision, p. 6)

Anita Reyes then asked the appellant if she could examine and inspect the packages.
Appellant, however, refused, assuring her that the packages simply contained books, cigars,
and gloves and were gifts to his friend in Zurich. In view of appellant's representation, Anita
Reyes no longer insisted on inspecting the packages. The four (4) packages were then
placed inside a brown corrugated box one by two feet in size (1' x 2'). Styro-foam was placed
at the bottom and on top of the packages before the box was sealed with masking tape, thus
making the box ready for shipment (Decision, p. 8).

Before delivery of appellant's box to the Bureau of Customs and/or Bureau of Posts, Mr. Job
Reyes (proprietor) and husband of Anita (Reyes), following standard operating procedure,
opened the boxes for final inspection. When he opened appellant's box, a peculiar odor
emitted therefrom. His curiousity aroused, he squeezed one of the bundles allegedly
containing gloves and felt dried leaves inside. Opening one of the bundles, he pulled out a
cellophane wrapper protruding from the opening of one of the gloves. He made an opening
on one of the cellophane wrappers and took several grams of the contents thereof (tsn, pp.
29-30, October 6, 1987; Emphasis supplied).

Job Reyes forthwith prepared a letter reporting the shipment to the NBI and requesting a
laboratory examination of the samples he extracted from the cellophane wrapper (tsn, pp. 5-
6, October 6, 1987).
 He brought the letter and a sample of appellant's shipment to the Narcotics Section of the
National Bureau of Investigation (NBI), at about 1:30 o'clock in the afternoon of that
date, i.e., August 14, 1987. He was interviewed by the Chief of Narcotics Section. Job Reyes
informed the NBI that the rest of the shipment was still in his office. Therefore, Job Reyes
and three (3) NBI agents, and a photographer, went to the Reyes' office at Ermita, Manila
(tsn, p. 30, October 6, 1987).

Job Reyes brought out the box in which appellant's packages were placed and, in the
presence of the NBI agents, opened the top flaps, removed the styro-foam and took out the
cellophane wrappers from inside the gloves. Dried marijuana leaves were found to have
been contained inside the cellophane wrappers (tsn, p. 38, October 6, 1987; Emphasis
supplied).

The package which allegedly contained books was likewise opened by Job Reyes. He
discovered that the package contained bricks or cake-like dried marijuana leaves. The
package which allegedly contained tabacalera cigars was also opened. It turned out that
dried marijuana leaves were neatly stocked underneath the cigars (tsn, p. 39, October 6,
1987).

The NBI agents made an inventory and took charge of the box and of the contents thereof,
after signing a "Receipt" acknowledging custody of the said effects (tsn, pp. 2-3, October 7,
1987).

Thereupon, the NBI agents tried to locate appellant but to no avail. Appellant's stated address in his
passport being the Manila Central Post Office, the agents requested assistance from the latter's
Chief Security. On August 27, 1987, appellant, while claiming his mail at the Central Post Office, was
invited by the NBI to shed light on the attempted shipment of the seized dried leaves. On the same
day the Narcotics Section of the NBI submitted the dried leaves to the Forensic Chemistry Section
for laboratory examination. It turned out that the dried leaves were marijuana flowering tops as
certified by the forensic chemist. (Appellee's Brief, pp. 9-11, Rollo, pp. 132-134).

Thereafter, an Information was filed against appellant for violation of RA 6425, otherwise known as
the Dangerous Drugs Act.

After trial, the court a quo rendered the assailed decision.

In this appeal, accused/appellant assigns the following errors, to wit:

THE LOWER COURT ERRED IN ADMITTING IN EVIDENCE THE ILLEGALLY SEARCHED

AND SEIZED OBJECTS CONTAINED IN THE FOUR PARCELS.

THE LOWER COURT ERRED IN CONVICTING APPELLANT DESPITE THE UNDISPUTED

FACT THAT HIS RIGHTS UNDER THE CONSTITUTION WHILE UNDER CUSTODIAL
PROCEEDINGS WERE NOT OBSERVED.

THE LOWER COURT ERRED IN NOT GIVING CREDENCE TO THE EXPLANATION OF

THE APPELLANT ON HOW THE FOUR PARCELS CAME INTO HIS POSSESSION
(Appellant's Brief, p. 1; Rollo, p. 55)

1. Appellant contends that the evidence subject of the imputed offense had been obtained in
violation of his constitutional rights against unreasonable search and seizure and privacy of
communication (Sec. 2 and 3, Art. III, Constitution) and therefore argues that the same should be
held inadmissible in evidence (Sec. 3 (2), Art. III).

Sections 2 and 3, Article III of the Constitution provide:

Sec. 2. The right of the people to be secure in their persons, houses, papers and effects
against unreasonable searches and seizures of whatever nature and for any purpose shall
be inviolable, and no search warrant or warrant of arrest shall issue except upon probable
cause to be determined personally by the judge after examination under oath or affirmation
of the complainant and the witnesses he may produce, and particularly describing the place
to be searched and the persons or things to be seized.

Sec. 3. (1) The privacy of communication and correspondence shall be inviolable except
upon lawful order of the court, or when public safety or order requires otherwise as
prescribed by law.

(2) Any evidence obtained in violation of this or the preceding section shall be inadmissible
for any purpose in any proceeding.

Our present constitutional provision on the guarantee against unreasonable search and seizure had
its origin in the 1935 Charter which, worded as follows:

The right of the people to be secure in their persons, houses, papers and effects against
unreasonable searches and seizures shall not be violated, and no warrants shall issue but
upon probable cause, to be determined by the judge after examination under oath or
affirmation of the complainant and the witnesses he may produce, and particularly describing
the place to be searched, and the persons or things to be seized. (Sec. 1 [3], Article III)

was in turn derived almost verbatim from the Fourth Amendment ** to the United States Constitution.
As such, the Court may turn to the pronouncements of the United States Federal Supreme Court
and State Appellate Courts which are considered doctrinal in this jurisdiction.

Thus, following the exclusionary rule laid down in Mapp v. Ohio by the US Federal Supreme
Court (367 US 643, 81 S.Ct. 1684, 6 L.Ed. 1081 [1961]), this Court, in Stonehill v. Diokno (20 SCRA
383 [1967]), declared as inadmissible any evidence obtained by virtue of a defective search and
seizure warrant, abandoning in the process the ruling earlier adopted in Moncado v. People's
Court (80 Phil. 1 [1948]) wherein the admissibility of evidence was not affected by the illegality of its
seizure. The 1973 Charter (Sec. 4 [2], Art. IV) constitutionalized the Stonehill ruling and is carried
over up to the present with the advent of the 1987 Constitution.

In a number of cases, the Court strictly adhered to the exclusionary rule and has struck down the
admissibility of evidence obtained in violation of the constitutional safeguard against unreasonable
searches and seizures. (Bache & Co., (Phil.), Inc., v. Ruiz, 37 SCRA 823 [1971]; Lim v. Ponce de
Leon, 66 SCRA 299 [1975]; People v. Burgos, 144 SCRA 1 [1986]; Roan v. Gonzales, 145 SCRA
687 [1987]; See also Salazar v. Hon. Achacoso, et al., GR No. 81510, March 14, 1990).

It must be noted, however, that in all those cases adverted to, the evidence so obtained were
invariably procured by the State acting through the medium of its law enforcers or other authorized
government agencies.
On the other hand, the case at bar assumes a peculiar character since the evidence sought to be
excluded was primarily discovered and obtained by a private person, acting in a private capacity and
without the intervention and participation of State authorities. Under the circumstances, can
accused/appellant validly claim that his constitutional right against unreasonable searches and
seizure has been violated? Stated otherwise, may an act of a private individual, allegedly in violation
of appellant's constitutional rights, be invoked against the State?

We hold in the negative. In the absence of governmental interference, the liberties guaranteed by
the Constitution cannot be invoked against the State.

As this Court held in Villanueva v. Querubin (48 SCRA 345 [1972]:

1. This constitutional right (against unreasonable search and seizure) refers to the immunity
of one's person, whether citizen or alien, from interference by government, included in which
is his residence, his papers, and other possessions. . . .

. . . There the state, however powerful, does not as such have the access except under the
circumstances above noted, for in the traditional formulation, his house, however humble, is
his castle. Thus is outlawed any unwarranted intrusion by government, which is called upon
to refrain from any invasion of his dwelling and to respect the privacies of his life. . . . (Cf.
Schermerber v. California, 384 US 757 [1966] and Boyd v. United States, 116 US 616
[1886]; Emphasis supplied).

In Burdeau v. McDowell (256 US 465 (1921), 41 S Ct. 547; 65 L.Ed. 1048), the Court there in
construing the right against unreasonable searches and seizures declared that:

(t)he Fourth Amendment gives protection against unlawful searches and seizures, and as
shown in previous cases, its protection applies to governmental action. Its origin and history
clearly show that it was intended as a restraint upon the activities of sovereign authority, and
was not intended to be a limitation upon other than governmental agencies; as against such
authority it was the purpose of the Fourth Amendment to secure the citizen in the right of
unmolested occupation of his dwelling and the possession of his property, subject to the right
of seizure by process duly served.

The above ruling was reiterated in State v. Bryan (457 P.2d 661 [1968]) where a parking attendant
who searched the automobile to ascertain the owner thereof found marijuana instead, without the
knowledge and participation of police authorities, was declared admissible in prosecution for illegal
possession of narcotics.

And again in the 1969 case of Walker v. State (429 S.W.2d 121), it was held that the search and
seizure clauses are restraints upon the government and its agents, not upon private individuals
(citing People v. Potter, 240 Cal. App.2d 621, 49 Cap. Rptr, 892 (1966); State v. Brown, Mo., 391
S.W.2d 903 (1965); State v. Olsen, Or., 317 P.2d 938 (1957).

Likewise appropos is the case of Bernas v. US (373 F.2d 517 (1967). The Court there said:

The search of which appellant complains, however, was made by a private citizen the
owner of a motel in which appellant stayed overnight and in which he left behind a travel
case containing the evidence***complained of. The search was made on the motel owner's
own initiative. Because of it, he became suspicious, called the local police, informed them of
the bag's contents, and made it available to the authorities.
 The fourth amendment and the case law applying it do not require exclusion of evidence
obtained through a search by a private citizen. Rather, the amendment only proscribes
governmental action."

The contraband in the case at bar having come into possession of the Government without the latter
transgressing appellant's rights against unreasonable search and seizure, the Court sees no cogent
reason why the same should not be admitted against him in the prosecution of the offense charged.

Appellant, however, would like this court to believe that NBI agents made an illegal search and
seizure of the evidence later on used in prosecuting the case which resulted in his conviction.

The postulate advanced by accused/appellant needs to be clarified in two days. In both instances,
the argument stands to fall on its own weight, or the lack of it.

First, the factual considerations of the case at bar readily foreclose the proposition that NBI agents
conducted an illegal search and seizure of the prohibited merchandise. Records of the case clearly
indicate that it was Mr. Job Reyes, the proprietor of the forwarding agency, who made
search/inspection of the packages. Said inspection was reasonable and a standard operating
procedure on the part of Mr. Reyes as a precautionary measure before delivery of packages to the
Bureau of Customs or the Bureau of Posts (TSN, October 6 & 7, 1987, pp. 15-18; pp. 7-8; Original
Records, pp. 119-122; 167-168).

It will be recalled that after Reyes opened the box containing the illicit cargo, he took samples of the
same to the NBI and later summoned the agents to his place of business. Thereafter, he opened the
parcel containing the rest of the shipment and entrusted the care and custody thereof to the NBI
agents. Clearly, the NBI agents made no search and seizure, much less an illegal one, contrary to
the postulate of accused/appellant.

Second, the mere presence of the NBI agents did not convert the reasonable search effected by
Reyes into a warrantless search and seizure proscribed by the Constitution. Merely to observe and
look at that which is in plain sight is not a search. Having observed that which is open, where no
trespass has been committed in aid thereof, is not search (Chadwick v. State, 429 SW2d 135).
Where the contraband articles are identified without a trespass on the part of the arresting officer,
there is not the search that is prohibited by the constitution (US v. Lee 274 US 559, 71 L.Ed. 1202
[1927]; Ker v. State of California 374 US 23, 10 L.Ed.2d. 726 [1963]; Moore v. State, 429 SW2d 122
[1968]).

In Gandy v. Watkins (237 F. Supp. 266 [1964]), it was likewise held that where the property was
taken into custody of the police at the specific request of the manager and where the search was
initially made by the owner there is no unreasonable search and seizure within the constitutional
meaning of the term.

That the Bill of Rights embodied in the Constitution is not meant to be invoked against acts of private
individuals finds support in the deliberations of the Constitutional Commission. True, the liberties
guaranteed by the fundamental law of the land must always be subject to protection. But protection
against whom? Commissioner Bernas in his sponsorship speech in the Bill of Rights answers the
query which he himself posed, as follows:

First, the general reflections. The protection of fundamental liberties in the essence of
constitutional democracy. Protection against whom? Protection against the state. The Bill of
Rights governs the relationship between the individual and the state. Its concern is not the
relation between individuals, between a private individual and other individuals. What the Bill
 of Rights does is to declare some forbidden zones in the private sphere inaccessible to any
power holder. (Sponsorship Speech of Commissioner Bernas , Record of the Constitutional
Commission, Vol. 1, p. 674; July 17, 1986; Emphasis supplied)

The constitutional proscription against unlawful searches and seizures therefore applies as a
restraint directed only against the government and its agencies tasked with the enforcement of the
law. Thus, it could only be invoked against the State to whom the restraint against arbitrary and
unreasonable exercise of power is imposed.

If the search is made upon the request of law enforcers, a warrant must generally be first secured if
it is to pass the test of constitutionality. However, if t he search is made at the behest or initiative of
the proprietor of a private establishment for its own and private purposes, as in the case at bar, and
without the intervention of police authorities, the right against unreasonable search and seizure
cannot be invoked for only the act of private individual, not the law enforcers, is involved. In sum, the
protection against unreasonable searches and seizures cannot be extended to acts committed by
private individuals so as to bring it within the ambit of alleged unlawful intrusion by the government.

Appellant argues, however, that since the provisions of the 1935 Constitution has been modified by
the present phraseology found in the 1987 Charter, expressly declaring as inadmissible any
evidence obtained in violation of the constitutional prohibition against illegal search and seizure, it
matters not whether the evidence was procured by police authorities or private individuals
(Appellant's Brief, p. 8, Rollo, p. 62).

The argument is untenable. For one thing, the constitution, in laying down the principles of the
government and fundamental liberties of the people, does not govern relationships between
individuals. Moreover, it must be emphasized that the modifications introduced in the 1987
Constitution (re: Sec. 2, Art. III) relate to the issuance of either a search warrant or warrant of
arrest vis-a-vis the responsibility of the judge in the issuance thereof (SeeSoliven v. Makasiar, 167
SCRA 393 [1988]; Circular No. 13 [October 1, 1985] and Circular No. 12 [June 30, 1987]. The
modifications introduced deviate in no manner as to whom the restriction or inhibition against
unreasonable search and seizure is directed against. The restraint stayed with the State and did not
shift to anyone else.

Corolarilly, alleged violations against unreasonable search and seizure may only be invoked against
the State by an individual unjustly traduced by the exercise of sovereign authority. To agree with
appellant that an act of a private individual in violation of the Bill of Rights should also be construed
as an act of the State would result in serious legal complications and an absurd interpretation of the
constitution.

Similarly, the admissibility of the evidence procured by an individual effected through private seizure
equally applies, in pari passu, to the alleged violation, non-governmental as it is, of appellant's
constitutional rights to privacy and communication.

2. In his second assignment of error, appellant contends that the lower court erred in convicting him
despite the undisputed fact that his rights under the constitution while under custodial investigation
were not observed.

Again, the contention is without merit, We have carefully examined the records of the case and
found nothing to indicate, as an "undisputed fact", that appellant was not informed of his
constitutional rights or that he gave statements without the assistance of counsel. The law enforcers
testified that accused/appellant was informed of his constitutional rights. It is presumed that they
have regularly performed their duties (See. 5(m), Rule 131) and their testimonies should be given full
faith and credence, there being no evidence to the contrary. What is clear from the records, on the
other hand, is that appellant refused to give any written statement while under investigation as
testified by Atty. Lastimoso of the NBI, Thus:

Fiscal Formoso:

You said that you investigated Mr. and Mrs. Job Reyes. What about the accused here, did
you investigate the accused together with the girl?

WITNESS:

Yes, we have interviewed the accused together with the girl but the accused availed of his
constitutional right not to give any written statement, sir. (TSN, October 8, 1987, p. 62;
Original Records, p. 240)

The above testimony of the witness for the prosecution was not contradicted by the defense on
cross-examination. As borne out by the records, neither was there any proof by the defense that
appellant gave uncounselled confession while being investigated. What is more, we have examined
the assailed judgment of the trial court and nowhere is there any reference made to the testimony of
appellant while under custodial investigation which was utilized in the finding of conviction.
Appellant's second assignment of error is therefore misplaced.

3. Coming now to appellant's third assignment of error, appellant would like us to believe that he was
not the owner of the packages which contained prohibited drugs but rather a certain Michael, a
German national, whom appellant met in a pub along Ermita, Manila: that in the course of their 30-
minute conversation, Michael requested him to ship the packages and gave him P2,000.00 for the
cost of the shipment since the German national was about to leave the country the next day
(October 15, 1987, TSN, pp. 2-10).

Rather than give the appearance of veracity, we find appellant's disclaimer as incredulous, self-
serving and contrary to human experience. It can easily be fabricated. An acquaintance with a
complete stranger struck in half an hour could not have pushed a man to entrust the shipment of four
(4) parcels and shell out P2,000.00 for the purpose and for appellant to readily accede to comply
with the undertaking without first ascertaining its contents. As stated by the trial court, "(a) person
would not simply entrust contraband and of considerable value at that as the marijuana flowering
tops, and the cash amount of P2,000.00 to a complete stranger like the Accused. The Accused, on
the other hand, would not simply accept such undertaking to take custody of the packages and ship
the same from a complete stranger on his mere say-so" (Decision, p. 19, Rollo, p. 91). As to why he
readily agreed to do the errand, appellant failed to explain. Denials, if unsubstantiated by clear and
convincing evidence, are negative self-serving evidence which deserve no weight in law and cannot
be given greater evidentiary weight than the testimony of credible witnesses who testify on
affirmative matters (People v. Esquillo, 171 SCRA 571 [1989]; People vs. Sariol, 174 SCRA 237
[1989]).

Appellant's bare denial is even made more suspect considering that, as per records of the Interpol,
he was previously convicted of possession of hashish by the Kleve Court in the Federal Republic of
Germany on January 1, 1982 and that the consignee of the frustrated shipment, Walter Fierz, also a
Swiss national, was likewise convicted for drug abuse and is just about an hour's drive from
appellant's residence in Zurich, Switzerland (TSN, October 8, 1987, p. 66; Original Records, p. 244;
Decision, p. 21; Rollo, p. 93).
Evidence to be believed, must not only proceed from the mouth of a credible witness, but it must be
credible in itself such as the common experience and observation of mankind can approve as
probable under the circumstances (People v. Alto, 26 SCRA 342 [1968], citing Daggers v. Van Dyke,
37 N.J. Eg. 130; see also People v. Sarda, 172 SCRA 651 [1989]; People v. Sunga, 123 SCRA 327
[1983]); Castaares v. CA, 92 SCRA 567 [1979]). As records further show, appellant did not even
bother to ask Michael's full name, his complete address or passport number. Furthermore, if indeed,
the German national was the owner of the merchandise, appellant should have so indicated in the
contract of shipment (Exh. "B", Original Records, p. 40). On the contrary, appellant signed the
contract as the owner and shipper thereof giving more weight to the presumption that things which a
person possesses, or exercises acts of ownership over, are owned by him (Sec. 5 [j], Rule 131). At
this point, appellant is therefore estopped to claim otherwise.

Premises considered, we see no error committed by the trial court in rendering the assailed
judgment.

WHEREFORE, the judgment of conviction finding appellant guilty beyond reasonable doubt of the
crime charged is hereby AFFIRMED. No costs.

SO ORDERED.

Nicaragua v. United States

The Republic of Nicaragua v. The United States of America (1986) ICJ 1 is a public
international law case decided by the International Court of Justice (ICJ). The ICJ ruled in favor
of Nicaragua and against the United States and awarded reparations to Nicaragua. The ICJ held
that the U.S. had violated international law by supporting the Contras in their rebellion against the
Nicaraguan government and by mining Nicaragua's harbors. The United States refused to
participate in the proceedings after the Court rejected its argument that the ICJ lacked jurisdiction
to hear the case. The U.S. also blocked enforcement of the judgment by the United Nations
Security Council and thereby prevented Nicaragua from obtaining any
compensation.[2] Nicaragua, under the later, post-FSLN government of Violeta Chamorro,
withdrew the complaint from the court in September 1992 following a repeal of the law which had
required the country to seek compensation.[3]
The Court found in its verdict that the United States was "in breach of its obligations under
customary international law not to use force against another State", "not to intervene in its affairs",
"not to violate its sovereignty", "not to interrupt peaceful maritime commerce", and "in breach of
its obligations under Article XIX of the Treaty of Friendship, Commerce and Navigation between
the Parties signed at Managua on 21 January 1956."
The Court had 16 final decisions upon which it voted. In Statement 9, the Court stated that while
the U.S. encouraged human rights violations by the Contras by the manual entitled Psychological
Operations in Guerrilla Warfare, this did not make such acts attributable to the U.S.

Background and history of US intervention in Nicaragua

The first armed intervention by the United States in Nicaragua occurred under President Taft. In
1909, he ordered the overthrow of Nicaraguan President Jos Santos Zelaya. During August and
September 1912, a contingent of 2300 U.S. Marines landed at the port of Corinto and
occupied Len and the railway line to Granada. A pro-U.S. government was formed under the
occupation. The 1914 BryanChamorro Treaty granted perpetual canal rights to the U.S. in
Nicaragua and was signed ten days before the U.S.-operated Panama Canal opened for use,
thus preventing anyone from building a competing canal in Nicaragua without U.S. permission.
In 1927, under Augusto Csar Sandino, a major peasant uprising was launched against both the
U.S. occupation and the Nicaraguan establishment. In 1933, the Marines withdrew and left
the National Guard in charge of internal security and elections. In 1934, Anastasio Somoza
Garca, the head of the National Guard, ordered his forces to capture and murder Sandino. In
1937, Somoza assumed the presidency, while still in control of the National Guard, and
established a dictatorship that his family controlled until 1979.
The downfall of the regime is attributed to its embezzlement of millions of dollars in foreign aid
that was given to the country in response to the devastating 1972 earthquake. Many moderate
supporters of the dictatorship began abandoning it in the face of growing revolutionary sentiment.
The Sandinista (FSLN) movement organized relief, began to expand its influence and assumed
the leadership of the revolution. A popular uprising brought the FSLN to power in 1979. The United
States had long been opposed to the socialist FSLN, and after the revolution the Carter
administration moved quickly to support the Somocistas with financial and material aid.
When Ronald Reagan took office, he augmented the direct support to an anti-Sandinista group,
called the Contras, which included factions loyal to the former dictatorship. When Congress
prohibited further funding to the Contras, Oliver North continued the funding through arms sales
that were also prohibited by Congress.
Nicaragua's submissions
Nicaragua charged:
(a) That the United States, in recruiting, training, arming, equipping, financing, supplying
and otherwise encouraging, supporting, aiding, and directing military
and paramilitaryactions in and against Nicaragua, had violated its treaty obligations to
Nicaragua under:
Article 2 (4) of the United Nations Charter;
Articles 18 and 20 of the Charter of the Organization of American States;
Article 8 of the Convention on Rights and Duties of States;
Article I, Third, of the Convention concerning the Duties and Rights of States in the Event
of Civil Strife.
(b) That the United States had breached international law by
1. violating the sovereignty of Nicaragua by:
armed attacks against Nicaragua by air, land and sea;
incursions into Nicaraguan territorial waters;
aerial trespass into Nicaraguan airspace;
efforts by direct and indirect means to coerce and intimidate the Government of Nicaragua.
2. using force and the threat of force against Nicaragua.
3. intervening in the internal affairs of Nicaragua.
4. infringing upon the freedom of the high seas and interrupting peaceful maritime
commerce.
5. killing, wounding and kidnapping citizens of Nicaragua.
Nicaragua demanded that all such actions cease and that the United States had an
obligation to pay reparations to the government for damage to their people, property,
and economy.
It is noteworthy that the United States, the defaulting party, was the only member that
put forward arguments against the validity of the judgment of the court, arguing that it
passed a decision that it "had neither the jurisdiction nor the competence to render."
Members that sided with the United States in opposing Nicaragua's claims did not
 challenge the court's jurisdiction, its findings, nor the substantive merits of the
case.[9] Pursuant to general and customary international law, the United States has
an obligation to Nicaragua to respect the sovereignty of Nicaragua. ii. Pursuant to
general and customary international law, the United States has an obligation to
Nicaragua not to use force or the threat of force against Nicaragua. iii. Pursuant to
general and customary international law, the United States has an obligation to
Nicaragua not to intervene in the internal affairs of Nicaragua.

Judgment
The very long judgment first listed 291 points, among them that the United States had been
involved in the "unlawful use of force". The alleged violations included attacks on Nicaraguan
facilities and naval vessels, the mining of Nicaraguan ports, the invasion of Nicaraguan air space,
and the training, arming, equipping, financing and supplying of forces (the "Contras") and seeking
to overthrow Nicaragua's Sandinista government. This was followed by the statements that the
judges voted on.
Findings
The court found evidence of an arms flow between Nicaragua and insurgents in El Salvador
between 1979-81. However, there was not enough evidence to show that the Nicaraguan
government was imputable for this or that the US response was proportional. The court also found
that certain transborder incursions into the territory of Guatemala and Costa Rica, in 1982, 1983
and 1984, were imputable to the Government of Nicaragua. However, neither Guatemala nor
Costa Rica had made any request for US intervention; El Salvador did in 1984, well after the US
had intervened unilaterally.
"As regards El Salvador, the Court considers that in customary international law the provision of
arms to the opposition in another State does not constitute an armed attack on that State. As
regards Honduras and Costa Rica, the Court states that, in the absence of sufficient information
as to the transborder incursions into the territory of those two States from Nicaragua, it is difficult
to decide whether they amount, singly or collectively, to an armed attack by Nicaragua. The Court
finds that neither these incursions nor the alleged supply of arms may be relied on as justifying
the exercise of the right of collective self-defence."
Regarding human rights violations by the Contras, "The Court has to determine whether the
relationship of the contras to the United States Government was such that it would be right to
equate the Contras, for legal purposes, with an organ of the United States Government, or as
acting on behalf of that Government. The Court considers that the evidence available to it is
insufficient to demonstrate the total dependence of the contras on United States aid. A partial
dependency, the exact extent of which the Court cannot establish, may be inferred from the fact
that the leaders were selected by the United States, and from other factors such as the
organisation, training and equipping of the force, planning of operations, the choosing of targets
and the operational support provided. There is no clear evidence that the United States actually
exercised such a degree of control as to justify treating the contras as acting on its behalf... Having
reached the above conclusion, the Court takes the view that the Contras remain responsible for
their acts, in particular the alleged violations by them of humanitarian law. For the United States
to be legally responsible, it would have to be proved that that State had effective control of the
operations in the course of which the alleged violations were committed."
The Court concluded that the United States, despite its objections, was subject to the Court's
jurisdiction. The Court had ruled on November 26 by 11 votes to one that it had jurisdiction in the
case on the basis of either Article 36 (i.e. compulsory jurisdiction) or the 1956 Treaty of Friendship,
Commerce and Navigation between the United States and Nicaragua. The Charter provides that,
in case of doubt, it is for the Court itself to decide whether it has jurisdiction, and that each member
of the United Nations undertakes to comply with the decision of the Court. The Court also ruled
by unanimity that the present case was admissible. The United States then announced that it had
"decided not to participate in further proceedings in this case." About a year after the Court's
jurisdictional decision, the United States took the further, radical step of withdrawing its consent
to the Court's compulsory jurisdiction, ending its previous 40 year legal commitment to binding
international adjudication. The Declaration of acceptance of the general compulsory jurisdiction
of the International Court of Justice terminated after a 6-month notice of termination delivered by
the Secretary of State to the United Nations on October 7, 1985.
Although the Court called on the United States to "cease and to refrain" from the unlawful use of
force against Nicaragua and stated that the US was "in breach of its obligation under customary
international law not to use force against another state" and ordered it to pay reparations, the
United States refused to comply. As a permanent member of the Security Council, the U.S. has
been able to block any enforcement mechanism attempted by Nicaragua. On November 3, 1986
the United Nations General Assembly passed, by a vote of 94-3 (El Salvador, Israel and the US
voted against), a non-binding[16] resolution urging the US to comply.
The ruling
On June 27, 1986, the Court made the following ruling:
The Court

1. Decides that in adjudicating the dispute brought before it by the Application

filed by the Republic of Nicaragua on 9 April 1984, the Court is required to
apply the "multilateral treaty reservation" contained in proviso (c) to the
declaration of acceptance of jurisdiction made under Article 36, paragraph 2,
of the Statute of the Court by the Government of the United States of America
deposited on 26 August 1946;
2. Rejects the justification of collective self-defense maintained by the United
States of America in connection with the military and paramilitary activities in
and against Nicaragua the subject of this case;
3. Decides that the United States of America, by training, arming, equipping,
financing and supplying the contra forces or otherwise encouraging,
supporting and aiding military and paramilitary activities in and against
Nicaragua, has acted, against the Republic of Nicaragua, in breach of its
obligation under customary international law not to intervene in the
affairs of another State;
4. Decides that the United States of America, by certain attacks on Nicaraguan
territory in 1983-1984, namely attacks on Puerto Sandino on 13 September
and 14 October 1983, an attack on Corinto on 10 October 1983; an attack on
Potosi Naval Base on 4/5 January 1984, an attack on San Juan del Sur on 7
March 1984; attacks on patrol boats at Puerto Sandino on 28 and 30 March
1984; and an attack on San Juan del Norte on 9 April 1984; and further by
those acts of intervention referred to in subparagraph (3) hereof which involve
the use of force, has acted, against the Republic of Nicaragua, in breach of
its obligation under customary international law not to use force against
another State;
5. Decides that the United States of America, by directing or authorizing over
Rights of Nicaraguan territory, and by the acts imputable to the United States
referred to in subparagraph (4) hereof, has acted, against the Republic of
 Nicaragua, in breach of its obligation under customary international law not
to violate the sovereignty of another State;
6. Decides that, by laying mines in the internal or territorial waters of the
Republic of Nicaragua during the first months of 1984, the United States of
America has acted, against the Republic of Nicaragua, in breach of its
obligations under customary international law not to use force against
another State, not to intervene in its affairs, not to violate its sovereignty
and not to interrupt peaceful maritime commerce;
7. Decides that, by the acts referred to in subparagraph (6) hereof the United
States of America has acted, against the Republic of Nicaragua, in breach of
its obligations under Article XIX of the Treaty of Friendship, Commerce and
Navigation between the United States of America and the Republic of
Nicaragua signed at Managua on 21 January 1956;
8. Decides that the United States of America, by failing to make known the
existence and location of the mines laid by it, referred to in subparagraph (6)
hereof, has acted in breach of its obligations under customary international
law in this respect;
9. Finds that the United States of America, by producing in 1983 a manual
entitled 'Operaciones sicolgicas en guerra de guerrillas', and disseminating
it to contra forces, has encouraged the commission by them of acts contrary
to general principles of humanitarian law; but does not find a basis for
concluding that any such acts which may have been committed are imputable
to the United States of America as acts of the United States of America;
10. Decides that the United States of America, by the attacks on Nicaraguan
territory referred to in subparagraph (4) hereof, and by declaring a general
embargo on trade with Nicaragua on 1 May 1985, has committed acts
calculated to deprive of its object and purpose the Treaty of Friendship,
Commerce and Navigation between the Parties signed at Managua on 21
January 1956;
11. Decides that the United States of America, by the attacks on Nicaraguan
territory referred to in subparagraph (4) hereof, and by declaring a general
embargo on trade with Nicaragua on 1 May 1985, has acted in breach of its
obligations under Article XIX of the Treaty of Friendship, Commerce and
Navigation between the Parties signed at Managua on 21 January 1956;
12. Decides that the United States of America is under a duty immediately to
cease and to refrain from all such acts as may constitute breaches of the
foregoing legal obligations;
13. Decides that the United States of America is under an obligation to make
reparation to the Republic of Nicaragua for all injury caused to Nicaragua by
the breaches of obligations under customary international law enumerated
above;
14. Decides that the United States of America is under an obligation to make
reparation to the Republic of Nicaragua for all injury caused to Nicaragua by
the breaches of the Treaty of Friendship, Commerce and Navigation between
the Parties signed at Managua on 21 January 1956;
15. Decides that the form and amount of such reparation, failing agreement
between the Parties, will be settled by the Court, and reserves for this purpose
the subsequent procedure in the case;
16. Recalls to both Parties their obligation to seek a solution to their disputes by
peaceful means in accordance with international law.
Legal clarification and importance
The ruling did in many ways clarify issues surrounding prohibition of the use of force and the right
of self-defence. Arming and training the Contra was found to be in breach with principles of non-
intervention and prohibition of use of force, as was laying mines in Nicaraguan territorial waters.
Nicaragua's dealings with the armed opposition in El Salvador, although it might be considered a
breach with the principle of non-intervention and the prohibition of use of force, did not constitute
"an armed attack", which is the wording in article 51 justifying the right of self-defence.
The Court considered also the United States claim to be acting in collective self-defence of El
Salvador and found the conditions for this not reached as El Salvador never requested the
assistance of the United States on the grounds of self-defence.
In regards to laying mines, "...the laying of mines in the waters of another State without any
warning or notification is not only an unlawful act but also a breach of the principles of
humanitarian law underlying the Hague Convention No. VIII of 1907."

Dissent
Judge Schwebel's dissent was twice as long as the actual judgment. Judge Schwebel argued that
the Sandinista government came to power with support of foreign intervention similar to what it
was now complaining about. He argued that the Sandinista government achieved international
recognition and received large amounts of foreign aid in exchange for commitments they
subsequently violated. He cited evidence that the Sandinista government had indeed supported
the rebels in El Salvador and noted that Nicaraguas own CIA witness contradicted their
assertions that they had never at any point supported the rebels in El Salvador. The CIA witness
said that there was no evidence of weapon shipments since early 1981, but Schwebel argued
that he could not credibly explained why opponents of Contra aid such as Congressman Boland,
who also saw the evidence, believed that weapon shipments were ongoing. He further argued
that Daniel Ortega publicly admitted such shipments in statements in 1985 and 1986.
Furthermore, there was no dispute that the leadership of the rebels operated in Nicaragua from
time to time.
He stated that in August 1981 the U.S. offered to resume aid to Nicaragua and to not support
regime change in exchange for Nicaraguan commitments to not support the rebels in El Salvador.
These proposals were rejected by the Sandinistas, and judge Schwebel argued that the U.S. was
entitled to take action in collective self-defense with El Salvador by authorizing contra aid in
December 1981. He stated that further U.S. proposals to resolve the issue made in early 1982
were also ignored by the Sandinistas. The Sandinista government in 1983 began advancing
proposals in which it would undertake not to support the rebels, but Schwebel noted that these
were coupled with demands that the U.S. cease supporting the lawful government of El Salvador.
The judge noted that since early 1985 the U.S. had increasingly made regime change a primary
objective but argued this was not inconsistent with self-defense because it was reasonable to
believe that Nicaragua would not maintain any commitments unless Sandinista power was diluted.
The judge said that both sides of the wars in Nicaragua and El Salvador had committed atrocities.
He said the U.S. mining of Nicaraguan harbors was unlawful in regard to third parties, but not
Nicaragua.

Certain witnesses against the US

First witness: Commander Luis Carrion
The first witness called by Nicaragua was Nicaragua's first Vice Minister of the Interior,
Commander Luis Carrion. Commander Carrion had overall responsibility for state security and
was in charge of all government operations in the "principal war zone". He was responsible for
monitoring United States involvement in military and paramilitary activities against Nicaragua,
directing Nicaragua's military and intelligence efforts against the contra guerrillas.
Commander Carrion began by explaining the condition of the contras prior to United States' aid
in December 1981. Commander Carrion stated that the contras consisted of insignificant bands
of poorly armed and poorly organized members of Somoza's National Guard, who carried out
uncoordinated border raids and rustled cattle (presumably for food).
In December 1981, the U.S. Congress authorized an initial appropriation of 19 million dollars to
finance paramilitary operations in Nicaragua and elsewhere in Central America. Because of this
aid, Commander Carrion stated that the contras began to become centralized and received both
training and weapons from the CIA. During 1982 the contra guerrillas engaged the Sandinista
armed forces in a series of hit and run border raids and carried out a number of sabotage
operations including:

1. the destruction of two key bridges in the northern part of Nicaragua, and
2. the planting of bombs in Nicaraguan civil aircraft in Mexico and in the baggage
area of a Nicaraguan port.
The United States Central Intelligence Agency, and Argentine military officers financed by the
CIA, were engaged in the training of the contra forces. The guerrillas received both basic infantry
training as well as training in specialized sabotage and demolition for "special operation groups".
The U.S. Congress apportioned new funds for the contras to the amount of $30 million at the end
of 1982. This made it possible for the contra forces to launch a military offensive against
Nicaragua. According to Commander Carrion, the offensive known as "C Plan" had the objective
of capturing the Nicaraguan border town of Jalapa in order to install a provisional government,
which could receive international recognition. This plan failed.
After the failure of the Jalapa offensive the contras changed their tactics from frontal assaults to
economic warfare against State farms, coffee plantations, grain storage centers, road junctions,
etc.
The CIA began to support the contras by setting up and coordinating a communications and
logistical system. The CIA supplied aircraft and the construction of airfields in the Honduran
border area next to Nicaragua. This allowed the contras to carry out deep penetration raids into
the more developed and populated areas of the Nicaraguan interior. U.S. Army engineers created
this airfield. The purpose of these deep penetration attacks upon economic targets was to weaken
the Nicaraguan economy, causing a shortages of goods.
As a part of its training program for the contras, the CIA prepared and distributed a manual
entitled Psychological Operations in Guerrilla Warfare. This manual included instructions in the
"use of implicit and explicit terror", and in the "selective use of violence for propaganda effects".
Commander Carrion explained that the manual was given to the Contras, "All of these terrorist
instructions have the main purpose of alienating the population from the Government through
creating a climate of terror and fear, so that nobody would dare support the Government". The
manual calls for the "neutralization" (i.e. assassination) of Sandinista local government officials,
judges, etc. for purposes of intimidation. It was openly admitted by the President Reagan in a
press conference that the manual had been prepared by a CIA contract employee.
After the United States Congress approved an additional $24 million aid to the contras in
December 1983, a new offensive was launched, named Plan Sierra. This offensive involved
approximately 7000 members of the contra forces. As in earlier attacks, the initial objective of this
offensive was to capture the border town of Jalapa to install a provisional government, which the
CIA informed the contras would be immediately recognized by the United States Government.
But this contra offensive was also repulsed by the Nicaraguan government forces.
In the beginning of 1984, the contras made a major effort to prevent the harvesting of the coffee
crop, which is one of Nicaragua's most important export products. Coffee plantations and state
farms where coffee is grown were attacked, vehicles were destroyed, and coffee farmers were
killed.
Commander Carrion testified that the ability of the contras to carry out military operations was
completely dependent upon United States funding, training and logistical support. Carrion stated
that the U.S. Government supplied the contras with uniforms, weapons, communications
equipment, intelligence, training, and coordination in using this material aid.
In September 1983, CIA operatives blew up Nicaragua's only oil pipeline, which was used to
transport oil from off-loading facilities to storage tanks on shore. The United States was also
directly involved in a large scale sabotage operation directed against Nicaragua's oil storage
facilities. This last attack was carried out by CIA contract employees termed by that organization
as "Unilaterally Controlled Latin Assets" (UCLAs). The CIA personnel were also directly involved
in a helicopter attack on a Nicaraguan army training camp. One of the helicopters was shot down
by Nicaraguan ground fire resulting in the death of two U.S. citizens.
Commander Carrion testified that the United States was involved in the mining of Nicaragua's
ports between February - April 1984. The mining operation was carried out by CIA ships directing
the operation from international waters, while the actual mining was carried out by CIA employees
on board speedboats operating inshore. After the mine-laying was completed the speedboats
returned to the mother vessel.
Carrion stated that 3,886 people had been killed and 4,731 wounded in the four years since the
contras began their attacks. Carrion estimated property damage at $375 million.
Commander Carrion stated if the United States stopped aid, support and training, this would result
in the end of the contras military activities within three months. Asked why he was so sure of this,
Commander Carrion answered, "Well, because the contras are an artificial force, artificially set
up by the United States, that exists only because it counts on United States direction, on United
States training, on United States assistance, on United States weapons, on United States
everything...Without that kind of support and direction the contras would simply disband,
disorganize, and thus lose their military capacity in a very short time".

Second witness: Dr. David MacMichael

David MacMichael was an expert on counter-insurgency, guerrilla warfare, and Latin American
affairs, he was also a witness because he was closely involved with U.S. intelligence activities as
a contract employee from March 1981 - April 1983. MacMichael worked for Stanford Research
Institute, which was contracted by the U.S. Department of Defense. After this he worked two years
for the CIA as a "senior estimates officer", preparing the National Intelligence Estimate. Dr.
MacMichael's responsibility was centered upon Central America. He had top-secret clearance.
He was qualified and authorized to have access to all relevant U.S. intelligence concerning
Central America, including intelligence relating to alleged Nicaraguan support for, and arms
shipments to the anti-Government insurgents in El Salvador. He took part in high level meetings
of the Latin American affairs office of the CIA. Including a fall 1981 meeting, which submitted the
initial plan to set up a 1500-man covert force on the Nicaraguan border, shipping arms from
Nicaragua to the El Salvador insurgents. This plan was approved by President Reagan.[22][23]
"The overall purpose (for the creation of the contras) was to weaken, even destabilize the
Nicaraguan Government and thus reduce the menace it allegedly posed to the United States'
interests in Central America..."
Contra paramilitary actions would "hopefully provoke cross-border attacks by Nicaraguan forces
and thus serve to demonstrate Nicaragua's aggressive nature and possibly call into play the
Organization of American States' provisions (regarding collective self-defense). It was hoped that
the Nicaraguan Government would clamp down on civil liberties within Nicaragua itself, arresting
its opposition, so demonstrating its allegedly inherent totalitarian nature and thus increase
domestic dissent within the country, and further that there would be reaction against United States
citizens, particularly against United States diplomatic personnel within Nicaragua and thus to
demonstrate the hostility of Nicaragua towards the United States".
In response to repeated questions as to whether there was any substantial evidence of the supply
of weapons to the guerrilla movement in El Salvador- either directly by the Nicaraguan
Government itself-or with the knowledge, approval or authorization of the Nicaraguan
Government of either non-official Nicaraguan sources, or by third country nationals inside or
outside Nicaragua, using Nicaraguan territory for this purpose, Dr. MacMichael answered that
there was no such evidence. In the opinion of the witness it would not have been possible for
Nicaragua to send arms to the insurgents in El Salvador in significant amounts (as alleged by the
U.S. Government) and over a prolonged period, without this being detected by the U.S.
intelligence network in the area...Counsel for Nicaragua, asked the witness several times whether
any detection of arms shipments by or through Nicaragua had taken place during the period he
was employed by the CIA. (MacMichael) answered repeatedly that there was no such evidence.
He also stated that after his employment had terminated, nothing had occurred that would cause
him to change his opinion. He termed the evidence that had been publicly disclosed by the U.S.
Government concerning Nicaraguan arms deliveries to the El Salvadoran insurgents as both
"scanty" and "unreliable". The witness did however state that based on evidence, which had been
gathered immediately prior to his employment with the CIA, evidence he had already actually
seen, there was substantial evidence that arms shipments were reaching El Salvador from
Nicaragua - with the probable involvement and complicity of the Nicaraguan Government -
through late 1980 up until the spring of 1981....But this evidence, which most importantly had
included actual seizures of weapons, which could be traced to Nicaragua, as well as documentary
evidence and other sources, had completely ceased by early 1981. Since then, no evidence
linking Nicaragua to shipments of arms in any substantial quantities had resumed coming in.
Third witness: Professor Michael Glennon
Mr. Glennon testified about a fact-finding mission he had conducted in Nicaragua to investigate
alleged human rights violations committed by the contra guerrillas, sponsored by the International
Human Rights Law Group, and the Washington Office on Latin America. Glennon conducted the
investigation with Mr. Donald T. Fox who is a New York attorney and a member of the International
Commission of Jurists.
They traveled to Nicaragua, visiting the northern region where the majority of contra military
operations took place. The two lawyers interviewed around 36 northern frontier residents who had
direct experience with the contras. They also spoke with the U.S. Ambassador to Nicaragua, and
with senior officials of the U.S. Department of State in Washington after returning to the United
States.
No hearsay evidence was accepted. Professor Glennon stated that those interviewed were
closely questioned and their evidence was carefully cross-checked with available documentary
evidence. Doubtful "testimonies" were rejected, and the results were published in April 1985. The
conclusions of the report were summarized by Glennon in Court:
"We found that there is substantial credible evidence that the contras were engaged with some
frequency in acts of terroristic violence directed at Nicaraguan civilians. These are individuals who
have no connection with the war effort-persons with no economic, political or military significance.
These are Individuals who are not caught in the cross-fire between Government and contra
forces, but rather individuals who are deliberately targeted by the contras for acts of terror. "Terror"
was used in the same sense as in recently enacted United States law, i.e. "an activity that involves
a violent act or an act dangerous to human life that Is a violation or the criminal law, and appears
to be intended to intimidate or coerce a civilian population, to Influence the policy of a government
by intimidation or coercion, or to affect the conduct of a government by assassination or
kidnapping".
In talks with U.S. State Department officials, at those in Managua U.S. Embassy, and with officials
in Washington, Professor Glennon had inquired whether the U.S. Government had ever
investigated human rights abuses by the contras. Professor Glennon testified that no such
investigation had ever been conducted, because in the words of a ranking State Department
official who he could not name, the U.S. Government maintained a policy of "intentional
ignorance" on the matter. State Department officials in Washington- had admitted to Glennon that
"it was clear that the level of atrocities was enormous". Those words "enormous" and "atrocities"
were the ranking State Department official's words.
Fourth witness: Father Jean Loison
Father Jean Loison was a French priest who worked as a nurse in a hospital in the northern
frontier region close to Honduras.
Asked whether the contras engaged in acts of violence directed against the civilian population,
Father Loison answered:
"Yes, I could give you several examples. Near Quilali, at about 30 kilometers east of Quilali, there
was a little village called El Coco. The contras arrived, they devastated it, they destroyed and
burned everything. They arrived in front of a little house and turned their machinegun fire on it,
without bothering to check if there were any people inside. Two children, who had taken fright and
hidden under a bed, were hit. I could say the same thing of a man and woman who were hit, this
was in the little co-operative of Sacadias Olivas. It was just the same. They too had taken fright
and got into bed. Unlike El Coco, the contras had just been on the attack, they had encountered
resistance and were now in flight. During their flight they went into a house, and seeing that there
were people there, they threw grenade. The man and the woman were killed and one of the
children was injured."
About contra kidnappings:
"I would say that kidnappings are one of the reasons why some of the peasants have formed
themselves into groups. Here (indicates a point on the map) is Quilali. Between Quilali and Uilili,
in this region to the north, there are hardly any peasants left of any age to bear arms, because
they have all been carried off"."
Father Loison described many examples of violence, mostly indiscriminate, directed at the civilian
population in the region where he resides. The picture that emerges from his testimony is that the
contras engage in brutal violation of minimum standards of humanity. He described murders of
unarmed civilians, including women and children, rape followed in many instances by torture or
murder, and indiscriminate terror designed to coerce the civilian population. His testimony was
similar to various reports including the International Human Rights Law Group, Amnesty
International, and others.
Fifth witness: William Hper
William Hper was Nicaragua's Minister of Finance. He testified about Nicaragua economic
damage, including the loss of fuel as a result of the attack in the oil storage facilities at Corinto,
the damage to Nicaragua's commerce as a result of the mining of its ports, and other economic
damage.

UN voting
After five vetoes in the Security Council between 1982 and 1985 of resolutions concerning the
situation in Nicaragua [5], the United States made one final veto on 28 October 1986[27] (France,
Thailand, and United Kingdom abstaining) of a resolution calling for full and immediate
compliance with the judgment.
Nicaragua brought the matter to the U.N. Security Council, where the United States vetoed a
resolution (11 to 1, 3 abstentions) calling on all states to observe international law. Nicaragua also
turned to the General Assembly, which passed a resolution 94 to 3 calling for compliance with the
World Court ruling. Two states, Israel and El Salvador, joined the United States in opposition. At
that time, El Salvador was receiving substantial funding and military advisement from the U.S.,
which was aiming to crush a Sandinista-like revolutionary movement by the FMLN. At the same
session, Nicaragua called upon the U.N. to send an independent fact-finding mission to the border
to secure international monitoring of the borders after a conflict there; the proposal was rejected
by Honduras with U.S. backing. A year later, on November 12, 1987, the General Assembly again
called for "full and immediate compliance" with the World Court decision. This time only Israel
joined the United States in opposing adherence to the ruling.]

U.S. defense and response

The United States refused to participate in the merits phase of the proceedings, but the Court
found that the US refusal did not prevent it from deciding the case. The Court also rejected the
United States defense that its action constituted collective self-defense. The United States argued
that the Court did not have jurisdiction, with U.S. ambassador to the United Nations Jeane
Kirkpatrick dismissing the Court as a "semi-legal, semi-juridical, semi-political body, which nations
sometimes accept and sometimes don't." [31]
The United States had signed the treaty accepting the Court's decision as binding, but with the
exception that the court would not have the power to hear cases based on multilateral treaty
obligations unless it involved all parties to the treaty affected by that decision or the United States
specially agreed to jurisdiction. The court found that it was obliged to apply this exception and
refused to take on claims by Nicaragua based on the United Nations Charter and Organization of
American States charter, but concluded that it could still decide the case based on customary
international law obligations with 11-4 majority.
After five vetoes in the Security Council between 1982 and 1985 of resolutions concerning the
situation in Nicaragua [6], the United States made one final veto on 28 October 1986[27] (France,
Thailand, and United Kingdom abstaining) of a resolution calling for full and immediate
compliance with the Judgement.[28]
When the same resolution was brought before the United Nations General Assembly on 3
November it was passed.[29] Only El Salvador and Israel voted with the U.S. against it. El
Salvador's ruling junta was at that time receiving substantial funding and military advisement from
the U.S., which was aiming to crush a Sandinista-like revolutionary movement by the FMLN. In
spite of this resolution, the U.S. still chose not to pay the fine.

Significance
Third-party interpretations
Professor of International Law, Anthony D'Amato, writing for the American Journal of International
Law (Vol. 80, 1986), commented on this case, stating that "...law would collapse if defendants
could only be sued when they agreed to be sued, and the proper measurement of that collapse
would be not just the drastically diminished number of cases but also the necessary restructuring
of a vast system of legal transactions and relations predicated on the availability of courts as a
last resort. There would be talk of a return to the law of the jungle." The author also notes that the
case resulted in an unusual candor. A month after the announced withdrawal, Secretary of State
Shultz suggested, and President Reagan later confirmed in a press conference, that the goal of
U.S. policy was to overthrow the Sandinista Government of Nicaragua. Although this was what
Nicaragua had alleged to be the U.S. goal, while the case was actively pending, the United States
could not concede that goal without serious risk of undermining its litigating position.

(Nicaragua v. United States of America)

International Court of Justice

June 27, 1986

MERITS

Judgment

Present: President NAGENDRA SINGH; Vice-President DE LACHARRIERE; Judges LACHS,

RUDA, ELIAS, ODA, AGO, SETTE-CAMARA, SCHWEBEL, Sir Robert JENNINGS,
MBAYE, BEDJAOUI, NI, EVENSEN; Judge ad hoc COLLIARD; Registrar TORRES
BERNARDEZ.

In the case concerning military and paramilitary activities in and against Nicaragua, ...

THE COURT,

composed as above, delivers the following Judgment:

1. On 9 April 1984 the Ambassador of the Republic of Nicaragua to the Netherlands filed in the
Registry of the Court an Application instituting proceedings against the United States of America
in respect of a dispute concerning responsibility for military and paramilitary activities in and
against Nicaragua. In order to found the jurisdiction of the Court the Application relied on
declarations made by the Parties accepting the compulsory jurisdiction of the Court under Article
36 of the Statute.

2. Pursuant to Article 40, paragraph 2, of the Statute, the Application was at once communicated
to the Government of the United States of America. In accordance with paragraph 3 of that
Article, all other States entitled to appear before the Court were notified of the Application.

3. At the same time as the Application was filed, the Republic of Nicaragua also filed a request
for the indication of provisional measures under Article 41 of the Statute. By an Order dated 10
May 1984, the Court rejected a request made by the United States for removal of the case from
the list, indicated, pending its final decision in the proceedings, certain provisional measures, and
decided that, until the Court delivers its final judgment in the case, it would keep the matters
covered by the Order continuously under review.

4. By the said Order of 10 May 1984, the Court further decided that the written proceedings in
the case should first be addressed to the questions of the jurisdiction of the Court to entertain the
dispute and of the admissibility of the Application. By an Order dated 14 May 1984, the
President of the Court fixed 30 June 1984 as time-limit for the filing of a Memorial by the
Republic of Nicaragua and 17 August 1984 as time-limit for the filing of a Counter- Memorial
by the United States of America on the questions of jurisdiction and admissibility and these
pleadings were duly filed within the time-limits fixed.

5. In its Memorial on jurisdiction and admissibility, the Republic of Nicaragua contended that, in
addition to the basis of jurisdiction relied on in the Application, a Treaty of Friendship,
Commerce and Navigation signed by the Parties in 1956 provides an independent basis for
jurisdiction under Article 36, paragraph 1, of the Statute of the Court.

6. Since the Court did not include upon the bench a judge of Nicaraguan nationality, Nicaragua,
by a letter dated 3 August 1984, exercised its right under Article 31, paragraph 2, of the Statute
of the Court to choose a judge ad hoc to sit in the case. The person so designated was Professor
Claude-Albert Colliard.

7. On 15 August 1984, two days before the closure of the written proceedings on the questions of
jurisdiction and admissibility, the Republic of El Salvador filed a Declaration of Intervention in
the case under Article 63 of the Statute. Having been supplied with the written observations of
the Parties on the Declaration pursuant to Article 83 of the Rules of Court, the Court, by an
Order dated 4 October 1984, decided not to hold a hearing on the Declaration of Intervention,
and decided that that Declaration was inadmissible inasmuch as it related to the phase of the
proceedings then current.

8. On 8-10 October and 15-18 October 1984, the Court held public hearings at which it heard the
argument of the Parties on the questions of the jurisdiction of the Court to entertain the dispute
and the admissibility of the Application.

9. By a Judgment dated 26 November 1984, the Court found that it had jurisdiction to entertain
the Application on the basis of Article 36, paragraphs 2 and 5, of the Statute of the Court; that it
had jurisdiction to entertain the Application in so far as it relates to a dispute concerning the
interpretation or application of the Treaty of Friendship, Commerce and Navigation between the
United States and Nicaragua of 21 January 1956, on the basis of Article XXIV of that Treaty;
that it had jurisdiction to entertain the case; and that the Application was admissible.

10. By a letter dated 18 January 1985 the Agent of the United States referred to the Court's
Judgment of 26 November 1984 and informed the Court as follows:

'the United States is constrained to conclude that the judgment of the Court was clearly and
manifestly erroneous as to both fact and law. The United States remains firmly of the view, for
the reasons given in its written and oral pleadings, that the Court is without jurisdiction to
entertain the dispute, and that the Nicaraguan application of 9 April 1984 is inadmissible.
Accordingly, it is my duty to inform you that the United States intends not to participate in any
further proceedings in connection with this case, and reserves its rights in respect of any decision
by the Court regarding Nicaragua's claims.'

11. By an Order dated 22 January 1985, the President of the Court, after referring to the letter
from the United States Agent, fixed 30 April 1985 as time-limit for a Memorial of Nicaragua and
31 May 1985 as time-limit for a Counter-Memorial of the United States of America on the merits
of the dispute. The Memorial of Nicaragua was filed within the time-limit so fixed; no pleading
was filed by the United States of America, nor did it make any request for extension of the time-
limit. In its Memorial, communicated to the United States pursuant to Article 43 of the Statute of
the Court, Nicaragua invoked Article 53 of the Statute and called upon the Court to decide the
case despite the failure of the Respondent to appear and defend.

12. On 10 September 1985, immediately prior to the opening of the oral proceedings, the Agent
of Nicaragua submitted to the Court a number of documents referred to as 'Supplemental
Annexes' to the Memorial of Nicaragua. In application of Article 56 of the Rules of Court, these
documents were treated as 'new documents' and copies were transmitted to the United States of
America, which did not lodge any objection to their production.

13. On 12-13 and 16-20 September 1985, the Court held public hearings at which it was
addressed by the following representatives of Nicaragua: H.E. Mr. Carlos Arguello Gomez, Hon.
Abram Chayes, Mr. Paul S. Reichler, Mr. Ian Brownlie, and Mr. Alain Pellet. The United States
was not represented at the hearing. The following witnesses were called by Nicaragua and gave
evidence: Commander Luis Carrion, Vice-Minister of the Interior of Nicaragua (examined by
Mr. Brownlie); Dr. David MacMichael, a former officer of the United States Central Intelligence
Agency (CIA) (examined by Mr. Chayes); Professor Michael John Glennon (examined by Mr.
Reichler); Father Jean Loison (examined by Mr. Pellet); Mr. William Huper, Minister of Finance
of Nicaragua (examined by Mr. Arguello Gomez). Questions were put by Members of the Court
to the witnesses, as well as to the Agent and counsel of Nicaragua, and replies were given either
orally at the hearing or subsequently in writing. On 14 October 1985 the Court requested
Nicaragua to make available certain further information and documents, and one Member of the
Court put a question to Nicaragua. The verbatim records of the hearings and the information and
documents supplied in response to these requests were transmitted by the Registrar to the United
States of America.
14. Pursuant to Article 53, paragraph 2, of the Rules of Court, the pleadings and annexed
documents were made accessible to the public by the Court as from the date of opening of the
oral proceedings.

15. In the course of the written proceedings, the following submissions were presented on behalf
of the Government of Nicaragua:

in the Application:

'Nicaragua, reserving the right to supplement or to amend this Application and subject to the
presentation to the Court of the relevant evidence and legal argument, requests the Court to
adjudge and declare as follows:

(a) That the United States, in recruiting, training, arming, equipping, financing, supplying and
otherwise encouraging, supporting, aiding, and directing military and paramilitary actions in and
against Nicaragua, has violated and is violating its express charter and treaty obligations to
Nicaragua, and in particular, its charter and treaty obligations under:

- Article 2 (4) of the United Nations Charter;

- Articles 18 and 20 of the Charter of the Organization of American States;

- Article 8 of the Convention on Rights and Duties of States;

- Article I, Third, of the Convention concerning the Duties and Rights of States in the Event of
Civil Strife.

(b) That the United States, in breach of its obligation under general and customary international
law, has violated and is violating the sovereignty of Nicaragua by:

- armed attacks against Nicaragua by air, land and sea;

- incursions into Nicaraguan territorial waters;

- aerial trespass into Nicaraguan airspace;

- efforts by direct and indirect means to coerce and intimidate the Government of Nicaragua.

(c) That the United States, in breach of its obligation under general and customary international
law, has used and is using force and the threat of force against Nicaragua.

(d) That the United States, in breach of its obligation under general and customary international
law, has intervened and is intervening in the internal affairs of Nicaragua.
(e) That the United States, in breach of its obligation under general and customary international
law, has infringed and is infringing the freedom of the high seas and interrupting peaceful
maritime commerce.

(f) That the United States, in breach of its obligation under general and customary international
law, has killed, wounded and kidnapped and is killing, wounding and kidnapping citizens of
Nicaragua.

(g) That, in view of its breaches of the foregoing legal obligations, the United States is under a
particular duty to cease and desist immediately: from all use of force - whether direct or indirect,
overt or covert - against Nicaragua, and from all threats of force against Nicaragua;

from all violations of the sovereignty, territorial integrity or political independence of Nicaragua,
including all intervention, direct or indirect, in the internal affairs of Nicaragua;

from all support of any kind - including the provision of training, arms, ammunition, finances,
supplies, assistance, direction or any other form of support - to any nation, group, organization,
movement or individual engaged or planning to engage in military or paramilitary actions in or
against Nicaragua;

from all efforts to restrict, block or endanger access to or from Nicaraguan ports;

and from all killings, woundings and kidnappings of Nicaraguan citizens.

(h) That the United States has an obligation to pay Nicaragua, in its own right and as parens
patriae for the citizens of Nicaragua, reparations for damages to person, property and the
Nicaraguan economy caused by the foregoing violations of international law in a sum to be
determined by the Court. Nicaragua reserves the right to introduce to the Court a precise
evaluation of the damages caused by the United States';

in the Memorial on the merits:

'The Republic of Nicaragua respectfully requests the Court to grant the following relief:

First: the Court is requested to adjudge and declare that the United States has violated the
obligations of international law indicated in this Memorial, and that in particular respects the
United States is in continuing violation of those obligations.

Second: the Court is requested to state in clear terms the obligation which the United States bears
to bring to an end the aforesaid breaches of international law.

Third: the Court is requested to adjudge and declare that, in consequence of the violations of
international law indicated in this Memorial, compensation is due to Nicaragua, both on its own
behalf and in respect of wrongs inflicted upon its nationals; and the Court is requested further to
receive evidence and to determine, in a subsequent phase of the present proceedings, the
quantum of damages to be assessed as the compensation due to the Republic of Nicaragua.
Fourth: without prejudice to the foregoing request, the Court is requested to award to the
Republic of Nicaragua the sum of 370,200,000 United States dollars, which sum constitutes the
minimum valuation of the direct damages, with the exception of damages for killing nationals of
Nicaragua, resulting from the violations of international law indicated in the substance of this
Memorial.

With reference to the fourth request, the Republic of Nicaragua reserves the right to present
evidence and argument, with the purpose of elaborating the minimum (and in that sense
provisional) valuation of direct damages and, further, with the purpose of claiming compensation
for the killing of nationals of Nicaragua and consequential loss in accordance with the principles
of international law in respect of the violations of international law generally, in a subsequent
phase of the present proceedings in case the Court accedes to the third request of the Republic of
Nicaragua.

16. At the conclusion of the last statement made on behalf of Nicaragua at the hearing, the final
submissions of Nicaragua were presented, which submissions were identical to those contained
in the Memorial on the merits and set out above.

17. No pleadings on the merits having been filed by the United States of America, which was
also not represented at the oral proceedings of September 1985, no submissions on the merits
were presented on its behalf.

18. The dispute before the Court between Nicaragua and the United States concerns events in
Nicaragua subsequent to the fall of the Government of President Anastasio Somoza Debayle in
Nicaragua in July 1979, and activities of the Government of the United States in relation to
Nicaragua since that time. Following the departure of President Somoza, a Junta of National
Reconstruction and an 18-member government was installed by the body which had led the
armed opposition to President Somoza, the Frente Sandinista de Liberacion Nacional (FSLN).
That body had initially an extensive share in the new government, described as a 'democratic
coalition', and as a result of later resignations and reshuffles, became almost its sole component.
Certain opponents of the new Government, primarily supporters of the former Somoza
Government and in particular ex-members of the National Guard, formed themselves into
irregular military forces, and commenced a policy of armed opposition, though initially on a
limited scale.

19. The attitude of the United States Government to the 'democratic coalition government' was at
first favourable; and a programme of economic aid to Nicaragua was adopted. However by 1981
this attitude had changed. United States aid to Nicaragua was suspended in January 1981 and
terminated in April 1981. According to the United States, the reason for this change of attitude
was reports of involvement of the Government of Nicaragua in logistical support, including
provision of arms, for guerrillas in El Salvador. There was however no interruption in diplomatic
relations, which have continued to be maintained up to the present time. In September 1981,
according to testimony called by Nicaragua, it was decided to plan and undertake activities
directed against Nicaragua.
20. The armed opposition to the new Government in Nicaragua, which originally comprised
various movements, subsequently became organized into two main groups: the Fuerza
Democratica Nicaraguense (FDN) and the Alianza Revolucionaria Democratica (ARDE). The
first of these grew from 1981 onwards into a trained fighting force, operating along the borders
with Honduras; the second, formed in 1982, operated along the borders with Costa Rica. The
precise extent to which, and manner in which, the United States Government contributed to
bringing about these developments will be studied more closely later in the present Judgment.
However, after an initial period in which the 'covert' operations of United States personnel and
persons in their pay were kept from becoming public knowledge, it was made clear, not only in
the United States press, but also in Congress and in official statements by the President and high
United States officials, that the United States Government had been giving support to the contras,
a term employed to describe those fighting against the present Nicaraguan Government. In 1983,
budgetary legislation enacted by the United States Congress made specific provision for funds to
be used by United States intelligence agencies for supporting 'directly or indirectly, military or
paramilitary operations in Nicaragua'. According to Nicaragua, the contras have caused it
considerable material damage and widespread loss of life, and have also committed such acts as
killing of prisoners, indiscriminate killing of civilians, torture, rape and kidnapping. It is
contended by Nicaragua that the United States Government is effectively in control of the
contras, that it devised their strategy and directed their tactics, and that the purpose of that
Government was, from the beginning, to overthrow the Government of Nicaragua.

21. Nicaragua claims furthermore that certain military or paramilitary operations against it were
carried out, not by the contras, who at the time claimed responsibility, but by persons in the pay
of the United States Government, and under the direct command of United States personnel, who
also participated to some extent in the operations. These operations will also be more closely
examined below in order to determine their legal significance and the responsibility for them;
they include the mining of certain Nicaraguan ports in early 1984, and attacks on ports, oil
installations, a naval base, etc. Nicaragua has also complained of overflights of its territory by
United States aircraft, not only for purposes of intelligence-gathering and supply to the contras in
the field, but also in order to intimidate the population.

22. In the economic field, Nicaragua claims that the United States has withdrawn its own aid to
Nicaragua, drastically reduced the quota for imports of sugar from Nicaragua to the United
States, and imposed a trade embargo; it has also used its influence in the Inter-American
Development Bank and the International Bank for Reconstruction and Development to block the
provision of loans to Nicaragua.

23. As a matter of law, Nicaragua claims, inter alia, that the United States has acted in violation
of Article 2, paragraph 4, of the United Nations Charter, and of a customary international law
obligation to refrain from the threat or use of force; that its actions amount to intervention in the
internal affairs of Nicaragua, in breach of the Charter of the Organization of American States and
of rules of customary international law forbidding intervention; and that the United States has
acted in violation of the sovereignty of Nicaragua, and in violation of a number of other
obligations established in general customary international law and in the inter-American system.
The actions of the United States are also claimed by Nicaragua to be such as to defeat the object
and purpose of a Treaty of Friendship, Commerce and Navigation concluded between the Parties
in 1956, and to be in breach of provisions of that Treaty.

24. As already noted, the United States has not filed any pleading on the merits of the case, and
was not represented at the hearings devoted thereto. It did however make clear in its Counter-
Memorial on the questions of jurisdiction and admissibility that 'by providing, upon request,
proportionate and appropriate assistance to third States not before the Court' it claims to be
acting in reliance on the inherent right of self-defence 'guaranteed . . . by Article 51 of the
Charter' of the United Nations, that is to say the right of collective self-defence.

25. Various elements of the present dispute have been brought before the United Nations
Security Council by Nicaragua, in April 1984 (as the Court had occasion to note in its Order of
10 May 1984, and in its Judgment on jurisdiction and admissibility of 26 November 1984, I.C.J.
Reports 1984, p. 432, para. 91), and on a number of other occasions. The subject-matter of the
dispute also forms part of wider issues affecting Central America at present being dealt with on a
regional basis in the context of what is known as the 'Contadora Process' (I.C.J. Reports 1984,
pp. 183-185, paras. 34-36; pp. 438-441, paras. 102-108).

26. The position taken up by the Government of the United States of America in the present
proceedings, since the delivery of the Court's Judgment of 26 November 1984, as defined in the
letter from the United States Agent dated 18 January 1985, brings into operation Article 53 of the
Statute of the Court, which provides that 'Whenever one of the parties does not appear before the
Court, or fails to defend its case, the other party may call upon the Court to decide in favour of
its claim'. Nicaragua, has, in its Memorial and oral argument, invoked Article 53 and asked for a
decision in favour of its claim. A special feature of the present case is that the United States only
ceased to take part in the proceedings after a Judgment had been given adverse to its contentions
on jurisdiction and admissibility. Furthermore, it stated when doing so 'that the judgment of the
Court was clearly and manifestly erroneous as to both fact and law', that it 'remains firmly of the
view . . . that the Court is without jurisdiction to entertain the dispute' and that the United States
'reserves its rights in respect of any decision by the Court regarding Nicaragua's claims'.

27. When a State named as party to proceedings before the Court decides not to appear in the
proceedings, or not to defend its case, the Court usually expresses regret, because such a decision
obviously has a negative impact on the sound administration of justice (cf. Fisheries Jurisdiction,
I.C.J. Reports 1973, p. 7, para. 12; p. 54, para. 13; I.C.J. Reports 1974, p. 9, para. 17; p. 181,
para. 18; Nuclear Tests, I.C.J. Reports 1974, p. 257, para. 15; p. 461, para. 15; Aegean Sea
Continental Shelf, I.C.J. Reports 1978, p. 7, para. 15; United States Diplomatic and Consular
Staff in Tehran, I.C.J. Reports 1980, p. 18, para. 33). In the present case, the Court regrets even
more deeply the decision of the respondent State not to participate in the present phase of the
proceedings, because this decision was made after the United States had participated fully in the
proceedings on the request for provisional measures, and the proceedings on jurisdiction and
admissibility. Having taken part in the proceedings to argue that the Court lacked jurisdiction,
the United States thereby acknowledged that the Court had the power to make a finding on its
own jurisdiction to rule upon the merits. It is not possible to argue that the Court had jurisdiction
only to declare that it lacked jurisdiction. In the normal course of events, for a party to appear
before a court entails acceptance of the possibility of the court's finding against that party.
Furthermore the Court is bound to emphasize that the non-participation of a party in the
proceedings at any stage of the case cannot, in any circumstances, affect the validity of its
judgment. Nor does such validity depend upon the acceptance of that judgment by one party. The
fact that a State purports to 'reserve its rights' in respect of a future decision of the Court, after
the Court has determined that it has jurisdiction, is clearly of no effect on the validity of that
decision. Under Article 36, paragraph 6, of its Statute, the Court has jurisdiction to determine
any dispute as to its own jurisdiction, and its judgment on that matter, as on the merits, is final
and binding on the parties under Articles 59 and 60 of the Statute (cf. Corfu Channel, Judgment
of 15 December 1949, I.C.J. Reports 1949, p. 248).

28. When Article 53 of the Statute applies, the Court is bound to 'satisfy itself, not only that it
has jurisdiction in accordance with Articles 36 and 37, but also that the claim' of the party
appearing is well founded in fact and law. In the present case, the Court has had the benefit of
both Parties pleading before it at the earlier stages of the procedure, those concerning the request
for the indication of provisional measures and to the questions of jurisdiction and admissibility.
By its Judgment of 26 November 1984, the Court found, inter alia, that it had jurisdiction to
entertain the case; it must however take steps to 'satisfy itself' that the claims of the Applicant are
'well founded in fact and law'. The question of the application of Article 53 has been dealt with
by the Court in a number of previous cases, referred to above, and the Court does not therefore
find it necessary to recapitulate the content of these decisions. The reasoning adopted to dispose
of the basic problems arising was essentially the same, although the words used may have
differed slightly from case to case. Certain points of principle may however be restated here. A
State which decides not to appear must accept the consequences of its decision, the first of which
is that the case will continue without its participation; the State which has chosen not to appear
remains a party to the case, and is bound by the eventual judgment in accordance with Article 59
of the Statute. There is however no question of a judgment automatically in favour of the party
appearing, since the Court is required, as mentioned above, to 'satisfy itself' that that party's
claim is well founded in fact and law.

29. The use of the term 'satisfy itself' in the English text of the Statute (and in the French text the
term 's'assurer') implies that the Court must attain the same degree of certainty as in any other
case that the claim of the party appearing is sound in law, and, so far as the nature of the case
permits, that the facts on which it is based are supported by convincing evidence. For the purpose
of deciding whether the claim is well founded in law, the principle jura novit curia signifies that
the Court is not solely dependent on the argument of the parties before it with respect to the
applicable law (cf. 'Lotus', P.C.I.J., Series A, No. 10, p. 31), so that the absence of one party has
less impact. As the Court observed in the Fisheries Jurisdiction cases:

'The Court . . ., as an international judicial organ, is deemed to take judicial notice of

international law, and is therefore required in a case falling under Article 53 of the Statute, as in
any other case, to consider on its own initiative all rules of international law which may be
relevant to the settlement of the dispute. It being the duty of the Court itself to ascertain and
apply the relevant law in the given circumstances of the case, the burden of establishing or
proving rules of international law cannot be imposed upon any of the parties, for the law lies
within the judicial knowledge of the Court.' (I.C.J. Reports 1974, p. 9, para. 17; p. 181, para. 18.)
Nevertheless the views of the parties to a case as to the law applicable to their dispute are very
material, particularly, as will be explained below (paragraphs 184 and 185), when those views
are concordant. In the present case, the burden laid upon the Court is therefore somewhat
lightened by the fact that the United States participated in the earlier phases of the case, when it
submitted certain arguments on the law which have a bearing also on the merits.

30. As to the facts of the case, in principle the Court is not bound to confine its consideration to
the material formally submitted to it by the parties (cf. Brazilian Loans, P.C.I.J., Series A, No.
20/21, p. 124; Nuclear Tests, I.C.J. Reports 1974, pp. 263-264, paras. 31, 32). Nevertheless, the
Court cannot by its own enquiries entirely make up for the absence of one of the Parties; that
absence, in a case of this kind involving extensive questions of fact, must necessarily limit the
extent to which the Court is informed of the facts. It would furthermore be an over-simplification
to conclude that the only detrimental consequence of the absence of a party is the lack of
opportunity to submit argument and evidence in support of its own case. Proceedings before the
Court call for vigilance by all. The absent party also forfeits the opportunity to counter the
factual allegations of its opponent. It is of course for the party appearing to prove the allegations
it makes, yet as the Court has held:

'While Article 53 thus obliges the Court to consider the submissions of the Party which appears,
it does not compel the Court to examine their accuracy in all their details; for this might in
certain unopposed cases prove impossible in practice.' (Corfu Channel, I.C.J. Reports 1949, p.
248.)

31. While these are the guiding principles, the experience of previous cases in which one party
has decided not to appear shows that something more is involved. Though formally absent from
the proceedings, the party in question frequently submits to the Court letters and documents, in
ways and by means not contemplated by the Rules. The Court has thus to strike a balance. On the
one hand, it is valuable for the Court to know the views of both parties in whatever form those
views may have been expressed. Further, as the Court noted in 1974, where one party is not
appearing 'it is especially incumbent upon the Court to satisfy itself that it is in possession of all
the available facts' (Nuclear Tests, I.C.J. Reports 1974, p. 263, para. 31; p. 468, para. 32). On the
other hand, the Court has to emphasize that the equality of the parties to the dispute must remain
the basic principle for the Court. The intention of Article 53 was that in a case of non-appearance
neither party should be placed at a disadvantage; therefore the party which declines to appear
cannot be permitted to profit from its absence, since this would amount to placing the party
appearing at a disadvantage. The provisions of the Statute and Rules of Court concerning the
presentation of pleadings and evidence are designed to secure a proper administration of justice,
and a fair and equal opportunity for each party to comment on its opponent's contentions. The
treatment to be given by the Court to communications or material emanating from the absent
party must be determined by the weight to be given to these different considerations, and is not
susceptible of rigid definition in the form of a precise general rule. The vigilance which the
Court can exercise when aided by the presence of both parties to the proceedings has a
counterpart in the special care it has to devote to the proper administration of justice in a case in
which only one party is present.
32. Before proceeding further, the Court considers it appropriate to deal with a preliminary
question, relating to what may be referred to as the justiciability of the dispute submitted to it by
Nicaragua. In its Counter-Memorial on jurisdiction and admissibility the United States advanced
a number of arguments why the claim should be treated as inadmissible: inter alia, again
according to the United States, that a claim of unlawful use of armed force is a matter committed
by the United Nations Charter and by practice to the exclusive competence of other organs, in
particular the Security Council; and that an 'ongoing armed conflict' involving the use of armed
force contrary to the Charter is one with which a court cannot deal effectively without
overstepping proper judicial bounds. These arguments were examined by the Court in its
Judgment of 26 November 1984, and rejected. No further arguments of this nature have been
submitted to the Court by the United States, which has not participated in the subsequent
proceedings. However the examination of the merits which the Court has now carried out shows
the existence of circumstances as a result of which, it might be argued, the dispute, or that part of
it which relates to the questions of use of force and collective self-defence, would be
nonjusticiable.

33. In the first place, it has been suggested that the present dispute should be declared
nonjusticiable, because it does not fall into the category of 'legal disputes' within the meaning of
Article 36, paragraph 2, of the Statute. It is true that the jurisdiction of the Court under that
provision is limited to 'legal disputes' concerning any of the matters enumerated in the text. The
question whether a given dispute between two States is or is not a 'legal dispute' for the purposes
of this provision may itself be a matter in dispute between those two States; and if so, that
dispute is to be settled by the decision of the Court in accordance with paragraph 6 of Article 36.
In the present case, however, this particular point does not appear to be in dispute between the
Parties. The United States, during the proceedings devoted to questions of jurisdiction and
admissibility, advanced a number of grounds why the Court should find that it had no
jurisdiction, or that the claim was not admissible. It relied inter alia on proviso (c) to its own
declaration of acceptance of jurisdiction under Article 36, paragraph 2, without ever advancing
the more radical argument that the whole declaration was inapplicable because the dispute
brought before the Court by Nicaragua was not a 'legal dispute' within the meaning of that
paragraph. As a matter of admissibility, the United States objected to the application of Article
36, paragraph 2, not because the dispute was not a 'legal dispute', but because of the express
allocation of such matters as the subject of Nicaragua's claims to the political organs under the
United Nations Charter, an argument rejected by the Court in its Judgment of 26 November 1984
(I.C.J. Reports 1984, pp. 431- 436). Similarly, while the United States contended that the nature
of the judicial function precludes its application to the substance of Nicaragua's allegations in
this case - an argument which the Court was again unable to uphold (ibid., pp. 436-438) , it was
careful to emphasize that this did not mean that it was arguing that international law was not
relevant or controlling in a dispute of this kind. In short, the Court can see no indication
whatsoever that, even in the view of the United States, the present dispute falls outside the
category of 'legal disputes' to which Article 36, paragraph 2, of the Statute applies. It must
therefore proceed to examine the specific claims of Nicaragua in the light of the international law
applicable.

34. There can be no doubt that the issues of the use of force and collective self-defence raised in
the present proceedings are issues which are regulated both by customary international law and
by treaties, in particular the United Nations Charter. Yet it is also suggested that, for another
reason, the questions of this kind which arise in the present case are not justiciable, that they fall
outside the limits of the kind of questions a court can deal with. It is suggested that the plea of
collective self-defence which has been advanced by the United States as a justification for its
actions with regard to Nicaragua requires the Court to determine whether the United States was
legally justified in adjudging itself under a necessity, because its own security was in jeopardy,
to use force in response to foreign intervention in El Salvador. Such a determination, it is said,
involves a pronouncement on political and military matters, not a question of a kind that a court
can usefully attempt to answer.

35. As will be further explained below, in the circumstances of the dispute now before the Court,
what is in issue is the purported exercise by the United States of a right of collective self-defence
in response to an armed attack on another State. The possible lawfulness of a response to the
imminent threat of an armed attack which has not yet taken place has not been raised. The Court
has therefore to determine first whether such attack has occurred, and if so whether the measures
allegedly taken in self-defence were a legally appropriate reaction as a matter of collective self-
defence. To resolve the first of these questions, the Court does not have to determine whether the
United States, or the State which may have been under attack, was faced with a necessity of
reacting. Nor does its examination, if it determines that an armed attack did occur, of issues
relating to the collective character of the self-defence and the kind of reaction, necessarily
involve it in any evaluation of military considerations. Accordingly the Court can at this stage
confine itself to a finding that, in the circumstances of the present case, the issues raised of
collective self-defence are issues which it has competence, and is equipped, to determine.

36. By its Judgment of 26 November 1984, the Court found that it had jurisdiction to entertain
the present case, first on the basis of the United States declaration of acceptance of jurisdiction,
under the optional clause of Article 36, paragraph 2, of the Statute, deposited on 26 August 1946,
and secondly on the basis of Article XXIV of a Treaty of Friendship, Commerce and Navigation
between the Parties, signed at Managua on 21 January 1956. The Court notes that since the
institution of the present proceedings, both bases of jurisdiction have been terminated. On 1 May
1985 the United States gave written notice to the Government of Nicaragua to terminate the
Treaty, in accordance with Article XXV, paragraph 3, thereof; that notice expired, and thus
terminated the treaty relationship, on 1 May 1986. On 7 October 1985 the United States
deposited with the Secretary-General of the United Nations a notice terminating the declaration
under the optional clause, in accordance with the terms of that declaration, and that notice
expired on 7 April 1986. These circumstances do not however affect the jurisdiction of the Court
under Article 36, paragraph 2, of the Statute, or its jurisdiction under Article XXIV, paragraph 2,
of the Treaty to determine 'any dispute between the Parties as to the interpretation or application'
of the Treaty. As the Court pointed out in the Nottebohm case:

'When an Application is filed at a time when the law in force between the parties entails the
compulsory jurisdiction of the Court . . . the filing of the Application is merely the condition
required to enable the clause of compulsory jurisdiction to produce its effects in respect of the
claim advanced in the Application. Once this condition has been satisfied, the Court must deal
with the claim; it has jurisdiction to deal with all its aspects, whether they relate to jurisdiction,
to admissibility or to the merits. An extrinsic fact such as the subsequent lapse of the Declaration
[or, as in the present case also, the Treaty containing a compromissory clause], by reason of the
expiry of the period or by denunciation, cannot deprive the Court of the jurisdiction already
established.' (I.C.J. Reports 1953, p. 123.)

37. In the Judgment of 26 November 1984 the Court, however, also declared that one objection
advanced by the United States, that concerning the exclusion from the United States acceptance
of jurisdiction under the optional clause of 'disputes arising under a multilateral treaty', raised 'a
question concerning matters of substance relating to the merits of the case', and concluded:

'That being so, and since the procedural technique formerly available of joinder of preliminary
objections to the merits has been done away with since the 1972 revision of the Rules of Court,
the Court has no choice but to avail itself of Article 79, paragraph 7, of the present Rules of
Court, and declare that Paragraph 7, of the present Rules of Court, and declare tht the objection
based on the multilateral treaty reservation of the United States Declaration of Acceptance does
not possess, in the circumstances of the case, an exclusively preliminary character, and that
consequently it does not constitute an obstacle for the Court to entertain the proceedings
instituted by Nicaragua under the Application of 9 April 1984.' (I.C.J. Reports 1984, pp. 425-
426, para. 76.)

******************

42. The Court must thus now rule upon the consequences of the United States multilateral treaty
reservation for the decision which it has to give. It will be recalled that the United States
acceptance of jurisdiction deposited on 26 August 1946 contains a proviso excluding from its
application: 'disputes arising under a multilateral treaty, unless (1) all parties to the treaty
affected by the decision are also parties to the case before the Court, or (2) the United States of
America specially agrees to jurisdiction'. The 1984 Judgment included pronouncements on
certain aspects of that reservation, but the Court then took the view that it was neither necessary
nor possible, at the jurisdictional stage of the proceedings, for it to take a position on all the
problems posed by the reservation.

43. It regarded this as not necessary because, in its Application, Nicaragua had not confined its
claims to breaches of multilateral treaties but had also invoked a number of principles of 'general
and customary international law', as well as the bilateral Treaty of Friendship, Commerce and
Navigation of 1956. These principles remained binding as such, although they were also
enshrined in treaty law provisions. Consequently, since the case had not been referred to the
Court solely on the basis of multilateral treaties, it was not necessary for the Court, in order to
consider the merits of Nicaragua's claim, to decide the scope of the reservation in question: 'the
claim . . . would not in any event be barred by the multilateral treaty reservation' (I.C.J. Reports
1984, p. 425, para. 73). Moreover, it was not found possible for the reservation to be definitively
dealt with at the jurisdictional stage of the proceedings. To make a judgment on the scope of the
reservation would have meant giving a definitive interpretation of the term 'affected' in that
reservation. In its 1984 Judgment, the Court held that the term 'affected' applied not to
multilateral treaties, but to the parties to such treaties. The Court added that if those parties
wished to protect their interests 'in so far as these are not already protected by Article 59 of the
Statute', they 'would have the choice of either instituting proceedings or intervening' during the
merits phase. But at all events, according to the Court, 'the determination of the States "affected"
could not be left to the parties but must be made by the Court' (I.C.J. Reports 1984, p. 425, para.
75). This process could however not be carried out at the stage of the proceedings in which the
Court then found itself; 'it is only when the general lines of the judgment to be given become
clear,' the Court said, 'that the States 'affected' could be identified' (ibid.). The Court thus
concluded that this was 'a question concerning matters of substance relating to the merits of the
case' (ibid., para. 76). Since 'the question of what States may be "affected" by the decision on the
merits is not in itself a jurisdictional problem,' the Court found that it 'has no choice but to avail
itself of Article 79, paragraph 7, of the present Rules of Court, and declare that the objection
based on the multilateral treaty reservation . . . does not possess, in the circumstances of the case,
an exclusively preliminary character' (ibid., para. 76).

44. Now that the Court has considered the substance of the dispute, it becomes both possible and
necessary for it to rule upon the points related to the United States reservation which were not
settled in 1984. It is necessary because the Court's jurisdiction, as it has frequently recalled, is
based on the consent of States, expressed in a variety of ways including declarations made under
Article 36, paragraph 2, of the Statute. It is the declaration made by the United States under that
Article which defines the categories of dispute for which the United States consents to the
Court's jurisdiction. If therefore that declaration, because of a reservation contained in it,
excludes from the disputes for which it accepts the Court's jurisdiction certain disputes arising
under multilateral treaties, the Court must take that fact into account. The final decision on this
point, which it was not possible to take at the jurisdictional stage, can and must be taken by the
Court now when coming to its decision on the merits. If this were not so, the Court would not
have decided whether or not the objection was well-founded, either at the jurisdictional stage,
because it did not possess an exclusively preliminary character, or at the merits stage, because it
did to some degree have such a character. It is now possible to resolve the question of the
application of the reservation because, in the light of the Court's full examination of the facts of
the case and the law, the implications of the argument of collective self-defence raised by the
United States have become clear.

45. The reservation in question is not necessarily a bar to the United States' accepting the Court's
jurisdiction whenever a third State which may be affected by the decision is not a party to the
proceedings. According to the actual text of the reservation, the United States can always
disregard this fact if it 'specially agrees to jurisdiction'. Besides, apart from this possibility, as the
Court recently observed: 'in principle a State may validly waive an objection to jurisdiction
which it might otherwise have been entitled to raise' (I.C.J. Reports 1985, p. 216, para. 43). But it
is clear that the fact that the United States, having refused to participate at the merits stage, did
not have an opportunity to press again at that stage the argument which, in the jurisdictional
phase, it founded on its multilateral treaty reservation cannot be tantamount to a waiver of the
argument drawn from the reservation. Unless unequivocally waived, the reservation constitutes a
limitation on the extent of the jurisdiction voluntarily accepted by the United States; and, as the
Court observed in the Aegean Sea Continental Shelf case,

'It would not discharge its duty under Article 53 of the Statute if it were to leave out of its
consideration a reservation, the invocation of which by the Respondent was properly brought to
its notice earlier in the proceedings.' (I.C.J. Reports 1978, p. 20, para. 47.)
The United States has not in the present phase submitted to the Court any arguments whatever,
either on the merits proper or on the question - not exclusively preliminary - of the multilateral
treaty reservation. The Court cannot therefore consider that the United States has waived the
reservation or no longer ascribes to it the scope which the United States attributed to it when last
stating its position on this matter before the Court. This conclusion is the more decisive
inasmuch as a respondent's non-participation requires the Court, as stated for example in the
Fisheries Jurisdiction cases, to exercise 'particular circumspection and . . . special care' (I.C.J.
Reports 1974, p. 10, para. 17, and p. 181, para. 18).

46. It has also been suggested that the United States may have waived the multilateral treaty
reservation by its conduct of its case at the jurisdictional stage, or more generally by asserting
collective self defence in accordance with the United Nations Charter as justification for its
activities vis-a-vis Nicaragua. There is no doubt that the United States, during its participation in
the proceedings, insisted that the law applicable to the dispute was to be found in multilateral
treaties, particularly the United Nations Charter and the Charter of the Organization of American
States; indeed, it went so far as to contend that such treaties supervene and subsume customary
law on the subject. It is however one thing for a State to advance a contention that the law
applicable to a given dispute derives from a specified source; it is quite another for that State to
consent to the Court's having jurisdiction to entertain that dispute, and thus to apply that law to
the dispute. The whole purpose of the United States argument as to the applicability of the
United Nations and Organization of American States Charters was to convince the Court that the
present dispute is one 'arising under' those treaties, and hence one which is excluded from
jurisdiction by the multilateral treaty reservation in the United States declaration of acceptance of
jurisdiction. It is impossible to interpret the attitude of the United States as consenting to the
Court's applying multilateral treaty law to resolve the dispute, when what the United States was
arguing was that, for the very reason that the dispute 'arises under' multilateral treaties, no
consent to its determination by the Court has ever been given. The Court was fully aware, when
it gave its 1984 Judgment, that the United States regarded the law of the two Charters as
applicable to the dispute; it did not then regard that approach as a waiver, nor can it do so now.
The Court is therefore bound to ascertain whether its jurisdiction is limited by virtue of the
reservation in question.

47. In order to fulfil this obligation, the Court is now in a position to ascertain whether any third
States, parties to multilateral treaties invoked by Nicaragua in support of its claims, would be
'affected' by the Judgment, and are not parties to the proceedings leading up to it. The
multilateral treaties discussed in this connection at the stage of the proceedings devoted to
jurisdiction were four in number: the Charter of the United Nations, the Charter of the
Organization of American States, the Montevideo Convention on the Rights and Duties of States
of 26 December 1933, and the Havana Convention on the Rights and Duties of States in the
Event of Civil Strife of 20 February 1928 (cf. I.C.J. Reports 1984, p. 422, para. 68). However,
Nicaragua has not placed any particular reliance on the latter two treaties in the present
proceedings; and in reply to a question by a Member of the Court on the point, the Nicaraguan
Agent stated that while Nicaragua had not abandoned its claims under these two conventions, it
believed 'that the duties and obligations established by these conventions have been subsumed in
the Organization of American States Charter.' The Court therefore considers that it will be
sufficient to examine the position under the two Charters, leaving aside the possibility that the
dispute might be regarded as 'arising' under either or both of the other two conventions.

48. The argument of the Parties at the jurisdictional stage was addressed primarily to the impact
of the multilateral treaty reservation on Nicaragua's claim that the United States has used force
against it in breach of the United Nations Charter and of the Charter of the Organization of
American States, and the Court will first examine this aspect of the matter. According to the
views presented by the United States during the jurisdictional phase, the States which would be
'affected' by the Court's judgment were El Salvador, Honduras and Costa Rica. Clearly, even if
only one of these States is found to be 'affected', the United States reservation takes full effect.
The Court will for convenience first take the case of El Salvador, as there are certain special
features in the position of this State. It is primarily for the benefit of El Salvador, and to help it to
respond to an alleged armed attack by Nicaragua, that the United States claims to be exercising a
right of collective self-defence, which it regards as a justification of its own conduct towards
Nicaragua. Moreover, El Salvador, confirming this assertion by the United States, told the Court
in the Declaration of Intervention which it submitted on 15 August 1984 that it considered itself
the victim of an armed attack by Nicaragua, and that it had asked the United States to exercise
for its benefit the right of collective self-defence. Consequently, in order to rule upon Nicaragua's
complaint against the United States, the Court would have to decide whether any justification for
certain United States activities in and against Nicaragua can be found in the right of collective
self-defence which may, it is alleged, be exercised in response to an armed attack by Nicaragua
on El Salvador. Furthermore, reserving for the present the question of the content of the
applicable customary international law, the right of self- defence is of course enshrined in the
United Nations Charter, so that the dispute is, to this extent, a dispute 'arising under a multilateral
treaty' to which the United States, Nicaragua and El Salvador are parties.

49. As regards the Charter of the Organization of American States, the Court notes that
Nicaragua bases two distinct claims upon this multilateral treaty: it is contended, first, that the
use of force by the United States against Nicaragua in violation of the United Nations Charter is
equally a violation of Articles 20 and 21 of the Organization of American States Charter, and
secondly that the actions it complains of constitute intervention in the internal and external
affairs of Nicaragua in violation of Article 18 of the Organization of American States Charter.
The Court will first refer to the claim of use of force alleged to be contrary to Articles 20 and 21.
Article 21 of the Organization of American States Charter provides:

'The American States bind themselves in their international relations not to have recourse to the
use of force, except in the case of self-defense in accordance with existing treaties or in
fulfillment thereof.'

Nicaragua argues that the provisions of the Organization of American States Charter prohibiting
the use of force are 'coterminous with the stipulations of the United Nations Charter', and that
therefore the violations by the United States of its obligations under the United Nations Charter
also, and without more, constitute violations of Articles 20 and 21 of the Organization of
American States Charter.
50. Both Article 51 of the United Nations Charter and Article 21 of the Organization of
American States Charter refer to self-defence as an exception to the principle of the prohibition
of the use of force. Unlike the United Nations Charter, the Organization of American States
Charter does not use the expression 'collective self-defence', but refers to the case of 'self-defence
in accordance with existing treaties or in fulfillment thereof', one such treaty being the United
Nations Charter. Furthermore it is evident that if actions of the United States complied with all
requirements of the United Nations Charter so as to constitute the exercise of the right of
collective self-defence, it could not be argued that they could nevertheless constitute a violation
of Article 21 of the Organization of American States Charter. It therefore follows that the
situation of El Salvador with regard to the assertion by the United States of the right of collective
self-defence is the same under the Organization of American States Charter as it is under the
United Nations Charter.

51. In its Judgment of 26 November 1984, the Court recalled that Nicaragua's Application,
according to that State, does not cast doubt on El Salvador's right to receive aid, military or
otherwise, from the United States (I.C.J. Reports 1984, p. 430, para. 86). However, this refers to
the direct aid provided to the Government of El Salvador on its territory in order to help it
combat the insurrection with which it is faced, not to any indirect aid which might be contributed
to this combat by certain United States activities in and against Nicaragua. The Court has to
consider the consequences of a rejection of the United States' justification of its actions as the
exercise of the right of collective self-defence for the sake of El Salvador, in accordance with the
United Nations Charter. A judgment to that effect would declare contrary to treaty-law the
indirect aid which the United States Government considers itself entitled to give the Government
of El Salvador in the form of activities in and against Nicaragua. The Court would of course
refrain from any finding on whether El Salvador could lawfully exercise the right of individual
self- defence; but El Salvador would still be affected by the Court's decision on the lawfulness of
resort by the United States to collective self-defence. If the Court found that no armed attack had
occurred, then not only would action by the United States in purported exercise of the right of
collective self- defence prove to be unjustified, but so also would any action which El Salvador
might take or might have taken on the asserted ground of individual self- defence.

52. It could be argued that the Court, if it found that the situation does not permit the exercise by
El Salvador of its right of self-defence, would not be 'affecting' that right itself but the
application of it by El Salvador in the circumstances of the present case. However, it should be
recalled that the condition of the application of the multilateral treaty reservation is not that the
'right' of a State be affected, but that the State itself be 'affected' - a broader criterion.
Furthermore whether the relations between Nicaragua and El Salvador can be qualified as
relations between an attacker State and a victim State which is exercising its right of self-
defence, would appear to be a question in dispute between those two States. But El Salvador has
not submitted this dispute to the Court; it therefore has a right to have the Court refrain from
ruling upon a dispute which it has not submitted to it. Thus, the decision of the Court in this case
would affect this right of El Salvador and consequently this State itself.

53. Nor is it only in the case of a decision of the Court rejecting the United States claim to be
acting in self-defence that El Salvador would be "affected" by the decision. The multilateral
treaty reservation does not require, as a condition for the exclusion of a dispute from the
jurisdiction of the Court, that a State party to the relevant treaty be 'adversely' or 'prejudicially'
affected by the decision, even though this is clearly the case primarily in view. In other situations
in which the position of a State not before the Court is under consideration (cf. Monetary Gold
Removed from Rome in 1943, I.C.J. Reports 1954, p. 32; Continental Shelf (Libyan Arab
Jamahiriya/Malta), Application to Intervene, Judgment, I.C.J. Reports 1984, p. 20, para. 31) it is
clearly impossible to argue that that State may be differently treated if the Court's decision will
not necessarily be adverse to the interests of the absent State, but could be favourable to those
interests. The multilateral treaty reservation bars any decision that would 'affect' a third State
party to the relevant treaty. Here also, it is not necessary to determine whether the decision will
'affect' that State unfavourably or otherwise; the condition of the reservation is met if the State
will necessarily be 'affected', in one way or the other.

54. There may of course be circumstances in which the Court, having examined the merits of the
case, concludes that no third State could be 'affected' by the decision: for example, as pointed out
in the 1984 Judgment, if the relevant claim is rejected on the facts (I.C.J. Reports 1984, p. 425,
para. 75). If the Court were to conclude in the present case, for example, that the evidence was
not sufficient for a finding that the United States had used force against Nicaragua, the question
of justification on the grounds of self-defence would not arise, and there would be no possibility
of El Salvador being 'affected' by the decision. In 1984 the Court could not, on the material
available to it, exclude the possibility of such a finding being reached after fuller study of the
case, and could not therefore conclude at once that El Salvador would necessarily be 'affected' by
the eventual decision. It was thus this possibility which prevented the objection based on the
reservation from having an exclusively preliminary character.

55. As indicated in paragraph 49 above, there remains the claim of Nicaragua that the United
States has intervened in the internal and external affairs of Nicaragua in violation of Article 18 of
the Organization of American States Charter. That Article provides:

'No State or group of States has the right to intervene, directly or indirectly, for any reason
whatever, in the internal or external affairs of any other State. The foregoing principle prohibits
not only armed force but also any other form of interference or attempted threat against the
personality of the State or against its political, economic, and cultural elements.'

The potential link, recognized by this text, between intervention and the use of armed force, is
actual in the present case, where the same activities attributed to the United States are
complained of under both counts, and the response of the United States is the same to each
complaint - that it has acted in self-defence. The Court has to consider what would be the impact,
for the States identified by the United States as likely to be 'affected', of a decision whereby the
Court would decline to rule on the alleged violation of Article 21 of the Organization of
American States Charter, concerning the use of force, but passed judgment on the alleged
violation of Article 18. The Court will not here enter into the question whether self- defence may
justify an intervention involving armed force, so that it has to be treated as not constituting a
breach either of the principle of non-use of force or of that of non-intervention. At the same time,
it concludes that in the particular circumstances of this case, it is impossible to say that a ruling
on the alleged breach by the United States of Article 18 of the Organization of American States
Charter would not 'affect' El Salvador.
56. The Court therefore finds that El Salvador, a party to the United Nations Charter and to the
Charter of the Organization of American States, is a State which would be 'affected' by the
decision which the Court would have to take on the claims by Nicaragua that the United States
has violated Article 2, paragraph 4, of the United Nations Charter and Articles 18, 20 and 21 of
the Organization of American States Charter. Accordingly, the Court, which under Article 53 of
the Statute has to be 'satisfied' that it has jurisdiction to decide each of the claims it is asked to
uphold, concludes that the jurisdiction conferred upon it by the United States declaration of
acceptance of jurisdiction under Article 36, paragraph 2, of the Statute does not permit the Court
to entertain these claims. It should however be recalled that, as will be explained further below,
the effect of the reservation in question is confined to barring the applicability of the United
Nations Charter and Organization of American States Charter as multilateral treaty law, and has
no further impact on the sources of international law which Article 38 of the Statute requires the
Court to apply.

57. One of the Court's chief difficulties in the present case has been the determination of the facts
relevant to the dispute. First of all, there is marked disagreement between the Parties not only on
the interpretation of the facts, but even on the existence or nature of at least some of them.
Secondly, the respondent State has not appeared during the present merits phase of the
proceedings, thus depriving the Court of the benefit of its complete and fully argued statement
regarding the facts. The Court's task was therefore necessarily more difficult, and it has had to
pay particular heed, as said above, to the proper application of Article 53 of its Statute. Thirdly,
there is the secrecy in which some of the conduct attributed to one or other of the Parties has
been carried on. This makes it more difficult for the Court not only to decide on the imputability
of the facts, but also to establish what are the facts. Sometimes there is no question, in the sense
that it does not appear to be disputed, that an act was done, but there are conflicting reports, or a
lack of evidence, as to who did it. The problem is then not the legal process of imputing the act
to a particular State for the purpose of establishing responsibility, but the prior process of tracing
material proof of the identity of the perpetrator. The occurrence of the act itself may however
have been shrouded in secrecy. In the latter case, the Court has had to endeavour first to establish
what actually happened, before entering on the next stage of considering whether the act (if
proven) was imputable to the State to which it has been attributed.

58. A further aspect of this case is that the conflict to which it relates has continued and is
continuing. It has therefore been necessary for the Court to decide, for the purpose of its
definition of the factual situation, what period of time, beginning from the genesis of the dispute,
should be taken into consideration. The Court holds that general principles as to the judicial
process require that the facts on which its Judgment is based should be those occurring up to the
close of the oral proceedings on the merits of the case. While the Court is of course very well
aware, from reports in the international press, of the developments in Central America since that
date, it cannot, as explained below (paragraphs 62 and 63), treat such reports as evidence, nor has
it had the benefit of the comments or argument of either of the Parties on such reports. As the
Court recalled in the Nuclear Tests cases, where facts, apparently of such a nature as materially
to affect its decision, came to its attention after the close of the hearings:

'It would no doubt have been possible for the Court, had it considered that the interests of justice
so required, to have afforded the Parties the opportunity, e.g., by reopening the oral proceedings,
of addressing to the Court comments on the statements made since the close of those
proceedings.' (I.C.J. Reports 1974, p. 264, para. 33; p. 468, para. 34.)

Neither Party has requested such action by the Court; and since the reports to which reference
has been made do not suggest any profound modification of the situation of which the Court is
seised, but rather its intensification in certain respects, the Court has seen no need to reopen the
hearings.

59. The Court is bound by the relevant provisions of its Statute and its Rules relating to the
system of evidence, provisions devised to guarantee the sound administration of justice, while
respecting the equality of the parties. The presentation of evidence is governed by specific rules
relating to, for instance, the observance of time-limits, the communication of evidence to the
other party, the submission of observations on it by that party, and the various forms of challenge
by each party of the other's evidence. The absence of one of the parties restricts this procedure to
some extent. The Court is careful, even where both parties appear, to give each of them the same
opportunities and chances to produce their evidence; when the situation is complicated by the
non-appearance of one of them, then a fortiori the Court regards it as essential to guarantee as
perfect equality as possible between the parties. Article 53 of the Statute therefore obliges the
Court to employ whatever means and resources may enable it to satisfy itself whether the
submissions of the applicant State are well-founded in fact and law, and simultaneously to
safeguard the essential principles of the sound administration of justice.

60. The Court should now indicate how these requirements have to be met in this case so that it
can properly fulfil its task under that Article of its Statute. In so doing, it is not unaware that its
role is not a passive one; and that, within the limits of its Statute and Rules, it has freedom in
estimating the value of the various elements of evidence, though it is clear that general principles
of judicial procedure necessarily govern the determination of what can be regarded as proved.

61. In this context, the Court has the power, under Article 50 of its Statute, to entrust 'any
individual, body, bureau, commission or other organization that it may select, with the task of
carrying out an enquiry or giving an expert opinion', and such a body could be a group of judges
selected from among those sitting in the case. In the present case, however, the Court felt it was
unlikely that an enquiry of this kind would be practical or desirable, particularly since such a
body, if it was properly to perform its task, might have found it necessary to go not only to the
applicant State, but also to several other neighbouring countries, and even to the respondent
State, which had refused to appear before the Court.

62. At all events, in the present case the Court has before it documentary material of various
kinds from various sources. A large number of documents have been supplied in the form of
reports in press articles, and some also in the form of extracts from books. Whether these were
produced by the applicant State, or by the absent Party before it ceased to appear in the
proceedings, the Court has been careful to treat them with great caution; even if they seem to
meet high standards of objectivity, the Court regards them not as evidence capable of proving
facts, but as material which can nevertheless contribute, in some circumstances, to corroborating
the existence of a fact, i.e., as illustrative material additional to other sources of evidence.
63. However, although it is perfectly proper that press information should not be treated in itself
as evidence for judicial purposes, public knowledge of a fact may nevertheless be established by
means of these sources of information, and the Court can attach a certain amount of weight to
such public knowledge. In the case of United States Diplomatic and Consular Staff in Tehran,
the Court referred to facts which 'are, for the most part, matters of public knowledge which have
received extensive coverage in the world press and in radio and television broadcasts from Iran
and other countries' (I.C.J. Reports 1980, p. 9, para. 12). On the basis of information, including
press and broadcast material, which was 'wholly consistent and concordant as to the main facts
and circumstances of the case', the Court was able to declare that it was satisfied that the
allegations of fact were well-founded (ibid., p. 10, para. 13). The Court has however to show
particular caution in this area. Widespread reports of a fact may prove on closer examination to
derive from a single source, and such reports, however numerous, will in such case have no
greater value as evidence than the original source. It is with this important reservation that the
newspaper reports supplied to the Court should be examined in order to assess the facts of the
case, and in particular to ascertain whether such facts were matters of public knowledge.

64. The material before the Court also includes statements by representatives of States,
sometimes at the highest political level. Some of these statements were made before official
organs of the State or of an international or regional organization, and appear in the official
records of those bodies. Others, made during press conferences or interviews, were reported by
the local or international press. The Court takes the view that statements of this kind, emanating
from high-ranking official political figures, sometimes indeed of the highest rank, are of
particular probative value when they acknowledge facts or conduct unfavourable to the State
represented by the person who made them. They may then be construed as a form of admission.

65. However, it is natural also that the Court should treat such statements with caution, whether
the official statement was made by an authority of the Respondent or of the Applicant. Neither
Article 53 of the Statute, nor any other ground, could justify a selective approach, which would
have undermined the consistency of the Court's methods and its elementary duty to ensure
equality between the Parties. The Court must take account of the manner in which the statements
were made public; evidently, it cannot treat them as having the same value irrespective of
whether the text is to be found in an official national or international publication, or in a book or
newspaper. It must also take note whether the text of the official statement in question appeared
in the language used by the author or on the basis of a translation (cf. I.C.J. Reports 1980, p. 10,
para. 13). It may also be relevant whether or not such a statement was brought to the Court's
knowledge by official communications filed in conformity with the relevant requirements of the
Statute and Rules of Court. Furthermore, the Court has inevitably had sometimes to interpret the
statements, to ascertain precisely to what degree they constituted acknowledgments of a fact.

66. At the hearings in this case, the applicant State called five witnesses to give oral evidence,
and the evidence of a further witness was offered in the form of an affidavit 'subscribed and
sworn' in the United States, District of Columbia, according to the formal requirements in force
in that place. A similar affidavit, sworn by the United States Secretary of State, was annexed to
the Counter-Memorial of the United States on the questions of jurisdiction and admissibility.
One of the witnesses presented by the applicant State was a national of the respondent State,
formerly in the employ of a government agency the activity of which is of a confidential kind,
and his testimony was kept strictly within certain limits; the witness was evidently concerned not
to contravene the legislation of his country of origin. In addition, annexed to the Nicaraguan
Memorial on the merits were two declarations, entitled 'affidavits', in the English language, by
which the authors 'certify and declare' certain facts, each with a notarial certificate in Spanish
appended, whereby a Nicaraguan notary authenticates the signature to the document. Similar
declarations had been filed by Nicaragua along with its earlier request for the indication of
provisional measures.

67. As regards the evidence of witnesses, the failure of the respondent State to appear in the
merits phase of these proceedings has resulted in two particular disadvantages. First, the absence
of the United States meant that the evidence of the witnesses presented by the Applicant at the
hearings was not tested by cross-examination; however, those witnesses were subjected to
extensive questioning from the bench. Secondly, the Respondent did not itself present any
witnesses of its own. This latter disadvantage merely represents one aspect, and a relatively
secondary one, of the more general disadvantage caused by the non-appearance of the
Respondent.

68. The Court has not treated as evidence any part of the testimony given which was not a
statement of fact, but a mere expression of opinion as to the probability or otherwise of the
existence of such facts, not directly known to the witness. Testimony of this kind, which may be
highly subjective, cannot take the place of evidence. An opinion expressed by a witness is a mere
personal and subjective evaluation of a possibility, which has yet to be shown to correspond to a
fact; it may, in conjunction with other material, assist the Court in determining a question of fact,
but is not proof in itself. Nor is testimony of matters not within the direct knowledge of the
witness, but known to him only from hearsay, of much weight; as the Court observed in relation
to a particular witness in the Corfu Channel case:

'The statements attributed by the witness . . . to third parties, of which the Court has received no
personal and direct confirmation, can be regarded only as allegations falling short of conclusive
evidence.' (I.C.J. Reports 1949, pp. 16-17.)

69. The Court has had to attach considerable significance to the declarations made by the
responsible authorities of the States concerned in view of the difficulties which it has had to face
in determining the facts. Nevertheless, the Court was still bound to subject these declarations to
the necessary critical scrutiny. A distinctive feature of the present case was that two of the
witnesses called to give oral evidence on behalf of Nicaragua were members of the Nicaraguan
Government, the Vice-Minister of the Interior (Commander Carrion), and the Minister of
Finance (Mr. Huper). The Vice- Minister of the Interior was also the author of one of the two
declarations annexed to the Nicaraguan Memorial on the merits, the author of the other being the
Minister for Foreign Affairs. On the United States side, an affidavit was filed sworn by the
Secretary of State. These declarations at ministerial level on each side were irreconcilable as to
their statement of certain facts. In the view of the Court, this evidence is of such a nature as to be
placed in a special category. In the general practice of courts, two forms of testimony which are
regarded as prima facie of superior credibility are, first the evidence of a disinterested witness -
one who is not a party to the proceedings and stands to gain or lose nothing from its outcome -
and secondly so much of the evidence of a party as is against its own interest. Indeed the latter
approach was invoked in this case by counsel for Nicaragua.

70. A member of the government of a State engaged, not merely in international litigation, but in
litigation relating to armed conflict, will probably tend to identify himself with the interests of
his country, and to be anxious when giving evidence to say nothing which could prove adverse to
its cause. The Court thus considers that it can certainly retain such parts of the evidence given by
Ministers, orally or in writing, as may be regarded as contrary to the interests or contentions of
the State to which the witness owes allegiance, or as relating to matters not controverted. For the
rest, while in no way impugning the honour or veracity of the Ministers of either Party who have
given evidence, the Court considers that the special circumstances of this case require it to treat
such evidence with great reserve. The Court believes this approach to be the more justified in
view of the need to respect the equality of the parties in a case where one of them is no longer
appearing; but this should not be taken to mean that the non-appearing party enjoys a priori a
presumption in its favour.

71. However, before outlining the limits of the probative effect of declarations by the authorities
of the States concerned, the Court would recall that such declarations may involve legal effects,
some of which it has defined in previous decisions (Nuclear Tests, United States Diplomatic and
Consular Staff in Tehran cases). Among the legal effects which such declarations may have is
that they may be regarded as evidence of the truth of facts, as evidence that such facts are
attributable to the States the authorities of which are the authors of these declarations and, to a
lesser degree, as evidence for the legal qualification of these facts. The Court is here concerned
with the significance of the official declarations as evidence of specific facts and of their
imputability to the States in question.

72. The declarations to which the Court considers it may refer are not limited to those made in
the pleadings and the oral argument addressed to it in the successive stages of the case, nor are
they limited to statements made by the Parties. Clearly the Court is entitled to refer, not only to
the Nicaraguan pleadings and oral argument, but to the pleadings and oral argument submitted to
it by the United States before it withdrew from participation in the proceedings, and to the
Declaration of Intervention of El Salvador in the proceedings. It is equally clear that the Court
may take account of public declarations to which either Party has specifically drawn attention,
and the text, or a report, of which has been filed as documentary evidence. But the Court
considers that, in its quest for the truth, it may also take note of statements of representatives of
the Parties (or of other States) in international organizations, as well as the resolutions adopted or
discussed by such organizations, in so far as factually relevant, whether or not such material has
been drawn to its attention by a Party.

73. In addition, the Court is aware of the existence and the contents of a publication of the United
States State Department entitled 'Revolution Beyond Our Borders', Sandinista Intervention in
Central America intended to justify the policy of the United States towards Nicaragua. This
publication was issued in September 1985, and on 6 November 1985 was circulated as an official
document of the United Nations General Assembly and the Security Council, at the request of
the United States (A/40/858; S/17612); Nicaragua had circulated in reply a letter to the
Secretary-General, annexing inter alia an extract from its Memorial on the Merits and an extract
from the verbatim records of the hearings in the case (A/40/907; S/17639). The United States
publication was not submitted to the Court in any formal manner contemplated by the Statute
and Rules of Court, though on 13 September 1985 the United States Information Office in The
Hague sent copies to an official of the Registry to be made available to anyone at the Court
interested in the subject. The representatives of Nicaragua before the Court during the hearings
were aware of the existence of this publication, since it was referred to in a question put to the
Agent of Nicaragua by a Member of the Court. They did not attempt to refute before the Court
what was said in that publication, pointing out that materials of this kind 'do not constitute
evidence in this case', and going on to suggest that it 'cannot properly be considered by the
Court'. The Court however considers that, in view of the special circumstances of this case, it
may, within limits, make use of information in such a publication.

74. In connection with the question of proof of facts, the Court notes that Nicaragua has relied on
an alleged implied admission by the United States. It has drawn attention to the invocation of
collective self-defence by the United States, and contended that 'the use of the justification of
collective self-defence constitutes a major admission of direct and substantial United States
involvement in the military and paramilitary operations' directed against Nicaragua. The Court
would observe that the normal purpose of an invocation of self-defence is to justify conduct
which would otherwise be wrongful. If advanced as a justification in itself, not coupled with a
denial of the conduct alleged, it may well imply both an admission of that conduct, and of the
wrongfulness of that conduct in the absence of the justification of self-defence. This reasoning
would do away with any difficulty in establishing the facts, which would have been the subject
of an implicit overall admission by the United States, simply through its attempt to justify them
by the right of self-defence. However, in the present case the United States has not listed the
facts or described the measures which it claims to have taken in self- defence; nor has it taken the
stand that it is responsible for all the activities of which Nicaragua accuses it but such activities
were justified by the right of self-defence. Since it has not done this, the United States cannot be
taken to have admitted all the activities, or any of them; the recourse to the right of self-defence
thus does not make possible a firm and complete definition of admitted facts. The Court thus
cannot consider reliance on self-defence to be an implicit general admission on the part of the
United States; but it is certainly a recognition as to the imputability of some of the activities
complained of.

75. Before examining the complaint of Nicaragua against the United States that the United States
is responsible for the military capacity, if not the very existence, of the contra forces, the Court
will first deal with events which, in the submission of Nicaragua, involve the responsibility of
the United States in a more direct manner. These are the mining of Nicaraguan ports or waters in
early 1984; and certain attacks on, in particular, Nicaraguan port and oil installations in late 1983
and early 1984. It is the contention of Nicaragua that these were not acts committed by members
of the contras with the assistance and support of United States agencies. Those directly
concerned in the acts were, it is claimed, not Nicaraguan nationals or other members of the FDN
or ARDE, but either United States military personnel or persons of the nationality of unidentified
Latin American countries, paid by, and acting on the direct instructions of, United States military
or intelligence personnel. (These persons were apparently referred to in the vocabulary of the
CIA as 'UCLAs' - 'Unilaterally Controlled Latino Assets', and this acronym will be used, purely
for convenience, in what follows.) Furthermore, Nicaragua contends that such United States
personnel, while they may have refrained from themselves entering Nicaraguan territory or
recognized territorial waters, directed the operations and gave very close logistic, intelligence
and practical support. A further complaint by Nicaragua which does not relate to contra activity
is that of overflights of Nicaraguan territory and territorial waters by United States military
aircraft. These complaints will now be examined.

76. On 25 February 1984, two Nicaraguan fishing vessels struck mines in the Nicaraguan port of
El Bluff, on the Atlantic coast. On 1 March 1984 the Dutch dredger Geoponte, and on 7 March
1984 the Panamanian vessel Los Caraibes were damaged by mines at Corinto. On 20 March
1984 the Soviet tanker Lugansk was damaged by a mine in Puerto Sandino. Further vessels were
damaged or destroyed by mines in Corinto on 28, 29 and 30 March. The period for which the
mines effectively closed or restricted access to the ports was some two months. Nicaragua claims
that a total of 12 vessels or fishing boats were destroyed or damaged by mines, that 14 people
were wounded and two people killed. The exact position of the mines - whether they were in
Nicaraguan internal waters or in its territorial sea - has not been made clear to the Court: some
reports indicate that those at Corinto were not in the docks but in the access channel, or in the
bay where ships wait for a berth. Nor is there any direct evidence of the size and nature of the
mines; the witness Commander Carrion explained that the Nicaraguan authorities were never
able to capture an unexploded mine. According to press reports, the mines were laid on the sea-
bed and triggered either by contact, acoustically, magnetically or by water pressure; they were
said to be small, causing a noisy explosion, but unlikely to sink a ship. Other reports mention
mines of varying size, some up to 300 pounds of explosives. Press reports quote United States
administration officials as saying that mines were constructed by the CIA with the help of a
United States Navy Laboratory.

77. According to a report in Lloyds List and Shipping Gazette, responsibility for mining was
claimed on 2 March 1984 by the ARDE. On the other hand, according to an affidavit by Mr.
Edgar Chamorro, a former political leader of the FDN, he was instructed by a CIA official to
issue a press release over the clandestine radio on 5 January 1984, claiming that the FDN had
mined several Nicaraguan harbours. He also stated that the FDN in fact played no role in the
mining of the harbours, but did not state who was responsible. According to a press report, the
contras announced on 8 January 1984, that they were mining all Nicaraguan ports, and warning
all ships to stay away from them; but according to the same report, nobody paid much attention
to this announcement. It does not appear that the United States Government itself issued any
warning or notification to other States of the existence and location of the mines.

78. It was announced in the United States Senate on 10 April 1984 that the Director of the CIA
had informed the Senate Select Committee on Intelligence that President Reagan had approved a
CIA plan for the mining of Nicaraguan ports; press reports state that the plan was approved in
December 1983, but according to a member of that Committee, such approval was given in
February 1984. On 10 April 1984, the United States Senate voted that 'it is the sense of the
Congress that no funds . . . shall be obligated or expended for the purpose of planning, directing,
executing or supporting the mining of the ports or territorial waters of Nicaragua'.

During a televised interview on 28 May 1984, of which the official transcript has been produced
by Nicaragua, President Reagan, when questioned about the mining of ports, said 'Those were
homemade mines . . . that couldn't sink a ship. They were planted in those harbors . . . by the
Nicaraguan rebels.' According to press reports quoting sources in the United States
administration, the laying of mines was effected from speed boats, not by members of the ARDE
or FDN, but by the 'UCLAs'. The mother ships used for the operation were operated, it is said, by
United States nationals; they are reported to have remained outside the 12-mile limit of
Nicaraguan territorial waters recognized by the United States. Other less sophisticated mines
may, it appears, have been laid in ports and in Lake Nicaragua by contras operating separately; a
Nicaraguan military official was quoted in the press as stating that 'most' of the mining activity
was directed by the United States.

79. According to Nicaragua, vessels of Dutch, Panamanian, Soviet, Liberian and Japanese
registry, and one (Homin) of unidentified registry, were damaged by mines, though the damage
to the Homin has also been attributed by Nicaragua rather to gunfire from minelaying vessels.
Other sources mention damage to a British or a Cuban vessel. No direct evidence is available to
the Court of any diplomatic protests by a State whose vessel had been damaged; according to
press reports, the Soviet Government accused the United States of being responsible for the
mining, and the British Government indicated to the United States that it deeply deplored the
mining, as a matter of principle. Nicaragua has also submitted evidence to show that the mining
of the ports caused a rise in marine insurance rates for cargo to and from Nicaragua, and that
some shipping companies stopped sending vessels to Nicaraguan ports.

80. On this basis, the Court finds it established that, on a date in late 1983 or early 1984, the
President of the United States authorized a United States government agency to lay mines in
Nicaraguan ports; that in early 1984 mines were laid in or close to the ports of El Bluff, Corinto
and Puerto Sandino, either in Nicaraguan internal waters or in its territorial sea or both, by
persons in the pay and acting on the instructions of that agency, under the supervision and with
the logistic support of United States agents; that neither before the laying of the mines, nor
subsequently, did the United States Government issue any public and official warning to
international shipping of the existence and location of the mines; and that personal and material
injury was caused by the explosion of the mines, which also created risks causing a rise in
marine insurance rates.

81. The operations which Nicaragua attributes to the direct action of United States personnel or
'UCLAs', in addition to the mining of ports, are apparently the following:

(i) 8 September 1983: an attack was made on Sandino international airport in Managua by a
Cessna aircraft, which was shot down;

(ii) 13 September 1983: an underwater oil pipeline and part of the oil terminal at Puerto Sandino
were blown up;

(iii) 2 October 1983: an attack was made on oil storage facilities at Benjamin Zeledon on the
Atlantic coast, causing the loss of a large quantity of fuel;
(iv) 10 October 1983: an attack was made by air and sea on the port of Corinto, involving the
destruction of five oil storage tanks, the loss of millions of gallons of fuel, and the evacuation of
large numbers of the local population;

(v) 14 October 1983: the underwater oil pipeline at Puerto Sandino was again blown up;

(vi) 4/5 January 1984: an attack was made by speedboats and helicopters using rockets against
the Potosi Naval Base;

(vii) 24/25 February 1984: an incident at El Bluff listed under this date appears to be the mine
explosion already mentioned in paragraph 76;

(viii) 7 March 1984: an attack was made on oil and storage facility at San Juan del Sur by
speedboats and helicopters;

(ix) 28/30 March 1984: clashes occurred at Puerto Sandino between speedboats, in the course of
minelaying operations, and Nicaraguan patrol boats; intervention by a helicopter in support of
the speed-boats;

(x) 9 April 1984: a helicopter allegedly launched from a mother ship in international waters
provided fire support for an ARDE attack on San Juan del Norte.

82. At the time these incidents occurred, they were considered to be acts of the contras, with no
greater degree of United States support than the many other military and paramilitary activities
of the contras. The declaration of Commander Carrion lists the incidents numbered (i), (ii), (iv)
and (vi) above in the catalogue of activities of 'mercenaries', without distinguishing these items
from the rest; it does not mention items (iii), (v) and (vii) to (x). According to a report in the New
York Times (13 October 1983), the Nicaraguan Government, after the attack on Corinto (item
(iv) above) protested to the United States Ambassador in Managua at the aid given by the United
States to the contras, and addressed a diplomatic note in the same sense to the United States
Secretary of State. The Nicaraguan Memorial does not mention such a protest, and the Court has
not been supplied with the text of any such note.

83. On 19 October 1983, thus nine days after the attack on Corinto, a question was put to
President Reagan at a press conference. Nicaragua has supplied the Court with the official
transcript which, so far as relevant, reads as follows:

'Question: Mr. President, regarding the recent rebel attacks on a Nicaraguan oil depot, is it proper
for the CIA to be involved in planning such attacks and supplying equipment for air raids? And
do the American people have a right to be informed about any CIA role?

The President: I think covert actions have been a part of government and a part of government's
responsibilities for as long as there has been a government. I'm not going to comment on what, if
any, connection such activities might have had with what has been going on, or with some of the
specific operations down there.
But I do believe in the right of a country when it believes that its interests are best served to
practice covert activity and then, while your people may have a right to know, you can't let your
people know without letting the wrong people know, those that are in opposition to what you're
doing.'

Nicaragua presents this as one of a series of admissions 'that the United States was habitually and
systematically giving aid to mercenaries carrying out military operations against the Government
of Nicaragua'. In the view of the Court, the President's refusal to comment on the connection
between covert activities and 'what has been going on, or with some of the specific operations
down there' can, in its context, be treated as an admission that the United States had something to
do with the Corinto attack, but not necessarily that United States personnel were directly
involved.

84. The evidence available to the Court to show that the attacks listed above occurred, and that
they were the work of United States personnel or 'UCLAs', other than press reports, is as follows.
In his declaration, Commander Carrion lists items (i), (ii), (iv) and (vi), and in his oral evidence
before the Court he mentioned items (ii) and (iv). Items (vi) to (x) were listed in what was said to
be a classified CIA internal memorandum or report, excerpts from which were published in the
Wall Street Journal on 6 March 1985; according to the newspaper, 'intelligence and
congressional officials' had confirmed the authenticity of the document. So far as the Court is
aware, no denial of the report was made by the United States administration. The affidavit of the
former FDN leader Edgar Chamorro states that items (ii), (iv) and (vi) were the work of UCLAs
despatched from a CIA 'mother ship', though the FDN was told by the CIA to claim
responsibility. It is not however clear what the source of Mr. Chamorro's information was; since
there is no suggestion that he participated in the operation (he states that the FDN 'had nothing
whatsoever to do' with it), his evidence is probably strictly hearsay, and at the date of his
affidavit, the same allegations had been published in the press. Although he did not leave the
FDN until the end of 1984, he makes no mention of the attacks listed above of January to April
1984.

85. The Court considers that it should eliminate from further consideration under this heading the
following items:

- the attack of 8 September 1983 on Managua airport (item (i)): this was claimed by the ARDE; a
press report is to the effect that the ARDE purchased the aircraft from the CIA, but there is no
evidence of CIA planning, or the involvement of any United States personnel or UCLAs;

- the attack on Benjamin Zeledon on 2 October 1983 (item (iii)): there is no evidence of the
involvement of United States personnel or UCLAs;

- the incident of 24-25 February 1984 (item vii), already dealt with under the heading of the
mining of ports.

86. On the other hand the Court finds the remaining incidents listed in paragraph 81 to be
established. The general pattern followed by these attacks appears to the Court, on the basis of
that evidence and of press reports quoting United States administration sources, to have been as
follows. A 'mother ship' was supplied (apparently leased) by the CIA; whether it was of United
States registry does not appear. Speedboats, guns and ammunition were supplied by the United
States administration, and the actual attacks were carried out by 'UCLAs'. Helicopters piloted by
Nicaraguans and others piloted by United States nationals were also involved on some occasions.
According to one report the pilots were United States civilians under contract to the CIA.
Although it is not proved that any United States military personnel took a direct part in the
operations, agents of the United States participated in the planning, direction, support and
execution of the operations. The execution was the task rather of the 'UCLAs', while United
States nationals participated in the planning, direction and support. The imputability to the
United States of these attacks appears therefore to the Court to be established.

87. Nicaragua complains of infringement of its airspace by United States military aircraft. Apart
from a minor incident on 11 January 1984 involving a helicopter, as to which, according to a
press report, it was conceded by the United States that it was possible that the aircraft violated
Nicaraguan airspace, this claim refers to overflights by aircraft at high altitude for intelligence
reconnaissance purposes, or aircraft for supply purposes to the contras in the field, and aircraft
producing 'sonic booms'. The Nicaraguan Memorial also mentions low-level reconnaissance
flights by aircraft piloted by United States personnel in 1983, but the press report cited affords no
evidence that these flights, along the Honduran border, involved any invasion of airspace. In
addition Nicaragua has made a particular complaint of the activities of a United States SR-71
plane between 7 and 11 November 1984, which is said to have flown low over several
Nicaraguan cities 'producing loud sonic booms and shattering glass windows, to exert
psychological pressure on the Nicaraguan Government and population'.

88. The evidence available of these overflights is as follows. During the proceedings on
jurisdiction and admissibility, the United States Government deposited with the Court a
'Background Paper' published in July 1984, incorporating eight aerial photographs of ports,
camps, an airfield, etc., in Nicaragua, said to have been taken between November 1981 and June
1984. According to a press report, Nicaragua made a diplomatic protest to the United States in
March 1982 regarding overflights, but the text of such protest has not been produced. In the
course of a Security Council debate on 25 March 1982, the United States representative said that

'It is true that once we became aware of Nicaragua's intentions and actions, the United States
Government undertook overflights to safeguard our own security and that of other States which
are threatened by the Sandinista Government, and continued 'These overflights, conducted by
unarmed, high-flying planes, for the express and sole purpose of verifying reports of Nicaraguan
intervention, are no threat to regional peace and stability; quite the contrary.' (S/PV.2335, p. 48,
emphasis added.)

The use of the present tense may be taken to imply that the overflights were continuing at the
time of the debate. Press reports of 12 November 1984 confirm the occurrence of sonic booms at
that period, and report the statement of Nicaraguan Defence Ministry officials that the plane
responsible was a United States SR-71.
89. The claim that sonic booms were caused by United States aircraft in November 1984 rests on
assertions by Nicaraguan Defence Ministry officials, reported in the United States press; the
Court is not however aware of any specific denial of these flights by the United States
Government. On 9 November 1984 the representative of Nicaragua in the Security Council
asserted that United States SR-71 aircraft violated Nicaraguan airspace on 7 and 9 November
1984; he did not specifically mention sonic booms in this respect (though he did refer to an
earlier flight by a similar aircraft, on 31 October 1984, as having been 'accompanied by loud
explosions' (S/PV. 2562, pp. 8-10)). The United States representative in the Security Council did
not comment on the specific incidents complained of by Nicaragua but simply said that 'the
allegation which is being advanced against the United States' was 'without foundation' (ibid., p.
28).

90. As to low-level reconnaissance flights by United States aircraft, or flights to supply the
contras in the field, Nicaragua does not appear to have offered any more specific evidence of
these; and it has supplied evidence that United States agencies made a number of planes
available to the contras themselves for use for supply and low-level reconnaissance purposes.
According to Commander Carrion, these planes were supplied after late 1982, and prior to the
contras receiving the aircraft, they had to return at frequent intervals to their basecamps for
supplies, from which it may be inferred that there were at that time no systematic overflights by
United States planes for supply purposes.

91. The Court concludes that, as regards the high-altitude overflights for reconnaissance
purposes, the statement admitting them made in the Security Council is limited to the period up
to March 1982. However, not only is it entitled to take into account that the interest of the United
States in 'verifying reports of Nicaraguan intervention' - the justification offered in the Security
Council for these flights - has not ceased or diminished since 1982, but the photographs attached
to the 1984 Background Paper are evidence of at least sporadic overflights subsequently. It sees
no reason therefore to doubt the assertion of Nicaragua that such flights have continued. The
Court finds that the incidents of overflights causing 'sonic booms' in November 1984 are to some
extent a matter of public knowledge. As to overflights of aircraft for supply purposes, it appears
from Nicaragua's evidence that these were carried out generally, if not exclusively, by the contras
themselves, though using aircraft supplied to them by the United States. Whatever other
responsibility the United States may have incurred in this latter respect, the only violations of
Nicaraguan airspace which the Court finds imputable to the United States on the basis of the
evidence before it are first of all, the high-altitude reconnaissance flights, and secondly the low-
altitude flights of 7 to 11 November 1984, complained of as causing 'sonic booms'.

92. One other aspect of activity directly carried out by the United States in relation to Nicaragua
has to be mentioned here, since Nicaragua has attached a certain significance to it. Nicaragua
claims that the United States has on a number of occasions carried out military manoeuvres
jointly with Honduras on Honduran territory near the Honduras/Nicaragua frontier; it alleges that
much of the military equipment flown in to Honduras for the joint manoeuvres was turned over
to the contras when the manoeuvres ended, and that the manoeuvres themselves formed part of a
general and sustained policy of force intended to intimidate the Government of Nicaragua into
accepting the political demands of the United States Government. The manoeuvres in question
are stated to have been carried out in autumn 1982; February 1983 ('Ahuas Tara I'); August 1983
('Ahuas Tara II'), during which American warships were, it is said, sent to patrol the waters off
both Nicaragus's coasts; November 1984, when there were troop movements in Honduras and
deployment of warships off the Atlantic coast of Nicaragua; February 1985 ('Ahuas Tara III');
March 1985 ('Universal Trek ' 85'); June 1985, paratrooper exercises. As evidence of these
manoeuvres having taken place, Nicaragua has offered newspaper reports; since there was no
secrecy about the holding of the manoeuvres, the Court considers that it may treat the matter as
one of public knowledge, and as such, sufficiently established.

93. The Court must now examine in more detail the genesis, development and activities of the
contra force, and the role of the United States in relation to it, in order to determine the legal
significance of the conduct of the United States in this respect. According to Nicaragua, the
United States 'conceived, created and organized a mercenary army, the contra force'. However,
there is evidence to show that some armed opposition to the Government of Nicaragua existed in
1979-1980, even before any interference or support by the United States. Nicaragua dates the
beginning of the activity of the United States to 'shortly after' 9 March 1981, when, it was said,
the President of the United States made a formal presidential finding authorizing the CIA to
undertake 'covert activities' directed against Nicaragua. According to the testimony of
Commander Carrion, who stated that the 'organized military and paramilitary activities' began in
December 1981, there were Nicaraguan 'anti-government forces' prior to that date, consisting of
'just a few small bands very poorly armed, scattered along the northern border of Nicaragua and .
. . composed mainly of ex-members of the Somoza's National Guard. They did not have any
military effectiveness and what they mainly did was rustling cattle and killing some civilians
near the borderlines.'

These bands had existed in one form or another since the fall of the Somoza government: the
affidavit of Mr. Edgar Chamorro refers to 'the ex-National Guardsmen who had fled to Honduras
when the Somoza government fell and had been conducting sporadic raids on Nicaraguan border
positions ever since'. According to the Nicaraguan Memorial, the CIA initially conducted
military and paramilitary activities against Nicaragua soon after the presidential finding of 9
March 1981, 'through the existing armed bands'; these activities consisted of 'raids on civilian
settlements, local militia outposts and army patrols'. The weapons used were those of the former
National Guard. In the absence of evidence, the Court is unable to assess the military
effectiveness of these bands at that time; but their existence is in effect admitted by the
Nicaraguan Government.

94. According to the affidavit of Mr. Chamorro, there was also a political opposition to the
Nicaraguan Government, established outside Nicaragua, from the end of 1979 onward, and in
August 1981 this grouping merged with an armed opposition force called the 15th of September
Legion, which had itself incorporated the previously disparate armed opposition bands, through
mergers arranged by the CIA. It was thus that the FDN is said to have come into being. The other
major armed opposition group, the ARDE, was formed in 1982 by Alfonso Robelo Callejas, a
former member of the original 1979 Junta and Eden Pastora Gomez, a Sandinista military
commander, leader of the FRS (Sandino Revolutionary Front) and later Vice-Minister in the
Sandinista government. Nicaragua has not alleged that the United States was involved in the
formation of this body. Even on the face of the evidence offered by the Applicant, therefore, the
Court is unable to find that the United States created an armed opposition in Nicaragua.
However, according to press articles citing official sources close to the United States Congress,
the size of the contra force increased dramatically once United States financial and other
assistance became available: from an initial body of 500 men (plus, according to some reports,
1,000 Miskito Indians) in December 1981, the force grew to 1,000 in February 1982, 1,500 in
August 1982, 4,000 in December 1982, 5,500 in February 1983, 8,000 in June 1983 and 12,000
in November 1983. When (as explained below) United States aid other than 'humanitarian
assistance' was cut off in September 1984, the size of the force was reported to be over 10,000
men.

95. The financing by the United States of the aid to the contras was initially undisclosed, but
subsequently became the subject of specific legislative provisions and ultimately the stake in a
conflict between the legislative and executive organs of the United States. Initial activities in
1981 seem to have been financed out of the funds available to the CIA for 'covert' action;
according to subsequent press reports quoted by Nicaragua, $19.5 million was allocated to these
activities. Subsequently, again according to press sources, a further $19 million was approved in
late 1981 for the purpose of the CIA plan for military and paramilitary operations authorized by
National Security Decision Directive 17. The budgetary arrangements for funding subsequent
operations up to the end of 1983 have not been made clear, though a press report refers to the
United States Congress as having approved 'about $20 million' for the fiscal year to 30
September 1983, and from a Report of the Permanent Select Committee on Intelligence of the
House of Representatives (hereinafter called the 'Intelligence Committee') it appears that the
covert programme was funded by the Intelligence Authorization Act relating to that fiscal year,
and by the Defense Appropriations Act, which had been amended by the House of
Representatives so as to prohibit 'assistance for the purpose of overthrowing the Government of
Nicaragua'. In May 1983, this Committee approved a proposal to amend the Act in question so as
to prohibit United States support for military or paramilitary operations in Nicaragua. The
proposal was designed to have substituted for these operations the provision of open security
assistance to any friendly Central American country so as to prevent the transfer of military
equipment from or through Cuba or Nicaragua. This proposal was adopted by the House of
Representatives, but the Senate did not concur; the executive in the meantime presented a request
for $45 million for the operations in Nicaragua for the fiscal year to 30 September 1984.

Again conflicting decisions emerged from the Senate and House of Representatives, but
ultimately a compromise was reached. In November 1983, legislation was adopted, coming into
force on 8 December 1983, containing the following provision:

'During fiscal year 1984, not more than $24,000,000 of the funds available to the Central
Intelligence Agency, the Department of Defense, or any other agency or entity of the United
States involved in intelligence activities may be obligated or expended for the purpose or which
would have the effect of supporting, directly or indirectly, military or paramilitary operations in
Nicaragua by any nation, group, organization, movement, or individual.' (Intelligence
Authorization Act 1984, Section 108.)

96. In March 1984, the United States Congress was asked for a supplemental appropriation of
$21 million 'to continue certain activities of the Central Intelligence Agency which the President
has determined are important to the national security of the United States', i.e., for further
support for the contras. The Senate approved the supplemental appropriation, but the House of
Representatives did not. In the Senate, two amendments which were proposed but not accepted
were: to prohibit the funds appropriated from being provided to any individual or group known
to have as one of its intentions the violent overthrow of any Central American government; and
to prohibit the funds being used for acts of terrorism in or against Nicaragua. In June 1984, the
Senate took up consideration of the executive's request for $28 million for the activities in
Nicaragua for the fiscal year 1985. When the Senate and the House of Representatives again
reached conflicting decisions, a compromise provision was included in the Continuing
Appropriations Act 1985 (Section 8066). While in principle prohibiting the use of funds during
the fiscal year to 30 September 1985 'for the purpose or which would have the effect of
supporting, directly or indirectly, military or paramilitary operations in Nicaragua by any nation,
group, organization, movement or individual', the Act provided $14 million for that purpose if
the President submitted a report to Congress after 28 February 1985 justifying such an
appropriation, and both Chambers of Congress voted affirmatively to approve it. Such a report
was submitted on 10 April 1985; it defined United States objectives toward Nicaragua in the
following terms:

'United States policy toward Nicaragua since the Sandinistas' ascent to power has consistently
sought to achieve changes in Nicaraguan government policy and behavior. We have not sought
to overthrow the Nicaraguan Government nor to force on Nicaragua a specific system of
government.'

The changes sought were stated to be:

'- termination of all forms of Nicaraguan support for insurgencies or subversion in neighboring
countries;

- reduction of Nicaragua's expanded military/security apparatus to restore military balance in the

region;

- severance of Nicaragua's military and security ties to the Soviet Bloc and Cuba and the return
to those countries of their military and security advisers now in Nicaragua; and

- implementation of Sandinista commitment to the Organization of American States to political

pluralism, human rights, free elections, non- alignment, and a mixed economy.'

At the same time the President of the United States, in a press conference, referred to an offer of
a cease-fire in Nicaragua made by the opponents of the Nicaraguan Government on 1 March
1984, and pledged that the $14 million appropriation, if approved, would not be used for arms or
munitions, but for 'food, clothing and medicine and other support for survival' during the period
'while the cease-fire offer is on the table'. On 23 and 24 April 1985, the Senate voted for, and the
House of Representatives against, the $14 million appropriation.

97. In June 1985, the United States Congress was asked to approve the appropriation of $38
million to fund military or paramilitary activities against Nicaragua during the fiscal years 1985
and 1986 (ending 30 September 1986). This appropriation was approved by the Senate on 7 June
1985. The House of Representatives, however, adopted a proposal for an appropriation of $27
million, but solely for humanitarian assistance to the contras, and administration of the funds was
to be taken out of the hands of the CIA and the Department of Defense. The relevant legislation,
as ultimately agreed by the Senate and House of Representatives after submission to a
Conference Committee, provided '$27,000,000 for humanitarian assistance to the Nicaraguan
democratic resistance. Such assistance shall be provided in such department or agency of the
United States as the President shall designate, except the Central Intelligence Agency or the
Department of Defense . . .

As used in this subsection, the term 'humanitarian assistance' means the provision of food,
clothing, medicine, and other humanitarian assistance, and it does not include the provision of
weapons, weapons systems, ammunition, or other equipment, vehicles, or material which can be
used to inflict serious bodily harm or death.'

The Joint Explanatory Statement of the Conference Committee noted that while the legislation
adopted 'does proscribe these two agencies [CIA and DOD] from administering the funds and
from providing any military training or advice to the democratic resistance . . . none of the
prohibitions on the provision of military or paramilitary assistance to the democratic resistance
prevents the sharing of intelligence information with the democratic resistance'.

In the House of Representatives, it was stated that an assurance had been given by the National
Security Council and the White House that 'neither the [CIA] reserve for contingencies nor any
other funds available [would] be used for any material assistance other than that authorized . . .
for humanitarian assistance for the Nicaraguan democratic resistance, unless authorized by a
future act of Congress'. Finance for supporting the military and paramilitary activities of the
contras was thus available from the budget of the United States Government from some time in
1981 until 30 September 1984; and finance limited to 'humanitarian assistance' has been
available since that date from the same source and remains authorized until 30 September 1986.

98. It further appears, particularly since the restriction just mentioned was imposed, that financial
and other assistance has been supplied from private sources in the United States, with the
knowledge of the Government. So far as this was earmarked for 'humanitarian assistance', it was
actively encouraged by the United States President. According to press reports, the State
Department made it known in September 1984 that the administration had decided 'not to
discourage' private American citizens and foreign governments from supporting the contras. The
Court notes that this statement was prompted by an incident which indicated that some private
assistance of a military nature was being provided.

99. The Court finds at all events that from 1981 until 30 September 1984 the United States
Government was providing funds for military and paramilitary activities by the contras in
Nicaragua, and thereafter for 'humanitarian assistance'. The most direct evidence of the specific
purposes to which it was intended that these funds should be put was given by the oral testimony
of a witness called by Nicaragua: Mr. David MacMichael, formerly in the employment of the
CIA as a Senior Estimates Officer with the Analytic Group of the National Intelligence Council.
He informed the Court that in 1981 he participated in that capacity in discussion of a plan
relating to Nicaragua, excerpts from which were subsequently published in the Washington Post,
and he confirmed that, with the exception of a detail (here omitted), these excerpts gave an
accurate account of the plan, the purposes of which they described as follows:

'Covert operations under the CIA proposal, according to the NSC records, are intended to:

'Build popular support in Central America and Nicaragua for an opposition front that would be
nationalistic, anti-Cuban and anti-Somoza.

Support the opposition front through formation and training of action teams to collect
intelligence and engage in paramilitary and political operations in Nicaragua and elsewhere.

Work primarily through non-Americans'

to achieve these covert objectives . . .'

100. Evidence of how the funds appropriated were spent, during the period up to autumn 1984,
has been provided in the affidavit of the former FDN leader, Mr. Chamorro; in that affidavit he
gives considerable detail as to the assistance given to the FDN. The Court does not however
possess any comparable direct evidence as to support for the ARDE, though press reports
suggest that such support may have been given at some stages. Mr. Chamorro states that in 1981
former National Guardsmen in exile were offered regular salaries from the CIA, and that from
then on arms (FAL and AK-47 assault rifles and mortars), ammunition, equipment and food were
supplied by the CIA. When he worked full time for the FDN, he himself received a salary, as did
the other FDN directors. There was also a budget from CIA funds for communications,
assistance to Nicaraguan refugees or family members of FDN combatants, and a military and
logistics budget; however, the latter was not large since all arms, munitions and military
equipment, including uniforms, boots and radio equipment, were acquired and delivered by the
CIA.

101. According to Mr. Chamorro, training was at the outset provided by Argentine military
officers, paid by the CIA, gradually replaced by CIA personnel. The training given was in

'guerrilla warfare, sabotage, demolitions, and in the use of a variety of weapons, including
assault rifles, machine guns, mortars, grenade launchers, and explosives, such as Claymore
mines . . . also . . . in field communications, and the CIA taught us how to use certain
sophisticated codes that the Nicaraguan Government forces would not be able to decipher'.

The CIA also supplied the FDN with intelligence, particularly as to Nicaraguan troop
movements, derived from radio and telephonic interception, code-breaking, and surveillance by
aircraft and satellites. Mr. Chamorro also refers to aircraft being supplied by the CIA; from press
reports it appears that those were comparatively small aircraft suitable for reconnaissance and a
certain amount of supply-dropping, not for offensive operations. Helicopters with Nicaraguan
crews are reported to have taken part in certain operations of the 'UCLAs' (see paragraph 86
above), but there is nothing to show whether these belonged to the contras or were lent by United
States agencies.
102. It appears to be recognized by Nicaragua that, with the exception of some of the operations
listed in paragraph 81 above, operations on Nicaraguan territory were carried out by the contras
alone, all United States trainers or advisers remaining on the other side of the frontier, or in
international waters. It is however claimed by Nicaragua that the United States Government has
devised the strategy and directed the tactics of the contra force, and provided direct combat
support for its military operations.

103. In support of the claim that the United States devised the strategy and directed the tactics of
the contras, counsel for Nicaragua referred to the successive stages of the United States
legislative authorization for funding the contras (outlined in paragraphs 95 to 97 above), and
observed that every offensive by the contras was preceded by a new infusion of funds from the
United States. From this, it is argued, the conclusion follows that the timing of each of those
offensives was determined by the United States. In the sense that an offensive could not be
launched until the funds were available, that may well be so; but, in the Court's view, it does not
follow that each provision of funds by the United States was made in order to set in motion a
particular offensive, and that that offensive was planned by the United States.

104. The evidence in support of the assertion that the United States devised the strategy and
directed the tactics of the contras appears to the Court to be as follows. There is considerable
material in press reports of statements by FDN officials indicating participation of CIA advisers
in planning and the discussion of strategy or tactics, confirmed by the affidavit of Mr. Chamorro.
Mr. Chamorro attributes virtually a power of command to the CIA operatives: he refers to them
as having 'ordered' or 'instructed' the FDN to take various action. The specific instances of
influence of United States agents on strategy or tactics which he gives are as follows: the CIA, he
says, was at the end of 1982 'urging' the FDN to launch an offensive designed to take and hold
Nicaraguan territory. After the failure of that offensive, the CIA told the FDN to move its men
back into Nicaragua and keep fighting. The CIA in 1983 gave a tactical directive not to destroy
farms and crops, and in 1984 gave a directive to the opposite effect. In 1983, the CIA again
indicated that they wanted the FDN to launch an offensive to seize and hold Nicaraguan territory.
In this respect, attention should also be drawn to the statement of Mr. Chamorro (paragraph 101
above) that the CIA supplied the FDN with intelligence, particularly as to Nicaraguan troop
movements, and small aircraft suitable for reconnaissance and a certain amount of supply-
dropping. Emphasis has been placed, by Mr. Chamorro, by Commander Carrion, and by counsel
for Nicaragua, on the impact on contra tactics of the availability of intelligence assistance and,
still more important, supply aircraft.

105. It has been contended by Nicaragua that in 1983 a 'new strategy' for contra operations in
and against Nicaragua was adopted at the highest level of the United States Government. From
the evidence offered in support of this, it appears to the Court however that there was, around
this time, a change in contra strategy, and a new policy by the United States administration of
more overt support for the contras, culminating in the express legislative authorization in the
Department of Defense Appropriations Act, 1984, section 775, and the Intelligence
Authorization Act for Fiscal Year 1984, section 108. The new contra strategy was said to be to
attack 'economic targets like electrical plants and storage facilities' and fighting in the cities.
106. In the light of the evidence and material available to it, the Court is not satisfied that all the
operations launched by the contra force, at every stage of the conflict, reflected strategy and
tactics wholly devised by the United States. However, it is in the Court's view established that
the support of the United States authorities for the activities of the contras took various forms
over the years, such as logistic support, the supply of information on the location and movements
of the Sandinista troops, the use of sophisticated methods of communication, the deployment of
field broadcasting networks, radar coverage, etc. The Court finds it clear that a number of
military and paramilitary operations by this force were decided and planned, if not actually by
United States advisers, then at least in close collaboration with them, and on the basis of the
intelligence and logistic support which the United States was able to offer, particularly the
supply aircraft provided to the contras by the United States.

107. To sum up, despite the secrecy which surrounded it, at least initially, the financial support
given by the Government of the United States to the military and paramilitary activities of the
contras in Nicaragua is a fully established fact. The legislative and executive bodies of the
respondent State have moreover, subsequent to the controversy which has been sparked off in the
United States, openly admitted the nature, volume and frequency of this support. Indeed, they
clearly take responsibility for it, this government aid having now become the major element of
United States foreign policy in the region. As to the ways in which such financial support has
been translated into practical assistance, the Court has been able to reach a general finding.

108. Despite the large quantity of documentary evidence and testimony which it has examined,
the Court has not been able to satisfy itself that the respondent State 'created' the contra force in
Nicaragua. It seems certain that members of the former Somoza National Guard, together with
civilian opponents to the Sandinista regime, withdrew from Nicaragua soon after that regime was
installed in Managua, and sought to continue their struggle against it, even if in a disorganized
way and with limited and ineffectual resources, before the Respondent took advantage of the
existence of these opponents and incorporated this fact into its policies vis-a-vis the regime of
the Applicant. Nor does the evidence warrant a finding that the United States gave 'direct and
critical combat support', at least if that form of words is taken to mean that this support was
tantamount to direct intervention by the United States combat forces, or that all contra operations
reflected strategy and tactics wholly devised by the United States. On the other hand, the Court
holds it established that the United States authorities largely financed, trained, equipped, armed
and organized the FDN.

109. What the Court has to determine at this point is whether or not the relationship of the
contras to the United States Government was so much one of dependence on the one side and
control on the other that it would be right to equate the contras, for legal purposes, with an organ
of the United States Government, or as acting on behalf of that Government. Here it is relevant
to note that in May 1983 the assessment of the Intelligence Committee, in the Report referred to
in paragraph 95 above, was that the contras 'constitute[d] an independent force' and that the 'only
element of control that could be exercised by the United States' was 'cessation of aid'.
Paradoxically this assessment serves to underline, a contrario, the potential for control inherent
in the degree of the contras' dependence on aid. Yet despite the heavy subsides and other support
provided to them by the United States, there is no clear evidence of the United States having
actually exercised such a degree of control in all fields as to justify treating the contras as acting
on its behalf.

110. So far as the potential control constituted by the possibility of cessation of United States
military aid is concerned, it may be noted that after 1 October 1984 such aid was no longer
authorized, though the sharing of intelligence, and the provision of 'humanitarian assistance' as
defined in the above-cited legislation (paragraph 97) may continue. Yet, according to Nicaragua's
own case, and according to press reports, contra activity has continued. In sum, the evidence
available to the Court indicates that the various forms of assistance provided to the contras by the
United States have been crucial to the pursuit of their activities, but is insufficient to demonstrate
their complete dependence on United States aid. On the other hand, it indicates that in the initial
years of United States assistance the contra force was so dependent. However, whether the
United States Government at any stage devised the strategy and directed the tactics of the contras
depends on the extent to which the United States made use of the potential for control inherent in
that dependence. The Court already indicated that it has insufficient evidence to reach a finding
on this point. It is a fortiori unable to determine that the contra force may be equated for legal
purposes with the forces of the United States. This conclusion, however, does not of course
suffice to resolve the entire question of the responsibility incurred by the United States through
its assistance to the contras.

111. In the view of the Court it is established that the contra force has, at least at one period,
been so dependent on the United States that it could not conduct its crucial or most significant
military and paramilitary activities without the multi-faceted support of the United States. This
finding is fundamental in the present case. Nevertheless, adequate direct proof that all or the
great majority of contra activities during that period received this support has not been, and
indeed probably could not be, advanced in every respect. It will suffice the Court to stress that a
degree of control by the United States Government, as described above, is inherent in the
position in which the contra force finds itself in relation to that Government.

112. To show the existence of this control, the Applicant argued before the Court that the
political leaders of the contra force had been selected, installed and paid by the United States; it
also argued that the purpose herein was both to guarantee United States control over this force,
and to excite sympathy for the Government's policy within Congress and among the public in the
United States. According to the affidavit of Mr. Chamorro, who was directly concerned, when
the FDN was formed 'the name of the organization, the members of the political junta, and the
members of the general staff were all chosen or approved by the CIA'; later the CIA asked that a
particular person be made head of the political directorate of the FDN, and this was done.
However, the question of the selection, installation and payment of the leaders of the contra force
is merely one aspect among others of the degree of dependency of that force. This partial
dependency on the United States authorities, the exact extent of which the Court cannot
establish, may certainly be inferred inter alia from the fact that the leaders were selected by the
United States. But it may also be inferred from other factors, some of which have been examined
by the Court, such as the organization, training and equipping of the force, the planning of
operations, the choosing of targets and the operational support provided.
113. The question of the degree of control of the contras by the United States Government is
relevant to the claim of Nicaragua attributing responsibility to the United States for activities of
the contras whereby the United States has, it is alleged, violated an obligation of international
law not to kill, wound or kidnap citizens of Nicaragua. The activities in question are said to
represent a tactic which includes 'the spreading of terror and danger to non- combatants as an end
in itself with no attempt to observe humanitarian standards and no reference to the concept of
military necessity'. In support of this, Nicaragua has catalogued numerous incidents, attributed to
'CIA- trained mercenaries' or 'mercenary forces', of kidnapping, assassination, torture, rape,
killing of prisoners, and killing of civilians not dictated by military necessity. The declaration of
Commander Carrion annexed to the Memorial lists the first such incident in December 1981, and
continues up to the end of 1984. Two of the witnesses called by Nicaragua (Father Loison and
Mr. Glennon) gave oral evidence as to events of this kind. By way of examples of evidence to
provide 'direct proof of the tactics adopted by the contras under United States guidance and
control', the Memorial of Nicaragua offers a statement, reported in the press, by the ex-FDN
leader Mr. Edgar Chamorro, repeated in the latter's affidavit, of assassinations in Nicaraguan
villages; the alleged existence of a classified Defence Intelligence Agency report of July 1982,
reported in the New York Times on 21 October 1984, disclosing that the contras were carrying
out assassinations; and the preparation by the CIA in 1983 of a manual of psychological warfare.
At the hearings, reliance was also placed on the affidavit of Mr. Chamorro.

114. In this respect, the Court notes that according to Nicaragua, the contras are no more than
bands of mercenaries which have been recruited, organized, paid and commanded by the
Government of the United States. This would mean that they have no real autonomy in relation
to that Government. Consequently, any offences which they have committed would be imputable
to the Government of the United States, like those of any other forces placed under the latter's
command. In the view of Nicaragua, 'stricto sensu, the military and paramilitary attacks launched
by the United States against Nicaragua do not constitute a case of civil strife. They are
essentially the acts of the United States.' If such a finding of the imputability of the acts of the
contras to the United States were to be made, no question would arise of mere complicity in
those acts, or of incitement of the contras to commit them.

115. The Court has taken the view (paragraph 110 above) that United States participation, even if
preponderant or decisive, in the financing, organizing, training, supplying and equipping of the
contras, the selection of its military or paramilitary targets, and the planning of the whole of its
operation, is still insufficient in itself, on the basis of the evidence in the possession of the Court,
for the purpose of attributing to the United States the acts committed by the contras in the course
of their military or paramilitary operations in Nicaragua. All the forms of United States
participation mentioned above, and even the general control by the respondent State over a force
with a high degree of dependency on it, would not in themselves mean, without further evidence,
that the United States directed or enforced the perpetration of the acts contrary to human rights
and humanitarian law alleged by the applicant State. Such acts could well be committed by
members of the contras without the control of the United States. For this conduct to give rise to
legal responsibility of the United States, it would in principle have to be proved that that State
had effective control of the military or paramilitary operations in the course of which the alleged
violations were committed.
116. The Court does not consider that the assistance given by the United States to the contras
warrants the conclusion that these forces are subject to the United States to such an extent that
any acts they have committed are imputable to that State. It takes the view that the contras
remain responsible for their acts, and that the United States is not responsible for the acts of the
contras, but for its own conduct vis-a-vis Nicaragua, including conduct related to the acts of the
contras. What the Court has to investigate is not the complaints relating to alleged violations of
humanitarian law by the contras, regarded by Nicaragua as imputable to the United States, but
rather unlawful acts for which the United States may be responsible directly in connection with
the activities of the contras. The lawfulness or otherwise of such acts of the United States is a
question different from the violations of humanitarian law of which the contras may or may not
have been guilty. It is for this reason that the Court does not have to determine whether the
violations of humanitarian law attributed to the contras were in fact committed by them. At the
same time, the question whether the United States Government was, or must have been, aware at
the relevant time that allegations of breaches of humanitarian law were being made against the
contras is relevant to an assessment of the lawfulness of the action of the United States. In this
respect, the material facts are primarily those connected with the issue in 1983 of a manual of
psychological operations.

117. Nicaragua has in fact produced in evidence before the Court two publications which it
claims were prepared by the CIA and supplied to the contras in 1983. The first of these, in
Spanish, is entitled 'Operaciones sicologicas en guerra de guerrillas' (Psychological Operations in
Guerrilla Warfare), by 'Tayacan'; the certified copy supplied to the Court carries no publisher's
name or date. In its Preface, the publication is described as

'a manual for the training of guerrillas in psychological operations, and its application to the
concrete case of the Christian and democratic crusade being waged in Nicaragua by the Freedom
Commandos'.

The second is entitled the Freedom Fighter's Manual, with the subtitle 'Practical guide to
liberating Nicaragua from oppression and misery by paralyzing the military-industrial complex
of the traitorous marxist state without having to use special tools and with minimal risk for the
combatant'. The text is printed in English and Spanish, and illustrated with simple drawings: it
consists of guidance for elementary sabotage techniques. The only indications available to the
Court of its authorship are reports in the New York Times, quoting a United States Congressman
and Mr. Edgar Chamorro as attributing the book to the CIA. Since the evidence linking the
Freedom Fighter's Manual to the CIA is no more than newspaper reports the Court will not treat
its publication as an act imputable to the United States Government for the purposes of the
present case.

118. The Court will therefore concentrate its attention on the other manual, that on
'Psychological Operations'. That this latter manual was prepared by the CIA appears to be clearly
established: a report published in January 1985 by the Intelligence Committee contains a specific
statement to that effect. It appears from this report that the manual was printed in several
editions; only one has been produced and it is of that text that the Court will take account. The
manual is devoted to techniques for winning the minds of the population, defined as including
the guerrilla troops, the enemy troops and the civilian population. In general, such parts of the
manual as are devoted to military rather than political and ideological matters are not in conflict
with general humanitarian law; but there are marked exceptions. A section on 'Implicit and
Explicit Terror', while emphasizing that 'the guerrillas should be careful not to become an
explicit terror, because this would result in a loss of popular support', and stressing the need for
good conduct toward the population, also includes directions to destroy military or police
installations, cut lines of communication, kidnap officials of the Sandinista government, etc.
Reference is made to the possibility that 'it should be necessary . . . to fire on a citizen who was
trying to leave the town', to be justified by the risk of his informing the enemy. Furthermore, a
section on 'Selective Use of Violence for Propagandistic Effects' begins with the words:

'It is possible to neutralize carefully selected and planned targets, such as court judges, mesta
judges, police and State Security officials, CDS chiefs, etc. For psychological purposes it is
necessary to take extreme precautions, and it is absolutely necessary to gather together the
population affected, so that they will be present, take part in the act, and formulate accusations
against the oppressor.'

In a later section on 'Control of mass concentrations and meetings', the following guidance is
given (inter alia):

'If possible, professional criminals will be hired to carry out specific selective 'jobs'.

Specific tasks will be assigned to others, in order to create a 'martyr' for the cause, taking the
demonstrators to a confrontation with the authorities, in order to bring about uprisings or
shootings, which will cause the death of one or more persons, who would become the martyrs, a
situation that should be made use of immediately against the regime, in order to create greater
conflicts.'

119. According to the affidavit of Mr. Chamorro, about 2,000 copies of the manual were
distributed to members of the FDN, but in those copies Mr. Chamorro had arranged for the pages
containing the last two passages quoted above to be torn out and replaced by expurgated pages.
According to some press reports, another edition of 3,000 copies was printed (though according
to one report Mr. Chamorro said that he knew of no other edition), of which however only some
100 are said to have reached Nicaragua, attached to balloons. He was quoted in a press report as
saying that the manual was used to train 'dozens of guerrilla leaders' for some six months from
December 1983 to May 1984. In another report he is quoted as saying that 'people did not read it'
and that most of the copies were used in a special course on psychological warfare for middle-
level commanders. In his affidavit, Mr. Chamorro reports that the attitude of some unit
commanders, in contrast to that recommended in the manual, was that 'the best way to win the
loyalty of the civilian population was to intimidate it' - by murders, mutilations, etc. - 'and make
it fearful of us'.

120. A question examined by the Intelligence Committee was whether the preparation of the
manual was a contravention of United States legislation and executive orders; inter alia, it
examined whether the advice on 'neutralizing' local officials contravened Executive Order
12333. This Executive Order, re- enacting earlier directives, was issued by President Reagan in
December 1981; it provides that
'2.11. No person employed by or acting on behalf of the United States Government shall engage
in or conspire to engage in, assassination.

2.12. No agency of the Intelligence Community shall participate in or request any person to
undertake activities forbidden by this Order.' (US Code, Congressional and Administrative
News, 97th Congress, First Session, 1981, p. B. 114.)

The manual was written, according to press reports, by 'a low-level contract employee' of the
CIA; the Report of the Intelligence Committee concluded:

'The Committee believes that the manual has caused embarrassment to the United States and
should never have been released in any of its various forms. Specific actions it describes are
repugnant to American values. The original purpose of the manual was to provide training to
moderate FDN behavior in the field. Yet, the Committee believes that the manual was written,
edited, distributed and used without adequate supervision. No one but its author paid much
attention to the manual. Most CIA officials learned about it from news accounts.

The Committee was told that CIA officers should have reviewed the manual and did not. The
Committee was told that all CIA officers should have known about the Executive Order's ban on
assassination . . . but some did not. The entire publication and distribution of the manual was
marked within the Agency by confusion about who had authority and responsibility for the
manual. The incident of the manual illustrates once again to a majority of the Committee that the
CIA did not have adequate command and control of the entire Nicaraguan covert action . . .

CIA officials up the chain of command either never read the manual or were never made aware
of it. Negligence, not intent to violate the law, marked the manual's history.

The Committee concluded that there was no intentional violation of Executive Order 12333.'

When the existence of the manual became known at the level of the United States Congress,
according to one press report, 'the CIA urged rebels to ignore all its recommendations and began
trying to recall copies of the document'.

121. When the Intelligence Committee investigated the publication of the psychological
operations manual, the question of the behaviour of the contras in Nicaragua became of
considerable public interest in the United States, and the subject of numerous press reports.
Attention was thus drawn to allegations of terrorist behaviour or atrocities said to have been
committed against civilians, which were later the subject of reports by various investigating
teams, copies of which have been supplied to the Court by Nicaragua. According to the press,
CIA officials presented to the Intelligence Committee in 1984 evidence of such activity, and
stated that this was the reason why the manual was prepared, it being intended to 'moderate the
rebels' behaviour'. This report is confirmed by the finding of the Intelligence Committee that
'The original purpose of the manual was to provide training to moderate FDN behaviour in the
field'. At the time the manual was prepared, those responsible were aware of, at the least,
allegations of behaviour by the contras inconsistent with humanitarian law.
122. The Court concludes that in 1983 an agency of the United States Government supplied to
the FDN a manual on psychological guerrilla warfare which, while expressly discouraging
indiscriminate violence against civilians, considered the possible necessity of shooting civilians
who were attempting to leave a town; and advised the 'neutralization' for propaganda purposes of
local judges, officials or notables after the semblance of trial in the presence of the population.
The text supplied to the contras also advised the use of professional criminals to perform
unspecified 'jobs', and the use of provocation at mass demonstrations to produce violence on the
part of the authorities so as to make 'martyrs'.

123. Nicaragua has complained to the Court of certain measures of an economic nature taken
against it by the Government of the United States, beginning with the cessation of economic aid
in April 1981, which it regards as an indirect form of intervention in its internal affairs.
According to information published by the United States Government, it provided more than
$100 million in economic aid to Nicaragua between July 1979 and January 1981; however,
concern in the United States Congress about certain activities attributed to the Nicaraguan
Government led to a requirement that, before disbursing assistance to Nicaragua, the President
certify that Nicaragua was not 'aiding, abetting or supporting acts of violence or terrorism in
other countries' (Special Central American Assistance Act, 1979, Sec. 536 (g)). Such a
certification was given in September 1980 (45 Federal Register 62779), to the effect that

'on the basis of an evaluation of the available evidence, that the Government of Nicaragua 'has
not co-operated with or harbors any international terrorist organization or is aiding, abetting or
supporting acts of violence or terrorism in other countries".

An official White House press release of the same date stated that

'The certification is based upon a careful consideration and evaluation of all the relevant
evidence provided by the intelligence community and by our Embassies in the field . . . Our
intelligence agencies as well as our Embassies in Nicaragua and neighboring countries were fully
consulted, and the diverse information and opinions from all sources were carefully weighed.'

On 1 April 1981 however a determination was made to the effect that the United States could no
longer certify that Nicaragua was not engaged in support for 'terrorism' abroad, and economic
assistance, which had been suspended in January 1981, was thereby terminated. According to the
Nicaraguan Minister of Finance, this also affected loans previously contracted, and its economic
impact was more than $36 million per annum. Nicaragua also claims that, at the multilateral
level, the United States has acted in the Bank for International Reconstruction and Development
and the Inter-American Development Bank to oppose or block loans to Nicaragua.

124. On 23 September 1983, the President of the United States made a proclamation modifying
the system of quotas for United States imports of sugar, the effect of which was to reduce the
quota attributed to Nicaragua by 90 per cent. The Nicaraguan Finance Minister assessed the
economic impact of the measure at between $15 and $18 million, due to the preferential system
of prices that sugar has in the market of the United States.
125. On 1 May 1985, the President of the United States made an Executive Order, which
contained a finding that 'the policies and actions of the Government of Nicaragua constitute an
unusual and extraordinary threat to the national security and foreign policy of the United States'
and declared a 'national emergency'. According to the President's message to Congress, this
emergency situation had been created by 'the Nicaraguan Government's aggressive activities in
Central America'. The Executive Order declared a total trade embargo on Nicaragua, prohibiting
all imports from and exports to that country, barring Nicaraguan vessels from United States ports
and excluding Nicaraguan aircraft from air transportation to and from the United States.

126. The Court has before it, in the Counter-Memorial on jurisdiction and admissibility filed by
the United States, the assertion that the United States, pursuant to the inherent right of individual
and collective self-defence, and in accordance with the Inter-American Treaty of Reciprocal
Assistance, has responded to requests from El Salvador, Honduras and Costa Rica, for assistance
in their self-defence against aggression by Nicaragua. The Court has therefore to ascertain, so far
as possible, the facts on which this claim is or may be based, in order to determine whether
collective self-defence constitutes a justification of the activities of the United States here
complained of. Furthermore, it has been suggested that, as a result of certain assurances given by
the Nicaraguan 'Junta of the Government of National Reconstruction' in 1979, the Government
of Nicaragua is bound by international obligations as regards matters which would otherwise be
matters of purely domestic policy, that it is in breach of those obligations, and that such breach
might justify the action of the United States. The Court will therefore examine the facts
underlying this suggestion also.

127. Nicaragua claims that the references made by the United States to the justification of
collective self-defence are merely 'pretexts' for the activities of the United States. It has alleged
that the true motive for the conduct of the United States is unrelated to the support which it
accuses Nicaragua of giving to the armed opposition in El Salvador, and that the real objectives
of United States policy are to impose its will upon Nicaragua and force it to comply with United
States demands. In the Court's view, however, if Nicaragua has been giving support to the armed
opposition in El Salvador, and if this constitutes an armed attack on El Salvador and the other
appropriate conditions are met, collective self-defence could be legally invoked by the United
States, even though there may be the possibility of an additional motive, one perhaps even more
decisive for the United States, drawn from the political orientation of the present Nicaraguan
Government. The existence of an additional motive, other than that officially proclaimed by the
United States, could not deprive the latter of its right to resort to collective self-defence. The
conclusion to be drawn is that special caution is called for in considering the allegations of the
United States concerning conduct by Nicaragua which may provide a sufficient basis for self-
defence.

128. In its Counter-Memorial on jurisdiction and admissibility, the United States claims that
Nicaragua has 'promoted and supported guerrilla violence in neighboring countries', particularly
in El Salvador; and has openly conducted cross-border military attacks on its neighbours,
Honduras and Costa Rica. In support of this, it annexed to the Memorial an affidavit by Secretary
of State George P. Shultz. In his affidavit, Mr. Shultz declares, inter alia, that:
'The United States has abundant evidence that the Government of Nicaragua has actively
supported armed groups engaged in military and paramilitary activities in and against El
Salvador, providing such groups with sites in Nicaragua for communications facilities, command
and control headquarters, training and logistics support. The Government of Nicaragua is directly
engaged with these armed groups in planning ongoing military and paramilitary activities
conducted in and against El Salvador. The Government of Nicaragua also participates directly in
the procurement, and transshipment through Nicaraguan territory, of large quantities of
ammunition, supplies and weapons for the armed groups conducting military and paramilitary
activities in and against El Salvador.

In addition to this support for armed groups operating in and against El Salvador, the
Government of Nicaragua has engaged in similar support, albeit on a smaller scale, for armed
groups engaged, or which have sought to engage, in military or paramilitary activities in and
against the Republic of Costa Rica, the Republic of Honduras, and the Republic of Guatemala.
The regular military forces of Nicaragua have engaged in several direct attacks on Honduran and
Costa Rican territory, causing casualties among the armed forces and civilian populations of
those States.'

In connection with this declaration, the Court would recall the observations it has already made
(paragraphs 69 and 70) as to the evidential value of declarations by ministers of the government
of a State engaged in litigation concerning an armed conflict.

129. In addition, the United States has quoted Presidents Magana and Duarte of El Salvador,
press reports, and United States Government publications. With reference to the claim as to
cross-border military attacks, the United States has quoted a statement of the Permanent
Representative of Honduras to the Security Council, and diplomatic protests by the Governments
of Honduras and Costa Rica to the Government of Nicaragua. In the subsequent United States
Government publication 'Revolution Beyond Our Borders', referred to in paragraph 73 above,
these claims are brought up to date with further descriptive detail. Quoting 'Honduran
government records', this publication asserts that there were 35 border incursions by the
Sandinista People's Army in 1981 and 68 in 1982.

130. In its pleading at the jurisdictional stage, the United States asserted the justification of
collective self-defence in relation to alleged attacks on El Salvador, Honduras and Costa Rica. It
is clear from the material laid before the Court by Nicaragua that, outside the context of the
present judicial proceedings, the United States administration has laid the greatest stress on the
question of arms supply and other forms of support to opponents of the Government in El
Salvador. In 1983, on the proposal of the Intelligence Committee, the covert programme of
assistance to the contras 'was to be directed only at the interdiction of arms to El Salvador'.
Nicaragua's other neighbours have not been lost sight of, but the emphasis has continued to be on
El Salvador: the United States Continuing Appropriations Act 1985, Section 8066 (b) (1) (A),
provides for aid for the military or paramilitary activities in Nicaragua to be resumed if the
President reports inter alia that
'the Government of Nicaragua is providing material or monetary support to anti-government
forces engaged in military or paramilitary operations in El Salvador or other Central American
countries'.

131. In the proceedings on the merits, Nicaragua has addressed itself primarily to refuting the
claim that it has been supplying arms and other assistance to the opponents of the Government of
El Salvador; it has not specifically referred to the allegations of attacks on Honduras or Costa
Rica. In this it is responding to what is, as noted above, the principal justification announced by
the United States for its conduct. In ascertaining whether the conditions for the exercise by the
United States of the right of collective self-defence are satisfied, the Court will accordingly first
consider the activities of Nicaragua in relation to El Salvador, as established by the evidence and
material available to the Court. It will then consider whether Nicaragua's conduct in relation to
Honduras or Costa Rica may justify the exercise of that right; in that respect it will examine only
the allegations of direct cross-border attacks, since the affidavit of Mr. Shultz claims only that
there was support by the provision of arms and supplies for military and paramilitary activities
'on a smaller scale' in those countries than in El Salvador.

132. In its Declaration of Intervention dated 15 August 1984, the Government of El Salvador
stated that: 'The reality is that we are the victims of aggression and armed attack from Nicaragua
and have been since at least 1980.' (Para. IV.) The statements of fact in that Declaration are
backed by a declaration by the Acting Minister for Foreign Affairs of El Salvador, similar in
form to the declarations by Nicaraguan Ministers annexed to its pleadings. The Declaration of
Intervention asserts that 'terrorists' seeking the overthrow of the Government of El Salvador were
'directed, armed, supplied and trained by Nicaragua' (para. III); that Nicaragua provided 'houses,
hideouts and communication facilities' (para. VI), and training centres managed by Cuban and
Nicaraguan military personnel (para. VII). On the question of arms supply, the Declaration states
that

'Although the quantities of arms and supplies, and the routes used, vary, there has been a
continuing flow of arms, ammunition, medicines, and clothing from Nicaragua to our country.'
(Para. VIII.)

133. In its observations, dated 10 September 1984, on the Declaration of Intervention of El

Salvador, Nicaragua stated as follows:

'The Declaration includes a series of paragraphs alleging activities by Nicaragua that El Salvador
terms an 'armed attack'. The Court should know that this is the first time El Salvador has asserted
it is under armed attack from Nicaragua. None of these allegations, which are properly addressed
to the merits phase of the case, is supported by proof or evidence of any kind. Nicaragua denies
each and every one of them, and stands behind the affidavit of its Foreign Minister, Father
Miguel d'Escoto Brockmann, in which the Foreign Minister affirms that the Government of
Nicaragua has not supplied arms or other materials of war to groups fighting against the
Government of El Salvador or provided financial support, training or training facilities to such
groups or their members.'
134. Reference has also to be made to the testimony of one of the witnesses called by Nicaragua.
Mr. David MacMichael (paragraph 99 above) said in evidence that he was in the full time
employment of the CIA from March 1981 to April 1983, working for the most part on Inter-
American affairs. During his examination by counsel for Nicaragua, he stated as follows:

'[Question:] In your opinion, if the Government of Nicaragua was sending arms to rebels in El
Salvador, could it do so without detection by United States intelligence-gathering capabilities?

[Answer:] In any significant manner over this long period of time I do not believe they could
have done so.

Q.: And there was in fact no such detection during the period that you served in the Central
Intelligence Agency?

A.: No.

Q.: In your opinion, if arms in significant quantities were being sent from Nicaraguan territory to
the rebels in El Salvador - with or without the Government's knowledge or consent - could these
shipments have been accomplished without detection by United States intelligence capabilities?

A.: If you say in significant quantities over any reasonable period of time, no I do not believe so.

Q.: And there was in fact no such detection during your period of service with the Agency?

A.: No.

Q.: Mr. MacMichael, up to this point we have been talking about the period when you were
employed by the CIA - 6 March 1981 to 3 April 1983. Now let me ask you without limit of time:
did you see any evidence of arms going to the Salvadorian rebels from Nicaragua at any time?

A.: Yes, I did.

Q.: When was that?

A.: Late 1980 to very early 1981.'

Mr. MacMichael indicated the sources of the evidence he was referring to, and his examination
continued:

'[Question:] Does the evidence establish that the Government of Nicaragua was involved during
this period?

[Answer:] No, it does not establish it, but I could not rule it out.'

135. After counsel for Nicaragua had completed his examination of the witness, Mr. MacMichael
was questioned from the bench, and in this context he stated (inter alia) as follows:
'[Question:] Thus if the Government of Nicaragua had shipped arms to El Salvador before March
1981, for example in 1980 and early 1981, in order to arm the big January offensive of the
insurgents in El Salvador, you would not be in a position to know that; is that correct?

[Answer:] I think I have testified, your honour, that I reviewed the immediate past intelligence
material at that time, that dealt with that period, and I have stated today that there was credible
evidence and that on the basis of my reading of it I could not rule out a finding that the
Nicaraguan Government had been involved during that period.

Q.: Would you rule it 'in'?

A.: I prefer to stay with my answer that I could not rule it out, but to answer you as directly as I
can my inclination would be more towards ruling ' in' than ruling 'out'.

.............................

Q.: I understand you to be saying, Mr. MacMichael, that you believe that it could be taken as a
fact that at least in late 1980/early 1981 the Nicaraguan Government was involved in the supply
of arms to the Salvadorian insurgency. Is that the conclusion I can draw from your remarks?

A.: I hate to have it appear that you are drawing this from me like a nail out of a block of wood
but, yes, that is my opinion.'

In short, the Court notes that the evidence of a witness called by Nicaragua in order to negate the
allegation of the United States that the Government of Nicaragua had been engaged in the supply
of arms to the armed opposition in El Salvador only partly contradicted that allegation.

136. Some confirmation of the situation in 1981 is afforded by an internal Nicaraguan

Government report, made available by the Government of Nicaragua in response to a request by
the Court, of a meeting held in Managua on 12 August 1981 between Commander Ortega, Co-
ordinator of the Junta of the Government of Nicaragua and Mr. Enders, Assistant Secretary of
State for Inter-American Affairs of the United States. According to this report, the question of
the flow of 'arms, munitions and other forms of military aid' to El Salvador, was raised by Mr.
Enders as one of the 'major problems' (problemas principales). At one point he is reported to
have said:

'On your part, you could take the necessary steps to ensure that the flow of arms to El Salvador is
again halted as in March of this year. We do not seek to involve ourselves in deciding how and
with whom this object should be achieved, but we may well monitor the results.'

Later in the course of the discussion, the following exchange is recorded:

'[Ortega:] As for the flow of arms to El Salvador, what must be stated is that as far as we have
been informed by you, efforts have been made to stop it; however, I want to make clear that there
is a great desire here to collaborate with the Salvadorian people, also among members of our
armed forces, although our Junta and the National Directorate have a decision that activities of
this kind should not be permitted. We would ask you to give us reports about that flow to help us
control it.

[Enders:] You have succeeded in doing so in the past and I believe you can do so now. We are
not in a position to supply you with intelligence reports. We would compromise our sources, and
our nations have not yet reached the necessary level to exchange intelligence reports.'

137. As regards the question, raised in this discussion, of the picture given by United States
intelligence sources, further evidence is afforded by the 1983 Report of the Intelligence
Committee (paragraphs 95, 109 above). In that Report, dated 13 May 1983, it was stated that

'The Committee has regularly reviewed voluminous intelligence material on Nicaraguan and
Cuban support for leftist insurgencies since the 1979 Sandinista victory in Nicaragua.'

The Committee continued:

'At the time of the filing of this report, the Committee believes that the intelligence available to it
continues to support the following judgments with certainty:

A major portion of the arms and other material sent by Cuba and other communist countries to
the Salvadorian insurgents transits Nicaragua with the permission and assistance of the
Sandinistas.

The Salvadorian insurgents rely on the use of sites in Nicaragua, some of which are located in
Managua itself, for communications, command-and-control, and for the logistics to conduct their
financial, material and propaganda activities.

The Sandinista leadership sanctions and directly facilitates all of the above functions.

Nicaragua provides a range of other support activities, including secure transit of insurgents to
and from Cuba, and assistance to the insurgents in planning their activities in El Salvador.

In addition, Nicaragua and Cuba have provided - and appear to continue providing - training to
the Salvadorian insurgents.'

The Court is not aware of the contents of any analogous report of a body with access to United
States intelligence material covering a more recent period. It notes however that the Resolution
adopted by the United States Congress on 29 July 1985 recorded the expectation of Congress
from the Government of Nicaragua of:

'the end to Sandinista support for insurgencies in other countries in the region, including the
cessation of military supplies to the rebel forces fighting the democratically elected government
in El Salvador'.

138. In its Declaration of Intervention, El Salvador alleges that 'Nicaraguan officials have
publicly admitted their direct involvement in waging war on us' (para. IX). It asserts that the
Foreign Minister of Nicaragua admitted such support at a meeting of the Foreign Ministers of the
Contadora Group in July 1983. Setting this against the declaration by the Nicaraguan Foreign
Minister annexed to the Nicaraguan Memorial, denying any involvement of the Nicaraguan
Government in the provision of arms or other supplies to the opposition in El Salvador, and in
view of the fact that the Court has not been informed of the exact words of the alleged
admission, or with any corroborative testimony from others present at the meeting, the Court
cannot regard as conclusive the assertion in the Declaration of Intervention. Similarly, the public
statement attributed by the Declaration of Intervention (para. XIII) to Commander Ortega,
referring to 'the fact of continuing support to the Salvadorian guerrillas' cannot, even assuming it
to be accurately quoted, be relied on as proof that that support (which, in the form of political
support, is openly admitted by the Nicaraguan Government) takes any specific material form,
such as the supply of arms.

139. The Court has taken note of four draft treaties prepared by Nicaragua in 1983, and
submitted as an official proposal within the framework of the Contadora process, the text of
which was supplied to the Court with the Nicaraguan Application. These treaties, intended to be
'subscribed to by all nations that desire to contribute to the peaceful solution of the present armed
conflict in the Republic of El Salvador' (p. 58), contained the following provisions:

'Article One

The High Contracting Parties promise to not offer and, should such be the case, to suspend
military assistance and training and the supply and trafficking of arms, munitions and military
equipment that may be made directly to the contending forces or indirectly through third States.

Article Two

The High Contracting Parties promise to adopt in their respective territories whatever measures
may be necessary to impede all supply and trafficking of arms, munitions and military equipment
and military assistance to and training of the contending forces in the Republic of El Salvador.'
(P. 60.)

In the Introduction to its proposal the Nicaraguan Government stated that it was ready to enter
into an agreement of this kind immediately, even if only with the United States, 'in order that the
Government of that country cease justifying its interventionist policy in El Salvador on the basis
of supposed actions by Nicaragua' (p. 58).

140. When filing its Counter-Memorial on the questions of jurisdiction and admissibility, the
United States deposited a number of documents in the Registry of the Court, two of which are
relevant to the questions here under examination. The first is a publication of the United States
Department of State dated 23 February 1981, entitled Communist Interference in El Salvador,
reproducing a number of documents (in Spanish with English translation) stated to have been
among documents in 'two particularly important document caches . . . recovered from the
Communist Party of El Salvador (PCS) in November 1980 and the People's Revolutionary Army
(ERP) in January 1981'. A summary of the documents is also to be found in an attachment to the
1983 Report of the Intelligence Committee, filed by Nicaragua. The second is a 'background
Paper' published by the United States Department of State and Department of Defense in July
1984, entitled Nicaragua's Military Build-Up and Support for Central American Subversion.

141. The full significance of the documents reproduced in the first of these publications, which
are 'written using cryptic language and abbreviations', is not readily apparent, without further
assistance from United States experts, who might have been called as witnesses had the United
States appeared in the proceedings. For example, there are frequent references to 'Lagos' which,
according to the United States, is a code-name for Nicaragua; but without such assistance the
Court cannot judge whether this interpretation is correct. There is also however some specific
reference in an undated document to aid to the armed opposition 'which all would pass through
Nicaragua' - no code-name being here employed - which the Court must take into account for
what it is worth.

142. The second document, the Background Paper, is stated to be based on 'Sandinista
documents, press reports, and interviews with captured guerrillas and defectors' as well as
information from 'intelligence sources'; specific intelligence reports are not cited 'because of the
potential consequences of revealing sources and methods'. The only material evidence included
is a number of aerial photographs (already referred to in paragraph 88 above), and a map said to
have been captured in a guerrilla camp in El Salvador, showing arms transport routes; this map
does not appear of itself to indicate that arms enter El Salvador from Nicaraguan territory.

143. The Court's attention has also been drawn to various press reports of statements by
diplomats, by leaders of the armed opposition in El Salvador, or defectors from it, supporting the
view that Nicaragua was involved in the arms supply. As the Court has already explained, it
regards press reports not as evidence capable of proving facts, but considers that they can
nevertheless contribute, in some circumstances, to corroborating the existence of a particular fact
(paragraph 62 above). The press reports here referred to will therefore be taken into account only
to that extent.

144. In an interview published in English in the New York Times Magazine on 28 April 1985,
and in Spanish in ABC, Madrid, on 12 May 1985 given by Daniel Ortega Saavedra, President of
the Junta of Nicaragua, he is reported to have said:

'We've said that we're willing to send home the Cubans, the Russians, the rest of the advisers.
We're willing to stop the movement of military aid, or any other kind of aid, through Nicaragua
to El Salvador, and we're willing to accept international verification. In return, we're asking for
one thing: that they don't attack us, that the United States stop arming and financing . . . the
gangs that kill our people, burn our crops and force us to divert enormous human and economic
resources into war when we desperately need them for development.' ...

The Court has to consider whether this press report can be treated as evidence of an admission by
the Nicaraguan Head of State that the Nicaraguan Government is in a position to stop the
movement of military or other aid through Nicaraguan territory to El Salvador; and whether it
can be deduced from this (in conjunction with other material) that the Nicaraguan Government is
responsible for the supply or transit of such aid.
145. Clearly the remarks attributed to President Ortega raise questions as to his meaning, namely
as to what exactly the Nicaraguan Government was offering to stop. According to Nicaragua's
own evidence, President Ortega had offered during the meeting of 12 August 1981 to stop the
arms flow if the United States would supply the necessary information to enable the Nicaraguan
Government to track it down; it may in fact be the interview of 12 August 1981 that President
Ortega was referring to when he spoke of what had been said to the United States Government.
At all events, against the background of the firm denial by the Nicaraguan Government of
complicity in an arms flow to El Salvador, the Court cannot regard remarks of this kind as an
admission that that Government was in fact doing what it had already officially denied and
continued subsequently to deny publicly.

146. Reference was made during the hearings to the testimony of defectors from Nicaragua or
from the armed opposition in El Salvador; the Court has no such direct testimony before it. The
only material available in this respect is press reports, some of which were annexed to the United
States Counter-Memorial on the questions of jurisdiction and admissibility. With appropriate
reservations, the Court has to consider what the weight is of such material, which includes
allegations of arms supply and of the training of Salvadoreans at a base near Managua. While the
Court is not prepared totally to discount this material, it cannot find that it is of any great weight
in itself. Still less can statements attributed in the press to unidentified diplomats stationed in
Managua be regarded as evidence that the Nicaraguan Government was continuing to supply aid
to the opposition in El Salvador.

147. The evidence or material offered by Nicaragua in connection with the allegation of arms
supply has to be assessed bearing in mind the fact that, in responding to that allegation,
Nicaragua has to prove a negative. Annexed to the Memorial was a declaration dated 21 April
1984 of Miguel d'Escoto Brockmann, the Foreign Minister of Nicaragua. In this respect the
Court has, as in the case of the affidavit of the United States Secretary of State, to recall the
observations it has already made (paragraphs 69 and 70) as to the evidential value of such
declarations. In the declaration, the Foreign Minister states that the allegations made by the
United States, that the Nicaraguan Government 'is sending arms, ammunition, communications
equipment and medical supplies to rebels conducting a civil war against the Government of El
Salvador, are false'. He continues:

'In truth, my government is not engaged, and has not been engaged, in the provision of arms or
other supplies to either of the factions engaged in the civil war in El Salvador . . . Since my
government came to power on July 19, 1979, its policy and practice has been to prevent our
national territory from being used as a conduit for arms or other military supplies intended for
other governments or rebel groups. In fact, on numerous occasions the security forces of my
government have intercepted clandestine arms shipments, apparently destined for El Salvador,
and confiscated them.'

The Foreign Minister explains the geographical difficulty of patrolling Nicaragua's frontiers:

'Nicaragua's frontier with Honduras, to the north, is 530 kilometers long. Most of it is
characterized by rugged mountains, or remote and dense jungles. Most of this border area is
inaccessible by motorized land transport and simply impossible to patrol. To the south,
Nicaragua's border with Costa Rica extends for 220 kilometers. This area is also characterized by
dense and remote jungles and is also virtually inaccessible by land transport. As a small
underdeveloped country with extremely limited resources, and with no modern or sophisticated
detection equipment, it is not easy for us to seal off our borders to all unwanted and illegal
traffic.'

He then points out the complication of the presence of the contras along the northern and
southern borders, and describes efforts by Nicaragua to obtain verifiable international
agreements for halting all arms traffic in the region.

148. Before turning to the evidence offered by Nicaragua at the hearings, the Court would note
that the action of the United States Government itself, on the basis of its own intelligence reports,
does not suggest that arms supply to El Salvador from the territory of Nicaragua was continuous
from July 1979, when the new regime took power in Managua, and the early months of 1981.
The presidential Determination of 12 September 1980, for the purposes of the Special Central
American Assistance Act 1979, quoted in paragraph 123 above, officially certified that the
Government of Nicaragua was not aiding, abetting or supporting acts of violence or terrorism in
other countries, and the press release of the same date emphasized the 'careful consideration and
evaluation of all the relevant evidence provided by the intelligence community and by our
Embassies in the field' for the purposes of the Determination. The 1983 Report of the
Intelligence Committee, on the other hand, referring to its regular review of intelligence since
'the 1979 Sandinista victory in Nicaragua', found that the intelligence available to it in May 1983
supported 'with certainty' the judgment that arms and material supplied to 'the Salvadorian
insurgents transits Nicaragua with the permission and assistance of the Sandinistas' (see
paragraph 137 above).

149. During the oral proceedings Nicaragua offered the testimony of Mr. MacMichael, already
reviewed above (paragraphs 134 and 135) from a different aspect. The witness, who was well
placed to judge the situation from United States intelligence, stated that there was no detection
by United States intelligence capabilities of arms traffic from Nicaraguan territory to El Salvador
during the period of his service (March 1981 to April 1983). He was questioned also as to his
opinion, in the light of official statements and press reports, on the situation after he left the CIA
and ceased to have access to intelligence material, but the Court considers it can attach little
weight to statements of opinion of this kind (cf. paragraph 68 above).

150. In weighing up the evidence summarized above, the Court has to determine also the
significance of the context of, or background to, certain statements or indications. That
background includes, first, the ideological similarity between two movements, the Sandinista
movement in Nicaragua and the armed opposition to the present government in El Salvador;
secondly the consequent political interest of Nicaragua in the weakening or overthrow of the
government in power in El Salvador; and finally, the sympathy displayed in Nicaragua, including
among members of the army, towards the armed opposition in El Salvador. At the meeting of 12
August 1981 (paragraph 136 above), for example, Commander Ortega told the United States
representative, Mr. Enders, that 'we are interested in seeing the guerrillas in El Salvador and
Guatemala triumph . . .', and that 'there is a great desire here to collaborate with the Salvadorian
people . . .'. Against this background, various indications which, taken alone, cannot constitute
either evidence or even a strong presumption of aid being given by Nicaragua to the armed
opposition in El Salvador, do at least require to be examined meticulously on the basis that it is
probable that they are significant.

151. It is in this light, for example, that one indirect piece of evidence acquires particular
importance. From the record of the meeting of 12 August 1981 in Managua, mentioned in the
preceding paragraph, it emerges that the Nicaraguan authorities may have immediately taken
steps, at the request of the United States, to bring to a halt or prevent various forms of support to
the armed opposition in El Salvador. The United States representative is there reported to have
referred to steps taken by the Government of Nicaragua in March 1981 to halt the flow of arms
to El Salvador, and his statement to that effect was not contradicted. According to a New York
Times report (17 September 1985) Commander Ortega stated that around this time measures
were taken to prevent an airstrip in Nicaragua from continuing to be used for this type of
activities. This, in the Court's opinion, is an admission of certain facts, such as the existence of
an airstrip designed to handle small aircraft, probably for the transport of weapons, the likely
destination being El Salvador, even if the Court has not received concrete proof of such
transport. The promptness with which the Nicaraguan authorities closed off this channel is a
strong indication that it was in fact being used, or had been used for such a purpose.

152. The Court finds, in short, that support for the armed opposition in El Salvador from
Nicaraguan territory was a fact up to the early months of 1981. While the Court does not possess
full proof that there was aid, or as to its exact nature, its scale and its continuance until the early
months of 1981, it cannot overlook a number of concordant indications, many of which were
provided moreover by Nicaragua itself, from which it can reasonably infer the provision of a
certain amount of aid from Nicaraguan territory. The Court has already explained (paragraphs
64, 69 and 70) the precise degree to which it intended to take account, as regards factual
evidence, of statements by members of the governments of the States concerned, including those
of Nicaragua. It will not return to this point.

153. After the early months of 1981, evidence of military aid from or through Nicaragua remains
very weak. This is so despite the deployment by the United States in the region of extensive
technical resources for tracking, monitoring and intercepting air, sea and land traffic, described
in evidence by Mr. MacMichael and its use of a range of intelligence and information sources in
a political context where, moreover, the Government had declared and recognized surveillance of
Nicaragua as a 'high priority'. The Court cannot of course conclude from this that no transborder
traffic in arms existed, although it does not seem particularly unreasonable to believe that traffic
of this kind, had it been persistent and on a significant scale, must inevitably have been
discovered, in view of the magnitude of the resources used for that purpose. The Court merely
takes note that the allegations of arms-trafficking are not solidly established; it has not, in any
event, been able to satisfy itself that any continuing flow on a significant scale took place after
the early months of 1981.

154. In this connection, it was claimed in the Declaration of Intervention by El Salvador that
there was a 'continuing flow of arms, ammunition, medicines, and clothing from Nicaragua to
our country' (para. VIII), and El Salvador also affirmed the existence of 'land infiltration routes
between Nicaragua and El Salvador'. Had evidence of this become available, it is not apparent
why El Salvador, given full knowledge of an arms-flow and the routes used, could not have put
an end to the traffic, either by itself or with the assistance of the United States, which has
deployed such powerful resources. There is no doubt that the United States and El Salvador are
making considerable effort to prevent any infiltration of weapons and any form of support to the
armed opposition in El Salvador from the direction of Nicaragua. So far as the Court has been
informed, however, they have not succeeded in tracing and intercepting this infiltration and these
various forms of support. Consequently, it can only interpret the lack of evidence of the
transborder arms-flow in one of the following two ways: either this flow exists, but is neither as
frequent nor as considerable as alleged by the respondent State; or it is being carried on without
the knowledge, and against the will, of a government which would rather put a stop to it. If this
latter conclusion is at all valid with regard to El Salvador and the United States it must therefore
be at least equally valid with regard to Nicaragua.

155. Secondly, even supposing it well established that military aid is reaching the armed
opposition in El Salvador from the territory of Nicaragua, it still remains to be proved that this
aid is imputable to the authorities of the latter country. Indeed, the applicant State has in no way
sought to conceal the possibility of weapons en route to the armed opposition in El Salvador
crossing its territory but it denies that this is the result of any deliberate official policy on its part.
As the Court observed in 1949:

'it cannot be concluded from the mere fact of the control exercised by a State over its territory
and waters that that State necessarily knew, or ought to have known, of any unlawful act
perpetrated therein, nor yet that it necessarily knew, or should have known, the authors. This
fact, by itself and apart from other circumstances, neither involves prima facie responsibility nor
shifts the burden of proof.' (Corfu Channel, I.C.J. Reports 1949, p. 18.)

Here it is relevant to bear in mind that there is reportedly a strong will for collaboration and
mutual support between important elements of the populations of both El Salvador and
Nicaragua, not least among certain members of the armed forces in Nicaragua. The Court sees no
reason to dismiss these considerations, especially since El Salvador itself recognizes the
existence in Nicaraguan coastal areas of 'traditional smugglers' (Declaration, para. VIII, H),
because Nicaragua is accused not so much of delivering weapons itself as of allowing them to
transit through its territory; and finally because evidence has been provided, in the report of the
meeting of 12 August 1981 referred to in paragraph 136 above, of a degree of co-operation
between the United States and Nicaragua for the purpose of putting a stop to these arms
deliveries. The continuation of this co-operation does not seem to have depended solely on the
Government of Nicaragua, for the Government of the United States, which in 1981 again raised
with it the question of this traffic, this time refused to provide the Nicaraguan authorities, as it
had on previous occasions, with the specific information and details that would have enabled
them to call a halt to it. Since the Government of the United States has justified its refusal by
claiming that any disclosure would jeopardize its sources of information, the Court has no means
of assessing the reality or cogency of the undivulged evidence which the United States claimed
to possess.

156. In passing, the Court would remark that, if this evidence really existed, the United States
could be expected to have taken advantage of it in order to forestall or disrupt the traffic
observed; it could presumably for example arrange for the deployment of a strong patrol force in
El Salvador and Honduras, along the frontiers of these States with Nicaragua. It is difficult to
accept that it should have continued to carry out military and paramilitary activities against
Nicaragua if their only purpose was, as alleged, to serve as a riposte in the exercise of the right of
collective self-defence. If, on the other hand, this evidence does not exist, that, as the Court has
pointed out, implies that the arms traffic is so insignificant and casual that it escapes detection
even by the sophisticated techniques employed for the purpose, and that, a fortiori, it could also
have been carried on unbeknown to the Government of Nicaragua, as that Government claims.
These two conclusions mutually support each other.

157. This second hypothesis would provide the Court with a further reason for taking
Nicaragua's affirmation into consideration, in that, if the flow of arms is in fact reaching El
Salvador without either Honduras or El Salvador or the United States succeeding in preventing
it, it would clearly be unreasonable to demand of the Government of Nicaragua a higher degree
of diligence than is achieved by even the combined efforts of the other three States. In particular,
when Nicaragua is blamed for allowing consignments of arms to cross its territory, this is
tantamount, where El Salvador is concerned, to an admission of its inability to stem the flow.
This is revealing as to the predicament of any government, including that of Nicaragua, faced
with this arms traffic: its determination to put a stop to it would be likely to fail. More especially,
to the extent that some of this aid is said to be successfully routed through Honduras, this
accusation against Nicaragua would also signify that Honduras, which is not suspected of
seeking to assist the armed opposition in El Salvador, is providing involuntary proof that it is by
no means certain that Nicaragua can combat this clandestine traffic any better than Honduras. As
the means at the disposal of the governments in the region are roughly comparable, the
geographical obstacles, and the intrinsic character of any clandestine arms traffic, simply show
that this traffic may be carried on successfully without any complicity from governmental
authorities, and even when they seek to put a stop to it. Finally, if it is true that the exceptionally
extensive resources deployed by the United States have been powerless to prevent this traffic
from keeping the Salvadorian armed opposition supplied, this suggests even more clearly how
powerless Nicaragua must be with the much smaller resources at its disposal for subduing this
traffic if it takes place on its territory and the authorities endeavour to put a stop to it.

158. Confining itself to the regional States concerned, the Court accordingly considers that it is
scarcely possible for Nicaragua's responsibility for an arms traffic taking place on its territory to
be automatically assumed while the opposite assumption is adopted with regard to its neighbours
in respect of similar traffic. Having regard to the circumstances characterizing this part of
Central America, the Court considers it more realistic, and consistent with the probabilities, to
recognize that an activity of that nature, if on a limited scale, may very well be pursued
unbeknown to the territorial government.

159. It may be objected that the Nicaraguan authorities are alleged to have declared on various
occasions that military assistance to the armed opposition in El Salvador was part of their official
policy. The Court has already indicated that it is unable to give weight to alleged statements to
that effect of which there is insufficient evidence. In the report of the diplomatic talks held on 12
August 1981 at Managua, Commander Ortega did not in any sense promise to cease sending
arms, but, on the contrary, said on the one hand that Nicaragua had taken immediate steps to put
a stop to it once precise information had been given and, on the other hand, expressed inability to
take such steps where Nicaragua was not provided with information enabling that traffic to be
located. The Court would further observe that the four draft treaties submitted by Nicaragua
within the Contadora process in 1983 (quoted in paragraph 139 above) do not constitute an
admission by Nicaragua of the supply of assistance to the armed opposition in El Salvador, but
simply make provision for the future in the context of the inter-American system, in which a
State is prohibited from assisting the armed opposition within another State.

160. On the basis of the foregoing, the Court is satisfied that, between July 1979, the date of the
fall of the Somoza regime in Nicaragua, and the early months of 1981, an intermittent flow of
arms was routed via the territory of Nicaragua to the armed opposition in El Salvador. On the
other hand, the evidence is insufficient to satisfy the Court that, since the early months of 1981,
assistance has continued to reach the Salvadorian armed opposition from the territory of
Nicaragua on any significant scale, or that the Government of Nicaragua was responsible for any
flow of arms at either period.

161. The Court therefore turns to the claim that Nicaragua has been responsible for cross-border
military attacks on Honduras and Costa Rica. The United States annexed to its Counter-
Memorial on jurisdiction, inter alia, a document entitled 'Resume of Sandinista Aggression in
Honduran Territory in 1982' issued by the Press and Information Officer of the Honduran
Ministry of Foreign Relations on 23 August 1982. That document listed 35 incidents said to
involve violations of Honduran territory, territorial waters or airspace, attacks on and harassment
of the Honduran population or Honduran patrols, between 30 January 1982 and 21 August 1982.
Also attached to the Counter- Memorial were copies of diplomatic Notes from Honduras to
Nicaragua protesting at other incidents stated to have occurred in June/July 1983 and July 1984.
The Court has no information as to whether Nicaragua replied to these communications, and if so
in what terms.

162. With regard to Costa Rica, the United States has supplied the text of diplomatic Notes of
protest from Costa Rica to Nicaragua concerning incidents in September 1983, February 1984
and April 1984, and a Note from Costa Rica to the Foreign Ministers of Colombia, Mexico,
Panama and Venezuela, referring to an incident of 29 April 1984, and requesting the sending of a
mission of observers. Again, the Court has no information as to the contemporary reaction of
Nicaragua to these allegations; from press reports it appears that the matter was later amicably
settled.

163. As the Court has already observed (paragraphs 130 to 131 above), both the Parties have
addressed themselves primarily to the question of aid by the Government of Nicaragua to the
armed opposition in El Salvador, and the question of aggression directed against Honduras and
Costa Rica has fallen somewhat into the background. Nevertheless the allegation that such
aggression affords a basis for the exercise by the United States of the right of collective self-
defence remains on the record; and the Court has to note that Nicaragua has not taken the
opportunity during the proceedings of expressly refuting the assertion that it has made cross-
border military attacks on the territory of those two States. At the opening of the hearings in
1984 on the questions of jurisdiction and admissibility, the Agent of Nicaragua referred to the
'supposed armed attacks of Nicaragua against its neighbours', and proceeded to 'reiterate our
denial of these accusations which in any case we will amply address in the merits phase of these
proceedings'. However, the declaration of the Nicaraguan Foreign Minister annexed to the
Memorial on the merits filed on 30 April 1985, while repudiating the accusation of support for
the armed opposition in El Salvador, did not refer at all to the allegation of border incidents
involving Honduras and Costa Rica.

164. The Court, while not as fully informed on the question as it would wish to be, therefore
considers as established the fact that certain trans-border military incursions into the territory of
Honduras and Costa Rica are imputable to the Government of Nicaragua. The Court is also
aware of the fact that the FDN operates along the Nicaraguan border with Honduras, and the
ARDE operates along the border with Costa Rica.

165. In view of the assertion by the United States that it has acted in exercise of the right of
collective self-defence for the protection of El Salvador, Honduras and Costa Rica, the Court has
also to consider the evidence available on the question whether those States, or any of them,
made a request for such protection. In its Counter-Memorial on jurisdiction and admissibility, the
United States informed the Court that

'El Salvador, Honduras, and Costa Rica have each sought outside assistance, principally from the
United States, in their self-defense against Nicaragua's aggression. Pursuant to the inherent right
of individual and collective self-defense, and in accordance with the terms of the Inter-American
Treaty of Reciprocal Assistance, the United States has responded to these requests.'

No indication has however been given of the dates on which such requests for assistance were
made. The affidavit of Mr. Shultz, Secretary of State, dated 14 August 1984 and annexed to the
United States Counter-Memorial on jurisdiction and admissibility, while asserting that the United
States is acting in accord with the provisions of the United Nations Charter, and pursuant to the
inherent right of self defence, makes no express mention of any request for assistance by the
three States named. El Salvador, in its Declaration of Intervention in the present proceedings of
15 August 1984, stated that, faced with Nicaraguan aggression,

'we have been called upon to defend ourselves, but our own economic and military capability is
not sufficient to face any international apparatus that has unlimited resources at its disposal, and
we have, therefore, requested support and assistance from abroad. It is our natural, inherent right
under Article 51 of the Charter of the United Nations to have recourse to individual and
collective acts of self-defence. It was with this in mind that President Duarte, during a recent
visit to the United States and in discussions with United States congressmen, reiterated the
importance of this assistance for our defence from the United States and the democratic nations
of the world.' (Para. XII.)

Again, no dates are given, but the Declaration continues 'This was also done by the
Revolutionary Junta of Government and the Government of President Magana', i.e., between
October 1979 and December 1980, and between April 1982 and June 1984.
166. The Court however notes that according to the report, supplied by the Agent of Nicaragua,
of the meeting on 12 August 1981 between President Ortega of Nicaragua and Mr. Enders, the
latter is reported to have referred to action which the United States might take

'if the arms race in Central America is built up to such a point that some of your [sc. Nicaragua's]
neighbours in Central America seek protection from us under the Inter-American Treaty [of
Reciprocal Assistance]'.

This remark might be thought to carry the implication that no such request had yet been made.
Admittedly, the report of the meeting is a unilateral one, and its accuracy cannot be assumed as
against the United States. In conjunction with the lack of direct evidence of a formal request for
assistance from any of the three States concerned to the United States, the Court considers that
this report is not entirely without significance.

167. Certain events which occurred at the time of the fall of the regime of President Somoza
have next to be mentioned, since reliance has been placed on them to support a contention that
the present Government of Nicaragua is in violation of certain alleged assurances given by its
immediate predecessor, the Government of National Reconstruction, in 1979. From the
documents made available to the Court, at its request, by Nicaragua, it appears that what
occurred was as follows. On 23 June 1979, the Seventeenth Meeting of Consultation of Ministers
of Foreign Affairs of the Organization of American States adopted by majority, over the negative
vote of, inter alios, the representative of the Somoza government of Nicaragua, a resolution on
the subject of Nicaragua. By that resolution after declaring that 'the solution of the serious
problem is exclusively within the jurisdiction of the people of Nicaragua', the Meeting of
Consultation declared

'That in the view of the Seventeenth Meeting of Consultation of Ministers of Foreign Affairs this
solution should be arrived at on the basis of the following:

1. Immediate and definitive replacement of the Somoza regime.

2. Installation in Nicaraguan territory of a democratic government, the composition of which

should include the principal representative groups which oppose the Somoza regime and which
reflects the free will of the people of Nicaragua.

3. Guarantee of the respect for human rights of all Nicaraguans without exception.

4. The holding of free elections as soon as possible, that will lead to the establishment of a truly
democratic government that guarantees peace, freedom, and justice.'

On 12 July 1979, the five members of the Nicaraguan 'Junta of the Government of National
Reconstruction' sent from Costa Rica a telegram to the Secretary- General of the Organization of
American States, communicating the 'Plan of the Government of National Reconstruction to
Secure Peace'. The telegram explained that the plan had been developed on the basis of the
Resolution of the Seventeenth Meeting of Consultation; in connection with that plan, the Junta
members stated that they wished to 'ratify' (ratificar) some of the 'goals that have inspired their
government'. These included, first

'our firm intention to establish full observance of human rights in our country in accordance with
the United Nations Universal Declaration of the Rights of Man [sic], and the Charter on Human
Rights of the Organization of American States';

The Inter-American Commission on Human Rights was invited 'to visit our country as soon as
we are installed in our national territory'. A further goal was

'the plan to call the first free elections our country has known in this century, so that Nicaraguans
can elect their representatives to the city councils and to a constituent assembly, and later elect
the country's highest authorities'.

The Plan to Secure Peace provided for the Government of National Reconstruction, as soon as
established, to decree a Fundamental Statute and an Organic Law, and implement the Program of
the Government of National Reconstruction. Drafts of these texts were appended to the Plan;
they were enacted into law on 20 July 1979 and 21 August 1979.

168. In this connection, the Court notes that, since thus announcing its objectives in 1979, the
Nicaraguan Government has in fact ratified a number of international instruments on human
rights. At the invitation of the Government of Nicaragua, the Inter-American Commission on
Human Rights visited Nicaragua and compiled two reports (OEA/Ser.L/V/11.53 and 62). A state
of emergency was declared by the Nicaraguan Government (and notified to the United Nations
Secretary-General) in July 1979, and was re-declared or extended on a number of subsequent
occasions. On 4 November 1984, presidential and legislative elections were held, in the presence
of foreign observers; seven political parties took part in the election, while three parties abstained
from taking part on the ground that the conditions were unsatisfactory.

169. The view of the United States as to the legal effect of these events is reflected in, for
example, a Report submitted to Congress by President Reagan on 10 April 1985 in connection
with finance for the contras. It was there stated that one of the changes which the United States
was seeking from the Nicaraguan Government was:

'implementation of Sandinista commitment to the Organization of American States to political

pluralism, human rights, free elections, non-alignment, and a mixed economy'.

A fuller statement of those views is contained in a formal finding by Congress on 29 July 1985,
to the following effect:

'(A) the Government of National Reconstruction of Nicaragua formally accepted the June 23,
1979, resolution as a basis for resolving the Nicaraguan conflict in its 'Plan to Achieve Peace'
which was submitted to the Organization of American States on July 12, 1979;
(B) the June 23, 1979, resolution and its acceptance by the Government of National
Reconstruction of Nicaragua was the formal basis for the removal of the Somoza regime and the
installation of the Government of National Reconstruction;

(C) the Government of National Reconstruction, now known as the Government of Nicaragua
and controlled by the Frente Sandinista (the FSLN), has flagrantly violated the provisions of the
June 23, 1979, resolution, the rights of the Nicaraguan people, and the security of the nations in
the region, in that it -

(i) no longer includes the democratic members of the Government of National Reconstruction in
the political process;

(ii) is not a government freely elected under conditions of freedom of the press, assembly, and
organization, and is not recognized as freely elected by its neighbors, Costa Rica, Honduras, and
El Salvador;

(iii) has taken significant steps towards establishing a totalitarian Communist dictatorship,
including the formation of FSLN neighborhood watch committees and the enactment of laws that
violate human rights and grant undue executive power;

(iv) has committed atrocities against its citizens as documented in reports by the Inter-American
Commission on Human Rights of the Organization of American States;

(v) has aligned itself with the Soviet Union and Soviet allies, including the German Democratic
Republic, Bulgaria, Libya, and the Palestine Liberation Organization;

(vi) has committed and refuses to cease aggression in the form of armed subversion against its
neighbors in violation of the Charter of the United Nations, the Charter of the Organization of
American States, the Inter- American Treaty of Reciprocal Assistance, and the 1965 United
Nations General Assembly Declaration on Intervention; and

(vii) has built up an army beyond the needs of immediate self-defense, at the expense of the
needs of the Nicaraguan people and about which the nations of the region have expressed
deepest concern.'

170. The resolution goes on to note the belief expressed by Costa Rica, El Salvador and
Honduras that

'their peace and freedom is not safe so long as the Government of Nicaragua excludes from
power most of Nicaragua's political leadership and is controlled by a small sectarian party,
without regard to the will of the majority of Nicaraguans'

and adds that

'the United States, given its role in the installation of the current Government of Nicaragua, has a
special responsibility regarding the implementation of the commitments made by that
Government in 1979, especially to those who fought against Somoza to bring democracy to
Nicaragua with United States support'.

Among the findings as to the 'Resolution of the Conflict' is the statement that the Congress

'supports the Nicaraguan democratic resistance in its efforts to peacefully resolve the Nicaraguan
conflict and to achieve the fulfillment of the Government of Nicaragua's solemn commitments to
the Nicaraguan people, the United States, and the Organization of American States'.

From the transcripts of speeches and press conferences supplied to the Court by Nicaragua, it is
clear that the resolution of Congress expresses a view shared by the President of the United
States, who is constitutionally responsible for the foreign policy of the United States.

171. The question whether the alleged violations by the Nicaraguan Government of the 1979
Resolution of the Organization of American States Meeting of Consultation, listed in paragraph
169, are relied on by the United States Government as legal justifications of its conduct towards
Nicaragua, or merely as political arguments, will be examined later in the present Judgment. It
may however be observed that the resolution clearly links United States support for the contras
to the breaches of what the United States regards as the 'solemn commitments' of the
Government of Nicaragua.

172. The Court has now to turn its attention to the question of the law applicable to the present
dispute. In formulating its view on the significance of the United States multilateral treaty
reservation, the Court has reached the conclusion that it must refrain from applying the
multilateral treaties invoked by Nicaragua in support of its claims, without prejudice either to
other treaties or to the other sources of law enumerated in Article 38 of the Statute. The first
stage in its determination of the law actually to be applied to this dispute is to ascertain the
consequences of the exclusion of the applicability of the multilateral treaties for the definition of
the content of the customary international law which remains applicable.

173. According to the United States, these consequences are extremely wide- ranging. The
United States has argued that:

'Just as Nicaragua's claims allegedly based on 'customary and general international law' cannot
be determined without recourse to the United Nations Charter as the principal source of that law,
they also cannot be determined without reference to the 'particular international law' established
by multilateral conventions in force among the parties.'

The United States contends that the only general and customary international law on which
Nicaragua can base its claims is that of the Charter: in particular, the Court could not, it is said,
consider the lawfulness of an alleged use of armed force without referring to the 'principal source
of the relevant international law', namely, Article 2, paragraph 4, of the United Nations Charter.
In brief, in a more general sense 'the provisions of the United Nations Charter relevant here
subsume and supervene related principles of customary and general international law'. The
United States concludes that 'since the multilateral treaty reservation bars adjudication of claims
based on those treaties, it bars all of Nicaragua's claims'. Thus the effect of the reservation in
question is not, it is said, merely to prevent the Court from deciding upon Nicaragua's claims by
applying the multilateral treaties in question; it further prevents it from applying in its decision
any rule of customary international law the content of which is also the subject of a provision in
those multilateral treaties.

174. In its Judgment of 26 November 1984, the Court has already commented briefly on this line
of argument. Contrary to the views advanced by the United States, it affirmed that it

'cannot dismiss the claims of Nicaragua under principles of customary and general international
law, simply because such principles have been enshrined in the texts of the conventions relied
upon by Nicaragua. The fact that the above-mentioned principles, recognized as such, have been
codified or embodied in multilateral conventions does not mean that they cease to exist and to
apply as principles of customary law, even as regards countries that are parties to such
conventions. Principles such as those of the non-use of force, non-intervention, respect for the
independence and territorial integrity of States, and the freedom of navigation, continue to be
binding as part of customary international law, despite the operation of provisions of
conventional law in which they have been incorporated.' (I.C.J. Reports 1984, p. 424, para. 73.)

Now that the Court has reached the stage of a decision on the merits, it must develop and refine
upon these initial remarks. The Court would observe that, according to the United States
argument, it should refrain from applying the rules of customary international law because they
have been 'subsumed' and 'supervened' by those of international treaty law, and especially those
of the United Nations Charter. Thus the United States apparently takes the view that the
existence of principles in the United Nations Charter precludes the possibility that similar rules
might exist independently in customary international law, either because existing customary
rules had been incorporated into the Charter, or because the Charter influenced the later adoption
of customary rules with a corresponding content.

175. The Court does not consider that, in the areas of law relevant to the present dispute, it can
be claimed that all the customary rules which may be invoked have a content exactly identical to
that of the rules contained in the treaties which cannot be applied by virtue of the United States
reservation. On a number of points, the areas governed by the two sources of law do not exactly
overlap, and the substantive rules in which they are framed are not identical in content. But in
addition, even if a treaty norm and a customary norm relevant to the present dispute were to have
exactly the same content, this would not be a reason for the Court to take the view that the
operation of the treaty process must necessarily deprive the customary norm of its separate
applicability. Nor can the multilateral treaty reservation be interpreted as meaning that, once
applicable to a given dispute, it would exclude the application of any rule of customary
international law the content of which was the same as, or analogous to, that of the treaty-law
rule which had caused the reservation to become effective.

176. As regards the suggestion that the areas covered by the two sources of law are identical, the
Court observes that the United Nations Charter, the convention to which most of the United
States argument is directed, by no means covers the whole area of the regulation of the use of
force in international relations. On one essential point, this treaty itself refers to pre-existing
customary international law; this reference to customary law is contained in the actual text of
Article 51, which mentions the 'inherent right' (in the French text the 'droit naturel') of individual
or collective self-defence, which 'nothing in the present Charter shall impair' and which applies
in the event of an armed attack. The Court therefore finds that Article 51 of the Charter is only
meaningful on the basis that there is a 'natural' or 'inherent' right of self-defence, and it is hard to
see how this can be other than of a customary nature, even if its present content has been
confirmed and influenced by the Charter. Moreover the Charter, having itself recognized the
existence of this right, does not go on to regulate directly all aspects of its content. For example,
it does not contain any specific rule whereby self-defence would warrant only measures which
are proportional to the armed attack and necessary to respond to it, a rule well established in
customary international law. Moreover, a definition of the 'armed attack' which, if found to exist,
authorizes the exercise of the 'inherent right' of self-defence, is not provided in the Charter, and
is not part of treaty law. It cannot therefore be held that Article 51 is a provision which
'subsumes and supervenes' customary international law. It rather demonstrates that in the field in
question, the importance of which for the present dispute need hardly be stressed, customary
international law continues to exist alongside treaty law. The areas governed by the two sources
of law thus do not overlap exactly, and the rules do not have the same content. This could also be
demonstrated for other subjects, in particular for the principle of non-intervention.

177. But as observed above (paragraph 175), even if the customary norm and the treaty norm
were to have exactly the same content, this would not be a reason for the Court to hold that the
incorporation of the customary norm into treaty-law must deprive the customary norm of its
applicability as distinct from that of the treaty norm. The existence of identical rules in
international treaty law and customary law has been clearly recognized by the Court in the North
Sea Continental Shelf cases. To a large extent, those cases turned on the question whether a rule
enshrined in a treaty also existed as a customary rule, either because the treaty had merely
codified the custom, or caused it to 'crystallize', or because it had influenced its subsequent
adoption. The Court found that this identity of content in treaty law and in customary
international law did not exist in the case of the rule invoked, which appeared in one article of
the treaty, but did not suggest that such identity was debarred as a matter of principle: on the
contrary, it considered it to be clear that certain other articles of the treaty in question 'were ...
regarded as reflecting, or as crystallizing, received or at least emergent rules of customary
international law' (I.C.J. Reports 1969, p. 39, para. 63). More generally, there are no grounds for
holding that when customary international law is comprised of rules identical to those of treaty
law, the latter 'supervenes' the former, so that the customary international law has no further
existence of its own.

178. There are a number of reasons for considering that, even if two norms belonging to two
sources of international law appear identical in content, and even if the States in question are
bound by these rules both on the level of treaty-law and on that of customary international law,
these norms retain a separate existence. This is so from the standpoint of their applicability. In a
legal dispute affecting two States, one of them may argue that the applicability of a treaty rule to
its own conduct depends on the other State's conduct in respect of the application of other rules,
on other subjects, also included in the same treaty. For example, if a State exercises its right to
terminate or suspend the operation of a treaty on the ground of the violation by the other party of
a 'provision essential to the accomplishment of the object or purpose of the treaty' (in the words
of Art. 60, para. 3 (b), of the Vienna Convention on the Law of Treaties), it is exempted, vis-a-
vis the other State, from a rule of treaty-law because of the breach by that other State of a
different rule of treaty-law. But if the two rules in question also exist as rules of customary
international law, the failure of the one State to apply the one rule does not justify the other State
in declining to apply the other rule. Rules which are identical in treaty law and in customary
international law are also distinguishable by reference to the methods of interpretation and
application. A State may accept a rule contained in a treaty not simply because it favours the
application of the rule itself, but also because the treaty establishes what that State regards as
desirable institutions or mechanisms to ensure implementation of the rule. Thus, if that rule
parallels a rule of customary international law, two rules of the same content are subject to
separate treatment as regards the organs competent to verify their implementation, depending on
whether they are customary rules or treaty rules. The present dispute illustrates this point.

179. It will therefore be clear that customary international law continues to exist and to apply,
separately from international treaty law, even where the two categories of law have an identical
content. Consequently, in ascertaining the content of the customary international law applicable
to the present dispute, the Court must satisfy itself that the Parties are bound by the customary
rules in question; but the Court is in no way bound to uphold these rules only in so far as they
differ from the treaty rules which it is prevented by the United States reservation from applying
in the present dispute.

180. The United States however presented a further argument, during the proceedings devoted to
the question of jurisdiction and admissibility, in support of its contention that the multilateral
treaty reservation debars the Court from considering the Nicaraguan claims based on customary
international law. The United States observed that the multilateral treaties in question contain
legal standards specifically agreed between the Parties to govern their mutual rights and
obligations, and that the conduct of the Parties will continue to be governed by these treaties,
irrespective of what the Court may decide on the customary law issue, because of the principle
of pacta sunt servanda. Accordingly, in the contention of the United States, the Court cannot
properly adjudicate the mutual rights and obligations of the two States when reference to their
treaty rights and obligations is barred; the Court would be adjudicating those rights and
obligations by standards other than those to which the Parties have agreed to conduct themselves
in their actual international relations.

181. The question raised by this argument is whether the provisions of the multilateral treaties in
question, particularly the United Nations Charter, diverge from the relevant rules of customary
international law to such an extent that a judgment of the Court as to the rights and obligations of
the parties under customary law, disregarding the content of the multilateral treaties binding on
the parties, would be a wholly academic exercise, and not 'susceptible of any compliance or
execution whatever' (Northern Cameroons, I.C.J. Reports 1963, p. 37). The Court does not
consider that this is the case. As already noted, on the question of the use of force, the United
States itself argues for a complete identity of the relevant rules of customary international law
with the provisions of the Charter. The Court has not accepted this extreme contention, having
found that on a number of points the areas governed by the two sources of law do not exactly
overlap, and the substantive rules in which they are framed are not identical in content
(paragraph 174 above). However, so far from having constituted a marked departure from a
customary international law which still exists unmodified, the Charter gave expression in this
field to principles already present in customary international law, and that law has in the
subsequent four decades developed under the influence of the Charter, to such an extent that a
number of rules contained in the Charter have acquired a status independent of it. The essential
consideration is that both the Charter and the customary international law flow from a common
fundamental principle outlawing the use of force in international relations. The differences which
may exist between the specific content of each are not, in the Court's view, such as to cause a
judgment confined to the field of customary international law to be ineffective or inappropriate,
or a judgment not susceptible of compliance or execution.

182. The Court concludes that it should exercise the jurisdiction conferred upon it by the United
States declaration of acceptance under Article 36, paragraph 2, of the Statute, to determine the
claims of Nicaragua based upon customary international law notwithstanding the exclusion from
its jurisdiction of disputes 'arising under' the United Nations and Organization of American
States Charters.

183. In view of this conclusion, the Court has next to consider what are the rules of customary
international law applicable to the present dispute. For this purpose, it has to direct its attention
to the practice and opinio juris of States; as the Court recently observed,

'It is of course axiomatic that the material of customary international law is to be looked for
primarily in the actual practice and opinio juris of States, even though multilateral conventions
may have an important role to play in recording and defining rules deriving from custom, or
indeed in developing them.' (Continental Shelf (Libyan Arab Jamahiriya/Malta), I.C.J. Reports
1985, pp. 29-30, para. 27.)

In this respect the Court must not lose sight of the Charter of the United Nations and that of the
Organization of American States, notwithstanding the operation of the multilateral treaty
reservation. Although the Court has no jurisdiction to determine whether the conduct of the
United States constitutes a breach of those conventions, it can and must take them into account in
ascertaining the content of the customary international law which the United States is also
alleged to have infringed.

184. The Court notes that there is in fact evidence, to be examined below, of a considerable
degree of agreement between the Parties as to the content of the customary international law
relating to the non-use of force and non- intervention. This concurrence of their views does not
however dispense the Court from having itself to ascertain what rules of customary international
law are applicable. The mere fact that States declare their recognition of certain rules is not
sufficient for the Court to consider these as being part of customary international law, and as
applicable as such to those States. Bound as it is by Article 38 of its Statute to apply, inter alia,
international custom 'as evidence of a general practice accepted as law', the Court may not
disregard the essential role played by general practice. Where two States agree to incorporate a
particular rule in a treaty, their agreement suffices to make that rule a legal one, binding upon
them; but in the field of customary international law, the shared view of the Parties as to the
content of what they regard as the rule is not enough. The Court must satisfy itself that the
existence of the rule in the opinio juris of States is confirmed by practice.
185. In the present dispute, the Court, while exercising its jurisdiction only in respect of the
application of the customary rules of non-use of force and non-intervention, cannot disregard the
fact that the Parties are bound by these rules as a matter of treaty law and of customary
international law. Furthermore, in the present case, apart from the treaty commitments binding
the Parties to the rules in question, there are various instances of their having expressed
recognition of the validity thereof as customary international law in other ways. It is therefore in
the light of this 'subjective element' - the expression used by the Court in its 1969 Judgment in
the North Sea Continental Shelf cases (I.C.J. Reports 1969, p. 44) - that the Court has to appraise
the relevant practice.

186. It is not to be expected that in the practice of States the application of the rules in question
should have been perfect, in the sense that States should have refrained, with complete
consistency, from the use of force or from intervention in each other's internal affairs. The Court
does not consider that, for a rule to be established as customary, the corresponding practice must
be in absolutely rigorous conformity with the rule. In order to deduce the existence of customary
rules, the Court deems it sufficient that the conduct of States should, in general, be consistent
with such rules, and that instances of State conduct inconsistent with a given rule should
generally have been treated as breaches of that rule, not as indications of the recognition of a new
rule. If a State acts in a way prima facie incompatible with a recognized rule, but defends its
conduct by appealing to exceptions or justifications contained within the rule itself, then whether
or not the State's conduct is in fact justifiable on that basis, the significance of that attitude is to
confirm rather than to weaken the rule.

187. The Court must therefore determine, first, the substance of the customary rules relating to
the use of force in international relations, applicable to the dispute submitted to it. The United
States has argued that, on this crucial question of the lawfulness of the use of force in inter-State
relations, the rules of general and customary international law, and those of the United Nations
Charter, are in fact identical. In its view this identity is so complete that, as explained above
(paragraph 173), it constitutes an argument to prevent the Court from applying this customary
law, because it is indistinguishable from the multilateral treaty law which it may not apply. In its
Counter-Memorial on jurisdiction and admissibility the United States asserts that 'Article 2(4) of
the Charter is customary and general international law'. It quotes with approval an observation by
the International Law Commission to the effect that

'the great majority of international lawyers today unhesitatingly hold that Article 2, paragraph 4,
together with other provisions of the Charter, authoritatively declares the modern customary law
regarding the threat or use of force' (ILC Yearbook, 1966, Vol. II, p. 247).

The United States points out that Nicaragua has endorsed this view, since one of its counsel
asserted that 'indeed it is generally considered by publicists that Article 2, paragraph 4, of the
United Nations Charter is in this respect an embodiment of existing general principles of
international law'. And the United States concludes:

'In sum, the provisions of Article 2(4) with respect to the lawfulness of the use of force are
'modern customary law' (International Law Commission, loc. cit.) and the 'embodiment of
general principles of international law' (counsel for Nicaragua, Hearing of 25 April 1984,
morning, loc. cit.). There is no other 'customary and general international law' on which
Nicaragua can rest its claims.'

'It is, in short, inconceivable that this Court could consider the lawfulness of an alleged use of
armed force without referring to the principal source of the relevant international law - Article
2(4) of the United Nations Charter.'

As for Nicaragua, the only noteworthy shade of difference in its view lies in Nicaragua's belief
that 'in certain cases the rule of customary law will not necessarily be identical in content and
mode of application to the conventional rule'.

188. The Court thus finds that both Parties take the view that the principles as to the use of force
incorporated in the United Nations Charter correspond, in essentials, to those found in customary
international law. The Parties thus both take the view that the fundamental principle in this area
is expressed in the terms employed in Article 2, paragraph 4, of the United Nations Charter.
They therefore accept a treaty-law obligation to refrain in their international relations from the
threat or use of force against the territorial integrity or political independence of any State, or in
any other manner inconsistent with the purposes of the United Nations. The Court has however
to be satisfied that there exists in customary international law an opinio juris as to the binding
character of such abstention. This opinio juris may, though with all due caution, be deduced
from, inter alia, the attitude of the Parties and the attitude of States towards certain General
Assembly resolutions, and particularly resolution 2625 (XXV) entitled 'Declaration on Principles
of International Law concerning Friendly Relations and Co-operation among States in
accordance with the Charter of the United Nations'. The effect of consent to the text of such
resolutions cannot be understood as merely that of a 'reiteration or elucidation' of the treaty
commitment undertaken in the Charter. On the contrary, it may be understood as an acceptance
of the validity of the rule or set of rules declared by the resolution by themselves. The principle
of non-use of force, for example, may thus be regarded as a principle of customary international
law, not as such conditioned by provisions relating to collective security, or to the facilities or
armed contingents to be provided under Article 43 of the Charter. It would therefore seem
apparent that the attitude referred to expresses an opinio juris respecting such rule (or set of
rules), to be thenceforth treated separately from the provisions, especially those of an
institutional kind, to which it is subject on the treaty-law plane of the Charter.

189. As regards the United States in particular, the weight of an expression of opinio juris can
similarly be attached to its support of the resolution of the Sixth International Conference of
American States condemning aggression (18 February 1928) and ratification of the Montevideo
Convention on Rights and Duties of States (26 December 1933), Article 11 of which imposes the
obligation not to recognize territorial acquisitions or special advantages which have been
obtained by force. Also significant is United States acceptance of the principle of the prohibition
of the use of force which is contained in the declaration on principles governing the mutual
relations of States participating in the Conference on Security and Co-operation in Europe

(Helsinki, 1 August 1975), whereby the participating States undertake to 'refrain in their mutual
relations, as well as in their international relations in general,' (emphasis added) from the threat
or use of force. Acceptance of a text in these terms confirms the existence of an opinio juris of
the participating States prohibiting the use of force in international relations.

190. A further confirmation of the validity as customary international law of the principle of the
prohibition of the use of force expressed in Article 2, paragraph 4, of the Charter of the United
Nations may be found in the fact that it is frequently referred to in statements by State
representatives as being not only a principle of customary international law but also a
fundamental or cardinal principle of such law. The International Law Commission, in the course
of its work on the codification of the law of treaties, expressed the view that 'the law of the
Charter concerning the prohibition of the use of force in itself constitutes a conspicuous example
of a rule in international law having the character of jus cogens' (paragraph (1) of the
commentary of the Commission to Article 50 of its draft Articles on the Law of Treaties, ILC
Yearbook, 1966-II, p. 247). Nicaragua in its Memorial on the Merits submitted in the present
case states that the principle prohibiting the use of force embodied in Article 2, paragraph 4, of
the Charter of the United Nations 'has come to be recognized as jus cogens'. The United States,
in its Counter- Memorial on the questions of jurisdiction and admissibility, found it material

to quote the views of scholars that this principle is a 'universal norm', a 'universal international
law', a 'universally recognized principle of international law', and a 'principle of jus cogens'.

191. As regards certain particular aspects of the principle in question, it will be necessary to
distinguish the most grave forms of the use of force (those constituting an armed attack) from
other less grave forms. In determining the legal rule which applies to these latter forms, the Court
can again draw on the formulations contained in the Declaration on Principles of International
Law concerning Friendly Relations and Co-operation among States in accordance with the
Charter of the United Nations (General Assembly resolution 2625 (XXV), referred to above). As
already observed, the adoption by States of this text affords an indication of their opinio juris as
to customary international law on the question. Alongside certain descriptions which may refer
to aggression, this text includes others which refer only to less grave forms of the use of force. In
particular, according to this resolution:

'Every State has the duty to refrain from the threat or use of force to violate the existing
international boundaries of another State or as a means of solving international disputes,
including territorial disputes and problems concerning frontiers of States.

.............................

States have a duty to refrain from acts of reprisal involving the use of force.

.............................

Every State has the duty to refrain from any forcible action which deprives peoples referred to in
the elaboration of the principle of equal rights and self-determination of that right to self-
determination and freedom and independence.
Every State has the duty to refrain from organizing or encouraging the organization of irregular
forces or armed bands, including mercenaries, for incursion into the territory of another State.

Every State has the duty to refrain from organizing, instigating, assisting or participating in acts
of civil strife or terrorist acts in another State or acquiescing in organized activities within its
territory directed towards the commission of such acts, when the acts referred to in the present
paragraph involve a threat or use of force.'

192. Moreover, in the part of this same resolution devoted to the principle of non-intervention in
matters within the national jurisdiction of States, a very similar rule is found:

'Also, no State shall organize, assist, foment, finance, incite or tolerate subversive, terrorist or
armed activities directed towards the violent overthrow of the regime of another State, or
interfere in civil strife in another State.'

In the context of the inter-American system, this approach can be traced back at least to 1928
(Convention on the Rights and Duties of States in the Event of Civil Strife, Art. 1 (1)); it was
confirmed by resolution 78 adopted by the General Assembly of the Organization of American
States on 21 April 1972. The operative part of this resolution reads as follows:

'The General Assembly Resolves:

1. To reiterate solemnly the need for the member states of the Organization to observe strictly the
principles of nonintervention and self-determination of peoples as a means of ensuring peaceful
coexistence among them and to refrain from committing any direct or indirect act that might
constitute a violation of those principles.

2. To reaffirm the obligation of those states to refrain from applying economic, political, or any
other type of measures to coerce another state and obtain from it advantages of any kind.

3. Similarly, to reaffirm the obligation of these states to refrain from organizing, supporting,
promoting, financing, instigation, or tolerating subversive, terrorist, or armed activities against
another state and from intervening in a civil war in another state or in its internal struggles.'

193. The general rule prohibiting force allows for certain exceptions. In view of the arguments
advanced by the United States to justify the acts of which it is accused by Nicaragua, the Court
must express a view on the content of the right of self-defence, and more particularly the right of
collective self-defence. First, with regard to the existence of this right, it notes that in the
language of Article 51 of the United Nations Charter, the inherent right (or 'droit naturel') which
any State possesses in the event of an armed attack, covers both collective and individual self-
defence. Thus, the Charter itself testifies to the existence of the right of collective self-defence in
customary international law. Moreover, just as the wording of certain General Assembly
declarations adopted by States demonstrates their recognition of the principle of the prohibition
of force as definitely a matter of customary international law, some of the wording in those
declarations operates similarly in respect of the right of self-defence (both collective and
individual). Thus, in the declaration quoted above on the Principles of International Law
concerning Friendly Relations and Co-operation among States in accordance with the Charter of
the United Nations, the reference to the prohibition of force is followed by a paragraph stating
that:

'nothing in the foregoing paragraphs shall be construed as enlarging or diminishing in any way
the scope of the provisions of the Charter concerning cases in which the use of force is lawful'.

This resolution demonstrates that the States represented in the General Assembly regard the
exception to the prohibition of force constituted by the right of individual or collective self-
defence as already a matter of customary international law.

194. With regard to the characteristics governing the right of self-defence, since the Parties
consider the existence of this right to be established as a matter of customary international law,
they have concentrated on the conditions governing its use. In view of the circumstances in
which the dispute has arisen, reliance is placed by the Parties only on the right of self-defence in
the case of an armed attack which has already occurred, and the issue of the lawfulness of a
response to the imminent threat of armed attack has not been raised. Accordingly the Court
expresses no view on that issue. The Parties also agree in holding that whether the response to
the attack is lawful depends on observance of the criteria of the necessity and the proportionality
of the measures taken in self-defence. Since the existence of the right of collective self-defence is
established in customary international law, the Court must define the specific conditions which
may have to be met for its exercise, in addition to the conditions of necessity and proportionality
to which the Parties have referred.

195. In the case of individual self-defence, the exercise of this right is subject to the State
concerned having been the victim of an armed attack. Reliance on collective self-defence of
course does not remove the need for this. There appears now to be general agreement on the
nature of the acts which can be treated as constituting armed attacks. In particular, it may be
considered to be agreed that an armed attack must be understood as including not merely action
by regular armed forces across an international border, but also 'the sending by or on behalf of a
State of armed bands, groups, irregulars or mercenaries, which carry out acts of armed force
against another State of such gravity as to amount to' (inter alia) an actual armed attack
conducted by regular forces, 'or its substantial involvement therein'. This description, contained
in Article 3, paragraph (g), of the Definition of Aggression annexed to General Assembly
resolution 3314 (XXIX), may be taken to reflect customary international law. The Court sees no
reason to deny that, in customary law, the prohibition of armed attacks may apply to the sending
by a State of armed bands to the territory of another State, if such an operation, because of its
scale and effects, would have been classified as an armed attack rather than as a mere frontier
incident had it been carried out by regular armed forces. But the Court does not believe that the
concept of 'armed attack' includes not only acts by armed bands where such acts occur on a
significant scale but also assistance to rebels in the form of the provision of weapons or logistical
or other support. Such assistance may be regarded as a threat or use of force, or amount to
intervention in the internal or external affairs of other States.

It is also clear that it is the State which is the victim of an armed attack which must form and
declare the view that it has been so attacked. There is no rule in customary international law
permitting another State to exercise the right of collective self-defence on the basis of its own
assessment of the situation. Where collective self-defence is invoked, it is to be expected that the
State for whose benefit this right is used will have declared itself to be the victim of an armed
attack.

196. The question remains whether the lawfulness of the use of collective self-defence by the
third State for the benefit of the attacked State also depends on a request addressed by that State
to the third State. A provision of the Charter of the Organization of American States is here in
point: and while the Court has no jurisdiction to consider that instrument as applicable to the
dispute, it may examine it to ascertain what light it throws on the content of customary
international law. The Court notes that the Organization of American States Charter includes, in
Article 3 (f), the principle that: 'an act of aggression against one American State is an act of
aggression against all the other American States' and a provision in Article 27 that:

'Every act of aggression by a State against the territorial integrity or the inviolability of the
territory or against the sovereignty or political independence of an American State shall be
considered an act of aggression against the other American States.'

197. Furthermore, by Article 3, paragraph 1, of the Inter-American Treaty of Reciprocal

Assistance, signed at Rio de Janeiro on 2 September 1947, the High- Contracting Parties

'agree that an armed attack by any State against an American State shall be considered as an
attack against all the American States and, consequently, each one of the said Contracting Parties
undertakes to assist in meeting the attack in the exercise of the inherent right of individual or
collective self-defence recognized by Article 51 of the Charter of the United Nations';

and under paragraph 2 of that Article,

'On the request of the State or States directly attacked and until the decision of the Organ of
Consultation of the Inter-American System, each one of the Contracting Parties may determine
the immediate measures which it may individually take in fulfilment of the obligation contained
in the preceding paragraph and in accordance with the principle of continental solidarity.'

(The 1947 Rio Treaty was modified by the 1975 Protocol of San Jose, Costa Rica, but that
Protocol is not yet in force.)

198. The Court observes that the Treaty of Rio de Janeiro provides that measures of collective
self-defence taken by each State are decided 'on the request of the State or States directly
attacked'. It is significant that this requirement of a request on the part of the attacked State
appears in the treaty particularly devoted to these matters of mutual assistance; it is not found in
the more general text (the Charter of the Organization of American States), but Article 28 of that
Charter provides for the application of the measures and procedures laid down in 'the special
treaties on the subject'.

199. At all events, the Court finds that in customary international law, whether of a general kind
or that particular to the inter-American legal system, there is no rule permitting the exercise of
collective self-defence in the absence of a request by the State which regards itself as the victim
of an armed attack. The Court concludes that the requirement of a request by the State which is
the victim of the alleged attack is additional to the requirement that such a State should have
declared itself to have been attacked.

200. At this point, the Court may consider whether in customary international law there is any
requirement corresponding to that found in the treaty law of the United Nations Charter, by
which the State claiming to use the right of individual or collective self-defence must report to an
international body, empowered to determine the conformity with international law of the
measures which the State is seeking to justify on that basis. Thus Article 51 of the United
Nations Charter requires that measures taken by States in exercise of this right of self-defence
must be 'immediately reported' to the Security Council. As the Court has observed above
(paragraphs 178 and 188), a principle enshrined in a treaty, if reflected in customary international
law, may well be so unencumbered with the conditions and modalities surrounding it in the
treaty. Whatever influence the Charter may have had on customary international law in these
matters, it is clear that in customary international law it is not a condition of the lawfulness of the
use of force in self-defence that a procedure so closely dependent on the content of a treaty
commitment and of the institutions established by it, should have been followed. On the other
hand, if self-defence is advanced as a justification for measures which would otherwise be in
breach both of the principle of customary international law and of that contained in the Charter,
it is to be expected that the conditions of the Charter should be respected. Thus for the purpose of
enquiry into the customary law position, the absence of a report may be one of the factors
indicating whether the State in question was itself convinced that it was acting in self-defence.

201. To justify certain activities involving the use of force, the United States has relied solely on
the exercise of its right of collective self-defence. However the Court, having regard particularly
to the non- participation of the United States in the merits phase, considers that it should enquire
whether customary international law, applicable to the present dispute, may contain other rules
which may exclude the unlawfulness of such activities. It does not, however, see any need to
reopen the question of the conditions governing the exercise of the right of individual self-
defence, which have already been examined in connection with collective self-defence. On the
other hand, the Court must enquire whether there is any justification for the activities in question,
to be found not in the right of collective self-defence against an armed attack, but in the right to
take counter-measures in response to conduct of Nicaragua which is not alleged to constitute an
armed attack. It will examine this point in connection with an analysis of the principle of non-
intervention in customary international law.

202. The principle of non-intervention involves the right of every sovereign State to conduct its
affairs without outside interference; though examples of trespass against this principle are not
infrequent, the Court considers that it is part and parcel of customary international law. As the
Court has observed: 'Between independent States, respect for territorial sovereignty is an
essential foundation of international relations' (I.C.J. Reports 1949, p. 35), and international law
requires political integrity also to be respected. Expressions of an opinio juris regarding the
existence of the principle of non- intervention in customary international law are numerous and
not difficult to find. Of course, statements whereby States avow their recognition of the
principles of international law set forth in the United Nations Charter cannot strictly be
interpreted as applying to the principle of non-intervention by States in the internal and external
affairs of other States, since this principle is not, as such, spelt out in the Charter. But it was
never intended that the Charter should embody written confirmation of every essential principle
of international law in force. The existence in the opinio juris of States of the principle of non-
intervention is backed by established and substantial practice. It has moreover been presented as
a corollary of the principle of the sovereign equality of States. A particular instance of this is
General Assembly resolution 2625 (XXV), the Declaration on the Principles of International
Law concerning Friendly Relations and Co-operation among States. In the Corfu Channel case,
when a State claimed a right of intervention in order to secure evidence in the territory of another
State for submission to an international tribunal (I.C.J. Reports 1949, p. 34), the Court observed
that:

'the alleged right of intervention as the manifestation of a policy of force, such as has, in the past,
given rise to most serious abuses and such as cannot, whatever be the present defects in
international organization, find a place in international law. Intervention is perhaps still less
admissible in the particular form it would take here; for, from the nature of things, it would be
reserved for the most powerful States, and might easily lead to perverting the administration of
international justice itself.' (I.C.J. Reports 1949, p. 35.)

203. The principle has since been reflected in numerous declarations adopted by international
organizations and conferences in which the United States and Nicaragua have participated, e.g.,
General Assembly resolution 2131 (XX), the Declaration on the Inadmissibility of Intervention
in the Domestic Affairs of States and the Protection of their Independence and Sovereignty. It is
true that the United States, while it voted in favour of General Assembly resolution 2131 (XX),
also declared at the time of its adoption in the First Committee that it considered the declaration
in that resolution to be 'only a statement of political intention and not a formulation of law'
(Official Records of the General Assembly, Twentieth Session, First Committee, A/C.1/SR.1423,
p. 436). However, the essentials of resolution 2131 (XX) are repeated in the Declaration
approved by resolution 2625 (XXV), which set out principles which the General Assembly
declared to be 'basic principles' of international law, and on the adoption of which no analogous
statement was made by the United States representative.

204. As regards inter-American relations, attention may be drawn to, for example, the United
States reservation to the Montevideo Convention on Rights and Duties of States (26 December
1933), declaring the opposition of the United States Government to 'interference with the
freedom, the sovereignty or other internal affairs, or processes of the Governments of other
nations'; or the ratification by the United States of the Additional Protocol relative to Non-
Intervention (23 December 1936). Among more recent texts, mention may be made of
resolutions AG/RES.78 and AG/RES.128 of the General Assembly of the Organization of
American States. In a different context, the United States expressly accepted the principles set
forth in the declaration, to which reference has already been made, appearing in the Final Act of
the Conference on Security and Co-operation in Europe (Helsinki, 1 August 1975), including an
elaborate statement of the principle of non-intervention; while these principles were presented as
applying to the mutual relations among the participating States, it can be inferred that the text
testifies to the existence, and the acceptance by the United States, of a customary principle which
has universal application.
205. Notwithstanding the multiplicity of declarations by States accepting the principle of non-
intervention, there remain two questions: first, what is the exact content of the principle so
accepted, and secondly, is the practice sufficiently in conformity with it for this to be a rule of
customary international law? As regards the first problem - that of the content of the principle of
non-intervention - the Court will define only those aspects of the principle which appear to be
relevant to the resolution of the dispute. In this respect it notes that, in view of the generally
accepted formulations, the principle forbids all States or groups of States to intervene directly or
indirectly in internal or external affairs of other States. A prohibited intervention must
accordingly be one bearing on matters in which each State is permitted, by the principle of State
sovereignty, to decide freely. One of these is the choice of a political, economic, social and
cultural system, and the formulation of foreign policy. Intervention is wrongful when it uses
methods of coercion in regard to such choices, which must remain free ones. The element of
coercion, which defines, and indeed forms the very essence of, prohibited intervention, is
particularly obvious in the case of an intervention which uses force, either in the direct form of
military action, or in the indirect form of support for subversive or terrorist armed activities
within another State. As noted above (paragraph 191), General Assembly resolution 2625 (XXV)
equates assistance of this kind with the use of force by the assisting State when the acts
committed in another State 'involve a threat or use of force'. These forms of action are therefore
wrongful in the light of both the principle of non-use of force, and that of non-intervention. In
view of the nature of Nicaragua's complaints against the United States, and those expressed by
the United States in regard to Nicaragua's conduct towards El Salvador, it is primarily acts of
intervention of this kind with which the Court is concerned in the present case.

206. However, before reaching a conclusion on the nature of prohibited intervention, the Court
must be satisfied that State practice justifies it.

There have been in recent years a number of instances of foreign intervention for the benefit of
forces opposed to the government of another State. The Court is not here concerned with the
process of decolonization; this question is not in issue in the present case. It has to consider
whether there might be indications of a practice illustrative of belief in a kind of general right for
States to intervene, directly or indirectly, with or without armed force, in support of an internal
opposition in another State, whose cause appeared particularly worthy by reason of the political
and moral values with which it was identified. For such a general right to come into existence
would involve a fundamental modification of the customary law principle of non-intervention.

207. In considering the instances of the conduct above described, the Court has to emphasize
that, as was observed in the North Sea Continental Shelf cases, for a new customary rule to be
formed, not only must the acts concerned 'amount to a settled practice', but they must be
accompanied by the opinio juris sive necessitatis. Either the States taking such action or other
States in a position to react to it, must have behaved so that their conduct is 'evidence of a belief
that this practice is rendered obligatory by the existence of a rule of law requiring it. The need
for such a belief, i.e., the existence of a subjective element, is implicit in the very notion of the
opinio juris sive necessitatis.' (I.C.J. Reports 1969, p. 44, para. 77.)

The Court has no jurisdiction to rule upon the conformity with international law of any conduct
of States not parties to the present dispute, or of conduct of the Parties unconnected with the
dispute; nor has it authority to ascribe to States legal views which they do not themselves
advance. The significance for the Court of cases of State conduct prima facie inconsistent with
the principle of non-intervention lies in the nature of the ground offered as justification. Reliance
by a State on a novel right or an unprecedented exception to the principle might, if shared in
principle by other States, tend towards a modification of customary international law. In fact
however the Court finds that States have not justified their conduct by reference to a new right of
intervention or a new exception to the principle of its prohibition. The United States authorities
have on some occasions clearly stated their grounds for intervening in the affairs of a foreign
State for reasons connected with, for example, the domestic policies of that country, its ideology,
the level of its armaments, or the direction of its foreign policy. But these were statements of
international policy, and not an assertion of rules of existing international law.

208. In particular, as regards the conduct towards Nicaragua which is the subject of the present
case, the United States has not claimed that its intervention, which it justified in this way on the
political level, was also justified on the legal level, alleging the exercise of a new right of
intervention regarded by the United States as existing in such circumstances.

As mentioned above, the United States has, on the legal plane, justified its intervention expressly
and solely by reference to the 'classic' rules involved, namely, collective self-defence against an
armed attack. Nicaragua, for its part, has often expressed its solidarity and sympathy with the
opposition in various States, especially in El Salvador. But Nicaragua too has not argued that this
was a legal basis for an intervention, let alone an intervention involving the use of force.

209. The Court therefore finds that no such general right of intervention, in support of an
opposition within another State, exists in contemporary international law. The Court concludes
that acts constituting a breach of the customary principle of non-intervention will also, if they
directly or indirectly involve the use of force, constitute a breach of the principle of non-use of
force in international relations.

210. When dealing with the rule of the prohibition of the use of force, the Court considered the
exception to it constituted by the exercise of the right of collective self-defence in the event of
armed attack. Similarly, it must now consider the following question: if one State acts towards
another State in breach of the principle of non-intervention, may a third State lawfully take such
action by way of counter-measures against the first State as would otherwise constitute an
intervention in its internal affairs? A right to act in this way in the case of intervention would be
analogous to the right of collective self-defence in the case of an armed attack, but both the act
which gives rise to the reaction, and that reaction itself, would in principle be less grave. Since
the Court is here dealing with a dispute in which a wrongful use of force is alleged, it has
primarily to consider whether a State has a right to respond to intervention with intervention
going so far as to justify a use of force in reaction to measures which do not constitute an armed
attack but may nevertheless involve a use of force. The question is itself undeniably relevant
from the theoretical viewpoint. However, since the Court is bound to confine its decision to those
points of law which are essential to the settlement of the dispute before it, it is not for the Court
here to determine what direct reactions are lawfully open to a State which considers itself the
victim of another State's acts of intervention, possibly involving the use of force. Hence it has
not to determine whether, in the event of Nicaragua's having committed any such acts against El
Salvador, the latter was lawfully entitled to take any particular counter-measure. It might
however be suggested that, in such a situation, the United States might have been permitted to
intervene in Nicaragua in the exercise of some right analogous to the right of collective self-
defence, one which might be resorted to in a case of intervention short of armed attack.

211. The Court has recalled above (paragraphs 193 to 195) that for one State to use force against
another, on the ground that that State has committed a wrongful act of force against a third State,
is regarded as lawful, by way of exception, only when the wrongful act provoking the response
was an armed attack. Thus the lawfulness of the use of force by a State in response to a wrongful
act of which it has not itself been the victim is not admitted when this wrongful act is not an
armed attack. In the view of the Court, under international law in force today - whether
customary international law or that of the United Nations system - States do not have a right of
'collective' armed response to acts which do not constitute an 'armed attack'. Furthermore, the
Court has to recall that the United States itself is relying on the 'inherent right of self-defence'
(paragraph 126 above), but apparently does not claim that any such right exists as would, in
respect of intervention, operate in the same way as the right of collective self-defence in respect
of an armed attack. In the discharge of its duty under Article 53 of the Statute, the Court has
nevertheless had to consider whether such a right might exist; but in doing so it may take note of
the absence of any such claim by the United States as an indication of opinio juris.

212. The Court should now mention the principle of respect for State sovereignty, which in
international law is of course closely linked with the principles of the prohibition of the use of
force and of non-intervention. The basic legal concept of State sovereignty in customary
international law, expressed in, inter alia, Article 2, paragraph 1, of the United Nations Charter,
extends to the internal waters and territorial sea of every State and to the air space above its
territory. As to superjacent air space, the 1944 Chicago Convention on Civil Aviation (Art. 1)
reproduces the established principle of the complete and exclusive sovereignty of a State over the
air space above its territory. That convention, in conjunction with the 1958 Geneva Convention
on the Territorial Sea, further specifies that the sovereignty of the coastal State extends to the
territorial sea and to the air space above it, as does the United Nations Convention on the Law of
the Sea adopted on 10 December 1982. The Court has no doubt that these prescriptions of treaty-
law merely respond to firmly established and longstanding tenets of customary international law.

213. The duty of every State to respect the territorial sovereignty of others is to be considered for
the appraisal to be made of the facts relating to the mining which occurred along Nicaragua's
coasts. The legal rules in the light of which these acts of mining should be judged depend upon
where they took place. The laying of mines within the ports of another State is governed by the
law relating to internal waters, which are subject to the sovereignty of the coastal State. The
position is similar as regards mines placed in the territorial sea. It is therefore the sovereignty of
the coastal State which is affected in such cases. It is also by virtue of its sovereignty that the
coastal State may regulate access to its ports.

214. On the other hand, it is true that in order to enjoy access to ports, foreign vessels possess a
customary right of innocent passage in territorial waters for the purposes of entering or leaving
internal waters; Article 18, paragraph 1 (b), of the United Nations Convention on the Law of the
Sea of 10 December 1982, does no more than codify customary international law on this point.
Since freedom of navigation is guaranteed, first in the exclusive economic zones which may
exist beyond territorial waters (Art. 58 of the Convention), and secondly, beyond territorial
waters and on the high seas (Art. 87), it follows that any State which enjoys a right of access to
ports for its ships also enjoys all the freedom necessary for maritime navigation. It may therefore
be said that, if this right of access to the port is hindered by the laying of mines by another State,
what is infringed is the freedom of communications and of maritime commerce. At all events, it
is certain that interference with navigation in these areas prejudices both the sovereignty of the
coastal State over its internal waters, and the right of free access enjoyed by foreign ships.

215. The Court has noted above (paragraph 77 in fine) that the United States did not issue any
warning or notification of the presence of the mines which had been laid in or near the ports of
Nicaragua. Yet even in time of war, the Convention relative to the laying of automatic submarine
contact mines of 18 October 1907 (the Hague Convention No. VIII) provides that 'every possible
precaution must be taken for the security of peaceful shipping' and belligerents are bound

'to notify the danger zones as soon as military exigencies permit, by a notice addressed to ship
owners, which must also be communicated to the Governments through the diplomatic channel'
(Art. 3). Neutral Powers which lay mines off their own coasts must issue a similar notification, in
advance (Art. 4). It has already been made clear above that in peacetime for one State to lay
mines in the internal or territorial waters of another is an unlawful act; but in addition, if a State
lays mines in any waters whatever in which the vessels of another State have rights of access or
passage, and fails to give any warning or notification whatsoever, in disregard of the security of
peaceful shipping, it commits a breach of the principles of humanitarian law underlying the
specific provisions of Convention No. VIII of 1907. Those principles were expressed by the
Court in the Corfu Channel case as follows:

'certain general and well recognized principles, namely: elementary considerations of humanity,
even more exacting in peace than in war' (I.C.J. Reports 1949, p. 22).

216. This last consideration leads the Court on to examination of the international humanitarian
law applicable to the dispute. Clearly, use of force may in some circumstances raise questions of
such law. Nicaragua has in the present proceedings not expressly invoked the provisions of
international humanitarian law as such, even though, as noted above (paragraph 113), it has
complained of acts committed on its territory which would appear to be breaches of the
provisions of such law. In the submissions in its Application it has expressly charged

'That the United States, in breach of its obligation under general and customary international law,
has killed, wounded and kidnapped and is killing, wounding and kidnapping citizens of
Nicaragua.' (Application, 26 (f).)

The Court has already indicated (paragraph 115) that the evidence available is insufficient for the
purpose of attributing to the United States the acts committed by the contras in the course of their
military or paramilitary operations in Nicaragua; accordingly, this submission has to be rejected.
The question however remains of the law applicable to the acts of the United States in relation to
the activities of the contras, in particular the production and dissemination of the manual on
psychological operations described in paragraphs 117 to 122 above; as already explained
(paragraph 116), this is a different question from that of the violations of humanitarian law of
which the contras may or may not have been guilty.

217. The Court observes that Nicaragua, which has invoked a number of multilateral treaties, has
refrained from making reference to the four Geneva Conventions of 12 August 1949, to which
both Nicaragua and the United States are parties. Thus at the time when the Court was seised of
the dispute, that dispute could be considered not to 'arise', to use the wording of the United States
multilateral treaty reservation, under any of these Geneva Conventions. The Court did not
therefore have to consider whether that reservation might be a bar to the Court treating the
relevant provisions of these Conventions as applicable. However, if the Court were on its own
initiative to find it appropriate to apply these Conventions, as such, for the settlement of the
dispute, it could be argued that the Court would be treating it as a dispute arising' under them; on
that basis, it would have to consider whether any State party to those Conventions would be
'affected' by the decision, for the purposes of the United States multilateral treaty reservation.

218. The Court however sees no need to take a position on that matter, since in its view the
conduct of the United States may be judged according to the fundamental general principles of
humanitarian law; in its view, the Geneva Conventions are in some respects a development, and
in other respects no more than the expression, of such principles. It is significant in this respect
that, according to the terms of the Conventions, the denunciation of one of them

'shall in no way impair the obligations which the Parties to the conflict shall remain bound to
fulfil by virtue of the principles of the law of nations, as they result from the usages established
among civilized peoples, from the laws of humanity and the dictates of the public conscience'
(Convention I, Art. 63; Convention II, Art. 62; Convention III, Art. 142; Convention IV, Art.
158).

Article 3 which is common to all four Geneva Conventions of 12 August 1949 defines certain
rules to be applied in the armed conflicts of a non- international character. There is no doubt that,
in the event of international armed conflicts, these rules also constitute a minimum yardstick, in
addition to the more elaborate rules which are also to apply to international conflicts; and they
are rules which, in the Court's opinion, reflect what the Court in 1949 called 'elementary
considerations of humanity' (Corfu Channel, Merits, I.C.J. Reports 1949, p. 22; paragraph 215
above). The Court may therefore find them applicable to the present dispute, and is thus not
required to decide what role the United States multilateral treaty reservation might otherwise
play in regard to the treaties in question.

219. The conflict between the contras' forces and those of the Government of Nicaragua is an
armed conflict which is 'not of an international character'. The acts of the contras towards the
Nicaraguan Government are therefore governed by the law applicable to conflicts of that
character; whereas the actions of the United States in and against Nicaragua fall under the legal
rules relating to international conflicts. Because the minimum rules applicable to international
and to non-international conflicts are identical, there is no need to address the question whether
those actions must be looked at in the context of the rules which operate for the one or for the
other category of conflict. The relevant principles are to be looked for in the provisions of Article
3 of each of the four Conventions of 12 August 1949, the text of which, identical in each
Convention, expressly refers to conflicts not having an international character.

220. The Court considers that there is an obligation on the United States Government, in the
terms of Article 1 of the Geneva Conventions, to 'respect' the Conventions and even 'to ensure
respect' for them 'in all circumstances', since such an obligation does not derive only from the
Conventions themselves, but from the general principles of humanitarian law to which the
Conventions merely give specific expression. The United States is thus under an obligation not
to encourage persons or groups engaged in the conflict in Nicaragua to act in violation of the
provisions of Article 3 common to the four 1949 Geneva Conventions, which reads as follows:

'In the case of armed conflict not of an international character occurring in the territory of one of
the High Contracting Parties, each Party to the conflict shall be bound to apply, as a minimum,
the following provisions:

(1) Persons taking no active part in the hostilities, including members of armed forces who have
laid down their arms and those placed hors de combat by sickness, wounds, detention, or any
other cause, shall in all circumstances be treated humanely, without any *115

adverse distinction founded on race, colour, religion or faith, sex, birth or wealth, or any other
similar criteria.

To this end, the following acts are and shall remain prohibited at any time and in any place
whatsoever with respect to the above-mentioned persons:

(a) violence to life and person, in particular murder of all kinds, mutilation, cruel treatment and
torture;

(b) taking of hostages;

(c) outrages upon personal dignity, in particular, humiliating and degrading treatment;

(d) the passing of sentences and the carrying out of executions without previous judgment
pronounced by a regularly constituted court affording all the judicial guarantees which are
recognized as indispensable by civilized peoples.

(2) the wounded and sick shall be collected and cared for . . .

The Parties to the conflict should further endeavour to bring into force, by means of special
agreements, all or part of the other provisions of the present Convention . . .'

221. In its Judgment of 26 November 1984, the Court concluded that, in so far as the claims
presented in Nicaragua's Application revealed the existence of a dispute as to the interpretation
or application of the Articles of the 1956 Treaty of Friendship, Commerce and Navigation
between the Parties mentioned in paragraph 82 of that Judgment (that is, Arts. XIX, XIV, XVII,
XX, I), it had jurisdiction to deal with them under Article XXIV, paragraph 2, of that treaty.
Having thus established its jurisdiction to entertain the dispute between the Parties in respect of
the interpretation and application of the Treaty in question, the Court must determine the
meaning of the various provisions which are relevant for its judgment. In this connection, the
Court has in particular to ascertain the scope of Article XXI, paragraphs 1 (c) and 1 (d), of the
Treaty. According to that clause

'the present Treaty shall not preclude the application of measures:

...........................

(c) regulating the production of or traffic in arms, ammunition and implements of war, or traffic
in other materials carried on directly or indirectly for the purpose of supplying a military
establishment;

(d) necessary to fulfill the obligations of a Party for the maintenance or restoration of
international peace and security, or necessary to protect its essential security interests'.

In the Spanish text of the Treaty (equally authentic with the English text) the last phrase is
rendered as 'sus intereses esenciales y seguridad'.

222. This article cannot be interpreted as removing the present dispute as to the scope of the
Treaty from the Court's jurisdiction. Being itself an article of the treaty, it is covered by the
provision in Article XXIV that any dispute about the 'interpretation or application' of the Treaty
lies within the Court's jurisdiction. Article XXI defines the instances in which the Treaty itself
provides for exceptions to the generality of its other provisions, but it by no means removes the
interpretation and application of that article from the jurisdiction of the Court as contemplated in
Article XXIV. That the Court has jurisdiction to determine whether measures taken by one of the
Parties fall within such an exception, is also clear a contrario from the fact that the text of Article
XXI of the Treaty does not employ the wording which was already to be found in Article XXI of
the General Agreement on Tariffs and Trade. This provision of GATT, contemplating exceptions
to the normal implementation of the General Agreement, stipulates that the Agreement is not to
be construed to prevent any contracting party from taking any action which it 'considers
necessary for the protection of its essential security interests', in such fields as nuclear fission,
arms, etc. The 1956 Treaty, on the contrary, speaks simply of 'necessary' measures, not of those
considered by a party to be such.

223. The Court will therefore determine the substantial nature of the two categories of measures
contemplated by this Article and which are not barred by the Treaty. No comment is required at
this stage on subparagraph 1 (c) of Article XXI. As to subparagraph 1 (d), clearly 'measures ...
necessary to fulfill the obligations of a Party for the maintenance or restoration of international
peace and security' must signify measures which the State in question must take in performance
of an international commitment of which any evasion constitutes a breach. A commitment of this
kind is accepted by Members of the United Nations in respect of Security Council decisions
taken on the basis of Chapter VII of the United Nations Charter (Art. 25), or, for members of the
Organization of American States, in respect of decisions taken by the Organ of Consultation of
the Inter-American system, under Articles 3 and 20 of the Inter-American Treaty of Reciprocal
Assistance (Rio de Janeiro, 1947). The Court does not believe that this provision of the 1956
Treaty can apply to the eventuality of the exercise of the right of individual or collective self-
defence.

224. On the other hand, action taken in self-defence, individual or collective, might be
considered as part of the wider category of measures qualified in Article XXI as 'necessary to
protect' the 'essential security interests' of a party. In its Counter-Memorial on jurisdiction and
admissibility, the United States contended that: 'Any possible doubts as to the applicability of the
FCN Treaty to Nicaragua's claims is dispelled by Article XXI of the Treaty ...' After quoting
paragraph 1 (d) (set out in paragraph 221 above), the Counter-Memorial continues:

'Article XXI has been described by the Senate Foreign Relations Committee as containing 'the
usual exceptions relating ... to traffic in arms, ammunition and implements of war and to
measures for collective or individual self- defense'.'

It is difficult to deny that self-defence against an armed attack corresponds to measures necessary
to protect essential security interests. But the concept of essential security interests certainly
extends beyond the concept of an armed attack, and has been subject to very broad
interpretations in the past. The Court has therefore to assess whether the risk run by these
'essential security interests' is reasonable, and secondly, whether the measures presented as being
designed to protect these interests are not merely useful but necessary'.

225. Since Article XXI of the 1956 Treaty contains a power for each of the parties to derogate
from the other provisions of the Treaty, the possibility of invoking the clauses of that Article
must be considered once it is apparent that certain forms of conduct by the United States would
otherwise be in conflict with the relevant provisions of the Treaty. The appraisal of the conduct
of the United States in the light of these relevant provisions of the Treaty pertains to the
application of the law rather than to its interpretation, and the Court will therefore undertake this
in the context of its general evaluation of the facts established in relation to the applicable law.

226. The Court, having outlined both the facts of the case as proved by the evidence before it,
and the general rules of international law which appear to it to be in issue as a result of these
facts, and the applicable treaty-law, has now to appraise the facts in relation to the legal rules
applicable. In so far as acts of the Respondent may appear to constitute violations of the relevant
rules of law, the Court will then have to determine whether there are present any circumstances
excluding unlawfulness, or whether such acts may be justified upon any other ground.

227. The Court will first appraise the facts in the light of the principle of the non-use of force,
examined in paragraphs 187 to 200 above. What is unlawful, in accordance with that principle, is
recourse to either the threat or the use of force against the territorial integrity or political
independence of any State. For the most part, the complaints by Nicaragua are of the actual use
of force against it by the United States. Of the acts which the Court has found imputable to the
Government of the United States, the following are relevant in this respect:

- the laying of mines in Nicaraguan internal or territorial waters in early 1984 (paragraph 80
above);
- certain attacks on Nicaraguan ports, oil installations and a naval base (paragraphs 81 and 86
above).

These activities constitute infringements of the principle of the prohibition of the use of force,
defined earlier, unless they are justified by circumstances which exclude their unlawfulness, a
question now to be examined. The Court has also found (paragraph 92) the existence of military
manoeuvres held by the United States near the Nicaraguan borders; and Nicaragua has made
some suggestion that this constituted a 'threat of force', which is equally forbidden by the
principle of non-use of force. The Court is however not satisfied that the manoeuvres complained
of, in the circumstances in which they were held, constituted on the part of the United States a
breach, as against Nicaragua, of the principle forbidding recourse to the threat or use of force.

228. Nicaragua has also claimed that the United States has violated Article 2, paragraph 4, of the
Charter, and has used force against Nicaragua in breach of its obligation under customary
international law in as much as it has engaged in 'recruiting, training, arming, equipping,
financing, supplying and otherwise encouraging, supporting, aiding, and directing military and
paramilitary actions in and against Nicaragua' (Application, para. 26 (a) and (c)).

So far as the claim concerns breach of the Charter, it is excluded from the Court's jurisdiction by
the multilateral treaty reservation. As to the claim that United States activities in relation to the
contras constitute a breach of the customary international law principle of the non-use of force,
the Court finds that, subject to the question whether the action of the United States might be
justified as an exercise of the right of self-defence, the United States has committed a prima facie
violation of that principle by its assistance to the contras in Nicaragua, by 'organizing or
encouraging the organization of irregular forces or armed bands ... for incursion into the territory
of another State', and 'participating in acts of civil strife ... in another State', in the terms of
General Assembly resolution 2625 (XXV). According to that resolution, participation of this
kind is contrary to the principle of the prohibition of the use of force when the acts of civil strife
referred to 'involve a threat or use of force'. In the view of the Court, while the arming and
training of the contras can certainly be said to involve the threat or use of force against
Nicaragua, this is not necessarily so in respect of all the assistance given by the United States
Government. In particular, the Court considers that the mere supply of funds to the contras, while
undoubtedly an act of intervention in the internal affairs of Nicaragua, as will be explained
below, does not in itself amount to a use of force.

229. The Court must thus consider whether, as the Respondent claims, the acts in question of the
United States are justified by the exercise of its right of collective self-defence against an armed
attack. The Court must therefore establish whether the circumstances required for the exercise of
this right of self-defence are present and, if so, whether the steps taken by the United States
actually correspond to the requirements of international law. For the Court to conclude that the
United States was lawfully exercising its right of collective self-defence, it must first find that
Nicaragua engaged in an armed attack against El Salvador, Honduras or Costa Rica.

230. As regards El Salvador, the Court has found (paragraph 160 above) that it is satisfied that
between July 1979 and the early months of 1981, an intermittent flow of arms was routed via the
territory of Nicaragua to the armed opposition in that country. The Court was not however
satisfied that assistance has reached the Salvadorian armed opposition, on a scale of any
significance, since the early months of 1981, or that the Government of Nicaragua was
responsible for any flow of arms at either period. Even assuming that the supply of arms to the
opposition in El Salvador could be treated as imputable to the Government of Nicaragua, to
justify invocation of the right of collective self-defence in customary international law, it would
have to be equated with an armed attack by Nicaragua on El Salvador. As stated above, the Court
is unable to consider that, in customary international law, the provision of arms to the opposition
in another State constitutes an armed attack on that State. Even at a time when the arms flow was
at its peak, and again assuming the participation of the Nicaraguan Government, that would not
constitute such armed attack.

231. Turning to Honduras and Costa Rica, the Court has also stated (paragraph 164 above) that it
should find established that certain transborder incursions into the territory of those two States,
in 1982, 1983 and 1984, were imputable to the Government of Nicaragua. Very little information
is however available to the Court as to the circumstances of these incursions or their possible
motivations, which renders it difficult to decide whether they may be treated for legal purposes
as amounting, singly or collectively, to an 'armed attack' by Nicaragua on either or both States.
The Court notes that during the Security Council debate in March/April 1984, the representative
of Costa Rica made no accusation of an armed attack, emphasizing merely his country's
neutrality and support for the Contadora process (S/PV.2529, pp. 13-23); the representative of
Honduras however stated that

'my country is the object of aggression made manifest through a number of incidents by
Nicaragua against our territorial integrity and civilian population' (ibid., p. 37).

There are however other considerations which justify the Court in finding that neither these
incursions, nor the alleged supply of arms to the opposition in El Salvador, may be relied on as
justifying the exercise of the right of collective self-defence.

232. The exercise of the right of collective self-defence presupposes that an armed attack has
occurred; and it is evident that it is the victim State, being the most directly aware of that fact,
which is likely to draw general attention to its plight. It is also evident that if the victim State
wishes another State to come to its help in the exercise of the right of collective self-defence, it
will normally make an express request to that effect. Thus in the present instance, the Court is
entitled to take account, in judging the asserted justification of the exercise of collective self-
defence by the United States, of the actual conduct of El Salvador, Honduras and Costa Rica at
the relevant time, as indicative of a belief by the State in question that it was the victim of an
armed attack by Nicaragua, and of the making of a request by the victim State to the United
States for help in the exercise of collective self-defence.

233. The Court has seen no evidence that the conduct of those States was consistent with such a
situation, either at the time when the United States first embarked on the activities which were
allegedly justified by self- defence, or indeed for a long period subsequently. So far as El
Salvador is concerned, it appears to the Court that while El Salvador did in fact officially declare
itself the victim of an armed attack, and did ask for the United States to exercise its right of
collective self-defence, this occurred only on a date much later than the commencement of the
United States activities which were allegedly justified by this request. The Court notes that on 3
April 1984, the representative of El Salvador before the United Nations Security Council, while
complaining of the 'open foreign intervention practised by Nicaragua in our internal affairs'
(S/PV.2528, p. 58), refrained from stating that El Salvador had been subjected to armed attack,
and made no mention of the right of collective self-defence which it had supposedly asked the
United States to exercise. Nor was this mentioned when El Salvador addressed a letter to the
Court in April 1984, in connection with Nicaragua's complaint against the United States. It was
only in its Declaration of Intervention filed on 15 August 1984, that El Salvador referred to
requests addressed at various dates to the United States for the latter to exercise its right of
collective self-defence (para. XII), asserting on this occasion that it had been the victim of
aggression from Nicaragua 'since at least 1980'. In that Declaration, El Salvador affirmed that
initially it had 'not wanted to present any accusation or allegation [against Nicaragua] to any of
the jurisdictions to which we have a right to apply', since it sought 'a solution of understanding
and mutual respect' (para. III).

234. As to Honduras and Costa Rica, they also were prompted by the institution of proceedings
in this case to address communications to the Court; in neither of these is there mention of armed
attack or collective self-defence. As has already been noted (paragraph 231 above), Honduras in
the Security Council in 1984 asserted that Nicaragua had engaged in aggression against it, but
did not mention that a request had consequently been made to the United States for assistance by
way of collective self-defence. On the contrary, the representative of Honduras emphasized that
the matter before the Security Council 'is a Central American problem, without exception, and it
must be solved regionally' (S/PV.2529, p. 38), i.e., through the Contadora process. The
representative of Costa Rica also made no reference to collective self-defence. Nor, it may be
noted, did the representative of the United States assert during that debate that it had acted in
response to requests for assistance in that context.

235. There is also an aspect of the conduct of the United States which the Court is entitled to take
into account as indicative of the view of that State on the question of the existence of an armed
attack. At no time, up to the present, has the United States Government addressed to the Security
Council, in connection with the matters the subject of the present case, the report which is
required by Article 51 of the United Nations Charter in respect of measures which a State
believes itself bound to take when it exercises the right of individual or collective self-defence.
The Court, whose decision has to be made on the basis of customary international law, has
already observed that in the context of that law, the reporting obligation enshrined in Article 51
of the Charter of the United Nations does not exist. It does not therefore treat the absence of a
report on the part of the United States as the breach of an undertaking forming part of the
customary international law applicable to the present dispute. But the Court is justified in
observing that this conduct of the United States hardly conforms with the latter's avowed
conviction that it was acting in the context of collective self-defence as consecrated by Article 51
of the Charter.This fact is all the more noteworthy because, in the Security Council, the United
States has itself taken the view that failure to observe the requirement to make a report
contradicted a State's claim to be acting on the basis of collective self-defence (S/PV.2187).

236. Similarly, while no strict legal conclusion may be drawn from the date of El Salvador's
announcement that it was the victim of an armed attack, and the date of its official request
addressed to the United States concerning the exercise of collective self-defence, those dates
have a significance as evidence of El Salvador's view of the situation. The declaration and the
request of El Salvador, made publicly for the first time in August 1984, do not support the
contention that in 1981 there was an armed attack capable of serving as a legal foundation for
United States activities which began in the second half of that year. The states concerned did not
behave as though there were an armed attack at the time when the activities attributed by the
United States to Nicaragua, without actually constituting such an attack, were nevertheless the
most accentuated; they did so behave only at a time when these facts fell furthest short of what
would be required for the Court to take the view that an armed attack existed on the part of
Nicaragua against El Salvador.

237. Since the Court has found that the condition sine qua non required for the exercise of the
right of collective self-defence by the United States is not fulfilled in this case, the appraisal of
the United States activities in relation to the criteria of necessity and proportionality takes on a
different significance. As a result of this conclusion of the Court, even if the United States
activities in question had been carried on in strict compliance with the canons of necessity and
proportionality, they would not thereby become lawful. If however they were not, this may
constitute an additional ground of wrongfulness. On the question of necessity, the Court observes
that the United States measures taken in December 1981 (or, at the earliest, March of that year -
paragraph 93 above) cannot be said to correspond to a 'necessity' justifying the United States
action against Nicaragua on the basis of assistance given by Nicaragua to the armed opposition
in El Salvador. First, these measures were only taken, and began to produce their effects, several
months after the major offensive of the armed opposition against the Government of El Salvador
had been completely repulsed (January 1981), and the actions of the opposition considerably
reduced in consequence. Thus it was possible to eliminate the main danger to the Salvadorian
Government without the United States embarking on activities in and against Nicaragua.
Accordingly, it cannot be held that these activities were undertaken in the light of necessity.
Whether or not the assistance to the contras might meet the criterion of proportionality, the Court
cannot regard the United States activities summarized in paragraphs 80, 81 and 86, i.e., those
relating to the mining of the Nicaraguan ports and the attacks on ports, oil installations, etc., as
satisfying that criterion. Whatever uncertainty may exist as to the exact scale of the aid received
by the Salvadorian armed opposition from Nicaragua, it is clear that these latter United States
activities in question could not have been proportionate to that aid. Finally on this point, the
Court must also observe that the reaction of the United States in the context of what it regarded
as self-defence was continued long after the period in which any presumed armed attack by
Nicaragua could reasonably be contemplated.

238. Accordingly, the Court concludes that the plea of collective self-defence against an alleged
armed attack on El Salvador, Honduras or Costa Rica, advanced by the United States to justify
its conduct toward Nicaragua, cannot be upheld; and accordingly that the United States has
violated the principle prohibiting recourse to the threat or use of force by the acts listed in
paragraph 227 above, and by its assistance to the contras to the extent that this assistance
'involve[s] a threat or use of force' (paragraph 228 above).
239. The Court comes now to the application in this case of the principle of non-intervention in
the internal affairs of States. It is argued by Nicaragua that the 'military and paramilitary
activities aimed at the government and people of Nicaragua' have two purposes:

(a) The actual overthrow of the existing lawful government of Nicaragua and its replacement by
a government acceptable to the United States; and

(b) The substantial damaging of the economy, and the weakening of the political system, in order
to coerce the government of Nicaragua into the acceptance of United States policies and political
demands.'

Nicaragua also contends that the various acts of an economic nature, summarized in paragraphs
123 to 125 above, constitute a form of 'indirect' intervention in Nicaragua's internal affairs.

240. Nicaragua has laid much emphasis on the intentions it attributes to the Government of the
United States in giving aid and support to the contras. It contends that the purpose of the policy
of the United States and its actions against Nicaragua in pursuance of this policy was, from the
beginning, to overthrow the Government of Nicaragua. In order to demonstrate this, it has drawn
attention to numerous statements by high officials of the United States Government, in particular
by President Reagan, expressing solidarity and support for the contras, described on occasion as
'freedom fighters', and indicating that support for the contras would continue until the
Nicaraguan Government took certain action, desired by the United States Government,
amounting in effect to a surrender to the demands of the latter Government. The official Report
of the President of the United States to Congress of 10 April 1985, quoted in paragraph 96
above, states that: 'We have not sought to overthrow the Nicaraguan Government nor to force on
Nicaragua a specific system of government.' But it indicates also quite openly that 'United States
policy toward Nicaragua' - which includes the support for the military and paramilitary activities
of the contras which it was the purpose of the Report to continue - 'has consistently sought to
achieve changes in Nicaraguan government policy and behavior'.

241. The Court however does not consider it necessary to seek to establish whether the intention
of the United States to secure a change of governmental policies in Nicaragua went so far as to
be equated with an endeavour to overthrow the Nicaraguan Government. It appears to the Court
to be clearly established first, that the United States intended, by its support of the contras, to
coerce the Government of Nicaragua in respect of matters in which each State is permitted, by
the principle of State sovereignty, to decide freely (see paragraph 205 above); and secondly that
the intention of the contras themselves was to overthrow the present Government of Nicaragua.
The 1983 Report of the Intelligence Committee refers to the contras' 'openly acknowledged goal
of overthrowing the Sandinistas'. Even if it be accepted, for the sake of argument, that the
objective of the United States in assisting the contras was solely to interdict the supply of arms to
the armed opposition in El Salvador, it strains belief to suppose that a body formed in armed
opposition to the Government of Nicaragua, and calling itself the 'Nicaraguan Democratic Force',
intended only to check Nicaraguan interference in El Salvador and did not intend to achieve
violent change of government in Nicaragua. The Court considers that in international law, if one
State, with a view to the coercion of another State, supports and assists armed bands in that State
whose purpose is to overthrow the government of that State, that amounts to an intervention by
the one State in the internal affairs of the other, whether or not the political objective of the State
giving such support and assistance is equally far reaching. It is for this reason that the Court has
only examined the intentions of the United States Government so far as they bear on the question
of self-defence.

242. The Court therefore finds that the support given by the United States, up to the end of
September 1984, to the military and paramilitary activities of the contras in Nicaragua, by
financial support, training, supply of weapons, intelligence and logistic support, constitutes a
clear breach of the principle of non-intervention. The Court has however taken note that, with
effect from the beginning of the United States governmental financial year 1985, namely 1
October 1984, the United States Congress has restricted the use of the funds appropriated for
assistance to the contras to 'humanitarian assistance' (paragraph 97 above). There can be no
doubt that the provision of strictly humanitarian aid to persons or forces in another country,
whatever their political affiliations or objectives, cannot be regarded as unlawful intervention, or
as in any other way contrary to international law. The characteristics of such aid were indicated
in the first and second of the fundamental principles declared by the Twentieth International
Conference of the Red Cross, that

'The Red Cross, born of a desire to bring assistance without discrimination to the wounded on the
battlefield, endeavours - in its international and national capacity - to prevent and alleviate
human suffering wherever it may be found. Its purpose is to protect life and health and to ensure
respect for the human being. It promotes mutual understanding, friendship, co- operation and
lasting peace amongst all peoples' and that

'It makes no discrimination as to nationality, race, religious beliefs, class or political opinions. It
endeavours only to relieve suffering, giving priority to the most urgent cases of distress.'

243. The United States legislation which limited aid to the contras to humanitarian assistance
however also defined what was meant by such assistance, namely:

'the provision of food, clothing, medicine, and other humanitarian assistance, and it does not
include the provision of weapons, weapons systems, ammunition, or other equipment, vehicles,
or material which can be used to inflict serious bodily harm or death' (paragraph 97 above).

It is also to be noted that, while the United States Congress has directed that the CIA and
Department of Defense are not to administer any of the funds voted, it was understood that
intelligence information might be 'shared' with the contras. Since the Court has no information as
to the interpretation in fact given to the Congress decision, or as to whether intelligence
information is in fact still being supplied to the contras, it will limit itself to a declaration as to
how the law applies in this respect. An essential feature of truly humanitarian aid is that it is
given 'without discrimination' of any kind. In the view of the Court, if the provision of
'humanitarian assistance' is to escape condemnation as an intervention in the internal affairs of
Nicaragua, not only must it be limited to the purposes hallowed in the practice of the Red Cross,
namely 'to prevent and alleviate human suffering', and 'to protect life and health and to ensure
respect for the human being'; it must also, and above all, be given without discrimination to all in
need in Nicaragua, not merely to the contras and their dependents.
244. As already noted, Nicaragua has also asserted that the United States is responsible for an
'indirect' form of intervention in its internal affairs inasmuch as it has taken, to Nicaragua's
disadvantage, certain action of an economic nature. The Court's attention has been drawn in
particular to the cessation of economic aid in April 1981; the 90 per cent reduction in the sugar
quota for United States imports from Nicaragua in April 1981; and the trade embargo adopted on
1 May 1985. While admitting in principle that some of these actions were not unlawful in
themselves, counsel for Nicaragua argued that these measures of economic constraint add up to a
systematic violation of the principle of non-intervention.

245. The Court does not here have to concern itself with possible breaches of such international
economic instruments as the General Agreement on Tariffs and Trade, referred to in passing by
counsel for Nicaragua; any such breaches would appear to fall outside the Court's jurisdiction,
particularly in view of the effect of the multilateral treaty reservation, nor has Nicaragua seised
the Court of any complaint of such breaches. The question of the compatibility of the actions
complained of with the 1956 Treaty of Friendship, Commerce and Navigation will be examined
below, in the context of the Court's examination of the provisions of that Treaty. At this point,
the Court has merely to say that it is unable to regard such action on the economic plane as is
here complained of as a breach of the customary-law principle of non-intervention.

246. Having concluded that the activities of the United States in relation to the activities of the
contras in Nicaragua constitute prima facie acts of intervention, the Court must next consider
whether they may nevertheless be justified on some legal ground. As the Court has stated, the
principle of non- intervention derives from customary international law. It would certainly lose
its effectiveness as a principle of law if intervention were to be justified by a mere request for
assistance made by an opposition group in another State - supposing such a request to have
actually been made by an opposition to the regime in Nicaragua in this instance. Indeed, it is
difficult to see what would remain of the principle of non-intervention in international law if
intervention, which is already allowable at the request of the government of a State, were also to
be allowed at the request of the opposition. This would permit any State to intervene at any
moment in the internal affairs of another State, whether at the request of the government or at the
request of its opposition. Such a situation does not in the Court's view correspond to the present
state of international law.

247. The Court has already indicated (paragraph 238) its conclusion that the conduct of the
United States towards Nicaragua cannot be justified by the right of collective self-defence in
response to an alleged armed attack on one or other of Nicaragua's neighbours. So far as regards
the allegations of supply of arms by Nicaragua to the armed opposition in El Salvador, the Court
has indicated that while the concept of an armed attack includes the despatch by one State of
armed bands into the territory of another State, the supply of arms and other support to such
bands cannot be equated with armed attack. Nevertheless, such activities may well constitute a
breach of the principle of the non-use of force and an intervention in the internal affairs of a
State, that is, a form of conduct which is certainly wrongful, but is of lesser gravity than an
armed attack. The Court must therefore enquire now whether the activities of the United States
towards Nicaragua might be justified as a response to an intervention by that State in the internal
affairs of another State in Central America.
248. The United States admits that it is giving its support to the contras in Nicaragua, but
justifies this by claiming that that State is adopting similar conduct by itself assisting the armed
opposition in El Salvador, and to a lesser extent in Honduras and Costa Rica, and has committed
transborder attacks on those two States. The United States raises this justification as one of self-
defence; having rejected it on those terms, the Court has nevertheless to consider whether it may
be valid as action by way of counter-measures in response to intervention. The Court has
however to find that the applicable law does not warrant such a justification.

249. On the legal level the Court cannot regard response to an intervention by Nicaragua as such
a justification. While an armed attack would give rise to an entitlement to collective self-defence,
a use of force of a lesser degree of gravity cannot, as the Court has already observed (paragraph
211 above), produce any entitlement to take collective counter-measures involving the use of
force. The acts of which Nicaragua is accused, even assuming them to have been established and
imputable to that State, could only have justified proportionate counter-measures on the part of
the State which had been the victim of these acts, namely El Salvador, Honduras or Costa Rica.
They could not justify counter-measures taken by a third State, the United States, and
particularly could not justify intervention involving the use of force.

250. In the Application, Nicaragua further claims:

'That the United States, in breach of its obligation under general and customary international law,
has violated and is violating the sovereignty of Nicaragua by:

- armed attacks against Nicaragua by air, land and sea;

- incursions into Nicaraguan territorial waters;

- aerial trespass into Nicaraguan airspace;

- efforts by direct and indirect means to coerce and intimidate the Government of Nicaragua.'
(Para. 26 (b).)

The Nicaraguan Memorial, however, enumerates under the heading of violations of sovereignty
only attacks on Nicaraguan territory, incursions into its territorial sea, and overflights. The claim
as to United States 'efforts by direct and indirect means to coerce and intimidate the Government
of Nicaragua' was presented in the Memorial under the heading of the threat or use of force,
which has already been dealt with above (paragraph 227). Accordingly, that aspect of
Nicaragua's claim will not be pursued further.

251. The effects of the principle of respect for territorial sovereignty inevitably overlap with
those of the principles of the prohibition of the use of force and of non-intervention. Thus the
assistance to the contras, as well as the direct attacks on Nicaraguan ports, oil installations, etc.,
referred to in paragraphs 81 to 86 above, not only amount to an unlawful use of force, but also
constitute infringements of the territorial sovereignty of Nicaragua, and incursions into its
territorial and internal waters. Similarly, the mining operations in the Nicaraguan ports not only
constitute breaches of the principle of the non-use of force, but also affect Nicaragua's
sovereignty over certain maritime expanses. The Court has in fact found that these operations
were carried on in Nicaragua's territorial or internal waters or both (paragraph 80), and
accordingly they constitute a violation of Nicaragua's sovereignty. The principle of respect for
territorial sovereignty is also directly infringed by the unauthorized overflight of a State's
territory by aircraft belonging to or under the control of the government of another State. The
Court has found above that such overflights were in fact made (paragraph 91 above).

252. These violations cannot be justified either by collective self-defence, for which, as the Court
has recognized, the necessary circumstances are lacking, nor by any right of the United States to
take counter-measures involving the use of force in the event of intervention by Nicaragua in El
Salvador, since no such right exists under the applicable international law. They cannot be
justified by the activities in El Salvador attributed to the Government of Nicaragua. The latter
activities, assuming that they did in fact occur, do not bring into effect any right belonging to the
United States which would justify the actions in question. Accordingly, such actions constitute
violations of Nicaragua's sovereignty under customary international law.

253. At this point it will be convenient to refer to another aspect of the legal implications of the
mining of Nicaragua's ports. As the Court has indicated in paragraph 214 above, where the
vessels of one State enjoy a right of access to ports of another State, if that right of access is
hindered by the laying of mines, this constitutes an infringement of the freedom of
communications and of maritime commerce. This is clearly the case here. It is not for the Court
to pass upon the rights of States which are not parties to the case before it; but it is clear that
interference with a right of access to the ports of Nicaragua is likely to have an adverse effect on
Nicaragua's economy and its trading relations with any State whose vessels enjoy the right of
access to its ports. Accordingly, the Court finds, in the context of the present proceedings
between Nicaragua and the United States, that the laying of mines in or near Nicaraguan ports
constituted an infringement, to Nicaragua's detriment, of the freedom of communications and of
maritime commerce.

254. The Court now turns to the question of the application of humanitarian law to the activities
of the United States complained of in this case. Mention has already been made (paragraph 215
above) of the violations of customary international law by reason of the failure to give notice of
the mining of the Nicaraguan ports, for which the Court has found the United States directly
responsible. Except as regards the mines, Nicaragua has not however attributed any breach of
humanitarian law to either United States personnel or the 'UCLAs', as distinct from the contras.
The Applicant has claimed that acts perpetrated by the contras constitute breaches of the
'fundamental norms protecting human rights'; it has not raised the question of the law applicable
in the event of conflict such as that between the contras and the established Government. In
effect, Nicaragua is accusing the contras of violations both of the law of human rights and
humanitarian law, and is attributing responsibility for these acts to the United States. The Court
has however found (paragraphs 115, 216) that this submission of Nicaragua cannot be upheld;
but it has also found the United States responsible for the publication and dissemination of the
manual on 'Psychological Operations in Guerrilla Warfare' referred to in paragraphs 118 to 122
above.
255. The Court has also found (paragraphs 219 and 220 above) that general principles of
humanitarian law include a particular prohibition, accepted by States, and extending to activities
which occur in the context of armed conflicts, whether international in character or not. By virtue
of such general principles, the United States is bound to refrain from encouragement of persons
or groups engaged in the conflict in Nicaragua to commit violations of Article 3 which is
common to all four Geneva Conventions of 12 August 1949. The question here does not of
course relate to the definition of the circumstances in which one State may be regarded as
responsible for acts carried out by another State, which probably do not include the possibility of
incitement. The Court takes note of the advice given in the manual on psychological operations
to 'neutralize' certain 'carefully selected and planned targets', including judges, police officers,
State Security officials, etc., after the local population have been gathered in order to 'take part in
the act and formulate accusations against the oppressor'. In the view of the Court, this must be
regarded as contrary to the prohibition in Article 3 of the Geneva Conventions, with respect to
non-combatants, of 'the passing of sentences and the carrying out of executions without previous
judgment pronounced by a regularly constituted court, affording all the judicial guarantees which
are recognized as indispensable by civilized peoples' and probably also of the prohibition of
'violence to life and person, in particular murder to all kinds, ...'.

256. It is also appropriate to recall the circumstances in which the manual of psychological
operations was issued. When considering whether the publication of such a manual, encouraging
the commission of acts contrary to general principles of humanitarian law, is unlawful, it is
material to consider whether that encouragement was offered to persons in circumstances where
the commission of such acts was likely or foreseeable. The Court has however found (paragraph
121) that at the relevant time those responsible for the issue of the manual were aware of, at the
least, allegations that the behaviour of the contras in the field was not consistent with
humanitarian law; it was in fact even claimed by the CIA that the purpose of the manual was to
'moderate' such behaviour. The publication and dissemination of a manual in fact containing the
advice quoted above must therefore be regarded as an encouragement, which was likely to be
effective, to commit acts contrary to general principles of international humanitarian law
reflected in treaties.

257. The Court has noted above (paragraphs 169 and 170) the attitude of the United States, as
expressed in the finding of the Congress of 29 July 1985, linking United States support to the
contras with alleged breaches by the Government of Nicaragua of its 'solemn commitments to
the Nicaraguan people, the United States, and the Organization of American States'. Those
breaches were stated to involve questions such as the composition of the government, its political
ideology and alignment, totalitarianism, human rights, militarization and aggression. So far as
the question of 'aggression in the form of armed subversion against its neighbours' is concerned,
the Court has already dealt with the claimed justification of collective self-defence in response to
armed attack, and will not return to that matter. It has also disposed of the suggestion of a right to
collective counter-measures in face of an armed intervention. What is now in question is whether
there is anything in the conduct of Nicaragua which might legally warrant counter-measures by
the United States.

258. The questions as to which the Nicaraguan Government is said to have entered into a
commitment are questions of domestic policy. The Court would not therefore normally consider
it appropriate to engage in a verification of the truth of assertions of this kind, even assuming that
it was in a position to do so. A State's domestic policy falls within its exclusive jurisdiction,
provided of course that it does not violate any obligation of international law. Every State
possesses a fundamental right to choose and implement its own political, economic and social
systems. Consequently, there would normally be no need to make any enquiries, in a matter
outside the Court's jurisdiction, to ascertain in what sense and along what lines Nicaragua has
actually exercised its right.

259. However, the assertion of a commitment raises the question of the possibility of a State
binding itself by agreement in relation to a question of domestic policy, such as that relating to
the holding of free elections on its territory. The Court cannot discover, within the range of
subjects open to international agreement, any obstacle or provision to hinder a State from making
a commitment of this kind. A State, which is free to decide upon the principle and methods of
popular consultation within its domestic order, is sovereign for the purpose of accepting a
limitation of its sovereignty in this field. This is a conceivable situation for a State which is
bound by institutional links to a confederation of States, or indeed to an international
organization. Both Nicaragua and the United States are members of the Organization of
American States. The Charter of that Organization however goes no further in the direction of an
agreed limitation on sovereignty of this kind than the provision in Article 3 (d) that 'The
solidarity of the American States and the high aims which are sought through it require the
political organization of those States on the basis of the effective exercise of representative
democracy;' on the other hand, it provides for the right of every State 'to organize itself as it sees
fit' (Art. 12), and to 'develop its cultural, political and economic life freely and naturally' (Art.
16).

260. The Court has set out above the facts as to the events of 1979, including the resolution of
the XVIIth Meeting of Consultation of Ministers for Foreign Affairs of the Organization of
American States, and the communications of 12 July 1979 from the Junta of the Government of
National Reconstruction of Nicaragua to the Secretary-General of the Organization,
accompanied by a 'Plan to secure peace'. The letter contained inter alia a list of the objectives of
the Nicaraguan Junta and stated in particular its intention of installing the new regime by a
peaceful, orderly transition and of respecting human rights under the supervision of the Inter-
American Commission on Human Rights, which the Junta invited to visit Nicaragua 'as soon as
we are installed'. In this way, before its installation in Managua, the new regime soothed
apprehensions as desired and expressed its intention of governing the country democratically.

261. However, the Court is unable to find anything in these documents, whether the resolution or
the communication accompanied by the 'Plan to secure peace', from which it can be inferred that
any legal undertaking was intended to exist. Moreover, the Junta made it plain in one of these
documents that its invitation to the Organization of American States to supervise Nicaragua's
political life should not be allowed to obscure the fact that it was the Nicaraguans themselves
who were to decide upon and conduct the country's domestic policy. The resolution of 23 June
1979 also declares that the solution of their problems is a matter 'exclusively' for the Nicaraguan
people, while stating that that solution was to be based (in Spanish, deberia inspirarse) on certain
foundations which were put forward merely as recommendations to the future government. This
part of the resolution is a mere statement which does not comprise any formal offer which if
accepted would constitute a promise in law, and hence a legal obligation. Nor can the Court take
the view that Nicaragua actually undertook a commitment to organize free elections, and that this
commitment was of a legal nature. The Nicaraguan Junta of National Reconstruction planned the
holding of free elections as part of its political programme of government, following the
recommendation of the XVIIth Meeting of Consultation of Foreign Ministers of the Organization
of American States. This was an essentially political pledge, made not only to the Organization,
but also to the people of Nicaragua, intended to be its first beneficiaries. But the Court cannot
find an instrument with legal force, whether unilateral or synallagmatic, whereby Nicaragua has
committed itself in respect of the principle or methods of holding elections. The Organization of
American States Charter has already been mentioned, with its respect for the political
independence of the member States; in the field of domestic policy, it goes no further than to list
the social standards to the application of which the Members 'agree to dedicate every effort',
including:

'The incorporation and increasing participation of the marginal sectors of the population, in both
rural and urban areas, in the economic, social, civic, cultural, and political life of the nation, in
order to achieve the full integration of the national community, acceleration of the process of
social mobility, and the consolidation of the democratic system.' (Art. 43 (f).)

It is evident that provisions of this kind are far from being a commitment as to the use of
particular political mechanisms.

262. Moreover, even supposing that such a political pledge had had the force of a legal
commitment, it could not have justified the United States insisting on the fulfilment of a
commitment made not directly towards the United States, but towards the Organization, the latter
being alone empowered to monitor its implementation. The Court can see no legal basis for the
'special responsibility regarding the implementation of the commitments made' by the
Nicaraguan Government which the United States considers itself to have assumed in view of 'its
role in the installation of the current Government of Nicaragua' (see paragraph 170 above).
Moreover, even supposing that the United States were entitled to act in lieu of the Organization,
it could hardly make use for the purpose of methods which the Organization could not use itself;
in particular, it could not be authorized to use force in that event. Of its nature, a commitment
like this is one of a category which, if violated, cannot justify the use of force against a sovereign
State.

263. The finding of the United States Congress also expressed the view that the Nicaraguan
Government had taken 'significant steps towards establishing a totalitarian Communist
dictatorship'. However the regime in Nicaragua be defined, adherence by a State to any particular
doctrine does not constitute a violation of customary international law; to hold otherwise would
make nonsense of the fundamental principle of State sovereignty, on which the whole of
international law rests, and the freedom of choice of the political, social, economic and cultural
system of a State. Consequently, Nicaragua's domestic policy options, even assuming that they
correspond to the description given of them by the Congress finding, cannot justify on the legal
plane the various actions of the Respondent complained of. The Court cannot contemplate the
creation of a new rule opening up a right of intervention by one State against another on the
ground that the latter has opted for some particular ideology or political system.
264. The Court has also emphasized the importance to be attached, in other respects, to a text
such as the Helsinki Final Act, or, on another level, to General Assembly resolution 2625 (XXV)
which, as its name indicates, is a declaration on 'Principles of International Law concerning
Friendly Relations and Co-operation among States in accordance with the Charter of the United
Nations'. Texts like these, in relation to which the Court has pointed to the customary content of
certain provisions such as the principles of the non-use of force and non-intervention, envisage
the relations among States having different political, economic and social systems on the basis of
coexistence among their various ideologies; the United States not only voiced no objection to
their adoption, but took an active part in bringing it about.

265. Similar considerations apply to the criticisms expressed by the United States of the external
policies and alliances of Nicaragua. Whatever the impact of individual alliances on regional or
international political-military balances, the Court is only competent to consider such questions
from the standpoint of international law. From that aspect, it is sufficient to say that State
sovereignty evidently extends to the area of its foreign policy, and that there is no rule of
customary international law to prevent a State from choosing and conducting a foreign policy in
co-ordination with that of another State.

266. The Court also notes that these justifications, advanced solely in a political context which it
is naturally not for the Court to appraise, were not advanced as legal arguments. The respondent
State has always confined itself to the classic argument of self-defence, and has not attempted to
introduce a legal argument derived from a supposed rule of 'ideological intervention', which
would have been a striking innovation. The Court would recall that one of the accusations of the
United States against Nicaragua is violation of 'the 1965 General Assembly Declaration on
Intervention' (paragraph 169 above), by its support for the armed opposition to the Government
in El Salvador. It is not aware of the United States having officially abandoned reliance on this
principle, substituting for it a new principle 'of ideological intervention', the definition of which
would be discretionary. As stated above (paragraph 29), the Court is not solely dependent for its
decision on the argument of the Parties before it with respect to the applicable law: it is required
to consider on its own initiative all rules of international law which may be relevant to the
settlement of the dispute even if these rules have not been invoked by a party. The Court is
however not entitled to ascribe to States legal views which they do not themselves formulate.

267. The Court also notes that Nicaragua is accused by the 1985 finding of the United States
Congress of violating human rights. This particular point requires to be studied independently of
the question of the existence of a 'legal commitment' by Nicaragua towards the Organization of
American States to respect these rights; the absence of such a commitment would not mean that
Nicaragua could with impunity violate human rights. However, where human rights are protected
by international conventions, that protection takes the form of such arrangements for monitoring
or ensuring respect for human rights as are provided for in the conventions themselves. The
political pledge by Nicaragua was made in the context of the Organization of American States,
the organs of which were consequently entitled to monitor its observance. The Court has noted
above (paragraph 168) that the Nicaraguan Government has since 1979 ratified a number of
international instruments on human rights, and one of these was the American Convention on
Human Rights (the Pact of San Jose, Costa Rica). The mechanisms provided for therein have
functioned. The Inter- American Commission on Human Rights in fact took action and compiled
two reports (OEA/Ser.L/V/11.53 and 62) following visits by the Commission to Nicaragua at the
Government's invitation. Consequently, the Organization was in a position, if it so wished, to
take a decision on the basis of these reports.

268. In any event, while the United States might form its own appraisal of the situation as to
respect for human rights in Nicaragua, the use of force could not be the appropriate method to
monitor or ensure such respect. With regard to the steps actually taken, the protection of human
rights, a strictly humanitarian objective, cannot be compatible with the mining of ports, the
destruction of oil installations, or again with the training, arming and equipping of the contras.
The Court concludes that the argument derived from the preservation of human rights in
Nicaragua cannot afford a legal justification for the conduct of the United States, and cannot in
any event be reconciled with the legal strategy of the respondent State, which is based on the
right of collective self-defence.

269. The Court now turns to another factor which bears both upon domestic policy and foreign
policy. This is the militarization of Nicaragua, which the United States deems excessive and such
as to prove its aggressive intent, and in which it finds another argument to justify its activities
with regard to Nicaragua. It is irrelevant and inappropriate, in the Court's opinion, to pass upon
this allegation of the United States, since in international law there are no rules, other than such
rules as may be accepted by the State concerned, by treaty or otherwise, whereby the level of
armaments of a sovereign State can be limited, and this principle is valid for all States without
exception.

270. Having thus concluded its examination of the claims of Nicaragua based on customary
international law, the Court must now consider its claims based on the Treaty of Friendship,
Commerce and Navigation between the Parties, signed at Managua on 21 January 1956; Article
XXIV, paragraph 2, of that Treaty provides for the jurisdiction of the Court for any dispute
between the Parties as to its interpretation or application. The first claim which Nicaragua makes
in relation to the Treaty is however one not based directly on a specific provision thereof.
Nicaragua has argued that the United States, by its conduct in relation to Nicaragua, has deprived
the Treaty of its object and purpose, and emptied it of real content. For this purpose, Nicaragua
has relied on the existence of a legal obligation of States to refrain from acts which would
impede the due performance of any treaties entered into by them. However, if there is a duty of a
State not to impede the due performance of a treaty to which it is a party, that is not a duty
imposed by the treaty itself. Nicaragua itself apparently contends that this is a duty arising under
customary international law independently of the treaty, that it is implicit in the rule pacta sunt
servanda. This claim therefore does not in fact fall under the heading of possible breach by the
United States of the provisions of the 1956 Treaty, though it may involve the interpretation or
application thereof.

271. In view of the Court's finding in its 1984 Judgment that the Court has jurisdiction both
under the 1956 FCN Treaty and on the basis of the United States acceptance of jurisdiction under
the Optional Clause of Article 36, paragraph 2, this poses no problem of jurisdiction in the
present case. It should however be emphasized that the Court does not consider that a
compromissory clause of the kind included in Article XXIV, paragraph 2, of the 1956 FCN
Treaty, providing for jurisdiction over disputes as to its interpretation or application, would
enable the Court to entertain a claim alleging conduct depriving the treaty of its object and
purpose. It is only because in the present case the Court has found that it has jurisdiction, apart
from Article XXIV, over any legal dispute between the Parties concerning any of the matters
enumerated in Article 36, paragraph 2, of the Statute, that it can proceed to examine Nicaragua's
claim under this head. However, as indicated in paragraph 221 above, the Court has first to
determine whether the actions of the United States complained of as breaches of the 1956 FCN
Treaty have to be regarded as 'measures ... necessary to protect its essential security interests [sus
intereses esenciales y seguridad]', since Article XXI of the Treaty provides that 'the present
Treaty shall not preclude the application of' such measures. The question thus arises whether
Article XXI similarly affords a defence to a claim under customary international law based on
allegation of conduct depriving the Treaty of its object and purpose if such conduct can be shown
to be 'measures ... necessary to protect' essential security interests.

272. In the view of the Court, an act cannot be said to be one calculated to deprive a treaty of its
object and purpose, or to impede its due performance, if the possibility of that act has been
foreseen in the treaty itself, and it has been expressly agreed that the treaty 'shall not preclude'
the act, so that it will not constitute a breach of the express terms of the treaty. Accordingly, the
Court cannot entertain either the claim of Nicaragua alleging conduct depriving the treaty of its
object and purpose, or its claims of breach of specific articles of the treaty, unless it is first
satisfied that the conduct complained of is not 'measures ... necessary to protect' the essential
security interests of the United States. The Court will first proceed to examine whether the
claims of Nicaragua in relation to the Treaty appear to be well founded, and then determine
whether they are nevertheless justifiable by reference to Article XXI.

273. The argument that the United States has deprived the Treaty of its object and purpose has a
scope which is not very clearly defined, but it appears that in Nicaragua's contention the Court
could on this ground make a blanket condemnation of the United States for all the activities of
which Nicaragua complains on more specific grounds. For Nicaragua, the Treaty is 'without
doubt a treaty of friendship which imposes on the Parties the obligation to conduct amicable
relations with each other', and 'Whatever the exact dimensions of the legal norm of 'friendship'
there can be no doubt of a United States violation in this case'. In other words, the Court is asked
to rule that a State which enters into a treaty of friendship binds itself, for so long as the Treaty is
in force, to abstain from any act toward the other party which could be classified as an unfriendly
act, even if such act is not in itself the breach of an international obligation. Such a duty might of
course be expressly stipulated in a treaty, or might even emerge as a necessary implication from
the text; but as a matter of customary international law, it is not clear that the existence of such a
far-reaching rule is evidenced in the practice of States. There must be a distinction, even in the
case of a treaty of friendship, between the broad category of unfriendly acts, and the narrower
category of acts tending to defeat the object and purpose of the Treaty. That object and purpose
is the effective implementation of friendship in the specific fields provided for in the Treaty, not
friendship in a vague general sense.

274. The Court has in this respect to note that the Treaty itself provides in Article XXIV,
paragraph 1, as follows:
'Each Party shall accord sympathetic consideration to, and shall afford adequate opportunity for
consultation regarding, such representations as the other Party may make with respect to any
matter affecting the operation of the present Treaty.' Nicaragua claims that the conduct of the
United States is such as drastically to 'affect the operation' of the Treaty; but so far as the Court is
informed, no representations on the specific question have been made. The Court has therefore
first to be satisfied that a claim based on the 1956 FCN Treaty is admissible even though no
attempt has been made to use the machinery of Article XXIV, paragraph 1, to resolve the
dispute. In general, treaty rules being lex specialis, it would not be appropriate that a State should
bring a claim based on a customary-law rule if it has by treaty already provided means for
settlement of such a claim. However, in the present case, the operation of Article XXIV,
paragraph 1, if it had been invoked, would have been wholly artificial. While Nicaragua does
allege that certain activities of the United States were in breach of the 1956 FCN Treaty, it has
also claimed, and the Court has found, that they were violations of customary international law.
In the Court's view, it would therefore be excessively formalistic to require Nicaragua first to
exhaust the procedure of Article XXIV, paragraph 1, before bringing the matter to the Court. In
its 1984 Judgment the Court has already dealt with the argument that Article XXIV, paragraph 2,
of the Treaty required that the dispute be 'one not satisfactorily adjusted by diplomacy', and that
this was not the case in view of the absence of negotiations between the Parties. The Court held
that:

'it does not necessarily follow that, because a State has not expressly referred in negotiations
with another State to a particular treaty as having been violated by conduct of that other State, it
is debarred from invoking a compromissory clause in that treaty' (I.C.J. Reports 1984, p. 428).

The point now at issue is different, since the claim of conduct impeding the operation of the
Treaty is not advanced on the basis of the compromissory clause in the Treaty. The Court
nevertheless considers that neither paragraph of Article XXIV constitutes a bar to examination of
Nicaragua's claims.

275. In respect of the claim that the United States activities have been such as to deprive the
1956 FCN Treaty of its object and purpose, the Court has to make a distinction. It is unable to
regard all the acts complained of in that light; but it does consider that there are certain activities
of the United States which are such as to undermine the whole spirit of a bilateral agreement
directed to sponsoring friendship between the two States parties to it. These are: the direct
attacks on ports, oil installations, etc., referred to in paragraphs 81 to 86 above; and the mining of
Nicaraguan ports, mentioned in paragraph 80 above. Any action less calculated to serve the
purpose of 'strengthening the bonds of peace and friendship traditionally existing between' the
Parties, stated in the Preamble of the Treaty, could hardly be imagined.

276. While the acts of economic pressure summarized in paragraphs 123 to 125 above are less
flagrantly in contradiction with the purpose of the Treaty, the Court reaches a similar conclusion
in respect of some of them. A State is not bound to continue particular trade relations longer than
it sees fit to do so, in the absence of a treaty commitment or other specific legal obligation; but
where there exists such a commitment, of the kind implied in a treaty of friendship and
commerce, such an abrupt act of termination of commercial intercourse as the general trade
embargo of 1 May 1985 will normally constitute a violation of the obligation not to defeat the
object and purpose of the treaty. The 90 per cent cut in the sugar import quota of 23 September
1983 does not on the other hand seem to the Court to go so far as to constitute an act calculated
to defeat the object and purpose of the Treaty. The cessation of economic aid, the giving of
which is more of a unilateral and voluntary nature, could be regarded as such a violation only in
exceptional circumstances. The Court has also to note that, by the very terms of the legislation
authorizing such aid (the Special Central American Assistance Act, 1979), of which the
Government of Nicaragua must have been aware, the continuance of aid was made subject to the
appreciation of Nicaragua's conduct by the President of the United States. As to the opposition to
the grant of loans from international institutions, the Court cannot regard this as sufficiently
linked with the 1956 FCN Treaty to constitute an act directed to defeating its object and purpose.

277. Nicaragua claims that the United States is in breach of Article I of the 1956 FCN Treaty,
which provides that each Party is to accord 'equitable treatment' to the nationals of the other.
Nicaragua suggests that whatever meaning given to the expression 'equitable treatment'

'it necessarily precludes the Government of the United States from ... killing, wounding or
kidnapping citizens of Nicaragua, and, more generally from threatening Nicaraguan citizens in
the integrity of their persons or the safety of their property'.

It is Nicaragua's claim that the treatment of Nicaraguan citizens complained of was inflicted by
the United States or by forces controlled by the United States. The Court is however not satisfied
that the evidence available demonstrates that the contras were 'controlled' by the United States
when committing such acts. As the Court has indicated (paragraph 110 above), the exact extent
of the control resulting from the financial dependence of the contras on the United States
authorities cannot be established; and it has not been able to conclude that the contras are subject
to the United States to such an extent that any acts they have committed are imputable to that
State (paragraph 115 above). Even if the provision for 'equitable treatment' in the Treaty is read
as involving an obligation not to kill, wound or kidnap Nicaraguan citizens in Nicaragua - as to
which the Court expresses no opinion - those acts of the contras performed in the course of their
military or paramilitary activities in Nicaragua are not conduct attributable to the United States.

278. Secondly, Nicaragua claims that the United States has violated the provisions of the Treaty
relating to freedom of communication and commerce. For the reasons indicated in paragraph 253
above, the Court must uphold the contention that the mining of the Nicaraguan ports by the
United States is in manifest contradiction with the freedom of navigation and commerce
guaranteed by Article XIX, paragraph 1, of the 1956 Treaty; there remains the question whether
such action can be justified under Article XXI (see paragraphs 280 to 282 below). In the
commercial context of the Treaty, Nicaragua's claim is justified not only as to the physical
damage to its vessels, but also the consequential damage to its trade and commerce. Nicaragua
however also contended that all the activities of the United States in and against Nicaragua are
'violative of the 1956 Treaty':

'Since the word 'commerce' in the 1956 Treaty must be understood in its broadest sense, all of the
activities by which the United States has deliberately inflicted on Nicaragua physical damage
and economic losses of all types, violate the principle of freedom of commerce which the Treaty
establishes in very general terms.'
It is clear that considerable economic loss and damage has been inflicted on Nicaragua by the
actions of the contras: apart from the economic impact of acts directly attributable to the United
States, such as the loss of fishing boats blown up by mines, the Nicaraguan Minister of Finance
estimated loss of production in 1981-1984 due to inability to collect crops, etc., at some US$ 300
million. However, as already noted (paragraph 277 above) the Court has not found the
relationship between the contras and the United States Government to have been proved to be
such that the United States is responsible for all acts of the contras.

279. The trade embargo declared by the United States Government on 1 May 1985 has already
been referred to in the context of Nicaragua's contentions as to acts tending to defeat the object
and purpose of the 1956 FCN Treaty. The question also arises of its compatibility with the letter
and the spirit of Article XIX of the Treaty. That Article provides that 'Between the territories of
the two Parties there shall be freedom of commerce and navigation' (para. 1) and continues

'3. Vessels of either Party shall have liberty, on equal terms with vessels of the other Party and
on equal terms with vessels of any third country, to come with their cargoes to all ports, places
and waters of such other Party open to foreign commerce and navigation ...'

By the Executive Order dated 1 May 1985 the President of the United States declared 'I hereby
prohibit vessels of Nicaraguan registry from entering into United States ports, and transactions
relating thereto'. The Court notes that on the same day the United States gave notice to Nicaragua
to terminate the Treaty under Article XXV, paragraph 3, thereof; but that Article requires 'one
year's written notice' for the termination to take effect. The freedom of Nicaraguan vessels, under
Article XIX, paragraph 3, 'to come with their cargoes to all ports, places and waters' of the
United States could not therefore be interfered with during that period of notice, let alone
terminated abruptly by the declaration of an embargo. The Court accordingly finds that the
embargo constituted a measure in contradiction with Article XIX of the 1956 FCN Treaty.

280. The Court has thus found that the United States is in breach of a duty not to deprive the
1956 FCN Treaty of its object and purpose, and has committed acts which are in contradiction
with the terms of the Treaty, subject to the question whether the exceptions in Article XXI,
paragraphs 1 (c) and 1 (d), concerning respectively 'traffic in arms' and 'measures ... necessary to
fulfill' obligations 'for the maintenance or restoration of international peace and security' or
necessary to protect the 'essential security interests' of a party, may be invoked to justify the acts
complained of. In its Counter- Memorial on jurisdiction and admissibility, the United States
relied on paragraph 1 (c) as showing the inapplicability of the 1956 FCN Treaty to Nicaragua's
claims. This paragraph appears however to be relevant only in respect of the complaint of supply
of arms to the contras, and since the Court does not find that arms supply to be a breach of the
Treaty, or an act calculated to deprive it of its object and purpose, paragraph 1 (c) does not need
to be considered further. There remains the question of the relationship of Article XXI,
paragraph 1 (d), to the direct attacks on ports, oil installations, etc.; the mining of Nicaraguan
ports; and the general trade embargo of 1 May 1985 (paragraphs 275 to 276 above).

281. In approaching this question, the Court has first to bear in mind the chronological sequence
of events. If the activities of the United States are to be covered by Article XXI of the Treaty,
they must have been, at the time they were taken, measures necessary to protect its essential
security interests. Thus the finding of the President of the United States on 1 May 1985 that 'the
policies and actions of the Government of Nicaragua constitute an unusual and extraordinary
threat to the national security and foreign policy of the United States', even if it be taken as
sufficient evidence that that was so, does not justify action by the United States previous to that
date.

282. Secondly, the Court emphasizes the importance of the word 'necessary' in Article XXI: the
measures taken must not merely be such as tend to protect the essential security interests of the
party taking them, but must be 'necessary' for that purpose. Taking into account the whole
situation of the United States in relation to Central America, so far as the Court is informed of it
(and even assuming that the justification of self-defence, which the Court has rejected on the
legal level, had some validity on the political level), the Court considers that the mining of
Nicaraguan ports, and the direct attacks on ports and oil installations, cannot possibly be justified
as 'necessary' to protect the essential security interests of the United States. As to the trade
embargo, the Court has to note the express justification for it given in the Presidential finding
quoted in paragraph 125 above, and that the measure was one of an economic nature, thus one
which fell within the sphere of relations contemplated by the Treaty. But by the terms of the
Treaty itself, whether a measure is necessary to protect the essential security interests of a party
is not, as the Court has emphasized (paragraph 222 above), purely a question for the subjective
judgment of the party; the text does not refer to what the party 'considers necessary' for that
purpose. Since no evidence at all is available to show how Nicaraguan policies had in fact
become a threat to 'essential security interests' in May 1985, when those policies had been
consistent, and consistently criticized by the United States, for four years previously, the Court is
unable to find that the embargo was 'necessary' to protect those interests. Accordingly, Article
XXI affords no defence for the United States in respect of any of the actions here under
consideration.

283. The third submission of Nicaragua in its Memorial on the merits, set out in paragraph 15
above, requests the Court to adjudge and declare that compensation is due to Nicaragua and

'to receive evidence and to determine, in a subsequent phase of the present proceedings, the
quantum of damages to be assessed as the compensation due to the Republic of Nicaragua'.

The fourth submission requests the Court to award to Nicaragua the sum of 370,200,000 United
States dollars, 'which sum constitutes the minimum valuation of the direct damages' claimed by
Nicaragua. In order to decide on these submissions, the Court must satisfy itself that it possesses
jurisdiction to do so. In general, jurisdiction to determine the merits of a dispute entails
jurisdiction to determine reparation. More specifically, the Court notes that in its declaration of
acceptance of jurisdiction under the Optional Clause of 26 August 1946, the United States
expressly accepted the Court's jurisdiction in respect of disputes concerning 'the nature or extent
of the reparation to be made for the breach of an international obligation'. The corresponding
declaration by which Nicaragua accepted the Court's jurisdiction contains no restriction of the
powers of the Court under Article 36, paragraph 2 (d), of its Statute; Nicaragua has thus accepted
the 'same obligation'. Under the 1956 FCN Treaty, the Court has jurisdiction to determine 'any
dispute between the Parties as to the interpretation or application of the present Treaty' (Art.
XXIV, para. 2); and as the Permanent Court of International Justice stated in the case concerning
the Factory at Chorzow, 'Differences relating to reparations, which may be due by reason of
failure to apply a convention, are consequently differences relating to its application.'
(Jurisdiction, Judgment No. 8, 1927, P.C.I.J., Series A, No. 9, p. 21.)

284. The Court considers appropriate the request of Nicaragua for the nature and amount of the
reparation due to it to be determined in a subsequent phase of the proceedings. While a certain
amount of evidence has been provided, for example, in the testimony of the Nicaraguan Minister
of Finance, of pecuniary loss sustained, this was based upon contentions as to the responsibility
of the United States which were more far reaching than the conclusions at which the Court has
been able to arrive. The opportunity should be afforded Nicaragua to demonstrate and prove
exactly what injury was suffered as a result of each action of the United States which the Court
has found contrary to international law. Nor should it be overlooked that, while the United States
has chosen not to appear or participate in the present phase of the proceedings, Article 53 of the
Statute does not debar it from appearing to present its arguments on the question of reparation if
it so wishes. On the contrary, the principle of the equality of the Parties requires that it be given
that opportunity. It goes without saying, however, that in the phase of the proceedings devoted to
reparation, neither Party may call in question such findings in the present Judgment as have
become res judicata.

285. There remains the request of Nicaragua (paragraph 15 above) for an award, at the present
stage of the proceedings, of $370,200,000 as the 'minimum (and in that sense provisional)
valuation of direct damages'. There is no provision in the Statute of the Court either specifically
empowering the Court to make an interim award of this kind, or indeed debarring it from doing
so. In view of the final and binding character of the Court's judgments, under Articles 59 and 60
of the Statute, it would however only be appropriate to make an award of this kind, assuming
that the Court possesses the power to do so, in exceptional circumstances, and where the
entitlement of the State making the claim was already established with certainty and precision.
Furthermore, in a case in which the respondent State is not appearing, so that its views on the
matter are not known to the Court, the Court should refrain from any unnecessary act which
might prove an obstacle to a negotiated settlement. It bears repeating that 'the judicial settlement
of international disputes, with a view to which the Court has been established, is simply an
alternative to the direct and friendly settlement of such disputes between the Parties; as
consequently it is for the Court to facilitate, so far as is compatible with its Statute, such direct
and friendly settlement ...' (Free Zones of Upper Savoy and the District of Gex, Order of 19
August 1929, P.C.I.J., Series A, No. 22, p. 13).

Accordingly, the Court does not consider that it can accede at this stage to the request made in
the Fourth Submission of Nicaragua.

286. By its Order of 10 May 1984, the Court indicated, pursuant to Article 41 of the Statute of
the Court, the provisional measures which in its view 'ought to be taken to preserve the
respective rights of either party', pending the final decision in the present case. In connection
with the first such measure, namely that

'The United States of America should immediately cease and refrain from any action restricting,
blocking or endangering access to or from Nicaraguan ports, and, in particular, the laying of
mines', the Court notes that no complaint has been made that any further action of this kind has
been taken.

287. On 25 June 1984, the Government of Nicaragua addressed a communication to the Court
referring to the Order indicating provisional measures, informing the Court of what Nicaragua
regarded as 'the failure of the United States to comply with that Order', and requesting the
indication of further measures. The action by the United States complained of consisted in the
fact that the United States was continuing 'to sponsor and carry out military and paramilitary
activities in and against Nicaragua'. By a letter of 16 July 1984, the President of the Court
informed the Agent of Nicaragua that the Court considered that that request should await the
outcome of the proceedings on jurisdiction which were then pending before the Court. The
Government of Nicaragua has not reverted to the question.

288. The Court considers that it should re-emphasize, in the light of its present findings, what
was indicated in the Order of 10 May 1984:

'The right to sovereignty and to political independence possessed by the Republic of Nicaragua,
like any other State of the region or of the world, should be fully respected and should not in any
way be jeopardized by any military and paramilitary activities which are prohibited by the
principles of international law, in particular the principle that States should refrain in their
international relations from the threat or use of force against the territorial integrity or the
political independence of any State, and the principle concerning the duty not to intervene in
matters within the domestic jurisdiction of a State, principles embodied in the United Nations
Charter and the Charter of the Organization of American States.'

289. Furthermore, the Court would draw attention to the further measures indicated in its Order,
namely that the Parties 'should each of them ensure that no action of any kind is taken which
might aggravate or extend the dispute submitted to the Court' and 'should each of them ensure
that no action is taken which might prejudice the rights of the other Party in respect of the
carrying out of whatever decision the Court may render in the case'.

When the Court finds that the situation requires that measures of this kind should be taken, it is
incumbent on each party to take the Court's indications seriously into account, and not to direct
its conduct solely by reference to what it believes to be its rights. Particularly is this so in a
situation of armed conflict where no reparation can affect the results of conduct which the Court
may rule to have been contrary to international law.

290. In the present Judgment, the Court has found that the Respondent has, by its activities in
relation to the Applicant, violated a number of principles of customary international law. The
Court has however also to recall a further principle of international law, one which is
complementary to the principles of a prohibitive nature examined above, and respect for which is
essential in the world of today: the principle that the parties to any dispute, particularly any
dispute the continuance of which is likely to endanger the maintenance of international peace and
security, should seek a solution by peaceful means. Enshrined in Article 33 of the United Nations
Charter, which also indicates a number of peaceful means which are available, this principle has
also the status of customary law. In the present case, the Court has already taken note, in its
Order indicating provisional measures and in its Judgment on jurisdiction and admissibility
(I.C.J. Reports 1984, pp. 183-184, paras. 34 ff., pp. 438-441, paras. 102 ff.) of the diplomatic
negotiation known as the Contadora Process, which appears to the Court to correspond closely to
the spirit of the principle which the Court has here recalled.

291. In its Order indicating provisional measures, the Court took note of the Contadora Process,
and of the fact that it had been endorsed by the United Nations Security Council and General
Assembly (I.C.J. Reports 1984, pp. 183- 184, para. 34). During that phase of the proceedings as
during the phase devoted to jurisdiction and admissibility, both Nicaragua and the United States
have expressed full support for the Contadora Process, and praised the results achieved so far.
Therefore, the Court could not but take cognizance of this effort, which merits full respect and
consideration as a unique contribution to the solution of the difficult situation in the region. The
Court is aware that considerable progress has been achieved on the main objective of the process,
namely agreement on texts relating to arms control and reduction, exclusion of foreign military
bases or military interference and withdrawal of foreign advisers, prevention of arms traffic,
stopping the support of groups aiming at the destabilization of any of the Governments
concerned, guarantee of human rights and enforcement of democratic processes, as well as on
co-operation for the creation of a mechanism for the verification of the agreements concerned.
The work of the Contadora Group may facilitate the delicate and difficult negotiations, in accord
with the letter and spirit of the United Nations Charter, that are now required. The Court recalls
to both Parties to the present case the need to co-operate with the Contadora efforts in seeking a
definitive and lasting peace in Central America, in accordance with the principle of customary
international law that prescribes the peaceful settlement of international disputes.

292. For these reasons,

THE COURT

(1) By eleven votes to four,

Decides that in adjudicating the dispute brought before it by the Application filed by the
Republic of Nicaragua on 9 April 1984, the Court is required to apply the 'multilateral treaty
reservation' contained in proviso (c) to the declaration of acceptance of jurisdiction made under
Article 36, paragraph 2, of the Statute of the Court by the Government of the United States of
America deposited on 26 August 1946;

IN FAVOUR: President Nagendra Singh; Vice-President de Lacharriere; Judges Lachs, Oda,

Ago, Schwebel, Sir Robert Jennings, Mbaye, Bedjaoui and Evensen; Judge ad hoc Colliard;

AGAINST: Judges Ruda, Elias, Sette-Camara and Ni.

(2) By twelve votes to three,

Rejects the justification of collective self-defence maintained by the United States of America in
connection with the military and paramilitary activities in and against Nicaragua the subject of
this case;
IN FAVOUR: President Nagendra Singh; Vice-President de Lacharriere; Judges Lachs, Ruda,
Elias, Ago, Sette-Camara, Mbaye, Bedjaoui, Ni and Evensen; Judge ad hoc Colliard;

AGAINST: Judges Oda, Schwebel and Sir Robert Jennings.

(3) By twelve votes to three,

Decides that the United States of America, by training, arming, equipping, financing and
supplying the contra forces or otherwise encouraging, supporting and aiding military and
paramilitary activities in and against Nicaragua, has acted, against the Republic of Nicaragua, in
breach of its obligation under customary international law not to intervene in the affairs of
another State;

IN FAVOUR: President Nagendra Singh; Vice-President de Lacharriere; Judges Lachs, Ruda,

Elias, Ago, Sette-Camara, Mbaye, Bedjaoui, Ni and Evensen; Judge ad hoc Colliard;

AGAINST: Judges Oda, Schwebel and Sir Robert Jennings.

(4) By twelve votes to three,

Decides that the United States of America, by certain attacks on Nicaraguan territory in 1983-
1984, namely attacks on Puerto Sandino on 13 September and 14 October 1983; an attack on
Corinto on 10 October 1983; an attack on Potosi Naval Base on 4/5 January 1984; an attack on
San Juan del Sur on 7 March 1984; attacks on patrol boats at Puerto Sandino on 28 and 30 March
1984; and an attack on San Juan del Norte on 9 April 1984; and further by those acts of
intervention referred to in subparagraph (3) hereof which involve the use of force, has acted,
against the Republic of Nicaragua, in breach of its obligation under customary international law
not to use force against another State;

IN FAVOUR: President Nagendra Singh; Vice-President de Lacharriere; Judges Lachs, Ruda,

Elias, Ago, Sette-Camara, Mbaye, Bedjaoui, Ni and Evensen; Judge ad hoc Colliard;

AGAINST: Judges Oda, Schwebel and Sir Robert Jennings.

(5) By twelve votes to three,

Decides that the United States of America, by directing or authorizing overflights of Nicaraguan
territory, and by the acts imputable to the United States referred to in subparagraph (4) hereof,
has acted, against the Republic of Nicaragua, in breach of its obligation under customary
international law not to violate the sovereignty of another State;

IN FAVOUR: President Nagendra Singh; Vice-President de Lacharriere; Judges Lachs, Ruda,

Elias, Ago, Sette-Camara, Mbaye, Bedjaoui, Ni and Evensen; Judge ad hoc Colliard;

AGAINST: Judges Oda, Schwebel and Sir Robert Jennings.

(6) By twelve votes to three,

Decides that, by laying mines in the internal or territorial waters of the Republic of Nicaragua
during the first months of 1984, the United States of America has acted, against the Republic of
Nicaragua, in breach of its obligations under customary international law not to use force against
another State, not to intervene in its affairs, not to violate its sovereignty and not to interrupt
peaceful maritime commerce;

IN FAVOUR: President Nagendra Singh; Vice-President de Lacharriere; Judges Lachs, Ruda,

Elias, Ago, Sette-Camara, Mbaye, Bedjaoui, Ni and Evensen; Judge ad hoc Colliard;

AGAINST: Judges Oda, Schwebel and Sir Robert Jennings.

(7) By fourteen votes to one,

Decides that, by the acts referred to in subparagraph (6) hereof, the United States of America has
acted, against the Republic of Nicaragua, in breach of its obligations under Article XIX of the
Treaty of Friendship, Commerce and Navigation between the United States of America and the
Republic of Nicaragua signed at Managua on 21 January 1956;

IN FAVOUR: President Nagendra Singh; Vice-President de Lacharriere; Judges Lachs, Ruda,

Elias, Oda, Ago, Sette-Camara, Sir Robert Jennings, Mbaye, Bedjaoui, Ni and Evensen; Judge ad
hoc Colliard;

AGAINST: Judge Schwebel.

(8) By fourteen votes to one,

Decides that the United States of America, by failing to make known the existence and location
of the mines laid by it, referred to in subparagraph *148

(6) hereof, has acted in breach of its obligations under customary international law in this
respect;

IN FAVOUR: President Nagendra Singh; Vice-President de Lacharriere; Judges Lachs, Ruda,

Elias, Ago, Sette-Camara, Schwebel, Sir Robert Jennings, Mbaye, Bedjaoui, Ni and Evensen;
Judge ad hoc Colliard;

AGAINST: Judge Oda.

(9) By fourteen votes to one,

Finds that the United States of America, by producing in 1983 a manual entitled Operaciones
sicologicas en guerra de guerrillas, and disseminating it to contra forces, has encouraged the
commission by them of acts contrary to general principles of humanitarian law; but does not find
a basis for concluding that any such acts which may have been committed are imputable to the
United States of America as acts of the United States of America;

IN FAVOUR: President Nagendra Singh; Vice-President de Lacharriere; Judges Lachs, Ruda,

Elias, Ago, Sette-Camara, Schwebel, Sir Robert Jennings, Mbaye, Bedjaoui, Ni and Evensen;
Judge ad hoc Colliard;

AGAINST: Judge Oda.

(10) By twelve votes to three,

Decides that the United States of America, by the attacks on Nicaraguan territory referred to in
subparagraph (4) hereof, and by declaring a general embargo on trade with Nicaragua on 1 May
1985, has committed acts calculated to deprive of its object and purpose the Treaty of
Friendship, Commerce and Navigation between the Parties signed at Managua on 21 January
1956;

IN FAVOUR: President Nagendra Singh; Vice-President de Lacharriere; Judges Lachs, Ruda,

Elias, Ago, Sette-Camara, Mbaye, Bedjaoui, Ni and Evensen; Judge ad hoc Colliard;

AGAINST: Judges Oda, Schwebel and Sir Robert Jennings.

(11) By twelve votes to three,

Decides that the United States of America, by the attacks on Nicaraguan territory referred to in
subparagraph (4) hereof, and by declaring a general embargo on trade with Nicaragua on 1 May
1985, has acted in breach of its obligations under Article XIX of the Treaty of Friendship,
Commerce and Navigation between the Parties signed at Managua on 21 January 1956;

IN FAVOUR: President Nagendra Singh; Vice-President de Lacharriere; Judges Lachs, Ruda,

Elias, Ago, Sette-Camara, Mbaye, Bedjaoui, Ni and Evensen; Judge ad hoc Colliard;

AGAINST: Judges Oda, Schwebel and Sir Robert Jennings.

(12) By twelve votes to three,

Decides that the United States of America is under a duty immediately to cease and to refrain
from all such acts as may constitute breaches of the foregoing legal obligations;

IN FAVOUR: President Nagendra Singh; Vice-President de Lacharriere; Judges Lachs, Ruda,

Elias, Ago, Sette-Camara, Mbaye, Bedjaoui, Ni and Evensen; Judge ad hoc Colliard;

AGAINST: Judges Oda, Schwebel and Sir Robert Jennings.

(13) By twelve votes to three,

Decides that the United States of America is under an obligation to make reparation to the
Republic of Nicaragua for all injury caused to Nicaragua by the breaches of obligations under
customary international law enumerated above;

IN FAVOUR: President Nagendra Singh; Vice-President de Lacharriere; Judges Lachs, Ruda,

Elias, Ago, Sette-Camara, Mbaye, Bedjaoui, Ni and Evensen; Judge ad hoc Colliard;

AGAINST: Judges Oda, Schwebel and Sir Robert Jennings.

(14) By fourteen votes to one,

Decides that the United States of America is under an obligation to make reparation to the
Republic of Nicaragua for all injury caused to Nicaragua by the breaches of the Treaty of
Friendship, Commerce and Navigation between the Parties signed at Managua on 21 January
1956;

IN FAVOUR: President Nagendra Singh; Vice-President de Lacharriere; Judges Lachs, Ruda,

Elias, Oda, Ago, Sette-Camara, Sir Robert Jennings, Mbaye, Bedjaoui, Ni and Evensen; Judge ad
hoc Colliard;

AGAINST: Judge Schwebel.

(15) By fourteen votes to one,

Decides that the form and amount of such reparation, failing agreement between the Parties, will
be settled by the Court, and reserves for this purpose the subsequent procedure in the case;

IN FAVOUR: President Nagendra Singh; Vice-President de Lacharriere; Judges Lachs, Ruda,

Elias, Oda, Ago, Sette-Camara, Sir Robert Jennings, Mbaye, Bedjaoui, Ni and Evensen; Judge ad
hoc Colliard;

AGAINST: Judge Schwebel.

(16) Unanimously,

Recalls to both Parties their obligation to seek a solution to their disputes by peaceful means in
accordance with international law.

Additional Concurring and Dissenting opinions Omitted.

G.R. No. 101083 July 30, 1993

JUAN ANTONIO, ANNA ROSARIO and JOSE ALFONSO, all surnamed OPOSA, minors, and
represented by their parents ANTONIO and RIZALINA OPOSA, ROBERTA NICOLE SADIUA,
minor, represented by her parents CALVIN and ROBERTA SADIUA, CARLO, AMANDA SALUD
and PATRISHA, all surnamed FLORES, minors and represented by their parents ENRICO and
NIDA FLORES, GIANINA DITA R. FORTUN, minor, represented by her parents SIGRID and
DOLORES FORTUN, GEORGE II and MA. CONCEPCION, all surnamed MISA, minors and
represented by their parents GEORGE and MYRA MISA, BENJAMIN ALAN V. PESIGAN,
minor, represented by his parents ANTONIO and ALICE PESIGAN, JOVIE MARIE ALFARO,
minor, represented by her parents JOSE and MARIA VIOLETA ALFARO, MARIA
CONCEPCION T. CASTRO, minor, represented by her parents FREDENIL and JANE CASTRO,
JOHANNA DESAMPARADO,
minor, represented by her parents JOSE and ANGELA DESAMPRADO, CARLO JOAQUIN T.
NARVASA, minor, represented by his parents GREGORIO II and CRISTINE CHARITY
NARVASA, MA. MARGARITA, JESUS IGNACIO, MA. ANGELA and MARIE GABRIELLE, all
surnamed SAENZ, minors, represented by their parents ROBERTO and AURORA SAENZ,
KRISTINE, MARY ELLEN, MAY, GOLDA MARTHE and DAVID IAN, all surnamed KING, minors,
represented by their parents MARIO and HAYDEE KING, DAVID, FRANCISCO and THERESE
VICTORIA, all surnamed ENDRIGA, minors, represented by their parents BALTAZAR and
TERESITA ENDRIGA, JOSE MA. and REGINA MA., all surnamed ABAYA, minors, represented
by their parents ANTONIO and MARICA ABAYA, MARILIN, MARIO, JR. and MARIETTE, all
surnamed CARDAMA, minors, represented by their parents MARIO and LINA CARDAMA,
CLARISSA, ANN MARIE, NAGEL, and IMEE LYN, all surnamed OPOSA, minors and
represented by their parents RICARDO and MARISSA OPOSA, PHILIP JOSEPH, STEPHEN
JOHN and ISAIAH JAMES, all surnamed QUIPIT, minors, represented by their parents JOSE
MAX and VILMI QUIPIT, BUGHAW CIELO, CRISANTO, ANNA, DANIEL and FRANCISCO, all
surnamed BIBAL, minors, represented by their parents FRANCISCO, JR. and MILAGROS
BIBAL, and THE PHILIPPINE ECOLOGICAL NETWORK, INC., petitioners,
vs.
THE HONORABLE FULGENCIO S. FACTORAN, JR., in his capacity as the Secretary of the
Department of Environment and Natural Resources, and THE HONORABLE ERIBERTO U.
ROSARIO, Presiding Judge of the RTC, Makati, Branch 66, respondents.

Oposa Law Office for petitioners.

The Solicitor General for respondents.

DAVIDE, JR., J.:

In a broader sense, this petition bears upon the right of Filipinos to a balanced and healthful ecology
which the petitioners dramatically associate with the twin concepts of "inter-generational
responsibility" and "inter-generational justice." Specifically, it touches on the issue of whether the
said petitioners have a cause of action to "prevent the misappropriation or impairment" of Philippine
rainforests and "arrest the unabated hemorrhage of the country's vital life support systems and
continued rape of Mother Earth."
The controversy has its genesis in Civil Case No. 90-77 which was filed before Branch 66 (Makati,
Metro Manila) of the Regional Trial Court (RTC), National Capital Judicial Region. The principal
plaintiffs therein, now the principal petitioners, are all minors duly represented and joined by their
respective parents. Impleaded as an additional plaintiff is the Philippine Ecological Network, Inc.
(PENI), a domestic, non-stock and non-profit corporation organized for the purpose of, inter alia,
engaging in concerted action geared for the protection of our environment and natural resources.
The original defendant was the Honorable Fulgencio S. Factoran, Jr., then Secretary of the
Department of Environment and Natural Resources (DENR). His substitution in this petition by the
new Secretary, the Honorable Angel C. Alcala, was subsequently ordered upon proper motion by the
petitioners. 1 The complaint 2 was instituted as a taxpayers' class suit 3 and alleges that the plaintiffs "are
all citizens of the Republic of the Philippines, taxpayers, and entitled to the full benefit, use and enjoyment
of the natural resource treasure that is the country's virgin tropical forests." The same was filed for
themselves and others who are equally concerned about the preservation of said resource but are "so
numerous that it is impracticable to bring them all before the Court." The minors further asseverate that
they "represent their generation as well as generations yet unborn." 4 Consequently, it is prayed for that
judgment be rendered:

. . . ordering defendant, his agents, representatives and other persons acting in his
behalf to

(1) Cancel all existing timber license agreements in the country;

(2) Cease and desist from receiving, accepting, processing, renewing or approving
new timber license agreements.

and granting the plaintiffs ". . . such other reliefs just and equitable under the premises." 5

The complaint starts off with the general averments that the Philippine archipelago of 7,100 islands
has a land area of thirty million (30,000,000) hectares and is endowed with rich, lush and verdant
rainforests in which varied, rare and unique species of flora and fauna may be found; these
rainforests contain a genetic, biological and chemical pool which is irreplaceable; they are also the
habitat of indigenous Philippine cultures which have existed, endured and flourished since time
immemorial; scientific evidence reveals that in order to maintain a balanced and healthful ecology,
the country's land area should be utilized on the basis of a ratio of fifty-four per cent (54%) for forest
cover and forty-six per cent (46%) for agricultural, residential, industrial, commercial and other uses;
the distortion and disturbance of this balance as a consequence of deforestation have resulted in a
host of environmental tragedies, such as (a) water shortages resulting from drying up of the water
table, otherwise known as the "aquifer," as well as of rivers, brooks and streams, (b) salinization of
the water table as a result of the intrusion therein of salt water, incontrovertible examples of which
may be found in the island of Cebu and the Municipality of Bacoor, Cavite, (c) massive erosion and
the consequential loss of soil fertility and agricultural productivity, with the volume of soil eroded
estimated at one billion (1,000,000,000) cubic meters per annum approximately the size of the
entire island of Catanduanes, (d) the endangering and extinction of the country's unique, rare and
varied flora and fauna, (e) the disturbance and dislocation of cultural communities, including the
disappearance of the Filipino's indigenous cultures, (f) the siltation of rivers and seabeds and
consequential destruction of corals and other aquatic life leading to a critical reduction in marine
resource productivity, (g) recurrent spells of drought as is presently experienced by the entire
country, (h) increasing velocity of typhoon winds which result from the absence of windbreakers, (i)
the floodings of lowlands and agricultural plains arising from the absence of the absorbent
mechanism of forests, (j) the siltation and shortening of the lifespan of multi-billion peso dams
constructed and operated for the purpose of supplying water for domestic uses, irrigation and the
generation of electric power, and (k) the reduction of the earth's capacity to process carbon dioxide
gases which has led to perplexing and catastrophic climatic changes such as the phenomenon of
global warming, otherwise known as the "greenhouse effect."

Plaintiffs further assert that the adverse and detrimental consequences of continued and
deforestation are so capable of unquestionable demonstration that the same may be submitted as a
matter of judicial notice. This notwithstanding, they expressed their intention to present expert
witnesses as well as documentary, photographic and film evidence in the course of the trial.

As their cause of action, they specifically allege that:

CAUSE OF ACTION

7. Plaintiffs replead by reference the foregoing allegations.

8. Twenty-five (25) years ago, the Philippines had some sixteen (16) million hectares
of rainforests constituting roughly 53% of the country's land mass.

9. Satellite images taken in 1987 reveal that there remained no more than 1.2 million
hectares of said rainforests or four per cent (4.0%) of the country's land area.

10. More recent surveys reveal that a mere 850,000 hectares of virgin old-growth
rainforests are left, barely 2.8% of the entire land mass of the Philippine archipelago
and about 3.0 million hectares of immature and uneconomical secondary growth
forests.

11. Public records reveal that the defendant's, predecessors have granted timber
license agreements ('TLA's') to various corporations to cut the aggregate area of 3.89
million hectares for commercial logging purposes.

A copy of the TLA holders and the corresponding areas covered is hereto attached
as Annex "A".

12. At the present rate of deforestation, i.e. about 200,000 hectares per annum or 25
hectares per hour nighttime, Saturdays, Sundays and holidays included the
Philippines will be bereft of forest resources after the end of this ensuing decade, if
not earlier.

13. The adverse effects, disastrous consequences, serious injury and irreparable
damage of this continued trend of deforestation to the plaintiff minor's generation and
to generations yet unborn are evident and incontrovertible. As a matter of fact, the
environmental damages enumerated in paragraph 6 hereof are already being felt,
experienced and suffered by the generation of plaintiff adults.

14. The continued allowance by defendant of TLA holders to cut and deforest the
remaining forest stands will work great damage and irreparable injury to plaintiffs
especially plaintiff minors and their successors who may never see, use, benefit
from and enjoy this rare and unique natural resource treasure.

This act of defendant constitutes a misappropriation and/or impairment of the natural

resource property he holds in trust for the benefit of plaintiff minors and succeeding
generations.
15. Plaintiffs have a clear and constitutional right to a balanced and healthful ecology
and are entitled to protection by the State in its capacity as the parens patriae.

16. Plaintiff have exhausted all administrative remedies with the defendant's office.
On March 2, 1990, plaintiffs served upon defendant a final demand to cancel all
logging permits in the country.

A copy of the plaintiffs' letter dated March 1, 1990 is hereto attached as Annex "B".

17. Defendant, however, fails and refuses to cancel the existing TLA's to the
continuing serious damage and extreme prejudice of plaintiffs.

18. The continued failure and refusal by defendant to cancel the TLA's is an act
violative of the rights of plaintiffs, especially plaintiff minors who may be left with a
country that is desertified (sic), bare, barren and devoid of the wonderful flora, fauna
and indigenous cultures which the Philippines had been abundantly blessed with.

19. Defendant's refusal to cancel the aforementioned TLA's is manifestly contrary to

the public policy enunciated in the Philippine Environmental Policy which, in pertinent
part, states that it is the policy of the State

(a) to create, develop, maintain and improve conditions under which man and nature
can thrive in productive and enjoyable harmony with each other;

(b) to fulfill the social, economic and other requirements of present and future
generations of Filipinos and;

(c) to ensure the attainment of an environmental quality that is conductive to a life of

dignity and well-being. (P.D. 1151, 6 June 1977)

20. Furthermore, defendant's continued refusal to cancel the aforementioned TLA's

is contradictory to the Constitutional policy of the State to

a. effect "a more equitable distribution of opportunities, income and wealth" and
"make full and efficient use of natural resources (sic)." (Section 1, Article XII of the
Constitution);

b. "protect the nation's marine wealth." (Section 2, ibid);

c. "conserve and promote the nation's cultural heritage and resources (sic)" (Section
14, Article XIV,id.);

d. "protect and advance the right of the people to a balanced and healthful ecology in
accord with the rhythm and harmony of nature." (Section 16, Article II, id.)

21. Finally, defendant's act is contrary to the highest law of humankind the natural
law and violative of plaintiffs' right to self-preservation and perpetuation.

22. There is no other plain, speedy and adequate remedy in law other than the
instant action to arrest the unabated hemorrhage of the country's vital life support
systems and continued rape of Mother Earth. 6
On 22 June 1990, the original defendant, Secretary Factoran, Jr., filed a Motion to Dismiss the
complaint based on two (2) grounds, namely: (1) the plaintiffs have no cause of action against him
and (2) the issue raised by the plaintiffs is a political question which properly pertains to the
legislative or executive branches of Government. In their 12 July 1990 Opposition to the Motion, the
petitioners maintain that (1) the complaint shows a clear and unmistakable cause of action, (2) the
motion is dilatory and (3) the action presents a justiciable question as it involves the defendant's
abuse of discretion.

On 18 July 1991, respondent Judge issued an order granting the aforementioned motion to
dismiss. 7 In the said order, not only was the defendant's claim that the complaint states no cause of
action against him and that it raises a political question sustained, the respondent Judge further ruled
that the granting of the relief prayed for would result in the impairment of contracts which is prohibited by
the fundamental law of the land.

Plaintiffs thus filed the instant special civil action for certiorari under Rule 65 of the Revised Rules of
Court and ask this Court to rescind and set aside the dismissal order on the ground that the
respondent Judge gravely abused his discretion in dismissing the action. Again, the parents of the
plaintiffs-minors not only represent their children, but have also joined the latter in this case. 8

On 14 May 1992, We resolved to give due course to the petition and required the parties to submit
their respective Memoranda after the Office of the Solicitor General (OSG) filed a Comment in behalf
of the respondents and the petitioners filed a reply thereto.

Petitioners contend that the complaint clearly and unmistakably states a cause of action as it
contains sufficient allegations concerning their right to a sound environment based on Articles 19, 20
and 21 of the Civil Code (Human Relations), Section 4 of Executive Order (E.O.) No. 192 creating
the DENR, Section 3 of Presidential Decree (P.D.) No. 1151 (Philippine Environmental Policy),
Section 16, Article II of the 1987 Constitution recognizing the right of the people to a balanced and
healthful ecology, the concept of generational genocide in Criminal Law and the concept of man's
inalienable right to self-preservation and self-perpetuation embodied in natural law. Petitioners
likewise rely on the respondent's correlative obligation per Section 4 of E.O. No. 192, to safeguard
the people's right to a healthful environment.

It is further claimed that the issue of the respondent Secretary's alleged grave abuse of discretion in
granting Timber License Agreements (TLAs) to cover more areas for logging than what is available
involves a judicial question.

Anent the invocation by the respondent Judge of the Constitution's non-impairment clause,
petitioners maintain that the same does not apply in this case because TLAs are not contracts. They
likewise submit that even if TLAs may be considered protected by the said clause, it is well settled
that they may still be revoked by the State when the public interest so requires.

On the other hand, the respondents aver that the petitioners failed to allege in their complaint a
specific legal right violated by the respondent Secretary for which any relief is provided by law. They
see nothing in the complaint but vague and nebulous allegations concerning an "environmental right"
which supposedly entitles the petitioners to the "protection by the state in its capacity as parens
patriae." Such allegations, according to them, do not reveal a valid cause of action. They then
reiterate the theory that the question of whether logging should be permitted in the country is a
political question which should be properly addressed to the executive or legislative branches of
Government. They therefore assert that the petitioners' resources is not to file an action to court, but
to lobby before Congress for the passage of a bill that would ban logging totally.
As to the matter of the cancellation of the TLAs, respondents submit that the same cannot be done
by the State without due process of law. Once issued, a TLA remains effective for a certain period of
time usually for twenty-five (25) years. During its effectivity, the same can neither be revised nor
cancelled unless the holder has been found, after due notice and hearing, to have violated the terms
of the agreement or other forestry laws and regulations. Petitioners' proposition to have all the TLAs
indiscriminately cancelled without the requisite hearing would be violative of the requirements of due
process.

Before going any further, We must first focus on some procedural matters. Petitioners instituted Civil
Case No. 90-777 as a class suit. The original defendant and the present respondents did not take
issue with this matter. Nevertheless, We hereby rule that the said civil case is indeed a class suit.
The subject matter of the complaint is of common and general interest not just to several, but to all
citizens of the Philippines. Consequently, since the parties are so numerous, it, becomes
impracticable, if not totally impossible, to bring all of them before the court. We likewise declare that
the plaintiffs therein are numerous and representative enough to ensure the full protection of all
concerned interests. Hence, all the requisites for the filing of a valid class suit under Section 12, Rule
3 of the Revised Rules of Court are present both in the said civil case and in the instant petition, the
latter being but an incident to the former.

This case, however, has a special and novel element. Petitioners minors assert that they represent
their generation as well as generations yet unborn. We find no difficulty in ruling that they can, for
themselves, for others of their generation and for the succeeding generations, file a class suit. Their
personality to sue in behalf of the succeeding generations can only be based on the concept of
intergenerational responsibility insofar as the right to a balanced and healthful ecology is concerned.
Such a right, as hereinafter expounded, considers
the "rhythm and harmony of nature." Nature means the created world in its entirety. 9 Such rhythm
and harmony indispensably include, inter alia, the judicious disposition, utilization, management, renewal
and conservation of the country's forest, mineral, land, waters, fisheries, wildlife, off-shore areas and
other natural resources to the end that their exploration, development and utilization be equitably
accessible to the present as well as future generations. 10 Needless to say, every generation has a
responsibility to the next to preserve that rhythm and harmony for the full enjoyment of a balanced and
healthful ecology. Put a little differently, the minors' assertion of their right to a sound environment
constitutes, at the same time, the performance of their obligation to ensure the protection of that right for
the generations to come.

The locus standi of the petitioners having thus been addressed, We shall now proceed to the merits
of the petition.

After a careful perusal of the complaint in question and a meticulous consideration and evaluation of
the issues raised and arguments adduced by the parties, We do not hesitate to find for the
petitioners and rule against the respondent Judge's challenged order for having been issued with
grave abuse of discretion amounting to lack of jurisdiction. The pertinent portions of the said order
reads as follows:

xxx xxx xxx

After a careful and circumspect evaluation of the Complaint, the Court cannot help
but agree with the defendant. For although we believe that plaintiffs have but the
noblest of all intentions, it (sic) fell short of alleging, with sufficient definiteness, a
specific legal right they are seeking to enforce and protect, or a specific legal wrong
they are seeking to prevent and redress (Sec. 1, Rule 2, RRC). Furthermore, the
Court notes that the Complaint is replete with vague assumptions and vague
 conclusions based on unverified data. In fine, plaintiffs fail to state a cause of action
in its Complaint against the herein defendant.

Furthermore, the Court firmly believes that the matter before it, being impressed with
political color and involving a matter of public policy, may not be taken cognizance of
by this Court without doing violence to the sacred principle of "Separation of Powers"
of the three (3) co-equal branches of the Government.

The Court is likewise of the impression that it cannot, no matter how we stretch our
jurisdiction, grant the reliefs prayed for by the plaintiffs, i.e., to cancel all existing
timber license agreements in the country and to cease and desist from receiving,
accepting, processing, renewing or approving new timber license agreements. For to
do otherwise would amount to "impairment of contracts" abhored (sic) by the
fundamental law. 11

We do not agree with the trial court's conclusions that the plaintiffs failed to allege with sufficient
definiteness a specific legal right involved or a specific legal wrong committed, and that the
complaint is replete with vague assumptions and conclusions based on unverified data. A reading of
the complaint itself belies these conclusions.

The complaint focuses on one specific fundamental legal right the right to a balanced and
healthful ecology which, for the first time in our nation's constitutional history, is solemnly
incorporated in the fundamental law. Section 16, Article II of the 1987 Constitution explicitly provides:

Sec. 16. The State shall protect and advance the right of the people to a balanced
and healthful ecology in accord with the rhythm and harmony of nature.

This right unites with the right to health which is provided for in the preceding section
of the same article:

Sec. 15. The State shall protect and promote the right to health of the people and
instill health consciousness among them.

While the right to a balanced and healthful ecology is to be found under the Declaration of Principles
and State Policies and not under the Bill of Rights, it does not follow that it is less important than any
of the civil and political rights enumerated in the latter. Such a right belongs to a different category of
rights altogether for it concerns nothing less than self-preservation and self-perpetuation aptly and
fittingly stressed by the petitioners the advancement of which may even be said to predate all
governments and constitutions. As a matter of fact, these basic rights need not even be written in the
Constitution for they are assumed to exist from the inception of humankind. If they are now explicitly
mentioned in the fundamental charter, it is because of the well-founded fear of its framers that
unless the rights to a balanced and healthful ecology and to health are mandated as state policies by
the Constitution itself, thereby highlighting their continuing importance and imposing upon the state a
solemn obligation to preserve the first and protect and advance the second, the day would not be too
far when all else would be lost not only for the present generation, but also for those to come
generations which stand to inherit nothing but parched earth incapable of sustaining life.

The right to a balanced and healthful ecology carries with it the correlative duty to refrain from
impairing the environment. During the debates on this right in one of the plenary sessions of the
1986 Constitutional Commission, the following exchange transpired between Commissioner Wilfrido
Villacorta and Commissioner Adolfo Azcuna who sponsored the section in question:
 MR. VILLACORTA:

Does this section mandate the State to provide sanctions against all
forms of pollution air, water and noise pollution?

MR. AZCUNA:

Yes, Madam President. The right to healthful (sic) environment

necessarily carries with it the correlative duty of not impairing the
same and, therefore, sanctions may be provided for impairment of
environmental balance. 12

The said right implies, among many other things, the judicious management and conservation of the
country's forests.

Without such forests, the ecological or environmental balance would be irreversiby disrupted.

Conformably with the enunciated right to a balanced and healthful ecology and the right to health, as
well as the other related provisions of the Constitution concerning the conservation, development
and utilization of the country's natural resources, 13 then President Corazon C. Aquino promulgated on
10 June 1987 E.O. No. 192, 14 Section 4 of which expressly mandates that the Department of
Environment and Natural Resources "shall be the primary government agency responsible for the
conservation, management, development and proper use of the country's environment and natural
resources, specifically forest and grazing lands, mineral, resources, including those in reservation and
watershed areas, and lands of the public domain, as well as the licensing and regulation of all natural
resources as may be provided for by law in order to ensure equitable sharing of the benefits derived
therefrom for the welfare of the present and future generations of Filipinos." Section 3 thereof makes the
following statement of policy:

Sec. 3. Declaration of Policy. It is hereby declared the policy of the State to ensure
the sustainable use, development, management, renewal, and conservation of the
country's forest, mineral, land, off-shore areas and other natural resources, including
the protection and enhancement of the quality of the environment, and equitable
access of the different segments of the population to the development and the use of
the country's natural resources, not only for the present generation but for future
generations as well. It is also the policy of the state to recognize and apply a true
value system including social and environmental cost implications relative to their
utilization, development and conservation of our natural resources.

This policy declaration is substantially re-stated it Title XIV, Book IV of the Administrative Code of
1987, 15specifically in Section 1 thereof which reads:

Sec. 1. Declaration of Policy. (1) The State shall ensure, for the benefit of the
Filipino people, the full exploration and development as well as the judicious
disposition, utilization, management, renewal and conservation of the country's
forest, mineral, land, waters, fisheries, wildlife, off-shore areas and other natural
resources, consistent with the necessity of maintaining a sound ecological balance
and protecting and enhancing the quality of the environment and the objective of
making the exploration, development and utilization of such natural resources
equitably accessible to the different segments of the present as well as future
generations.
 (2) The State shall likewise recognize and apply a true value system that takes into
account social and environmental cost implications relative to the utilization,
development and conservation of our natural resources.

The above provision stresses "the necessity of maintaining a sound ecological balance and
protecting and enhancing the quality of the environment." Section 2 of the same Title, on the other
hand, specifically speaks of the mandate of the DENR; however, it makes particular reference to the
fact of the agency's being subject to law and higher authority. Said section provides:

Sec. 2. Mandate. (1) The Department of Environment and Natural Resources shall
be primarily responsible for the implementation of the foregoing policy.

(2) It shall, subject to law and higher authority, be in charge of carrying out the
State's constitutional mandate to control and supervise the exploration, development,
utilization, and conservation of the country's natural resources.

Both E.O. NO. 192 and the Administrative Code of 1987 have set the objectives which will serve as
the bases for policy formulation, and have defined the powers and functions of the DENR.

It may, however, be recalled that even before the ratification of the 1987 Constitution, specific
statutes already paid special attention to the "environmental right" of the present and future
generations. On 6 June 1977, P.D. No. 1151 (Philippine Environmental Policy) and P.D. No. 1152
(Philippine Environment Code) were issued. The former "declared a continuing policy of the State (a)
to create, develop, maintain and improve conditions under which man and nature can thrive in
productive and enjoyable harmony with each other, (b) to fulfill the social, economic and other
requirements of present and future generations of Filipinos, and (c) to insure the attainment of an
environmental quality that is conducive to a life of dignity and well-being." 16 As its goal, it speaks of
the "responsibilities of each generation as trustee and guardian of the environment for succeeding
generations." 17 The latter statute, on the other hand, gave flesh to the said policy.

Thus, the right of the petitioners (and all those they represent) to a balanced and healthful ecology is
as clear as the DENR's duty under its mandate and by virtue of its powers and functions under
E.O. No. 192 and the Administrative Code of 1987 to protect and advance the said right.

A denial or violation of that right by the other who has the corelative duty or obligation to respect or
protect the same gives rise to a cause of action. Petitioners maintain that the granting of the TLAs,
which they claim was done with grave abuse of discretion, violated their right to a balanced and
healthful ecology; hence, the full protection thereof requires that no further TLAs should be renewed
or granted.

A cause of action is defined as:

. . . an act or omission of one party in violation of the legal right or rights of the other;
and its essential elements are legal right of the plaintiff, correlative obligation of the
defendant, and act or omission of the defendant in violation of said legal right. 18

It is settled in this jurisdiction that in a motion to dismiss based on the ground that the complaint fails
to state a cause of action, 19 the question submitted to the court for resolution involves the sufficiency of
the facts alleged in the complaint itself. No other matter should be considered; furthermore, the truth of
falsity of the said allegations is beside the point for the truth thereof is deemed hypothetically admitted.
The only issue to be resolved in such a case is: admitting such alleged facts to be true, may the court
render a valid judgment in accordance with the prayer in the complaint? 20 InMilitante vs.
Edrosolano, 21 this Court laid down the rule that the judiciary should "exercise the utmost care and
circumspection in passing upon a motion to dismiss on the ground of the absence thereof [cause of
action] lest, by its failure to manifest a correct appreciation of the facts alleged and deemed hypothetically
admitted, what the law grants or recognizes is effectively nullified. If that happens, there is a blot on the
legal order. The law itself stands in disrepute."

After careful examination of the petitioners' complaint, We find the statements under the introductory
affirmative allegations, as well as the specific averments under the sub-heading CAUSE OF
ACTION, to be adequate enough to show, prima facie, the claimed violation of their rights. On the
basis thereof, they may thus be granted, wholly or partly, the reliefs prayed for. It bears stressing,
however, that insofar as the cancellation of the TLAs is concerned, there is the need to implead, as
party defendants, the grantees thereof for they are indispensable parties.

The foregoing considered, Civil Case No. 90-777 be said to raise a political question. Policy
formulation or determination by the executive or legislative branches of Government is not squarely
put in issue. What is principally involved is the enforcement of a right vis-a-vis policies already
formulated and expressed in legislation. It must, nonetheless, be emphasized that the political
question doctrine is no longer, the insurmountable obstacle to the exercise of judicial power or the
impenetrable shield that protects executive and legislative actions from judicial inquiry or review. The
second paragraph of section 1, Article VIII of the Constitution states that:

Judicial power includes the duty of the courts of justice to settle actual controversies
involving rights which are legally demandable and enforceable, and to determine
whether or not there has been a grave abuse of discretion amounting to lack or
excess of jurisdiction on the part of any branch or instrumentality of the Government.

Commenting on this provision in his book, Philippine Political Law, 22 Mr. Justice Isagani A. Cruz, a
distinguished member of this Court, says:

The first part of the authority represents the traditional concept of judicial power,
involving the settlement of conflicting rights as conferred as law. The second part of
the authority represents a broadening of judicial power to enable the courts of justice
to review what was before forbidden territory, to wit, the discretion of the political
departments of the government.

As worded, the new provision vests in the judiciary, and particularly the Supreme
Court, the power to rule upon even the wisdom of the decisions of the executive and
the legislature and to declare their acts invalid for lack or excess of jurisdiction
because tainted with grave abuse of discretion. The catch, of course, is the meaning
of "grave abuse of discretion," which is a very elastic phrase that can expand or
contract according to the disposition of the judiciary.

In Daza vs. Singson, 23 Mr. Justice Cruz, now speaking for this Court, noted:

In the case now before us, the jurisdictional objection becomes even less tenable
and decisive. The reason is that, even if we were to assume that the issue presented
before us was political in nature, we would still not be precluded from revolving it
under the expanded jurisdiction conferred upon us that now covers, in proper cases,
even the political question. Article VII, Section 1, of the Constitution clearly provides:
...
The last ground invoked by the trial court in dismissing the complaint is the non-impairment of
contracts clause found in the Constitution. The court a quo declared that:

The Court is likewise of the impression that it cannot, no matter how we stretch our
jurisdiction, grant the reliefs prayed for by the plaintiffs, i.e., to cancel all existing
timber license agreements in the country and to cease and desist from receiving,
accepting, processing, renewing or approving new timber license agreements. For to
do otherwise would amount to "impairment of contracts" abhored (sic) by the
fundamental law. 24

We are not persuaded at all; on the contrary, We are amazed, if not shocked, by such a sweeping
pronouncement. In the first place, the respondent Secretary did not, for obvious reasons, even
invoke in his motion to dismiss the non-impairment clause. If he had done so, he would have acted
with utmost infidelity to the Government by providing undue and unwarranted benefits and
advantages to the timber license holders because he would have forever bound the Government to
strictly respect the said licenses according to their terms and conditions regardless of changes in
policy and the demands of public interest and welfare. He was aware that as correctly pointed out by
the petitioners, into every timber license must be read Section 20 of the Forestry Reform Code (P.D.
No. 705) which provides:

. . . Provided, That when the national interest so requires, the President may amend,
modify, replace or rescind any contract, concession, permit, licenses or any other
form of privilege granted herein . . .

Needless to say, all licenses may thus be revoked or rescinded by executive action. It is not
a contract, property or a property right protested by the due process clause of the
Constitution. In Tan vs. Director of Forestry, 25 this Court held:

. . . A timber license is an instrument by which the State regulates the utilization and
disposition of forest resources to the end that public welfare is promoted. A timber
license is not a contract within the purview of the due process clause; it is only a
license or privilege, which can be validly withdrawn whenever dictated by public
interest or public welfare as in this case.

A license is merely a permit or privilege to do what otherwise would be unlawful, and

is not a contract between the authority, federal, state, or municipal, granting it and
the person to whom it is granted; neither is it property or a property right, nor does it
create a vested right; nor is it taxation (37 C.J. 168). Thus, this Court held that the
granting of license does not create irrevocable rights, neither is it property or property
rights (People vs. Ong Tin, 54 O.G. 7576).

We reiterated this pronouncement in Felipe Ysmael, Jr. & Co., Inc. vs. Deputy Executive
Secretary: 26

. . . Timber licenses, permits and license agreements are the principal instruments by
which the State regulates the utilization and disposition of forest resources to the end
that public welfare is promoted. And it can hardly be gainsaid that they merely
evidence a privilege granted by the State to qualified entities, and do not vest in the
latter a permanent or irrevocable right to the particular concession area and the
forest products therein. They may be validly amended, modified, replaced or
rescinded by the Chief Executive when national interests so require. Thus, they are
not deemed contracts within the purview of the due process of law clause
 [See Sections 3(ee) and 20 of Pres. Decree No. 705, as amended. Also, Tan v.
Director of Forestry, G.R. No. L-24548, October 27, 1983, 125 SCRA 302].

Since timber licenses are not contracts, the non-impairment clause, which reads:

Sec. 10. No law impairing, the obligation of contracts shall be passed. 27

cannot be invoked.

In the second place, even if it is to be assumed that the same are contracts, the instant case does
not involve a law or even an executive issuance declaring the cancellation or modification of existing
timber licenses. Hence, the non-impairment clause cannot as yet be invoked. Nevertheless, granting
further that a law has actually been passed mandating cancellations or modifications, the same
cannot still be stigmatized as a violation of the non-impairment clause. This is because by its very
nature and purpose, such as law could have only been passed in the exercise of the police power of
the state for the purpose of advancing the right of the people to a balanced and healthful ecology,
promoting their health and enhancing the general welfare. In Abe vs. Foster Wheeler
Corp. 28 this Court stated:

The freedom of contract, under our system of government, is not meant to be

absolute. The same is understood to be subject to reasonable legislative regulation
aimed at the promotion of public health, moral, safety and welfare. In other words,
the constitutional guaranty of non-impairment of obligations of contract is limited by
the exercise of the police power of the State, in the interest of public health, safety,
moral and general welfare.

The reason for this is emphatically set forth in Nebia vs. New York, 29 quoted in Philippine American
Life Insurance Co. vs. Auditor General, 30 to wit:

Under our form of government the use of property and the making of contracts are
normally matters of private and not of public concern. The general rule is that both
shall be free of governmental interference. But neither property rights nor contract
rights are absolute; for government cannot exist if the citizen may at will use his
property to the detriment of his fellows, or exercise his freedom of contract to work
them harm. Equally fundamental with the private right is that of the public to regulate
it in the common interest.

In short, the non-impairment clause must yield to the police power of the state. 31

Finally, it is difficult to imagine, as the trial court did, how the non-impairment clause could apply with
respect to the prayer to enjoin the respondent Secretary from receiving, accepting, processing,
renewing or approving new timber licenses for, save in cases of renewal, no contract would have as
of yet existed in the other instances. Moreover, with respect to renewal, the holder is not entitled to it
as a matter of right.

WHEREFORE, being impressed with merit, the instant Petition is hereby GRANTED, and the
challenged Order of respondent Judge of 18 July 1991 dismissing Civil Case No. 90-777 is hereby
set aside. The petitioners may therefore amend their complaint to implead as defendants the holders
or grantees of the questioned timber license agreements.

No pronouncement as to costs.
SO ORDERED.

G.R. No. 101063, July 30, 1993

Juan Antonio Oposa, Anna Rosario Oposa, Jose Alfonso Oposa, et al. and the Philippine Ecological Network vs.
Fulgencio Factoran, in his capacity as the Secretary of the Department of Environment and Natural Resources and
Eriberto U. Rosario, Presiding Judge of the RTC, Makati, Branch 66

Facts: The complaint was instituted as a taxpayers class suit and alleges that the plaintiffs, minors who are represented by their
parents, are all citizens of the Republic of the Philippines, taxpayers, and entitled to the full benefit, use and enjoyment of the
natural resource treasure that is the countrys virgin tropical forests. The minors further acerbate that they represent their
generation as well as generations yet unborn. They prayed that the defendant and his agents cancel all existing timber license
agreements in the country and that they cease and desist from receiving, accepting, processing, renewing or approving new
timber license agreements. They contend that the continued abuse of the natural resources of the country are causing various
environmental tragedies and such violate peoples right to a healthful environment.

Secretary Factoran filed a Motion to Dismiss based on two grounds: first, the plaintiffs have no cause of action against him and
second, the issue raised by the plaintiffs is a political question which properly pertains to the legislative or executive branches of
the Government. The RTC Judge issued an order granting the aforementioned motion to dismiss. The Judge further ruled that
the granting of the relief prayed for would result in the impairment of contracts which is prohibited by the fundamental law of the
land. Plaintiffs thus filed the instant special civil action for certiorari under Rule 65 on the ground that the Judge gravely abused
his discretion in dismissing the action.

Issue: Whether or not the petitioners have a cause of action to prevent the misappropriation or impairment of Philippine
rainforests and arrest the unabated hemorrhage of the countrys vital life support systems and continued rape of Mother Earth.

Held: Yes. They can, for themselves, for others of their generation and for the succeeding generations, file a class suit. Their
personality to sue in behalf of the succeeding generations can only be based on the concept of intergenerational responsibility
insofar as the right to a balanced and healthful ecology is concerned. Every generation has a responsibility to the next to
preserve that rhythm and harmony of nature for the full enjoyment of a balanced and healthful ecology. The minors assertion of
their right to a sound environment constitutes, at the same time, the performance of their obligation to ensure the protection of
that right for the generations to come.

In addition, while the right to a balanced and healthful ecology is to be found under the Declaration of Principles and State
Policies and not under the Bill of Rights, it does not follow that it is less important than any of the civil and political rights
enumerated in the latter. Furthermore, the right to a balanced and healthful ecology carries with it the correlative duty to refrain
from impairing the environment and as stated by law, the Department of Environment and Natural Resources shall be the
primary government agency responsible for the conservation, management, development and proper use of the countys
environment and natural resources. Thus, the right of the petitioners (and all those they represent) to a balanced and healthful
ecology is as clear as the DENRs duty under its mandate and by virtue of its power and functions under E.O. No. 192 and the
Administrative Code of 1987 to protect and advance the said right.

A denial or violation of that right by the other who has the correlative duty or obligation to respect or protect the same gives rise
to a cause of action.

In re Yamashita
U.S. Supreme Court
327 U.S. 1, 13-16, 28, 34-35 (1946)

FACTS
After World War II, Japanese General Tomoyuki Yamashita was tried before a U.S. military tribunal in
Manilla for war crimes committed by troops under his command.
-U.S. claimed that D failed to discharge his duty as a commander to control the operations of the
members of his command, allowing them to commit brutal atrocities and other high crimes against the
U.S. and allies and was in violation of laws of war.
ISSUE
Does the law of war impose upon an army commander to take appropriate measures to control his troops
for prevention of violations of the law of war which are likely to attend occupation of hostile territory, and
whether he may be charged with personal responsibility for the failure to take such measures when
violations result?
HOLDING
There is an affirmative duty to take such measures as were in his power and appropriate in the
circumstances to protect prisoners of war and civilians.
DISCUSSION
Purpose of the law is to protect civilians and prisoners of war from brutality.
Fourth Hague Convention of 1907: Armed force must be commanded by a person responsible for his
subordinates.

Syllabus

Prior to September 3, 1945, petitioner was the Commanding General of the Fourteenth
Army Group of the Imperial Japanese Army in the Philippine Islands. On that day, he
surrendered to the United States Army and became a prisoner of war. Respondent was
the Commanding General of the United States Army Forces, Western Pacific, whose
command embraced the Philippine Islands. Respondent appointed a military
commission to try the petitioner on a charge of violation of the law of war. The gist of the
charge was that petitioner had failed in his duty as an army commander to control the
operations of his troops, "permitting them to commit" specified atrocities against the
civilian population and prisoners of war. Petitioner was found guilty, and sentenced to
death.

Held:

1. The military commission appointed to try the petitioner was lawfully created. P. 327
U. S. 9.

(a) Nature of the authority to create military commissions for the trial of enemy
combatants for offenses against the law of war, and principles governing the exercise of
jurisdiction by such commissions, considered. Citing Ex parte Quirin, 317 U. S. 1, and
other cases. Pp. 327 U. S. 7-9.

(b) A military commission may be appointed by any field commander, or by any

commander competent to appoint a general court-martial, as was respondent by order
of the President. P. 327 U. S. 10.

(c) The order creating the military commission was in conformity with the Act of
Congress (10 U.S.C. 1471-1593) sanctioning
Page 327 U. S. 2

the creation of such tribunals for the trial of offenses against the law of war committed
by enemy combatants. P. 327 U. S. 11.

2. Trial of the petitioner by the military commission was lawful, although hostilities had
ceased. P. 327 U. S. 12.

(a) A violation of the law of war, committed before the cessation of hostilities, may
lawfully be tried by a military commission after hostilities have ceased -- at least until
peace has been officially recognized by treaty or proclamation by the political branch of
the Government. P. 327 U. S. 12.

(b) Trial of the petitioner by the military commission was authorized by the political
branch of the Government, by military command, by international law and usage, and by
the terms of the surrender of the Japanese government. P. 327 U. S. 13.

3. The charge preferred against the petitioner was of a violation of the law of war.
P. 327 U. S. 13.

(a) The law of war imposes on an army commander a duty to take such appropriate
measures as are within his power to control the troops under his command for the
prevention of acts which are violations of the law of war and which are likely to attend
the occupation of hostile territory by an uncontrolled soldiery, and he may be charged
with personal responsibility for his failure to take such measures when violations result.
Pp. 327 U. S. 14,327 U. S. 16.

(b) What measures, if any, petitioner took to prevent the alleged violations of the law of
war, and whether such measures as he may have taken were appropriate and sufficient
to discharge the duty imposed upon him, were questions within the peculiar
competence of the military officers composing the commission, and were for it to
decide. P. 327 U. S. 16.

(c) Charges of violations of the law of war triable before a military tribunal need not be
stated with the precision of a common law indictment. P. 327 U. S. 17.

(d) The allegations of the charge here, tested by any reasonable standard, sufficiently
set forth a violation of the law of war, and the military commission had authority to try
and to decide the issue which it raised. P.327 U. S. 17.

4. In admitting on behalf of the prosecution a deposition and hearsay and opinion

evidence, the military commission did not violate any Act of Congress, treaty, or military
command defining the commission's authority. Pp. 327 U. S. 18, 327 U. S. 23.

(a) The Articles of War, including Articles 25 and 38, are not applicable to the trial of an
enemy combatant by a military commission
Page 327 U. S. 3

for violations of the law of war, and imposed no restrictions upon the procedure to be
followed in such trial. Pp. 327 U. S. 19-20.

(b) Article 63 of the Geneva Convention of 1929, which provides that

"Sentence may be pronounced against a prisoner of war only by the same courts and
according to the same procedure as in the case of persons belonging to the armed
forces of the detaining Power,"

does not require that Articles 25 and 38 of the Articles of War be applied in the trial of
the petitioner. Article 63 refers to sentence "pronounced against a prisoner of war" for
an offense committed while a prisoner of war, and not for a violation of the law of war
committed while a combatant. P. 327 U. S. 20.

(c) The Court expresses no opinion on the question of the wisdom of considering such
evidence as was received in this proceeding, nor on the question whether the action of
a military tribunal in admitting evidence which Congress or controlling military command
has directed to be excluded may be drawn in question by petition for habeas corpus or
prohibition. P.327 U. S. 23.

5. On an application for habeas corpus, the Court is not concerned with the guilt or
innocence of the petitioner. P. 327 U. S. 8.

6. By sanctioning trials of enemy aliens by military commission for offenses against the
law of war, Congress recognized the right of the accused to make a defense, and did
not foreclose their right to contend that the Constitution or laws of the United States
withhold authority to proceed with the trial. P.327 U. S. 9.

7. The Court does not appraise the evidence on which the petitioner here was
convicted. P. 327 U. S. 17.

8. The military commission's rulings on evidence and on the mode of conducting the
proceedings against the petitioner are not reviewable by the courts, but only by the
reviewing military authorities. From this viewpoint, it is unnecessary to consider what, in
other situations, the Fifth Amendment might require. Pp. 327 U. S. 8, 327 U. S. 23.

9. Article 60 of the Geneva Convention of 1929, which provides that,

"At the opening of a judicial proceeding directed against a prisoner of war, the detaining
Power shall advise the representative of the protecting Power thereof as soon as
possible, and always before the date set for the opening of the trial,"

applies only to persons who are subjected to judicial proceedings for offenses
committed while prisoners of war. P. 327 U. S. 23.
10. The detention of the petitioner for trial, and his detention upon his conviction, subject
to the prescribed review by the military authorities, were lawful. P. 327 U. S. 25.

Leave and petition denied.

Page 328 U. S. 4

No. 61, Misc. Application for leave to file a petition for writs of habeas corpus and
prohibition in this Court challenging the jurisdiction and legal authority of a military
commission which convicted applicant of a violation of the law of war and sentenced
him to be hanged. Denied.

No. 672. Petition for certiorari to review an order of the Supreme Court of the
Commonwealth of the Philippines, 42 Off.Gaz. 664, denying an application for writs of
habeas corpus and prohibition likewise challenging the jurisdiction and legal authority of
the military commission which tried and convicted petitioner. Denied.

U.S. Supreme Court

In re Yamashita, 327 U.S. 1 (1946)

In re Yamashita

No. 61, Misc.

Argued January 7, 8, 1946

Decided February 4, 1946*

327 U.S. 1

APPLICATION FOR LEAVE TO FILE PETITION FOR WRIT OF

HABEAS CORPUS AND WRIT OF PROHIBITION

Syllabus

Prior to September 3, 1945, petitioner was the Commanding General of the Fourteenth
Army Group of the Imperial Japanese Army in the Philippine Islands. On that day, he
surrendered to the United States Army and became a prisoner of war. Respondent was
the Commanding General of the United States Army Forces, Western Pacific, whose
command embraced the Philippine Islands. Respondent appointed a military
commission to try the petitioner on a charge of violation of the law of war. The gist of the
charge was that petitioner had failed in his duty as an army commander to control the
operations of his troops, "permitting them to commit" specified atrocities against the
civilian population and prisoners of war. Petitioner was found guilty, and sentenced to
death.

Held:

1. The military commission appointed to try the petitioner was lawfully created. P. 327
U. S. 9.

(a) Nature of the authority to create military commissions for the trial of enemy
combatants for offenses against the law of war, and principles governing the exercise of
jurisdiction by such commissions, considered. Citing Ex parte Quirin, 317 U. S. 1, and
other cases. Pp. 327 U. S. 7-9.

(b) A military commission may be appointed by any field commander, or by any

commander competent to appoint a general court-martial, as was respondent by order
of the President. P. 327 U. S. 10.

(c) The order creating the military commission was in conformity with the Act of
Congress (10 U.S.C. 1471-1593) sanctioning

Page 327 U. S. 2

the creation of such tribunals for the trial of offenses against the law of war committed
by enemy combatants. P. 327 U. S. 11.

2. Trial of the petitioner by the military commission was lawful, although hostilities had
ceased. P. 327 U. S. 12.

(a) A violation of the law of war, committed before the cessation of hostilities, may
lawfully be tried by a military commission after hostilities have ceased -- at least until
peace has been officially recognized by treaty or proclamation by the political branch of
the Government. P. 327 U. S. 12.

(b) Trial of the petitioner by the military commission was authorized by the political
branch of the Government, by military command, by international law and usage, and by
the terms of the surrender of the Japanese government. P. 327 U. S. 13.

3. The charge preferred against the petitioner was of a violation of the law of war.
P. 327 U. S. 13.
(a) The law of war imposes on an army commander a duty to take such appropriate
measures as are within his power to control the troops under his command for the
prevention of acts which are violations of the law of war and which are likely to attend
the occupation of hostile territory by an uncontrolled soldiery, and he may be charged
with personal responsibility for his failure to take such measures when violations result.
Pp. 327 U. S. 14,327 U. S. 16.

(b) What measures, if any, petitioner took to prevent the alleged violations of the law of
war, and whether such measures as he may have taken were appropriate and sufficient
to discharge the duty imposed upon him, were questions within the peculiar
competence of the military officers composing the commission, and were for it to
decide. P. 327 U. S. 16.

(c) Charges of violations of the law of war triable before a military tribunal need not be
stated with the precision of a common law indictment. P. 327 U. S. 17.

(d) The allegations of the charge here, tested by any reasonable standard, sufficiently
set forth a violation of the law of war, and the military commission had authority to try
and to decide the issue which it raised. P.327 U. S. 17.

4. In admitting on behalf of the prosecution a deposition and hearsay and opinion

evidence, the military commission did not violate any Act of Congress, treaty, or military
command defining the commission's authority. Pp. 327 U. S. 18, 327 U. S. 23.

(a) The Articles of War, including Articles 25 and 38, are not applicable to the trial of an
enemy combatant by a military commission

Page 327 U. S. 3

for violations of the law of war, and imposed no restrictions upon the procedure to be
followed in such trial. Pp. 327 U. S. 19-20.

(b) Article 63 of the Geneva Convention of 1929, which provides that

"Sentence may be pronounced against a prisoner of war only by the same courts and
according to the same procedure as in the case of persons belonging to the armed
forces of the detaining Power,"

does not require that Articles 25 and 38 of the Articles of War be applied in the trial of
the petitioner. Article 63 refers to sentence "pronounced against a prisoner of war" for
an offense committed while a prisoner of war, and not for a violation of the law of war
committed while a combatant. P. 327 U. S. 20.

(c) The Court expresses no opinion on the question of the wisdom of considering such
evidence as was received in this proceeding, nor on the question whether the action of
a military tribunal in admitting evidence which Congress or controlling military command
has directed to be excluded may be drawn in question by petition for habeas corpus or
prohibition. P.327 U. S. 23.

5. On an application for habeas corpus, the Court is not concerned with the guilt or
innocence of the petitioner. P. 327 U. S. 8.

6. By sanctioning trials of enemy aliens by military commission for offenses against the
law of war, Congress recognized the right of the accused to make a defense, and did
not foreclose their right to contend that the Constitution or laws of the United States
withhold authority to proceed with the trial. P.327 U. S. 9.

7. The Court does not appraise the evidence on which the petitioner here was
convicted. P. 327 U. S. 17.

8. The military commission's rulings on evidence and on the mode of conducting the
proceedings against the petitioner are not reviewable by the courts, but only by the
reviewing military authorities. From this viewpoint, it is unnecessary to consider what, in
other situations, the Fifth Amendment might require. Pp. 327 U. S. 8, 327 U. S. 23.

9. Article 60 of the Geneva Convention of 1929, which provides that,

"At the opening of a judicial proceeding directed against a prisoner of war, the detaining
Power shall advise the representative of the protecting Power thereof as soon as
possible, and always before the date set for the opening of the trial,"

applies only to persons who are subjected to judicial proceedings for offenses
committed while prisoners of war. P. 327 U. S. 23.

10. The detention of the petitioner for trial, and his detention upon his conviction, subject
to the prescribed review by the military authorities, were lawful. P. 327 U. S. 25.

Leave and petition denied.

Page 328 U. S. 4

No. 61, Misc. Application for leave to file a petition for writs of habeas corpus and
prohibition in this Court challenging the jurisdiction and legal authority of a military
commission which convicted applicant of a violation of the law of war and sentenced
him to be hanged. Denied.

No. 672. Petition for certiorari to review an order of the Supreme Court of the
Commonwealth of the Philippines, 42 Off.Gaz. 664, denying an application for writs of
habeas corpus and prohibition likewise challenging the jurisdiction and legal authority of
the military commission which tried and convicted petitioner. Denied.

MR. CHIEF JUSTICE STONE delivered the opinion of the Court.

No. 61 Miscellaneous is an application for leave to file a petition for writs of habeas
corpus and prohibition in this Court. No. 672 is a petition for certiorari to review an order
of the Supreme Court of the the Philippines (28 U.S.C. 349) denying petitioner's
application to that court for writs of habeas corpus and prohibition. As both applications
raise substantially like questions, and because of the importance and novelty of some of
those presented, we set the two applications down for oral argument as one case.

Page 327 U. S. 5

From the petitions and supporting papers, it appears that, prior to September 3, 1945,
petitioner was the Commanding General of the Fourteenth Army Group of the Imperial
Japanese Army in the Philippine Islands. On that date, he surrendered to and became a
prisoner of war of the United States Army Forces in Baguio, Philippine Islands. On
September 25th, by order of respondent, Lieutenant General Wilhelm D. Styer,
Commanding General of the United States Army Forces, Western Pacific, which
command embraces the Philippine Islands, petitioner was served with a charge
prepared by the Judge Advocate General's Department of the Army, purporting to
charge petitioner with a violation of the law of war. On October 8, 1945, petitioner, after
pleading not guilty to the charge, was held for trial before a military commission of five
Army officers appointed by order of General Styer. The order appointed six Army
officers, all lawyers, as defense counsel. Throughout the proceedings which followed,
including those before this Court, defense counsel have demonstrated their professional
skill and resourcefulness and their proper zeal for the defense with which they were
charged.

On the same date, a bill of particulars was filed by the prosecution, and the commission
heard a motion made in petitioner's behalf to dismiss the charge on the ground that it
failed to state a violation of the law of war. On October 29th, the commission was
reconvened, a supplemental bill of particulars was filed, and the motion to dismiss was
denied. The trial then proceeded until its conclusion on December 7, 1945, the
commission hearing two hundred and eighty-six witnesses, who gave over three
thousand pages of testimony. On that date, petitioner was found guilty of the offense as
charged, and sentenced to death by hanging.

The petitions for habeas corpus set up that the detention of petitioner for the purpose of
the trial was unlawful for

Page 327 U. S. 6

reasons which are now urged as showing that the military commission was without
lawful authority or jurisdiction to place petitioner on trial, as follows:

(a) That the military commission which tried and convicted petitioner was not lawfully
created, and that no military commission to try petitioner for violations of the law of war
could lawfully be convened after the cessation of hostilities between the armed forces of
the United States and Japan;
(b) that the charge preferred against petitioner fails to charge him with a violation of the
law of war;

(c) that the commission was without authority and jurisdiction to try and convict
petitioner, because the order governing the procedure of the commission permitted the
admission in evidence of depositions, affidavits, and hearsay and opinion evidence, and
because the commission's rulings admitting such evidence were in violation of the 25th
and 38th Articles of War (10 U.S.C. 1496, 1509) and the Geneva Convention (47
Stat. 2021), and deprived petitioner of a fair trial in violation of the due process clause of
the Fifth Amendment;

(d) that the commission was without authority and jurisdiction in the premises because
of the failure to give advance notice of petitioner's trial to the neutral power representing
the interests of Japan as a belligerent as required by Article 60 of the Geneva
Convention, 47 Stat. 2021, 2051.

On the same grounds, the petitions for writs of prohibition set up that the commission is
without authority to proceed with the trial.

The Supreme Court of the Philippine Islands, after hearing argument, denied the
petition for habeas corpus presented to it on the ground, among others, that its
jurisdiction was limited to an inquiry as to the jurisdiction of the commission to place
petitioner on trial for the offense charged, and that the commission, being validly
constituted

Page 327 U. S. 7

by the order of General Styer, had jurisdiction over the person of petitioner and over the
trial for the offense charged.

In Ex parte Quirin, 317 U. S. 1, we had occasion to consider at length the sources and
nature of the authority to create military commissions for the trial of enemy combatants
for offenses against the law of war. We there pointed out that Congress, in the exercise
of the power conferred upon it by Article I, 8, Cl. 10, of the Constitution to "define and
punish . . . Offenses against the Law of Nations . . . " of which the law of war is a part,
had, by the Articles of War (10 U.S.C. 1471-1593), recognized the "military
commission" appointed by military command, as it had previously existed in United
States Army practice, as an appropriate tribunal for the trial and punishment of offenses
against the law of war. Article 15 declares that

"the provisions of these articles conferring jurisdiction upon courts-martial shall not be
construed as depriving military commissions . . . or other military tribunals of concurrent
jurisdiction in respect of offenders of offenses that, by statute or by the law of war, may
be triable by such military commissions . . . or other military tribunals."
See a similar provision of the Espionage Act of 1917, 50 U.S.C. 38. Article 2 includes
among those persons subject to the Articles of War the personnel of our own military
establishment. But this, as Article 12 indicates, does not exclude from the class of
persons subject to trial by military commissions "any other person who, by the law of
war, is subject to trial by military tribunals" and who, under Article 12, may be tried by
court martial, or, under Article 15, by military commission.

We further pointed out that Congress, by sanctioning trial of enemy combatants for
violations of the law of war by military commission, had not attempted to codify the law
of war or to mark its precise boundaries. Instead, by Article 15, it had incorporated, by
reference, as within the

Page 327 U. S. 8

preexisting jurisdiction of military commissions created by appropriate military

command, all offenses which are defined as such by the law of war and which may
constitutionally be included within that jurisdiction. It thus adopted the system of military
common law applied by military tribunals so far as it should be recognized and deemed
applicable by the courts, and as further defined and supplemented by the Hague
Convention, to which the United States and the Axis powers were parties.

We also emphasized in Ex parte Quirin, as we do here, that, on application for habeas

corpus, we are not concerned with the guilt or innocence of the petitioners. We consider
here only the lawful power of the commission to try the petitioner for the offense
charged. In the present cases, it must be recognized throughout that the military
tribunals which Congress has sanctioned by the Articles of War are not courts whose
rulings and judgments are made subject to review by this Court. See Ex parte
Vallandingham, 1 Wall. 243; In re Vidal, 179 U. S. 126; cf. Ex parte Quirin, supra,317 U.
S. 39. They are tribunals whose determinations are reviewable by the military
authorities either as provided in the military orders constituting such tribunals or as
provided by the Articles of War. Congress conferred on the courts no power to review
their determinations save only as it has granted judicial power "to grant writs of habeas
corpus for the purpose of an inquiry into the cause of the restraint of liberty." 28 U.S.C.
451, 452. The courts may inquire whether the detention complained of is within the
authority of those detaining the petitioner. If the military tribunals have lawful authority to
hear, decide, and condemn, their action is not subject to judicial review merely because
they have made a wrong decision on disputed facts. Correction of their errors of
decision is not for the courts, but for the military authorities, which are alone authorized
to review their decisions. See Dynes v. Hoover, 20 How. 5, 61 U. S. 81; Runkle v.
United States, 122

Page 327 U. S. 9

U.S. 543, 122 U. S. 555-556; Carter v. McClaughry, 183 U. S. 365; Collins v.

McDonald, 258 U. S. 416. Cf. Matter of Moran, 203 U. S. 96, 203 U. S. 105.
Finally, we held in Ex parte Quirin, supra, 317 U. S. 24-25, as we hold now, that
Congress, by sanctioning trials of enemy aliens by military commission for offenses
against the law of war, had recognized the right of the accused to make a defense. Cf.
Ex parte Kawato, 317 U. S. 69. It has not foreclosed their right to contend that the
Constitution or laws of the United States withhold authority to proceed with the trial. It
has not withdrawn, and the Executive branch of the government could not, unless there
was suspension of the writ, withdraw from the courts the duty and power to make such
inquiry into the authority of the commission as may be made by habeas corpus.

With these governing principles in mind, we turn to the consideration of the several
contentions urged to establish want of authority in the commission. We are not here
concerned with the power of military commissions to try civilians. See Ex parte
Milligan, 4 Wall. 2, 71 U. S. 132; Sterling v. Constantin, 287 U. S. 378; Ex parte Quirin,
supra, 317 U. S. 45. The Government's contention is that General Styer's order creating
the commission conferred authority on it only to try the purported charge of violation of
the law of war committed by petitioner, an enemy belligerent, while in command of a
hostile army occupying United States territory during time of war. Our first inquiry must
therefore be whether the present commission was created by lawful military command,
and, if so, whether authority could thus be conferred on the commission to place
petitioner on trial after the cessation of hostilities between the armed forces of the
United States and Japan.

The authority to create the Commission. General Styer's order for the appointment of
the commission was made by him as Commander of the United States Armed Forces,
Western Pacific. His command includes, as part

Page 327 U. S. 10

of a vastly greater area, the Philippine Islands, where the alleged offenses were
committed, where petitioner surrender as a prisoner of war, and where, at the time of
the order convening the commission, he was detained as a prisoner in custody of the
United States Army. The Congressional recognition of military commissions and its
sanction of their use in trying offenses against the law of war to which we have referred
sanctioned their creation by military command in conformity to long established
American precedents. Such a commission may be appointed by any field commander,
or by any commander competent to appoint a general court martial, as was General
Styer, who had been vested with that power by order of the President. 2 Winthrop,
Military Law and Precedents,2d Ed., *1302; cf. Article of War 8.

Here, the commission was not only created by a commander competent to appoint it,
but his order conformed to the established policy of the Government and to higher
military commands authorizing his action. In a proclamation of July 2, 1942 (56 Stat.
1964), the President proclaimed that enemy belligerents who, during time of war, enter
the United States, or any territory possession thereof, and who violate the law of war,
should be subject to the law of war and to the jurisdiction of military tribunals. Paragraph
10 of the Declaration of Potsdam of July 6, 1945, declared that " . . . stern justice shall
be meted out to all war criminals, including those who have visited cruelties upon
prisoners." U.S. Dept. of State Bull., Vol. XIII, No. 318, pp. 137, 138. This Declaration
was accepted by the Japanese government by its note of August 10, 1945. U.S. Dept.
of State Bull., Vol. XIII, No. 320, p. 205.

By direction of the President, the Joint Chiefs of Staff of the American Military Forces,
on September 12, 1945, instructed General MacArthur, Commander in Chief, United
States Army Forces, Pacific, to proceed with the trial, before

Page 327 U. S. 11

appropriate military tribunals, of such Japanese war criminals "as have been or may be
apprehended." By order of General MacArthur of September 24, 1945, General Styer
was specifically directed to proceed with the trial of petitioner upon the charge here
involved. This order was accompanied by detailed rules and regulations which General
MacArthur prescribed for the trial of war criminals. These regulations directed, among
other things, that review of the sentence imposed by the commission should be by the
officer convening it, with "authority to approve, mitigate, remit, commute, suspend,
reduce, or otherwise alter the sentence imposed," and directed that no sentence of
death should be carried into effect until confirmed by the Commander in Chief, United
States Army Forces, Pacific.

It thus appears that the order creating the commission for the trial of petitioner was
authorized by military command, and was in complete conformity to the Act of Congress
sanctioning the creation of such tribunals for the trial of offenses against the law of war
committed by enemy combatants. And we turn to the question whether the authority to
create the commission and direct the trial by military order continued after the cessation
of hostilities.

An important incident to the conduct of war is the adoption of measures by the military
commander not only to repel and defeat the enemy, but to seize and subject to
disciplinary measures those enemies who, in their attempt to thwart or impede our
military effort, have violated the law of war. Ex parte Quirin, supra, 317 U. S. 28. The
trial and punishment of enemy combatants who have committed violations of the law of
war is thus not only a part of the conduct of war operating as a preventive measure
against such violations, but is an exercise of the authority sanctioned by Congress to
administer the system of military justice recognized by the law of war. That sanction is
without qualification as to the exercise of this authority so

Page 327 U. S. 12

long as a state of war exists -- from its declaration until peace is proclaimed.See United
States v. Anderson, 9 Wall. 56, 76 U. S. 70; The Protector, 12 Wall. 700, 79 U. S.
702; McElrath v. United States, 102 U. S. 426, 102 U. S. 438; Kahn v. Anderson, 255 U.
S. 1, 255 U. S. 9-10. The war power, from which the commission derives its existence,
is not limited to victories in the field, but carries with it the inherent power to guard
against the immediate renewal of the conflict, and to remedy, at least in ways Congress
has recognized, the evils which the military operations have produced. See Stewart v.
Kahn, 11 Wall. 493, 78 U. S. 507.

We cannot say that there is no authority to convene a commission after hostilities have
ended to try violations of the law of war committed before their cessation, at least until
peace has been officially recognized by treaty or proclamation of the political branch of
the Government. In fact, in most instances, the practical administration of the system of
military justice under the law of war would fail if such authority were thought to end with
the cessation of hostilities. For only after their cessation could the greater number of
offenders and the principal ones be apprehended and subjected to trial.

No writer on international law appears to have regarded the power of military tribunals,
otherwise competent to try violations of the law of war, as terminating before the formal
state of war has ended. [Footnote 1] In our own military history,

Page 327 U. S. 13

there have been numerous instances in which offenders were tried by military
commission after the cessation of hostilities and before the proclamation of peace, for
offenses against the law of war committed before the cessation of hostilities. [Footnote
2]

The extent to which the power to prosecute violations of the law of war shall be
exercised before peace is declared rests not with the courts, but with the political branch
of the Government, and may itself be governed by the terms of an armistice or the
treaty of peace. Here, peace has not been agreed upon or proclaimed. Japan, by her
acceptance of the Potsdam Declaration and her surrender, has acquiesced in the trials
of those guilty of violations of the law of war. The conduct of the trial by the military
commission has been authorized by the political branch of the Government, by military
command, by international law and usage, and by the terms of the surrender of the
Japanese government.

The Charge. Neither Congressional action nor the military orders constituting the
commission authorized it to place petitioner on trial unless the charge preferred against
him is of a violation of the law of war. The charge, so far as now relevant, is that
petitioner, between October 9, 1944, and September 2, 1945, in the Philippine Islands,

"while commander of armed forces of Japan at war with the United States of America
and its allies, unlawfully disregarded and failed to discharge his duty as commander to

Page 327 U. S. 14

control the operations of the members of his command, permitting them to commit
brutal atrocities and other high crimes against people of the United States and of its
allies and dependencies, particularly the Philippines, and he . . . thereby violated the
laws of war."

Bills of particulars, filed by the prosecution by order of the commission, allege a a series
of acts, one hundred and twenty-three in number, committed by members of the forces
under petitioner's command during the period mentioned. The first item specifies the
execution of a

"a deliberate plan and purpose to massacre and exterminate a large part of the civilian
population of Batangas Province, and to devastate and destroy public, private, and
religious property therein, as a result of which more than 25,000 men, women and
children, all unarmed noncombatant civilians, were brutally mistreated and killed,
without cause or trial, and entire settlements were devastated and destroyed wantonly
and without military necessity."

Other items specify acts of violence, cruelty, and homicide inflicted upon the civilian
population and prisoners of war, acts of wholesale pillage, and the wanton destruction
of religious monuments.

It is not denied that such acts directed against the civilian population of an occupied
country and against prisoners of war are recognized in international law as violations of
the law of war. Articles 4, 28, 46, and 47, Annex to Fourth Hague Convention, 1907, 36
Stat. 2277, 2296, 2303, 2306, 2307. But it is urged that the charge does not allege that
petitioner has either committed or directed the commission of such acts, and
consequently that no violation is charged as against him. But this overlooks the fact that
the gist of the charge is an unlawful breach of duty by petitioner as an army commander
to control the operations of the members of his command by "permitting them to
commit" the extensive and widespread atrocities specified. The question, then, is
whether the law of war imposes

Page 327 U. S. 15

on an army commander a duty to take such appropriate measures as are within his
power to control the troops under his command for the prevention of the specified acts
which are violations of the law of war and which are likely to attend the occupation of
hostile territory by an uncontrolled soldiery, and whether he may be charged with
personal responsibility for his failure to take such measures when violations result. That
this was the precise issue to be tried was made clear by the statement of the
prosecution at the opening of the trial.

It is evident that the conduct of military operations by troops whose excesses are
unrestrained by the orders or efforts of their commander would almost certainly result in
violations which it is the purpose of the law of war to prevent. Its purpose to protect
civilian populations and prisoners of war from brutality would largely be defeated if the
commander of an invading army could, with impunity, neglect to take reasonable
measures for their protection. Hence, the law of war presupposes that its violation is to
be avoided through the control of the operations of war by commanders who are to
some extent responsible for their subordinates.

This is recognized by the Annex to Fourth Hague Convention of 1907, respecting the
laws and customs of war on land. Article I lays down, as a condition which an armed
force must fulfill in order to be accorded the rights of lawful belligerents, that it must be
"commanded by a person responsible for his subordinates." 36 Stat. 2295. Similarly,
Article 19 of the Tenth Hague Convention, relating to bombardment by naval vessels,
provides that commanders in chief of the belligerent vessels "must see that the above
Articles are properly carried out." 36 Stat. 2389. And Article 26 of the Geneva Red
Cross Convention of 1929, 47 Stat. 2074, 2092, for the amelioration of the condition of
the wounded and sick in armies in the field, makes it

"the duty of the commanders in chief of the belligerent

Page 327 U. S. 16

armies to provide for the details of execution of the foregoing articles [of the
convention], as well as for unforeseen cases."

And, finally, Article 43 of the Annex of the Fourth Hague Convention, 36 Stat. 2306,
requires that the commander of a force occupying enemy territory, as was petitioner,

"shall take all the measures in his power to restore and ensure, as far as possible,
public order and safety, while respecting, unless absolutely prevented, the laws in force
in the country."

These provisions plainly imposed on petitioner, who at the time specified was military
governor of the Philippines as well as commander of the Japanese forces, an
affirmative duty to take such measures as were within his power and appropriate in the
circumstances to protect prisoners of war and the civilian population. This duty of a
commanding officer has heretofore been recognized, and its breach penalized by our
own military tribunals. [Footnote 3] A like principle has been applied so as to impose
liability on the United States in international arbitrations. Case of Jenaud, 3 Moore,
International Arbitrations 3000; Case of "The Zafiro," 5 Hackworth, Digest of
International Law 707.

We do not make the laws of war, but we respect them so far as they do not conflict with
the commands of Congress or the Constitution. There is no contention that the present
charge, thus read, is without the support of evidence, or that the commission held
petitioner responsible for failing to take measures which were beyond his control or
inappropriate for a commanding officer to take in the circumstances. [Footnote 4]

Page 327 U. S. 17
We do not here appraise the evidence on which petitioner was convicted. We do not
consider what measures, if any, petitioner took to prevent the commission, by the troops
under his command, of the plain violations of the law of war detailed in the bill of
particulars, or whether such measures as he may have taken were appropriate and
sufficient to discharge the duty imposed upon him. These are questions within the
peculiar competence of the military officers composing the commission, and were for it
to decide.See Smith v. Whitney, 116 U. S. 167, 116 U. S. 178. It is plain that the charge
on which petitioner was tried charged him with a breach of his duty to control the
operations of the members of his command, by permitting them to commit the specified
atrocities. This was enough to require the commission to hear evidence tending to
establish the culpable failure of petitioner to perform the duty imposed on him by the law
of war, and to pass upon its sufficiency to establish guilt.

Obviously, charges of violations of the law of war triable before a military tribunal need
not be stated with the precision of a common law indictment.Cf. Collins v. McDonald,
supra, 258 U. S. 420. But we conclude that the allegations of the charge, tested by any
reasonable standard, adequately allege a violation of the law of war, and that the

Page 327 U. S. 18

commission had authority to try and decide the issue which it raised. Cf. Dealy v. United
States, 152 U. S. 539; Williamson v. United States, 207 U. S. 425,207 U. S.
447; Glasser v. United States, 315 U. S. 60, 315 U. S. 66, and cases cited.

The Proceedings before the Commission. The regulations prescribed by General

MacArthur governing the procedure for the trial of petitioner by the commission directed
that the commission should admit such evidence

"as, in its opinion, would be of assistance in proving or disproving the charge, or such
as, in the commission's opinion, would have probative value in the mind of a reasonable
man,"

and that, in particular, it might admit affidavits, depositions, or other statements taken by
officers detailed for that purpose by military authority. The petitions in this case charged
that, in the course of the trial, the commission received, over objection by petitioner's
counsel, the deposition of a witness taken pursuant to military authority by a United
States Army captain. It also, over like objection, admitted hearsay and opinion evidence
tendered by the prosecution. Petitioner argues, as ground for the writ of habeas corpus,
that Article 25 [Footnote 5] of the Articles of War prohibited the reception in evidence by
the commission of depositions on behalf of the prosecution in a capital case, and that
Article 38 [Footnote 6] prohibited the reception of hearsay and of opinion evidence.

Page 327 U. S. 19

We think that neither Article 25 nor Article 38 is applicable to the trial of an enemy
combatant by a military commission for violations of the law of war. Article 2 of the
Articles of War enumerates "the persons . . . subject to these articles," who are
denominated, for purposes of the Articles, as "persons subject to military law." In
general, the persons so enumerated are members of our own Army and of the
personnel accompanying the Army. Enemy combatants are not included among them.
Articles 12, 13, and 14, before the adoption of Article 15 in 1916, 39 Stat. 653, made all
"persons subject to military law" amenable to trial by courts-martial for any offense
made punishable by the Articles of War. Article 12 makes triable by general court
martial "any other person who, by the law of war, is [triable] by military tribunals." Since
Article 2, in its 1916 form, 39 Stat. 651, includes some persons who, by the law of war,
were, prior to 1916, triable by military commission, it was feared by the proponents of
the 1916 legislation that, in the absence of a saving provision, the authority given by
Articles 12, 13, and 14 to try such persons before courts-martial might be construed to
deprive the nonstatutory military commission of a portion of what was considered to be
its traditional jurisdiction. To avoid this, and to preserve that jurisdiction intact, Article 15
was added to the Articles. [Footnote 7] It declared that

"The provisions of these articles

Page 327 U. S. 20

conferring jurisdiction upon courts-martial shall not be construed as depriving military

commissions . . . of concurrent jurisdiction in respect of offenders or offenses that, by
the law of war, may be lawfully triable by such military commissions."

By thus recognizing military commissions in order to preserve their traditional

jurisdiction over enemy combatants unimpaired by the Articles, Congress gave
sanction, as we held in Ex parte Quirin, to any use of the military commission
contemplated by the common law of war. But it did not thereby make subject to the
Articles of War persons other than those defined by Article 2 as being subject to the
Articles, nor did it confer the benefits of the Articles upon such persons. The Articles
recognized but one kind of military commission, not two. But they sanctioned the use of
that one for the trial of two classes of persons, to one of which the Articles do, and to
the other of which they do not, apply in such trials. Being of this latter class, petitioner
cannot claim the benefits of the Articles, which are applicable only to the members of
the other class. Petitioner, an enemy combatant, is therefore not a person made subject
to the Articles of War by Article 2, and the military commission before which he was
tried, though sanctioned, and its jurisdiction saved, by Article 15, was not convened by
virtue of the Articles of War, but pursuant to the common law of war. It follows that the
Articles of War, including Articles 25 and 38, were not applicable to petitioner's trial, and
imposed no restrictions upon the procedure to be followed. The Articles left the control
over the procedure in such a case where it had previously been -- with the military
command.

Petitioner further urges that, by virtue of Article 63 of the Geneva Convention of 1929,
47 Stat. 2052, he is entitled to the benefits afforded by the 25th and 38th Articles of War
to members of our own forces. Article 63 provides:
"Sentence may be pronounced against a prisoner of war

Page 327 U. S. 21

only by the same courts and according to the same procedure as in the case of persons
belonging to the armed forces of the detaining Power."

Since petitioner is a prisoner of war, and as the 25th and 38th Articles of War apply to
the trial of any person in our own armed forces, it is said that Article 63 requires them to
be applied in the trial of petitioner. But we think examination of Article 63 in its setting in
the Convention plainly shows that it refers to sentence "pronounced against a prisoner
of war" for an offense committed while a prisoner of war, and not for a violation of the
law of war committed while a combatant.

Article 63 of the Convention appears in part 3, entitled "Judicial Suits," of Chapter 3,

"Penalties Applicable to Prisoners of War," of V, "Prisoners' Relations with the
Authorities," one of the sections of Title III, "Captivity." All taken together relate only to
the conduct and control of prisoners of war while in captivity as such. Chapter 1 of
Section V, Article 42, deals with complaints of prisoners of war because of the
conditions of captivity. Chapter 2, Articles 43 and 44, relates to those of their number
chosen by prisoners of war to represent them.

Chapter 3 of Section V, Articles 45 through 67, is entitled "Penalties Applicable to

Prisoners of War." Part 1 of that chapter, Articles 45 through 53, indicates what acts of
prisoners of war committed while prisoners shall be considered offenses, and defines to
some extent the punishment which the detaining power may impose on account of such
offenses. [Footnote 8] Punishment is of two kinds -- "disciplinary" and

Page 327 U. S. 22

"judicial," the latter being the more severe. Article 52 requires that leniency be exercised
in deciding whether an offense requires disciplinary or judicial punishment. Part 2 of
Chapter 3 is entitled "Disciplinary Punishments," and further defines the extent of such
punishment and the mode in which it may be imposed. Part 3, entitled "Judicial Suits,"
in which Article 63 is found, describes the procedure by which "judicial" punishment may
be imposed. The three parts of Chapter 3, taken together, are thus a comprehensive
description of the substantive offenses which prisoners of war may commit during their
imprisonment, of the penalties which may be imposed on account of such offenses, and
of the procedure by which guilt may be adjudged and sentence pronounced.

We think it clear, from the context of these recited provisions, that part 3, and Article 63
which it contains, apply only to judicial proceedings directed against a prisoner of war
for offenses committed while a prisoner of war. Section

Page 327 U. S. 23
V gives no indication that this part was designed to deal with offenses other than those
referred to in parts 1 and 2 of chapter 3.

We cannot say that the commission, in admitting evidence to which objection is now
made, violated any act of Congress, treaty, or military command defining the
commission's authority. For reasons already stated, we hold that the commission's
rulings on evidence and on the mode of conducting these proceedings against petitioner
are not reviewable by the courts, but only by the reviewing military authorities. From this
viewpoint, it is unnecessary to consider what, in other situations, the Fifth Amendment
might require, and as to that, no intimation one way or the other is to be implied.
Nothing we have said is to be taken as indicating any opinion on the question of the
wisdom of considering such evidence, or whether the action of a military tribunal in
admitting evidence which Congress or controlling military command has directed to be
excluded may be drawn in question by petition for habeas corpus or prohibition.

Effect of failure to give notice of the trial to the protecting power. Article 60 of the
Geneva Convention of July 27, 1929, 47 Stat. 2051, to which the United States and
Japan were signatories, provides that,

"At the opening of a judicial proceeding directed against a prisoner of war, the detaining
Power shall advise the representative of the protecting Power thereof as soon as
possible, and always before the date set for the opening of the trial."

Petitioner relies on the failure to give the prescribed notice to the protecting power
[Footnote 9] to establish want of authority in the commission to proceed with the trial.

Page 327 U. S. 24

For reasons already stated, we conclude that Article 60 of the Geneva Convention,
which appears in part 3, Chapter 3, Section V, Title III of the Geneva Convention,
applies only to persons who are subjected to judicial proceedings for offenses
committed while prisoners of war. [Footnote 10]

Page 327 U. S. 25

It thus appears that the order convening the commission was a lawful order, that the
commission was lawfully constituted, that petitioner was charged with violation of the
law of war, and that the commission had authority to proceed with the trial, and, in doing
so, did not violate any military, statutory, or constitutional command. We have
considered, but find it unnecessary to discuss, other contentions which we find to be
without merit. We therefore conclude that the detention of petitioner for trial and his
detention upon his conviction, subject to the prescribed review by the military
authorities, were lawful, and that the petition for certiorari, and leave to file in this Court

Page 327 U. S. 26
petitions for writs of habeas corpus and prohibition should be, and they are

Denied.

MR. JUSTICE JACKSON took no part in the consideration or decision of these cases.

* Together with No. 672, Yamashita v. Styer, Commanding General, on petition for writ
of certiorari to the Supreme Court of the the Philippines. For earlier orders in these
cases, see 326 U.S. 693-694.

[Footnote 1]

The Commission on the Responsibility of the Authors of the War and on the
Enforcement of Penalties of the Versailles Peace Conference, which met after cessation
of hostilities in the First World War, were of the view that violators of the law of war
could be tried by military tribunals. See Report of the Commission, March 9, 1919, 14
Am.J.Int.L. 95, 121. See also memorandum of American commissioners concurring on
this point, id. at p. 141. The treaties of peace concluded after World War I recognized
the right of the Allies and of the United States to try such offenders before military
tribunals. See Art. 228 of Treaty of Versailles, June 28, 1919; Art. 173 of Treaty of St.
Germain, Sept. 10, 1919; Art. 157 of Treaty of Trianon, June 4, 1920.

The terms of the agreement which ended hostilities in the Boer War reserved the right
to try, before military tribunals, enemy combatants who had violated the law of war. 95
British and Foreign State Papers (1901-1902) 160. See also trials cited in Colby, War
Crimes, 23 Michigan Law Rev. 482, 496-497.

[Footnote 2]

See cases mentioned in Ex parte Quirin, supra, 317 U. S. 32, note 10, and in 2
Winthrop, supra, *1310-1311, n. 5; 14 Op.Atty.Gen. 249 (Modoc Indian Prisoners).

[Footnote 3]

Failure of an officer to take measures to prevent murder of an inhabitant of an occupied

country committed in his presence. Gen.Orders No. 221, Hq.Div. of the Philippines,
August 17, 1901. And, in Gen.Orders No. 264, Hq.Div. of the Philippines, September 9,
1901, it was held that an officer could not be found guilty for failure to prevent a murder
unless it appeared that the accused had "the power to prevent" it.

[Footnote 4]

In its findings, the commission took account of the difficulties

"faced by the accused with respect not only to the swift and overpowering advance of
American forces, but also to errors of his predecessors, weakness in organization,
equipment, supply . . . , training, communication, discipline, and morale of his troops,"

and

"the tactical situation, the character, training and capacity of staff officers and
subordinate commanders, as well as the traits of character of his troops."

It nonetheless found that petitioner had not taken such measures to control his troops
as were "required by the circumstances." We do not weigh the evidence. We merely
hold that the charge sufficiently states a violation against the law of war, and that the
commission, upon the facts found, could properly find petitioner guilty of such a
violation.

[Footnote 5]

Article 25 provides:

"A duly authenticated deposition taken upon reasonable notice to the opposite party
may be read in evidence before any military court or commission in any case not
capital, or in any proceeding before a court of inquiry or a military board, . .
. Provided, That testimony by deposition may be adduced for the defense in capital
cases."

[Footnote 6]

Article 38 provides:

"The President may, by regulations, which he may modify from time to time, prescribe
the procedure, including modes of proof, in cases before courts-martial, courts of
inquiry, military commissions, and other military tribunals, which regulations shall,
insofar as he shall deem practicable, apply the rules of evidence generally recognized in
the trial of criminal cases in the district courts of the United States: Provided, That
nothing contrary to or inconsistent with these articles shall be so prescribed. . . ."

[Footnote 7]

General Crowder, the Judge Advocate General, who appeared before Congress as
sponsor for the adoption of Article 15 and the accompanying amendment of Article 25,
in explaining the purpose of Article 15, said:

"Article 15 is new. We have included in article 2, as subject to military law, a number of

persons who are also subject to trial by military commission. A military commission is
our common law war court. It has no statutory existence, though it is recognized by
statute law. As long as the articles embraced them in the designation 'persons subject
to military law,' and provided that they might be tried by court-martial, I was afraid that,
having made a special provision for their trial by court-martial [Arts. 12, 13, and 14], it
might be held that the provision operated to exclude trials by military commission and
other war courts; so this new article was introduced. . . ."

Sen.R. 130, 64th Cong., 1st Sess., p. 40.

[Footnote 8]

Part 1 of Chapter 3, "General Provisions," provides in Articles 45 and 46 that prisoners

of war are subject to the regulations in force in the armies of the detaining power, that
punishments other than those provided "for the same acts for soldiers of the national
armies" may not be imposed on prisoners of war, and that "collective punishment for
individual acts" is forbidden. Article 47 provides that

"Acts constituting an offense against discipline, and particularly attempted escape, shall
be verified immediately; for all prisoners of war, commissioned or not, preventive arrest
shall be reduced to the absolute minimum. Judicial proceedings against prisoners of
war shall be conducted as rapidly as the circumstances permit. . . . In all cases, the
duration of preventive imprisonment shall be deducted from the disciplinary or the
judicial punishment inflicted."

Article 48 provides that prisoners of war, after having suffered "the judicial of disciplinary
punishment which has been imposed on them," are not to be treated differently from
other prisoners, but provides that "prisoners punished as a result of attempted escape
may be subjected to special surveillance." Article 49 recites that prisoners "given
disciplinary punishment may not be deprived of the prerogatives attached to their rank."
Articles 50 and 51 deal with escaped prisoners who have been retaken or prisoners
who have attempted to escape. Article 52 provides:

"Belligerents shall see that the competent authorities exercise the greatest leniency in
deciding the question of whether an infraction committed by a prisoner of war should be
punished more than once because of the same act or the same count."

[Footnote 9]

Switzerland, at the time of the trial, was the power designated by Japan for the
protection of Japanese prisoners of war detained by the United States, except in
Hawaii. U.S.Dept. of State Bull. Vol. XIII, No. 317, p. 125.

[Footnote 10]

One of the items of the bill of particulars in support of the charge against petitioner
specifies that he permitted members of the armed forces under his command to try and
execute three named and other prisoners of war,
"subjecting to trial without prior notice to a representative of the protecting power,
without opportunity to defend, and without counsel; denying opportunity to appeal from
the sentence rendered; failing to notify the protecting power of the sentence
pronounced, and executing a death sentence without communicating to the
representative of the protecting power the nature and circumstances of the offense
charged."

It might be suggested that, if Article 60 is inapplicable to petitioner, it is inapplicable in

the cases specified, and that, hence, he could not be lawfully held or convicted on a
charge of failing to require the notice provided for in Article 60 to be given.

As the Government insists, it does not appear from the charge and specifications that
the prisoners in question were not charged with offenses committed by them as
prisoners, rather than with offenses against the law of war committed by them as enemy
combatants. But, apart from this consideration, independently of the notice
requirements of the Geneva Convention, it is a violation of the law of war, on which
there could be a conviction if supported by evidence, to inflict capital punishment on
prisoners of war without affording to them opportunity to make a defense. 2
Winthrop, supra, *434, 435, 1241; Article 84, Oxford Manual; U.S. War Dept., Basic
Field Manual, Rules of Land Warfare (1940) par. 356; Lieber's Code, G.O. No. 100
(1863) Instructions for the Government of Armies of the United States in the Field, par.
12; Spaight, War Rights on Land, 462, n.

Further, the commission, in making its findings, summarized as follows the charges on
which it acted in three classes, any one of which, independently of the others if
supported by evidence, would be sufficient to support the conviction: (1) execution or
massacre without trial and maladministration generally of civilian internees and
prisoners of war; (2) brutalities committed upon the civilian population, and (3) burning
and demolition, without adequate military necessity, of a large number of homes, places
of business, places of religious worship, hospitals, public buildings, and educational
institutions.

The commission concluded: "(1) that a series of atrocities and other high crimes have
been committed by members of the Japanese armed forces" under command of
petitioner

"against people of the United States, their allies and dependencies; . . . that they were
not sporadic in nature, but in many cases were methodically supervised by Japanese
officers and noncommissioned officers;"

(2) that, during the period in question, petitioner "failed to provide effective control of
[his] troops, as was required by the circumstances." The commission said:

"Where murder and rape and vicious, revengeful actions are widespread offenses, and
there is no effective attempt by a commander to discover and control the criminal acts,
such a commander may be held responsible, even criminally liable, for the lawless acts
of his troops, depending upon their nature and the circumstances surrounding them."

The commission made no finding of noncompliance with the Geneva Convention.

Nothing has been brought to our attention from which we could conclude that the
alleged noncompliance with Article 60 of the Geneva Convention had any relation to the
commission's finding of a series of atrocities committed by members of the forces under
petitioner's command, and that he failed to provide effective control of his troops, as
was required by the circumstances, or which could support the petitions for habeas
corpus on the ground that petitioner had been charged with or convicted for failure to
require the notice prescribed by Article 60 to be given.

MR. JUSTICE MURPHY, dissenting.

The significance of the issue facing the Court today cannot be overemphasized. An
American military commission has been established to try a fallen military commander
of a conquered nation for an alleged war crime. The authority for such action grows out
of the exercise of the power conferred upon Congress by Article I, 8, Cl. 10 of the
Constitution to "define and punish . . . Offenses against the Law of Nations. . . ." The
grave issue raised by this case is whether a military commission so established and so
authorized may disregard the procedural rights of an accused person as guaranteed by
the Constitution, especially by the due process clause of the Fifth Amendment.

The answer is plain. The Fifth Amendment guarantee of due process of law applies to
"any person" who is accused of a crime by the Federal Government or any of its
agencies. No exception is made as to those who are accused of war crimes or as to
those who possess the status of an enemy belligerent. Indeed, such an exception would
be contrary to the whole philosophy of human rights which makes the Constitution the
great living document that it is. The immutable rights of the individual, including those
secured by the due process clause of the Fifth Amendment, belong not alone to the
members of those nations that excel on the battlefield or that subscribe to the
democratic ideology. They belong to every person in the world, victor or vanquished,
whatever may be his race, color, or beliefs. They rise above any status of belligerency
or outlawry. They survive any popular passion or frenzy of the moment. No court or
legislature or executive, not even the mightiest

Page 327 U. S. 27

army in the world, can ever destroy them. Such is the universal and indestructible
nature of the rights which the due process clause of the Fifth Amendment recognizes
and protects when life or liberty is threatened by virtue of the authority of the United
States.

The existence of these rights, unfortunately, is not always respected. They are often
trampled under by those who are motivated by hatred, aggression, or fear. But, in this
nation, individual rights are recognized and protected, at least in regard to governmental
action. They cannot be ignored by any branch of the Government, even the military,
except under the most extreme and urgent circumstances.

The failure of the military commission to obey the dictates of the due process
requirements of the Fifth Amendment is apparent in this case. The petitioner was the
commander of an army totally destroyed by the superior power of this nation. While
under heavy and destructive attack by our forces, his troops committed many brutal
atrocities and other high crimes. Hostilities ceased, and he voluntarily surrendered. At
that point, he was entitled, as an individual protected by the due process clause of the
Fifth amendment, to be treated fairly and justly according to the accepted rules of law
and procedure. He was also entitled to a fair trial as to any alleged crimes, and to be
free from charges of legally unrecognized crimes that would serve only to permit his
accusers to satisfy their desires for revenge.

A military commission was appointed to try the petitioner for an alleged war crime. The
trial was ordered to be held in territory over which the United States has complete
sovereignty. No military necessity or other emergency demanded the suspension of the
safeguards of due process. Yet petitioner was rushed to trial under an improper charge,
given insufficient time to prepare an adequate defense, deprived of the benefits of some
of the most

Page 327 U. S. 28

elementary rules of evidence, and summarily sentenced to be hanged. In all this

needless and unseemly haste, there was no serious attempt to charge or to prove that
he committed a recognized violation of the laws of war. He was not charged with
personally participating in the acts of atrocity, or with ordering or condoning their
commission. Not even knowledge of these crimes was attributed to him. It was simply
alleged that he unlawfully disregarded and failed to discharge his duty as commander to
control the operations of the members of his command, permitting them to commit the
acts of atrocity. The recorded annals of warfare and the established principles of
international law afford not the slightest precedent for such a charge. This indictment, in
effect, permitted the military commission to make the crime whatever it willed,
dependent upon its biased view as to petitioner's duties and his disregard thereof, a
practice reminiscent of that pursued in certain less respected nations in recent years.

In my opinion, such a procedure is unworthy of the traditions of our people or of the

immense sacrifices that they have made to advance the common ideals of mankind.
The high feelings of the moment doubtless will be satisfied. But in the sober afterglow
will come the realization of the boundless and dangerous implications of the procedure
sanctioned today. No one in a position of command in an army, from sergeant to
general, can escape those implications. Indeed, the fate of some future President of the
United States and his chiefs of staff and military advisers may well have been sealed by
this decision. But even more significant will be the hatred and ill will growing out of the
application of this unprecedented procedure. That has been the inevitable effect of
every method of punishment disregarding the element of personal culpability. The effect
in this instance, unfortunately, will be magnified infinitely, for here we are dealing with
the rights of man on an international level. To subject an enemy belligerent

Page 327 U. S. 29

to an unfair trial, to charge him with an unrecognized crime, or to vent on him our
retributive emotions only antagonizes the enemy nation and hinders the reconciliation
necessary to a peaceful world.

That there were brutal atrocities inflicted upon the helpless Filipino people, to whom
tyranny is no stranger, by Japanese armed forces under the petitioner's command is
undeniable. Starvation, execution, or massacre without trial, torture, rape, murder, and
wanton destruction of property were foremost among the outright violations of the laws
of war and of the conscience of a civilized world. That just punishment should be meted
out to all those responsible for criminal acts of this nature is also beyond dispute. But
these factors do not answer the problem in this case. They do not justify the
abandonment of our devotion to justice in dealing with a fallen enemy commander. To
conclude otherwise is to admit that the enemy has lost the battle, but has destroyed our
ideals.

War breeds atrocities. From the earliest conflicts of recorded history to the global
struggles of modern times, inhumanities, lust, and pillage have been the inevitable
byproducts of man's resort to force and arms. Unfortunately, such despicable acts have
a dangerous tendency to call forth primitive impulses of vengeance and retaliation
among the victimized peoples. The satisfaction of such impulses, in turn, breeds
resentment and fresh tension. Thus does the spiral of cruelty and hatred grow.

If we are ever to develop an orderly international community based upon a recognition

of human dignity, it is of the utmost importance that the necessary punishment of those
guilty of atrocities be as free as possible from the ugly stigma of revenge and
vindictiveness. Justice must be tempered by compassion, rather than by vengeance. In
this, the first case involving this momentous problem ever to reach this Court, our
responsibility is both lofty and difficult. We must insist, within the confines of our proper

Page 327 U. S. 30

jurisdiction, that the highest standards of justice be applied in this trial of an enemy
commander conducted under the authority of the United States. Otherwise, stark
retribution will be free to masquerade in a cloak of false legalism. And the hatred and
cynicism engendered by that retribution will supplant the great ideals to which this
nation is dedicated.

This Court, fortunately, has taken the first and most important step toward insuring the
supremacy of law and justice in the treatment of an enemy belligerent accused of
violating the laws of war. Jurisdiction properly has been asserted to inquire "into the
cause of restraint of liberty" of such a person. 28 U.S.C. 452. Thus, the obnoxious
doctrine asserted by the Government in this case -- to the effect that restraints of liberty
resulting from military trials of war criminals are political matters completely outside the
arena of judicial review -- has been rejected fully and unquestionably. This does not
mean, of course, that the foreign affairs and policies of the nation are proper subjects of
judicial inquiry. But, when the liberty of any person is restrained by reason of the
authority of the United States, the writ of habeas corpus is available to test the legality
of that restraint, even though direct court review of the restraint is prohibited. The
conclusive presumption must be made, in this country at least, that illegal restraints are
unauthorized and unjustified by any foreign policy of the Government, and that
commonly accepted juridical standards are to be recognized and enforced. On that
basis, judicial inquiry into these matters may proceed within its proper sphere.

The determination of the extent of review of war trials calls for judicial statesmanship of
the highest order. The ultimate nature and scope of the writ of habeas corpus are within
the discretion of the judiciary unless validly circumscribed by Congress. Here, we are
confronted with a use of the writ under circumstances novel in the history of the

Page 327 U. S. 31

Court. For my own part, I do not feel that we should be confined by the traditional lines
of review drawn in connection with the use of the writ by ordinary criminals who have
direct access to the judiciary in the first instance. Those held by the military lack any
such access; consequently the judicial review available by habeas corpus must be
wider than usual in order that proper standards of justice may be enforceable.

But, for the purposes of this case, I accept the scope of review recognized by the Court
at this time. As I understand it, the following issues in connection with war criminal trials
are reviewable through the use of the writ of habeas corpus: (1) whether the military
commission was lawfully created and had authority to try and to convict the accused of
a war crime; (2) whether the charge against the accused stated a violation of the laws of
war; (3) whether the commission, in admitting certain evidence, violated any law or
military command defining the commission's authority in that respect, and (4) whether
the commission lacked jurisdiction because of a failure to give advance notice to the
protecting power as required by treaty or convention.

The Court, in my judgment, demonstrates conclusively that the military commission was
lawfully created in this instance, and that petitioner could not object to its power to try
him for a recognized war crime. Without pausing here to discuss the third and fourth
issues, however, I find it impossible to agree that the charge against the petitioner
stated a recognized violation of the laws of war.

It is important, in the first place, to appreciate the background of events preceding this
trial. From October 9, 1944, to September 2, 1945, the petitioner was the Commanding
General of the 14th Army Group of the Imperial Japanese Army, with headquarters in
the Philippines. The reconquest of the Philippines by the armed forces of the United
States began approximately at the time when
Page 327 U. S. 32

the petitioner assumed this command. Combined with a great and decisive sea battle,
an invasion was made on the island of Leyte on October 20, 1944.

"In the six days of the great naval action, the Japanese position in the Philippines had
become extremely critical. Most of the serviceable elements of the Japanese Navy had
become committed to the battle, with disastrous results. The strike had miscarried, and
General MacArthur's land wedge was firmly implanted in the vulnerable flank of the
enemy. . . . There were 260,000 Japanese troops scattered over the Philippines, but
most of them might as well have been on the other side of the world so far as the
enemy's ability to shift them to meet the American thrusts was concerned. If General
MacArthur succeeded in establishing himself in the Visayas, where he could stage,
exploit, and spread under cover of overwhelming naval and air superiority, nothing could
prevent him from overrunning the Philippines."

Biennial Report of the Chief of Staff of the United States Army, July 1, 1943, to June 30,
1945, to the Secretary of War, p. 74.

By the end of 1944, the island of Leyte was largely in American hands. And on January
9, 1945, the island of Luzon was invaded.

"Yamashita's inability to cope with General MacArthur's swift moves, his desired
reaction to the deception measures, the guerrillas, and General Kenney's aircraft,
combined to place the Japanese in an impossible situation. The enemy was forced into
a piecemeal commitment of his troops."

Ibid., p. 78. It was at this time and place that most of the alleged atrocities took place.
Organized resistance around Manila ceased on February 23. Repeated land and air
assaults pulverized the enemy, and, within a few months, there was little left of
petitioner's command except a few remnants which had gathered for a last stand among
the precipitous mountains.

As the military commission here noted,

"The Defense established the difficulties faced by the Accused with respect

Page 327 U. S. 33

not only to the swift and overpowering advance of American forces, but also to the
errors of his predecessors, weaknesses in organization, equipment, supply, with
especial reference to food and gasoline, training, communication, discipline, and morale
of his troops. It was alleged that the sudden assignment of Naval and Air Forces to his
tactical command presented almost insurmountable difficulties. This situation was
followed, the Defense contended, by failure to obey his orders to withdraw troops from
Manila, and the subsequent massacre of unarmed civilians, particularly by Naval forces.
Prior to the Luzon Campaign, Naval forces had reported to a separate ministry in the
Japanese Government, and Naval Commanders may not have been receptive or
experienced in this instance with respect to a joint land operation under a single
commander who was designated from the Army Service."

The day of final reckoning for the enemy arrived in August, 1945. On September 3, the
petitioner surrendered to the United States Army at Baguio, Luzon. He immediately
became a prisoner of war, and was interned in prison in conformity with the rules of
international law. On September 25, approximately three weeks after surrendering, he
was served with the charge in issue in this case. Upon service of the charge, he was
removed from the status of a prisoner of war and placed in confinement as an accused
war criminal. Arraignment followed on October 8 before a military commission specially
appointed for the case. Petitioner pleaded not guilty. He was also served on that day
with a bill of particulars alleging 64 crimes by troops under his command. A
supplemental bill alleging 59 more crimes by his troops was filed on October 29, the
same day that the trial began. No continuance was allowed for preparation of a defense
as to the supplemental bill. The trial continued uninterrupted until December 5, 1945.
On December 7 petitioner was found guilty as charged, and was sentenced to be
hanged.

Page 327 U. S. 34

The petitioner was accused of having

"unlawfully disregarded and failed to discharge his duty as commander to control the
operations of the members of his command, permitting them to commit brutal atrocities
and other high crimes."

The bills of particular further alleged that specific acts of atrocity were committed by
"members of the armed forces of Japan under the command of the accused." Nowhere
was it alleged that the petitioner personally committed any of the atrocities, or that he
ordered their commission, or that he had any knowledge of the commission thereof by
members of his command.

The findings of the military commission bear out this absence of any direct personal
charge against the petitioner. The commission merely found that atrocities and other
high crimes

"have been committed by members of the Japanese armed forces under your command
. . . ; that they were not sporadic in nature, but, in many cases, were methodically
supervised by Japanese officers and noncommissioned officers . . . ; that, during the
period in question, you failed to provide effective control of your troops, as was required
by the circumstances."

In other words, read against the background of military events in the Philippines
subsequent to October 9, 1944, these charges amount to this:
"We, the victorious American forces, have done everything possible to destroy and
disorganize your lines of communication, your effective control of your personnel, your
ability to wage war. In those respects, we have succeeded. We have defeated and
crushed your forces. And now, we charge and condemn you for having been inefficient
in maintaining control of your troops during the period when we were so effectively
beseiging and eliminating your forces and blocking your ability to maintain effective
control. Many terrible atrocities were committed by your disorganized troops. Because
these atrocities were so widespread, we will not bother to charge or prove that you
committed, ordered, or

Page 327 U. S. 35

condoned any of them. We will assume that they must have resulted from your
inefficiency and negligence as a commander. In short, we charge you with the crime of
inefficiency in controlling your troops. We will judge the discharge of your duties by the
disorganization which we ourselves created in large part. Our standards of judgment are
whatever we wish to make them."

Nothing in all history or in international law, at least as far as I am aware, justifies such a
charge against a fallen commander of a defeated force. To use the very inefficiency and
disorganization created by the victorious forces as the primary basis for condemning
officers of the defeated armies bears no resemblance to justice, or to military reality.

International law makes no attempt to define the duties of a commander of an army

under constant and overwhelming assault, nor does it impose liability under such
circumstances for failure to meet the ordinary responsibilities of command. The
omission is understandable. Duties, as well as ability to control troops, vary according to
the nature and intensity of the particular battle. To find an unlawful deviation from duty
under battle conditions requires difficult and speculative calculations. Such calculations
become highly untrustworthy when they are made by the victor in relation to the actions
of a vanquished commander. Objective and realistic norms of conduct are then
extremely unlikely to be used in forming a judgment as to deviations from duty. The
probability that vengeance will form the major part of the victor's judgment is an
unfortunate but inescapable fact. So great is that probability that international law
refuses to recognize such a judgment as a basis for a war crime, however fair the
judgment may be in a particular instance. It is this consideration that undermines the
charge against the petitioner in this case. The indictment permits -- indeed compels --
the military commission of a victorious nation to

Page 327 U. S. 36

sit in judgment upon the military strategy and actions of the defeated enemy, and to use
its conclusions to determine the criminal liability of an enemy commander. Life and
liberty are made to depend upon the biased will of the victor, rather than upon objective
standards of conduct.
The Court's reliance upon vague and indefinite references in certain of the Hague
Conventions and the Geneva Red Cross Convention is misplaced. Thus, the statement
in Article 1 of the Annex to Hague Convention No. IV of October 18, 1907, 36 Stat.
2277, 2295, to the effect that the laws, rights and duties of war apply to military and
volunteer corps only if they are "commanded by a person responsible for his
subordinates," has no bearing upon the problem in this case. Even if it has, the clause
"responsible for his subordinates" fails to state to whom the responsibility is owed, or to
indicate the type of responsibility contemplated. The phrase has received differing
interpretations by authorities on international law. In Oppenheim, International Law (6th
ed., rev. by Lauterpacht, 1940, vol. 2, p. 204, fn. 3) it is stated that

"The meaning of the word 'responsible' . . . is not clear. It probably means 'responsible
to some higher authority,' whether the person is appointed from above or elected from
below. . . ."

Another authority has stated that the word "responsible" in this particular context means
"presumably to a higher authority," or "possibly it merely means one who controls his
subordinates, and who therefore can be called to account for their acts." Wheaton,
International Law (14th ed., by Keith, 1944, p. 172, fn. 30). Still another authority,
Westlake, International Law (1907, Part II, p. 61), states that "probably the responsibility
intended is nothing more than a capacity of exercising effective control." Finally,
Edwards and Oppenheim, Land Warfare (1912, p. 19, par. 22) state that it is enough "if
the commander of the corps is regularly or temporarily commissioned as an officer or is
a person of

Page 327 U. S. 37

position and authority." It seems apparent beyond dispute that the word "responsible"
was not used in this particular Hague Convention to hold the commander of a defeated
army to any high standard of efficiency when he is under destructive attack; nor was it
used to impute to him any criminal responsibility for war crimes committed by troops
under his command under such circumstances.

The provisions of the other conventions referred to by the Court are, on their face,
equally devoid of relevance or significance to the situation here in issue. Neither Article
19 of Hague Convention No. X, 36 Stat. 2371, 2389, nor Article 26 of the Geneva Red
Cross Convention of 1929, 47 Stat. 2074, 2092, refers to circumstances where the
troops of a commander commit atrocities while under heavily adverse battle conditions.
Reference is also made to the requirement of Article 43 of the Annex to Hague
Convention No. IV, 36 Stat. 2295, 2306, that the commander of a force occupying
enemy territory

"shall take all the measures in his power to restore, and ensure, as far as possible,
public order and safety, while respecting, unless absolutely prevented, the laws in force
in the country."
But the petitioner was more than a commander of a force occupying enemy territory. He
was the leader of an army under constant and devastating attacks by a superior
reinvading force. This provision is silent as to the responsibilities of a commander under
such conditions as that.

Even the laws of war heretofore recognized by this nation fail to impute responsibility to
a fallen commander for excesses committed by his disorganized troops while under
attack. Paragraph 347 of the War Department publication, Basic Field Manual, Rules of
Land Warfare, FM 27-10 (1940), states the principal offenses under the laws of war
recognized by the United States. This includes all of the atrocities which the Japanese
troops were alleged to have committed in this instance. Originally,

Page 327 U. S. 38

this paragraph concluded with the statement that

"The commanders ordering the commission of such acts, or under whose authority they
are committed by their troops, may be punished by the belligerent into whose hands
they may fall."

The meaning of the phrase "under whose authority they are committed" was not clear.
On November 15, 1944, however, this sentence was deleted and a new paragraph was
added relating to the personal liability of those who violate the laws of war. Change 1,
FM 27-10. The new paragraph 345.1 states that

"Individuals and organizations who violate the accepted laws and customs of war may
be punished therefor. However, the fact that the acts complained of were done pursuant
to order of a superior or government sanction may be taken into consideration in
determining culpability, either by way of defense or in mitigation of punishment. The
person giving such orders may also be punished."

From this, the conclusion seems inescapable that the United States recognizes
individual criminal responsibility for violations of the laws of war only as to those who
commit the offenses or who order or direct their commission. Such was not the
allegation here. Cf. Article 67 of the Articles of War, 10 U.S.C. 1539.

There are numerous instances, especially with reference to the Philippine Insurrection
in 1900 and 1901, where commanding officers were found to have violated the laws of
war by specifically ordering members of their command to commit atrocities and other
war crimes. Francisco Frani, G.O. 143, Dec. 13, 1900, Hq. Div. Phil.; Eugenio
Fernandez and Juan Soriano, G.O. 28, Feb. 6, 1901, Hq.Div.Phil.; Ciriaco Cabungal,
G.O. 188, Jul. 22, 1901, Hq.Div.Phil.; Natalio Valencia, G.O. 221, Aug. 17, 1901,
Hq.Div.Phil.; Aniceta Angeles, G.O. 246, Sept. 2, 1901, Hq.Div.Phil.; Francisco
Braganza, G.O. 291, Sept. 26, 1901, Hq.Div.Phil.; Lorenzo Andaya, G.O. 328, Oct. 25,
1901, Hq.Div.Phil. And, in other cases, officers have been held
Page 327 U. S. 39

liable where they knew that a crime was to be committed, had the power to prevent it,
and failed to exercise that power. Pedro Abad Santos, G.O. 130, June 19, 1901,
Hq.Div.Phil. Cf. Pedro A. Cruz, G.O. 264, Sept. 9, 1901, Hq.Div.Phil. In no recorded
instance, however, has the mere inability to control troops under fire or attack by
superior forces been made the basis of a charge of violating the laws of war.

The Government claims that the principle that commanders in the field are bound to
control their troops has been applied so as to impose liability on the United States in
international arbitrations. Case of Jeannaud, 1880, 3 Moore, International Arbitrations
(1898) 3000; Case of The Zafiro, 1910, 5 Hackworth, Digest of International Law (1943)
707. The difference between arbitrating property rights and charging an individual with a
crime against the laws of war is too obvious to require elaboration. But even more
significant is the fact that even these arbitration cases fail to establish any principle of
liability where troops are under constant assault and demoralizing influences by
attacking forces. The same observation applies to the common law and statutory
doctrine, referred to by the Government, that one who is under a legal duty to take
protective or preventive action is guilty of criminal homicide if he willfully or negligently
omits to act and death is proximately caused. State v. Harrison, 107 N.J.L. 213, 152 A.
867; State v. Irvine,126 La. 434, 52 So. 567; Holmes, The Common Law, p. 278. No
one denies that inaction or negligence may give rise to liability, civil or criminal. But it is
quite another thing to say that the inability to control troops under highly competitive and
disastrous battle conditions renders one guilty of a war crime in the absence of personal
culpability. Had there been some element of knowledge or direct connection with the
atrocities, the problem would be entirely different. Moreover, it must be remembered
that we are not dealing

Page 327 U. S. 40

here with an ordinary tort or criminal action; precedents in those fields are of little if any
value. Rather, we are concerned with a proceeding involving an international crime, the
treatment of which may have untold effects upon the future peace of the world. That fact
must be kept uppermost in our search for precedent.

The only conclusion I can draw is that the charge made against the petitioner is clearly
without precedent in international law or in the annals of recorded military history. This
is not to say that enemy commanders may escape punishment for clear and unlawful
failures to prevent atrocities. But that punishment should be based upon charges fairly
drawn in light of established rules of international law and recognized concepts of
justice.

But the charge in this case, as previously noted, was speedily drawn and filed but three
weeks after the petitioner surrendered. The trial proceeded with great dispatch, without
allowing the defense time to prepare an adequate case. Petitioner's rights under the due
process clause of the Fifth Amendment were grossly and openly violated without any
justification. All of this was done without any thorough investigation and prosecution of
those immediately responsible for the atrocities, out of which might have come some
proof or indication of personal culpability on petitioner's part. Instead the loose charge
was made that great numbers of atrocities had been committed and that petitioner was
the commanding officer; hence he must have been guilty of disregard of duty. Under
that charge the commission was free to establish whatever standard of duty on
petitioner's part that it desired. By this flexible method a victorious nation may convict
and execute any or all leaders of a vanquished foe, depending upon the prevailing
degree of vengeance and the absence of any objective judicial review.

At a time like this when emotions are understandably high it is difficult to adopt a
dispassionate attitude toward

Page 327 U. S. 41

a case of this nature. Yet now is precisely the time when that attitude is most essential.
While peoples in other lands may not share our beliefs as to due process and the
dignity of the individual, we are not free to give effect to our emotions in reckless
disregard of the rights of others. We live under the Constitution, which is the
embodiment of all the high hopes and aspirations of the new world. And it is applicable
in both war and peace. We must act accordingly. Indeed, an uncurbed spirt of revenge
and retribution, masked in formal legal procedure for purposes of dealing with a fallen
enemy commander, can do more lasting harm than all of the atrocities giving rise to that
spirit. The people's faith in the fairness and objectiveness of the law can be seriously
undercut by that spirit. The fires of nationalism can be further kindled. And the hearts of
all mankind can be embittered and filled with hatred, leaving forlorn and impoverished
the noble ideal of malice toward none and charity to all. These are the reasons that lead
me to dissent in these terms.

MR. JUSTICE RUTLEDGE, dissenting.

Not with ease does one find his views at odds with the Court's in a matter of this
character and gravity. Only the most deeply felt convictions could force one to differ.
That reason alone leads me to do so now, against strong considerations for withholding
dissent.

More is at stake than General Yamashita's fate. There could be no possible sympathy
for him if he is guilty of the atrocities for which his death is sought. But there can be and
should be justice administered according to law. In this stage of war's aftermath, it is too
early for Lincoln's great spirit, best lighted in the Second Inaugural, to have wide hold for
the treatment of foes. It is not too early -- it is never too early -- for the nation steadfastly
to follow its great constitutional traditions, none older or more universally protective
against unbridled power than due process

Page 327 U. S. 42
of law in the trial and punishment of men -- that is, of all men, whether citizens, aliens,
alien enemies, or enemy belligerents. It can become too late.

This long held attachment marks the great divide between our enemies and ourselves.
Theirs was a philosophy of universal force. Ours is one of universal law, albeit
imperfectly made flesh of our system and so dwelling among us. Every departure
weakens the tradition, whether it touches the high or the low, the powerful or the weak,
the triumphant or the conquered. If we need not or cannot be magnanimous, we can
keep our own law on the plane from which it has not descended hitherto and to which
the defeated foes' never rose.

With all deference to the opposing views of my brethren, whose attachment to that
tradition needless to say is no less than my own, I cannot believe in the face of this
record that the petitioner has had the fair trial our Constitution and laws command.
Because I cannot reconcile what has occurred with their measure, I am forced to speak.
At bottom, my concern is that we shall not forsake in any case, whether Yamashita's or
another's, the basic standards of trial which, among other guaranties, the nation fought
to keep; that our system of military justice shall not, alone among all our forms of
judging, be above or beyond the fundamental law or the control of Congress within its
orbit of authority, and that this Court shall not fail in its part under the Constitution to see
that these things do not happen.

This trial is unprecedented in our history. Never before have we tried and convicted an
enemy general for action taken during hostilities or otherwise in the course of military
operations or duty. Much less have we condemned one for failing to take action. The
novelty is not lessened by the trial's having taken place after hostilities ended and the
enemy, including the accused, had surrendered. Moreover, so far as the time permitted
for our

Page 327 U. S. 43

consideration has given opportunity, I have not been able to find precedent for the
proceeding in the system of any nation founded in the basic principles of our
constitutional democracy, in the laws of war, or in other internationally binding authority
or usage.

The novelty is legal, as well as historical. We are on strange ground. Precedent is not
all-controlling in law. There must be room for growth, since every precedent has an
origin. But it is the essence of our tradition for judges, when they stand at the end of the
marked way, to go forward with caution keeping sight, so far as they are able, upon the
great landmarks left behind and the direction they point ahead. If, as may be hoped, we
are now to enter upon a new era of law in the world, it becomes more important than
ever before for the nations creating that system to observe their greatest traditions of
administering justice, including this one, both in their own judging and in their new
creation. The proceedings in this case veer so far from some of our time-tested road
signs that I cannot take the large strides validating them would demand.
I

It is not in our tradition for anyone to be charged with crime which is defined after his
conduct, alleged to be criminal, has taken place, [Footnote 2/1] or in language not
sufficient to inform him of the nature of the offense or to enable him to make defense.
[Footnote 2/2] Mass guilt we do not impute to individuals, perhaps in any case, but
certainly in none where the person is not charged or shown actively to have participated
in or knowingly to have failed in taking action to

Page 327 U. S. 44

prevent the wrongs done by others, having both the duty and the power to do so.

It is outside our basic scheme to condemn men without giving reasonable opportunity
for preparing defense; [Footnote 2/3] in capital or other serious crimes, to convict on
"official documents . . . ; affidavits; . . . documents or translations thereof; diaries . .
photographs, motion picture films, and . . . newspapers" [Footnote 2/4] or on hearsay,
once, twice or thrice removed, [Footnote 2/5] more particularly when the documentary
evidence or some of it is prepared ex parte by the prosecuting authority and includes
not only opinion but conclusions of guilt. Nor in such cases do we deny the rights of
confrontation of witnesses and cross-examination. [Footnote 2/6]

Our tradition does not allow conviction by tribunals both authorized and bound [Footnote
2/7] by the instrument of their creation to receive and consider evidence which is
expressly excluded by Act of Congress or by treaty obligation; nor is it in accord with our
basic concepts to make the tribunal, specially constituted for the particular trial,
regardless of those prohibitions, the sole and exclusive judge of the credibility,

Page 327 U. S. 45

probative value, and admissibility of whatever may be tendered as evidence.

The matter is not one merely of the character and admissibility of evidence. It goes to
the very competency of the tribunal to try and punish consistently with the Constitution,
the laws of the United States made in pursuance thereof, and treaties made under the
nation's authority.

All these deviations from the fundamental law, and others, occurred in the course of
constituting the commission, the preparation for trial and defense, the trial itself, and
therefore, in effect, in the sentence imposed. Whether taken singly in some instances as
departures from specific constitutional mandates or in totality as in violation of the Fifth
Amendment's command that no person shall be deprived of life, liberty or property
without due process of law, a trial so vitiated cannot withstand constitutional scrutiny.

One basis protection of our system, and one only, petitioner has had. He has been
represented by able counsel, officers of the army he fought. Their difficult assignment
has been done with extraordinary fidelity not only to the accused, but to their high
conception of military justice, always to be administered in subordination to the
Constitution and consistent Acts of Congress and treaties. But, as will appear, even this
conceded shield was taken away in much of its value by denial of reasonable
opportunity for them to perform their function.

On this denial and the commission's invalid constitution specifically, but also more
generally upon the totality of departures from constitutional norms inherent in the idea of
a fair trial, I rest my judgment that the commission was without jurisdiction from the
beginning to try or punish the petitioner, and that, if it had acquired jurisdiction then, its
power to proceed was lost in the course of what was done before and during trial.

Only on one view, in my opinion, could either of these conclusions be avoided. This
would be that an enemy

Page 327 U. S. 46

belligerent in petitioner's position is altogether beyond the pale of constitutional

protection, regardless of the fact that hostilities had ended and he had surrendered with
his country. The Government has so argued, urging that we are still at war with Japan,
and all the power of the military effective during active hostilities in theaters of combat
continues in full force, unaffected by the events of August 14, 1945, and after.

In this view, the action taken here is one of military necessity, exclusively within the
authority of the President as Commander-in-Chief and his military subordinates to take
in warding off military danger and subject to no judicial restraint on any account,
although, somewhat inconsistently, it is said this Court may "examine" the proceedings
generally.

As I understand the Court, this is in substance the effect of what has been done. For I
cannot conceive any instance of departure from our basic concepts of fair trial if the
failures here are not sufficient to produce that effect.

We are technically still at war, because peace has not been negotiated finally or
declared. But there is no longer the danger which always exists before surrender and
armistice. Military necessity does not demand the same measures. The nation may be
more secure now than at any time after peace is officially concluded. In these facts is
one great difference from Ex parte Quirin, 317 U. S. 1. Punitive action taken now can be
effective only for the next war, for purposes of military security. And enemy aliens,
including belligerents, need the attenuated protections our system extends to them
more now than before hostilities ceased or than they may after a treaty of peace is
signed. Ample power there is to punish them or others for crimes, whether under the
laws of war during its course or later during occupation. There can be no question of
that. The only question is how it shall be done, consistently

Page 327 U. S. 47
with universal constitutional commands or outside their restricting effects. In this sense,
I think the Constitution follows the flag.

The other thing to be mentioned in order to be put aside is that we have no question
here of what the military might have done in a field of combat. There, the maxim about
the law becoming silent in the noise of arms applies. The purpose of battle is to kill. But
it does not follow that this would justify killing by trial after capture or surrender, without
compliance with laws or treaties made to apply in such cases, whether trial is before or
after hostilities end.

I turn now to discuss some of the details of what has taken place. My basic difference is
with the Court's view that provisions of the Articles of War and of treaties are not made
applicable to this proceeding, and with its ruling that, absent such applicable provisions,
none of the things done so vitiated the trial and sentence as to deprive the commission
of jurisdiction.

My Brother MURPHY has discussed the charge with respect to the substance of the
crime. With his conclusions in this respect, I agree. My own primary concern will be with
the constitution of the commission and other matters taking place in the course of the
proceedings, relating chiefly to the denial of reasonable opportunity to prepare
petitioner's defense and the sufficiency of the evidence, together with serious questions
of admissibility, to prove on offense, all going, as I think, to the commission's
jurisdiction.

Necessarily, only a short sketch can be given concerning each matter. And it may be
stated at the start that, although it was ruled in Ex parte Quirin, supra,that this Court had
no function to review the evidence, it was not there or elsewhere determined that it
could not ascertain whether conviction is founded upon evidence expressly excluded by
Congress or treaty; nor does the Court purport to do so now.

Page 327 U. S. 48

II

Invalidity of the Commission's Constitution

The fountainhead of the commission's authority was General MacArthur's directive by

which General Styer was ordered to and pursuant to which he did proceed with
constituting the commission. [Footnote 2/8] The directive was accompanied by
elaborate and detailed rules and regulations prescribing the procedure and rules of
evidence to be followed, of which, for present purposes, Section 16, set forth below,
[Footnote 2/9] is crucial.

Page 327 U. S. 49
Section 16, as will be noted, permits reception of documents, reports, affidavits,
depositions, diaries, letters, copies of documents or other secondary evidence of their
contents, hearsay, opinion evidence and conclusions -- in fact, of anything which, in the
commission's opinion, "would be of assistance in proving or disproving the charge,"
without any of the usual modes of authentication.

A more complete abrogation of customary safeguards relating to the proof, whether in

the usual rules of evidence or any reasonable substitute and whether for use in the trial
of crime in the civil courts or military tribunals, hardly could have been made. So far as
the admissibility and probative value of evidence was concerned, the directive made the
commission a law unto itself.

It acted accordingly. As against insistent and persistent objection to the reception of all
kinds of "evidence," oral, documentary and photographic, for nearly every kind of defect
under any of the usual prevailing standards for admissibility and probative value, the
commission not only consistently ruled against the defense, but repeatedly stated it was
bound by the directive to receive the kinds of evidence it specified, [Footnote 2/10]
reprimanded counsel for continuing to make objection, declined to hear further
objections, and, in more than one instance during the course of the proceedings,
reversed its rulings favorable to the defense where initially it had declined to receive
what the prosecution offered. Every conceivable kind of statement, rumor, report at first,
second, third or further hand, written, printed, or oral, and one "propaganda" film were
allowed to come in, most of this relating to atrocities committed

Page 327 U. S. 50

by troops under petitioner's command throughout the several thousand islands of the
Philippine Archipelago during the period of active hostilities covered by the American
forces' return to and recapture of the Philippines. [Footnote 2/11]

The findings reflect the character of the proof and the charge. The statement quoted
above [Footnote 2/12] gives only a numerical idea of the instances in which ordinary
safeguards in reception of written evidence were ignored. In addition to these 423
"exhibits," the findings state the commission "has heard 286 persons during the course
of this trial, most of whom have given eye-witness accounts of what they endured or
what they saw."

But there is not a suggestion in the findings that petitioner personally participated in,
was present at the occurrence of, or ordered any of these incidents, with the exception
of the wholly inferential suggestion noted below. Nor is there any express finding that he
knew of any one of the incidents in particular or of all taken together. The only inferential
findings that he had knowledge, or that the commission so found, are in the statement
that "the crimes alleged to have been permitted by the accused in violation of the laws
of war may be grouped into three categories" set out below, [Footnote 2/13] in the
further statement that
"the prosecution

Page 327 U. S. 51

presented evidence to show that the crimes were so extensive and so widespread, both
as to time and area, [Footnote 2/14] that they must either have been willfully
permitted by the accused or secretly ordered by"

him, and in the conclusion of guilt and the sentence. [Footnote 2/15] (Emphasis added.)
Indeed, the commission's ultimate findings [Footnote 2/16] draw no express conclusion
of knowledge, but state only two things: (1) the fact of widespread atrocities and crimes;
(2) that petitioner "failed to provide effective control . . . as required by the
circumstances."

This vagueness, if not vacuity, in the findings runs throughout the proceedings, from the
charge itself, through the proof and the findings, to the conclusion. It affects

Page 327 U. S. 52

the very gist of the offense -- whether that was willful, informed, and intentional omission
to restrain and control troops known by petitioner to be committing crimes, or was only a
negligent failure on his part to discover this and take whatever measures he then could
to stop the conduct.

Although it is impossible to determine from what is before us whether petitioner in fact

has been convicted of one or the other or of both these things, [Footnote 2/17] the case
has been

Page 327 U. S. 53

presented on the former basis and, unless, as is noted below, there is fatal duplicity, it
must be taken that the crime charged and sought to be proved was only the failure, with
knowledge, to perform the commander's function of control, although the Court's opinion
nowhere expressly declares that knowledge was essential to guilt or necessary to be
set forth in the charge.

It is in respect to this feature especially, quite apart from the reception of unverified
rumor, report, etc., that perhaps the greatest prejudice arose from the admission of
untrustworthy, unverified, unauthenticated evidence which could not be probed by
cross-examination or other means of testing credibility, probative value, or authenticity.

Counsel for the defense have informed us in the brief and at the argument that the sole
proof of knowledge introduced at the trial was in the form of ex parte affidavits and
depositions. Apart from what has been excerpted from the record in the applications
and the briefs and such portions of the record as I have been able to examine, it has
been impossible for me fully to verify counsel's statement in this respect. But the
Government has not disputed it, and it has maintained that we have no right to examine
the record upon any question "of evidence." Accordingly, without concession to that
view, the statement of counsel is taken for the fact . And, in that state of things,
petitioner has been convicted of a crime in which knowledge is an essential element,
with no proof of knowledge other than what would be inadmissible in any other capital
case or proceeding under our system, civil or military, and which, furthermore, Congress
has expressly commanded shall not be received in such cases tried by military
commissions and other military tribunals. [Footnote 2/18]

Moreover, counsel assert in the brief, and this also is not denied, that the sole proof
made of certain of the specifications

Page 327 U. S. 54

in the bills of particulars was by ex parte affidavits. It was in relation to this also vital
phase of the proof that there occurred one of the commission's reversals of its earlier
rulings in favor of the defense [Footnote 2/19] -- a fact, in itself, conclusive
demonstration of the necessity to the prosecution's case of the prohibited type of
evidence and of its prejudicial effects upon the defense.

These two basic elements in the proof -- namely, proof of knowledge of the crimes and
proof of the specifications in the bills, that is, of the atrocities themselves -- constitute
the most important instances, perhaps, if not the most flagrant, [Footnote 2/20]

Page 327 U. S. 55

of departure not only from the express command of Congress against receiving such
proof, but from the whole British-American tradition of the common law and the
Constitution. Many others occurred which there is neither time nor space to mention.
[Footnote 2/21]

Petitioner asserts, and there can be no reason to doubt, that, by the use of all this
forbidden evidence, he was deprived of the right of cross-examination and other means
to establish the credibility of the deponents or affiants, not to speak of the authors of
reports, letters, documents, and newspaper articles; of opportunity to determine whether
the multitudinous crimes specified in the bills were committed in fact by troops under his
command or by naval or air force troops not under his command at the time alleged; to
ascertain whether the crimes attested were isolated acts of individual soldiers or were
military acts committed by troop units acting under supervision of officers; and, finally,
whether, "in short, there was such a pattern' of conduct as the prosecution alleged and
its whole theory of the crime and the evidence required to be made out."

He points out in this connection that the commission based its decision on a finding as
to the extent and number

Page 327 U. S. 56
of the atrocities, and that this, of itself, establishes the prejudicial effect of the affidavits,
etc., and of the denial resulting from their reception of any means of probing the
evidence they contained, including all opportunity for cross-examination. Yet it is said
there is no sufficient showing of prejudice. The effect could not have been other than
highly prejudicial. The matter is not one merely of "rules of evidence." It goes, as will
appear more fully later, to the basic right of defense, including some fair opportunity to
test probative value.

Insufficient as this recital is to give a fair impression of what was done, it is enough to
show that this was no trial in the traditions of the common law and the Constitution. If
the tribunal itself was not strange to them otherwise, it was in its forms and modes of
procedure, in the character and substance of the evidence it received, in the denial of all
means to the accused and his counsel for testing the evidence, in the brevity and
ambiguity of its findings made upon such a mass of material, and, as will appear, in the
denial of any reasonable opportunity for preparation of the defense. Because this last
deprivation not only is important in itself, but is closely related to the departures from all
limitations upon the character of and modes of making the proof, it will be considered
before turning to the important legal questions relating to whether all these violations of
our traditions can be brushed aside as not forbidden by the valid Acts of Congress,
treaties, and the Constitution, in that order. If all these traditions can be so put away,
then indeed will we have entered upon a new but foreboding era of law.

III

Denial of Opportunity to Prepare Defense

Petitioner surrendered September 3, 1945, and was interned as a prisoner of war in

conformity with Article 9

Page 327 U. S. 57

of the Geneva Convention of July 27, 1929. [Footnote 2/22] He was served with the
charge on September 25, and put in confinement as an accused war criminal. On
October 8, he was arraigned, and pleaded not guilty. On October 29, the trial began,
and it continued until December 7, when sentence was pronounced, exactly four years,
almost to the hour, from the attack on Pearl Harbor.

On the day of arraignment, October 8, three weeks before the trial began, petitioner was
served with a bill of particulars specifying 64 items setting forth a vast number of
atrocities and crimes allegedly committed by troops under his command. [Footnote
2/23] The six officers appointed as defense counsel thus had three weeks -- it is true, at
the prosecution's suggestion, a week longer than they sought at first -- to investigate
and prepare to meet all these items and the large number of incidents they embodied,
many of which had occurred in distant islands of the archipelago. There is some
question whether they then anticipated the full scope and character of the charge or the
evidence they would have to meet. But, as will appear, they worked night and day at the
task. Even so, it would have been impossible to do thoroughly had nothing more
occurred.

But there was more. On the first day of the trial, October 29, the prosecution filed a
supplemental bill of particulars

Page 327 U. S. 58

containing 59 more specifications of the same general character, involving perhaps as

many incidents occurring over an equally wide area. [Footnote 2/24] A copy had been
given the defense three days earlier. One item, No. 89, charged that American soldiers,
prisoners of war, had been tried and executed without notice having been given to the
protecting power of the United States in accordance with the requirements of the
Geneva Convention, which it is now argued, strangely, the United States was not
required to observe as to petitioner's trial. [Footnote 2/25]

But what is more important is that defense counsel, as they felt was their duty, at once
moved for a continuance. [Footnote 2/26] The application was denied. However the
commission indicated that if, at the end of the prosecution's presentation

Page 327 U. S. 59

concerning the original bill, counsel should "believe they require additional time . . . , the
Commission will consider such a motion at that time," before taking up the items of the
supplemental bill. Counsel again indicated, without other result, that time was desired at
once "as much, if not more" to prepare for cross-examination "as the Prosecutor's case
goes in" as to prepare affirmative defense.

On the next day, October 30, the commission interrupted the prosecutor to say it would
not then listen to testimony or discussion upon the supplemental bill. After colloquy, it
adhered to its prior ruling and, in response to inquiry from the prosecution, the defense
indicated it would require two weeks before it could proceed on the supplemental bill.
On November 1, the commission ruled it would not receive affidavits without
corroboration by witnesses on any specification, a ruling reversed four days later.

On November 2, after the commission had received an affirmative answer to its inquiry
whether the defense was prepared to proceed with an item in the supplemental bill
which the prosecution proposed to prove, it announced:

"Hereafter, then, unless there is no [sic] objection by the Defense, the Commission will
assume that you are prepared to proceed with any items in the Supplemental Bill."

On November 8, the question arose again upon the prosecution's inquiry as to when the
defense would be ready to proceed on the supplemental bill, the prosecutor adding:
"Frankly, sir, it took the War Crimes Commission some three months to investigate
these matters, and I cannot conceive of the Defense undertaking a similar investigation
with any less period of time."

Stating it realized "the tremendous burden which we have placed on the Defense" and
its "determination to give them the time they require," the commission again adhered to
its ruling of October 29.

Page 327 U. S. 60

Four days later, the commission announced it would grant a continuance "only for the
most urgent and unavoidable reasons." [Footnote 2/27]

On November 20, when the prosecution rested, senior defense counsel moved for a
reasonable continuance, recalling the commission's indication that it would then
consider such a motion and stating that, since October 29, the defense had been
"working night and day," with "no time whatsoever to prepare any affirmative defense,"
since counsel had been fully occupied trying "to keep up with the new Bill of
Particulars."

The commission thereupon retired for deliberation and, on resuming its sessions
shortly, denied the motion. Counsel then asked for "a short recess of a day." The
commission suggested a recess until 1:30 in the afternoon. Counsel responded this
would not suffice. The commission stated it felt "that the Defense should be prepared, at
least on its opening statement," to which senior counsel answered: "We haven't had
time to do that, sir." The commission then recessed until 8:30 the following morning.

Further comment is hardly required. Obviously the burden placed upon the defense, in
the short time allowed for preparation on the original bill, was not only "tremendous." In
view of all the facts, it was an impossible one, even though the time allowed was a week
longer than asked. But the grosser vice was later, when the burden was more than
doubled by service of the supplemental bill on the eve of trial, a procedure which, taken
in connection with the consistent denials of continuance and the commission's later
reversal of its rulings favorable to the defense

Page 327 U. S. 61

was wholly arbitrary, cutting off the last vestige of adequate chance to prepare defense
and imposing a burden the most able counsel could not bear. This sort of thing has no
place in our system of justice, civil or military. Without more, this wide departure from
the most elementary principles of fairness vitiated the proceeding. When added to the
other denials of fundamental right sketched above, it deprived the proceeding of any
semblance of trial as we know that institution.

IV
Applicability of the Articles of War

The Court's opinion puts the proceeding and the petitioner, insofar as any rights relating
to his trial and conviction are concerned, wholly outside the Articles of War. In view of
what has taken place, I think the decision's necessary effect is also to place them
entirely beyond limitation and protection, respectively, by the Constitution. I disagree as
to both conclusions or effects.

The Court rules that Congress has not made Article 25 and 38 applicable to this
proceeding. It think it has made them applicable to this and all other military
commissions or tribunals. If so, the commission not only lost all power to punish
petitioner by what occurred in the proceedings. It never acquired jurisdiction to try him.
For the directive by which it was constituted, in the provisions of Section 16, [Footnote
2/28] was squarely in conflict with Articles 25 and 38 of the Articles of War, [Footnote
2/29] and therefore was void.

Page 327 U. S. 62

Article 25 allows reading of depositions in evidence, under prescribed conditions, in the

plainest terms "before any military court or commission in any case not capital,"
providing, however, that "testimony by deposition may be adduced for the defense in
capital cases." (Emphasis added.) This language clearly and broadly covers every kind
of military tribunal, whether "court" or "commission." It covers all capital cases. It makes
no exception or distinction for any accused.

Article 38 authorizes the President, by regulations, to prescribe procedure, including

modes of proof, even more all-inclusively, if possible, "in cases before courts-martial,
courts of inquiry, military commissions, and other military tribunals." Language could not
be more broadly inclusive. No exceptions are mentioned or suggested, whether of
tribunals or of accused persons. Every kind of military body for performing the function
of trial is covered. That is clear from the face of the Article.

Article 38, moreover, limits the President's power. He is, so far as practicable, to
prescribe "the rules of evidence generally recognized in the trial of criminal cases in the

Page 327 U. S. 63

district courts of the United States," a clear mandate that Congress intended all military
trials to conform as closely as possible to our customary procedural and evidentiary
protections, constitutional and statutory, for accused persons. But there are also two
unqualified limitations, one "that nothing contrary to or inconsistent with these articles
(specifically here Article 25) shall be so prescribed," the other "that all rules made in
pursuance of this article shall be laid before the Congress annually."

Notwithstanding these broad terms, the Court, resting chiefly on Article 2, concludes the
petitioner was not among the persons there declared to be subject to the Articles of
War, and therefore the commission which tries him is not subject to them. That Article
does not cover prisoners of war or war criminals. Neither does it cover civilians in
occupied territories, theaters of military operations, or other places under military
jurisdiction within or without the United States or territory subject to its sovereignty,
whether they be neutrals or enemy aliens, even citizens of the United States, unless
they are connected in the manner Article 2 prescribes with our armed forces, exclusive
of the Navy.

The logic which excludes petitioner on the basic that prisoners of war are not mentioned
in Article 2 would exclude all these. I strongly doubt the Court would go so far, if
presented with a trial like this in such instances. Nor does it follow necessarily that,
because some persons may not be mentioned in Article 2, they can be tried without
regard to any of the limitations placed by any of the other Articles upon military
tribunals.

Article 2, in defining persons "subject to the articles of war," was, I think, specifying
those to whom the Articles in general were applicable. And there is no dispute that most
of the Articles are not applicable to the petitioner. It does not follow, however, and
Article 2 does not provide, that there may not be in the Articles specific provisions

Page 327 U. S. 64

covering persons other than those specified in Article 2. Had it so provided, Article 2
would have been contradictory not only of Articles 25 and 38, but also of Article 15,
among others.

In 1916, when the last general revision of the Articles of War took place, [Footnote 2/30]
for the first time, certain of the Articles were specifically made applicable to military
commissions. Until then, they had applied only to courts-martial. There were two
purposes -- the first to give statutory recognition to the military commission without loss
of prior jurisdiction, and the second to give those tried before military commissions
some of the more important protections afforded persons tried by courts-martial.

In order to effectuate the first purpose, the Army proposed Article 15. [Footnote 2/31] To
effectuate the second purpose, Articles

Page 327 U. S. 66

25 and 38 and several others were proposed. [Footnote 2/32] But, as the Court now
construes the Articles of War, they have no application to military commissions before
which alleged offenders against the laws of war are tried. What the Court holds, in
effect, is that there are two types of military commissions, one to try offenses which
might be cognizable by a court-martial, the other to try war crimes, and that Congress
intended the Articles of War referring in terms to military commissions without exception
to be applicable only to the first type.
Page 327 U. S. 67

This misconceives both the history of military commissions and the legislative history of
the Articles of War. There is only one kind of military commission. It is true, as the
history noted shows, that what is now called "the military commission" arose from two
separate military courts instituted during the Mexican War. The first military court, called
by General Scott a "military commission," was given jurisdiction in Mexico over criminal
offenses of the class cognizable by civil courts in time of peace. The other military court,
called a "counsel of war" was given jurisdiction over offenses against the laws of war.
Winthrop, Military Law and Precedents (2d ed., reprinted 1920) *1298-1299. During the
Civil War,

"the two jurisdictions of the earlier commission and council respectively . . . [were]
united in the . . . war court, for which the general designation of 'military commission'
was retained as the preferable one."

Winthrop, supra at *1299. Since that time, there has been only one type of military
tribunal, called the military commission, though it may exercise different kinds of
jurisdiction, [Footnote 2/33] according to the circumstances under which and purposes
for which it is convened.

The testimony of General Crowder is perhaps the most authoritative evidence of what
was intended by the legislation,

Page 327 U. S. 68

for he was its most active official sponsor, spending years in securing its adoption and
revision. Articles 15, 25, and 38 particularly are traceable to his efforts. His concern to
secure statutory recognition for military commissions was equalled by his concern that
the statutory provisions giving this should not restrict their preexisting jurisdiction. He did
not wish, by securing additional jurisdiction, overlapping partially that of the court-
martial, to surrender other. Hence, Article 15. That Article had one purpose and one
only. It was to make sure that the acquisition of partially concurrent jurisdiction with
courts-martial should not cause loss of any other. And it was jurisdiction, not procedure,
which was covered by other Articles with which he and Congress were concerned in
that Article. It discloses no purpose to deal in any way with procedure or to qualify
Articles 25 and 38. And it is clear that General Crowder at all times regarded all military
commissions as being governed by the identical procedure. In fact, so far as Articles 25
and 38 are concerned, this seems obvious for all types of military tribunals. The same
would appear to be true of other Articles also, e.g., 24, (prohibiting compulsory self-
incrimination), 26, 27, 32 (contempts), all except the last dealing with procedural
matters.

Article 12 is especially significant. It empowers general courts-martial to try two classes

of offenders: (1) "any person subject to military law," under the definition of Article 2, for
any offense "made punishable by these articles;" (2) "and any other person who by the
law of war is subject to trial by military tribunals," not covered by the terms of Article 2.
(Emphasis added.)

Article 12 thus, in conformity with Article 15, gives the general court-martial concurrent
jurisdiction of war crimes and war criminals with military commissions. Neither it nor any
other Article states or indicates there are to be two kinds of general courts-martial for
trying war crimes; yet

Page 327 U. S. 69

this is the necessary result of the Court's decision, unless, in the alternative, that would
be to imply that, in exercising such jurisdiction, there is only one kind of general court-
martial, but there are two or more kinds of military commission, with wholly different
procedures and with the result that "the commander in the field" will not be free to
determine whether general court-martial or military commission shall be used as the
circumstances may dictate, but must govern his choice by the kind of procedure he
wishes to have employed.

The only reasonable and, I think, possible conclusion to draw from the Articles is that
the Articles which are in terms applicable to military commissions are so uniformly, and
those applicable to both such commissions and to courts-martial when exercising
jurisdiction over offenders against the laws of war likewise are uniformly, applicable, and
not diversely according to the person or offense being tried.

Not only the face of the Articles, but specific statements in General Crowder's testimony
support this view. Thus, in the portion quoted above [Footnote 2/34] from his 1916
statement, after stating expressly the purpose of Article 15 to preserve unimpaired the
military commission's jurisdiction, and to make it concurrent with that of courts-martial
insofar as the two would overlap, "so that the military commander in the field in time of
war will be at liberty to employ either form of court that happens to be convenient," he
went on to say: "Both classes of courts have the same procedure," a statement so
unequivocal as to leave no room for question. And his quotation from Winthrop supports
his statement, namely: "Its (i.e., the military commission's) composition, constitution and
procedure follow the analogy of courts-martial."

At no point in the testimony is there suggestion that there are two types of military
commission, one bound by

Page 327 U. S. 70

the procedural provisions of the Articles, the other wholly free from their restraints, or,
as the Court strangely puts the matter, that there is only one kind of commission, but
that it is bound or not bound by the Articles applicable in terms, depending upon who is
being tried and for what offense; for that very difference makes the difference between
one and two. The history and the discussion show conclusively that General Crowder
wished to secure, and Congress intended to give, statutory recognition to all forms of
military tribunals; to enable commanding officers in the field to use either court-martial
or military commission as convenience might dictate, thus broadening to this extent the
latter's jurisdiction and utility; but, at the same time, to preserve its full preexisting
jurisdiction, and also to lay down identical provisions for governing or providing for the
government of the procedure and rules of evidence of every type of military tribunal,
wherever and however constituted. [Footnote 2/35]

Page 327 U. S. 71

Finally, unless Congress was legislating with regard to all military commissions, Article
38, which gives the President the power to "prescribe the procedure, including modes of
proof, in cases before courts-martial, courts of inquiry, military commissions, and other
military tribunals" takes on a rather senseless meaning, for the President would have
such power only with respect to those military commissions exercising concurrent
jurisdiction with courts-martial.

All this seems so obvious upon a mere reading of the Articles themselves and the
legislative history as not to require demonstration. And all this Congress knew, as that
history shows. In the face of that showing, I cannot accept the Court's highly strained
construction, first, because I think it is in plain contradiction of the facts disclosed by the
history of Articles 15, 25 and 38 as well as their language, and also because that
construction defeats at least two of the ends General Crowder had in mind -- namely, to
secure statutory recognition for every form of military tribunal and to provide for them a
basic uniform

Page 327 U. S. 72

mode of procedure or method of providing for their procedure.

Accordingly, I think Articles 25 and 38 are applicable to this proceeding; that the
provisions of the governing directive in Section 16 are in direct conflict with those
Articles, and, for that reason, the commission was invalidly constituted, was without
jurisdiction, and its sentence is therefore void.

The Geneva Convention of 1929

If the provisions of Articles 25 and 38 were not applicable to the proceeding by their own
force as Acts of Congress, I think they would still be made applicable by virtue of the
terms of the Geneva Convention of 1929, in particular, Article 63. And in other respects,
in my opinion, the petitioner's trial was not in accord with that treaty, namely with Article
60.
The Court does not hold that the Geneva Convention is not binding upon the United
States, and no such contention has been made in this case. [Footnote 2/36] It relies on
other

Page 327 U. S. 73

arguments to show that Article 60, which provides that the protecting power shall be
notified in advance of a judicial proceeding directed against a prisoner of war, and
Article 63, which provides that a prisoner of war may be tried only by the same courts
and according to the same procedure as in the case of persons belonging to the armed
forces of the detaining power, are not properly invoked by the petitioner. Before
considering the Court's view that these Articles are not applicable to this proceeding by
their terms, it may be noted that, on his surrender, petitioner was interned in conformity
with Article 9 of this Convention.

Page 327 U. S. 74

The chief argument is that Articles 60 and 63 have reference only to offenses committed
by a prisoner of war while a prisoner of war, and not to violations of the law of war
committed while a combatant. This conclusion is derived from the setting in which these
articles are placed. I do not agree that the context gives any support to this argument.
The argument is, in essence, of the same type as the argument the Court employs to
nullify the application of Articles 25 and 38 of the Articles of War by restricting their own
broader coverage by reference to Article 2. For reasons set forth in the margin,
[Footnote 2/37] I think it equally invalid here.

Page 327 U. S. 76

Neither Article 60 nor Article 63 contains such a restriction of meaning as the Court
reads into it. [Footnote 2/38] In the absence of any such limitation, it would seem that
they were intended to cover all judicial proceedings, whether instituted for crimes
allegedly committed before capture or later. Policy supports this view. For such a
construction is require for the security of our own soldiers, taken prisoner, as much as
for that of prisoners we take. And the opposite one leaves prisoners of war open to any
form of trial and punishment for offenses against the law of war their captors may wish
to use, while safeguarding them, to the extent of the treaty limitations, in cases of
disciplinary offense. This, in many instances, would be to make the treaty strain at a
gnat and swallow the camel.

The United States has complied with neither of these Articles. It did not notify the
protecting power of Japan in advance of trial, as Article 60 requires it to do, although the
supplemental bill charges the same failure to petitioner

Page 327 U. S. 77
in Item 89. [Footnote 2/39] It is said that, although this may be true, the proceeding is
not thereby invalidated. The argument is that our noncompliance merely gives Japan a
right of indemnity against us, and that Article 60 was not intended to give Yamashita
any personal rights. I cannot agree. The treaties made by the United States are, by the
Constitution, made the supreme law of the land. In the absence of something in the
treaty indicating that its provisions were not intended to be enforced, upon breach, by
more than subsequent indemnification, it is, as I conceive it, the duty of the courts of this
country to insure the nation's compliance with such treaties, except in the case of
political questions. This is especially true where the treaty has provisions -- such as
Article 60 -- for the protection of a man being tried for an offense the punishment for
which is death; for to say that it was intended to provide for enforcement of such
provisions solely by claim, after breach, of indemnity would be, in many instances,
especially those involving trial of nationals of a defeated nation by a conquering one, to
deprive the Articles of all force. Executed men are not much aided by post-war claims
for indemnity. I do not think the adhering powers' purpose was to provide only for such
ineffective relief.

Finally, the Government has argued that Article 60 has no application after the actual
cessation of hostilities, as there is no longer any need for an intervening power between
the two belligerents. The premise is that Japan no longer needs Switzerland to
intervene with the United

Page 327 U. S. 78

States to protect the rights of Japanese nationals, since Japan is now in direct
communication with this Government. This, of course, is in contradiction of the
Government's theory, in other connections, that the war is not over, and military
necessity still requires use of all the power necessary for actual combat.

Furthermore the premise overlooks all the realities of the situation. Japan is a defeated
power, having surrendered, if not unconditionally, then under the most severe
conditions. Her territory is occupied by American military forces. She is scarcely in a
position to bargain with us or to assert her rights. Nor can her nationals. She no longer
holds American prisoners of war. [Footnote 2/40] Certainly, if there was the need of an
independent neutral to protect her nationals during the war, there is more now. In my
opinion the failure to give the notice required by Article 60 is only another instance of
the commission's failure to observe the obligations of our law.

What is more important, there was no compliance with Article 63 of the same
Convention. Yamashita was not tried "according to the same procedure as in the case
of persons belonging to the armed forces of the detaining Power." Had one of our
soldiers or officers been tried for alleged war crimes, he would have been entitled to the
benefits of the Articles of War. I think that Yamashita was equally entitled to the same
protection. In any event, he was entitled to their benefits under the provisions of Article
63 of the Geneva Convention. Those benefits he did not receive. Accordingly, his trial
was in violation of the Convention.
VI

The Fifth Amendment

Wholly apart from the violation of the Articles of War and of the Geneva Convention, I
am completely unable to

Page 327 U. S. 79

accept or to understand the Court's ruling concerning the applicability of the due
process clause of the Fifth Amendment to this case. Not heretofore has it been held that
any human being is beyond its universally protecting spread in the guaranty of a fair trial
in the most fundamental sense. That door is dangerous to open. I will have no part in
opening it. For, once it is ajar, even for enemy belligerents, it can be pushed back wider
for others, perhaps ultimately for all.

The Court does not declare expressly that petitioner, as an enemy belligerent, has no
constitutional rights, a ruling I could understand, but not accept. Neither does it affirm
that he has some, if but little, constitutional protection. Nor does the Court defend what
was done. I think the effect of what it does is in substance to deny him all such
safeguards. And this is the great issue in the cause.

For it is exactly here we enter wholly untrodden ground. The safe signposts to the rear
are not in the sum of protections surrounding jury trials or any other proceeding known
to our law. Nor is the essence of the Fifth Amendment's elementary protection
comprehended in any single one of our time-honored specific constitutional safeguards
in trial, though there are some without which the words "fair trial" and all they cannot
become a mockery.

Apart from a tribunal concerned that the law as applied shall be an instrument of justice,
albeit stern in measure to the guilt established, the heart of the security lies in two
things. One is that conviction shall not rest in any essential part upon unchecked rumor,
report, or the results of the prosecution's ex parte investigations, but shall stand on
proven fact; the other, correlative, lies in a fair chance to defend. This embraces at the
least the rights to know with reasonable clarity in advance of the trial the exact nature of
the offense with which one is to be charged; to have reasonable time for preparing to
meet the charge, and to have the aid of counsel in doing so, as also in the

Page 327 U. S. 80

trial itself, and if, during its course, one is taken by surprise, through the injection of new
charges or reversal of rulings which brings forth new masses of evidence, then to have
further reasonable time for meeting the unexpected shift.

So far as I know, it has not yet been held that any tribunal in our system, of whatever
character, is free to receive "such evidence as in its opinion would be of assistance in
proving or disproving the charge" or, again as in its opinion, "would have probative
value in the mind of a reasonable man;" and, having received what in its unlimited
discretion it regards as sufficient, is also free to determine what weight may be given to
the evidence received without restraint. [Footnote 2/41]

When to this fatal defect in the directive, however innocently made, are added the broad
departures from the fundamentals of fair play in the proof and in the right to defend
which occurred throughout the proceeding, there can be no accommodation with the
due process of law which the Fifth Amendment demands.

All this the Court puts to one side with the short assertion that no question of due
process under the Fifth Amendment or jurisdiction reviewable here is presented. I do
not think this meets the issue, standing alone or in conjunction with the suggestion
which follows that the Court gives no intimation one way or the other concerning

Page 327 U. S. 81

what Fifth Amendment due process might require in other situations.

It may be appropriate to add here that, although without doubt the directive was drawn
in good faith in the belief that it would expedite the trial and that enemy belligerents in
petitioner's position were not entitled to more, that state of mind and purpose cannot
cure the nullification of basic constitutional standards which has taken place.

It is not necessary to recapitulate. The difference between the Court's view of this
proceeding and my own comes down in the end to the view, on the one hand, that there
is no law restrictive upon these proceedings other than whatever rules and regulations
may be prescribed for their government by the executive authority or the military and, on
the other hand, that the provisions of the Articles of War, of the Geneva Convention and
the Fifth Amendment apply.

I cannot accept the view that anywhere in our system resides or lurks a power so
unrestrained to deal with any human being through any process of trial. What military
agencies or authorities may do with our enemies in battle or invasion, apart from
proceedings in the nature of trial and some semblance of judicial action, is beside the
point. Nor has any human being heretofore been held to be wholly beyond elementary
procedural protection by the Fifth Amendment. I cannot consent to even implied
departure from that great absolute.

It was a great patriot who said:

"He that would make his own liberty secure must guard even his enemy from
oppression, for if he violates this duty he establishes a precedent that will reach himself.
[Footnote 2/42]"

MR. JUSTICE MURPHY joins in this opinion.

[Footnote 2/1]

Cummings v. Missouri, 4 Wall. 277; Kring v. Missouri, 107 U. S. 221.

[Footnote 2/2]

Armour Packing Co. v. United States, 209 U. S. 56, 209 U. S. 83-84; United States v.
Cohen Grocery Co., 255 U. S. 81, cf. Screws v. United States, 325 U. S. 91. Seenote
17 and text.

[Footnote 2/3]

Hawk v. Olson, 326 U. S. 271; Snyder v. Massachusetts, 291 U. S. 97, 291 U. S. 105:
"What may not be taken away is notice of the charge and an adequate opportunity to be
heard in defense of it." See 327 U. S.

[Footnote 2/4]

The commission's findings state:

"We have received for analysis and evaluation 423 exhibits consisting of official
documents of the United States Army, the United States State Department, and the the
Philippines; affidavits; captured enemy documents or translations thereof; diaries taken
from Japanese personnel, photographs, motion picture films, and Manila newspapers."

See notes 19 and 20.

Concerning the specific nature of these elements in the proof, the issues to which they
were directed, and their prejudicial effects, see text infra and notes in 327 U. S.

[Footnote 2/5]

Queen v. Hepburn, 7 Cranch. 290; Donnelly v. United States, 228 U. S. 243, 228 U. S.
273. See 327 U. S. note 21.

[Footnote 2/6]

Motes v. United States, 178 U. S. 458, 178 U. S. 471; Paoni v. United States, 281 F.
801. See Parts 327 U. S. S. 56|>III.

[Footnote 2/7]

See 327 U. S. S. 1fn2/10|>10, 19; 327 U. S.

[Footnote 2/8]
The line of authorization within the military hierarchy extended from the President,
through the Joint Chiefs of Staff and General MacArthur, to General Styer, whose order
of September 25th and others were made pursuant to and in conformity with General
MacArthur's directive. The charge was prepared by the Judge Advocate General's
Department of the Army. There is no dispute concerning these facts or that the directive
was binding on General Styer and the commission, though it is argued his own authority
as area commanding general was independently sufficient to sustain what was done.

[Footnote 2/9]

"16. Evidence. -- a. The commission shall admit such evidence as in its opinion would
be of assistance in proving or disproving the charge, or such as in the commission's
opinion would have probative value in the mind of a reasonable man. In particular, and
without limiting in any way the scope of the foregoing general rules, the following
evidence may be admitted:"

"(1) Any document while appears to the commission to have been signed or issued
officially by any officer, department, agency, or member of the armed forces of any
government, without proof of the signature or of the issuance of the document."

"(2) Any report which appears to the commission to have been signed or issued by the
International Red Cross or a member thereof, or by a medical doctor or any medical
service personnel, or by an investigator or intelligence officer, or by any other person
whom the commission finds to have been acting in the course of his duty when making
the report."

"(3) Affidavits, depositions, or other statements taken by an officer detailed for that
purpose by military authority."

"(4) Any diary, letter or other document appearing to the commission to contain
information relating to the charge."

"(5) A copy of any document or other secondary evidence of its contents, if the
commission believes that the original is not available or cannot be produced without
undue delay. . . ."

[Footnote 2/10]

In one instance, the president of the commission said:

"The rules and regulations which guide this Commission are binding upon the
Commission and agencies provided to assist the Commission. . . . We have been
authorized to receive and weigh such evidence as we can consider to have probative
value, and further comments by the Defense on the right which we have to accept this
evidence is decidedly out of order."
But see note 19.

[Footnote 2/11]

Cf. text infra at note 19 concerning the prejudicial character of the evidence.

[Footnote 2/12]

Note 4.

[Footnote 2/13]

Namely,

"(1) starvation, execution or massacre without trial, and maladministration generally of

civilian internees and prisoners of war; (2) torture, rape, murder, and mass execution of
very large numbers of residents of the Philippines, including women and children and
members of religious orders, by starvation, beheading, bayoneting, clubbing, hanging,
burning alive, and destruction by explosives; (3) burning and demolition without
adequate military necessity of large numbers of homes, places of business, places of
religious worship, hospitals, public buildings, and educational institutions. In point of
time, the offenses extended throughout the period the accused was in command of
Japanese troops in the Philippines. In point of area, the crimes extended through the
Philippine Archipelago, although by far he most of the incredible acts occurred on
Luzon."

[Footnote 2/14]

Cf. note 13.

[Footnote 2/15]

In addition, the findings set forth that captured orders of subordinate officers gave proof
that "they at least" ordered acts "leading directly to" atrocities; that

"the proof offered to the Commission alleged criminal neglect . . . as well as complete
failure by the higher echelons of command to detect and prevent cruel and inhuman
treatment accorded by local commanders and guards;"

and that, although "the defense had established the difficulties faced by the accused"
with special reference, among other things, to the discipline and morale of his troops
under the "swift and overpowering advance of American forces," and notwithstanding he
had stoutly maintained his complete ignorance of the crimes, still he was an officer of
long experience; his assignment was one of broad responsibility; it was his duty "to
discoverand control" crimes by his troops, if widespread, and therefore
"The Commission concludes: (1) that a series of atrocities and other high crimes have
been committed by members of the Japanese armed forces under your command
against the people of the United States, their allies, and dependencies throughout the
Philippine Islands; that they were not sporadic in nature, but in many cases were
methodically supervised by Japanese officers and noncommissioned officers; (2) that,
during the period in question, you failed to provide effective control of your troops, as
was required by the circumstances."

"Accordingly, upon secret written ballot, two-thirds or more of the members concurring,
the Commission finds you guilty as charged and sentences you to death by hanging."

(Emphasis added.)

[Footnote 2/16]

See note 15.

[Footnote 2/17]

The charge, set forth at the end of this note, is consistent with either theory -- or both --
and thus ambiguous, as were the findings. See note 15. The only word implying
knowledge was "permitting." If "willfully" is essential to constitute a crime or charge of
one, otherwise subject to the objection of "vagueness," cf. Screws v. United States, 325
U. S. 91, it would seem that "permitting" alone would hardly be sufficient to charge
"willful and intentional" action or omission; and, if taken to be sufficient to charge
knowledge, it would follow necessarily that the charge itself was not drawn to state, and
was insufficient to support, a finding of mere failure to detect or discover the criminal
conduct of others.

At the most, "permitting" could charge knowledge only by inference or implication. And,
reasonably, the word could be taken in the context of the charge to mean "allowing" or
"not preventing" -- a meaning consistent with absence of knowledge and mere failure to
discover. In capital cases, such ambiguity is wholly out of place. The proof was equally
ambiguous in the same respect, so far as we have been informed, and so, to repeat,
were the findings. The use of "willfully," even qualified by a "must have," one time only
in the findings hardly can supply the absence of that or an equivalent word or language
in the charge or in the proof to support that essential element in the crime.

The charge was as follows:

"Tomoyuki Yamashita, General Imperial Japanese Army, between 9 October 1944 and
2 September 1945 at Manila and other places in the Philippine Islands, while
commander of armed forces of Japan at war with the United States of America and its
allies, unlawfully disregarded and failed to discharge his duty as commander to control
the operations of the members of his command, permitting them to commit brutal
atrocities and other high crimes against people of the United States and of its allies and
dependencies, particularly the Philippines, and he, General Tomoyuki Yamashita,
thereby violated the laws of war."

[Footnote 2/18]

Cf. Text infra, 327 U. S.

[Footnote 2/19]

On November 1, early in the trial, the president of the commission stated:

"I think the Prosecution should consider the desirability of striking certain items. The
Commission feels that there must be witnesses introduced on each of the specifications
or items. It has no objection to considering affidavits, but it is unwilling to form an
opinion of a particular item based solely on an affidavit. Therefore, until evidence is
introduced, these particular exhibits are rejected."

(Emphasis added.)

Later evidence of the excluded type was offered, to introduction of which the defense
objected on various grounds, including the prior ruling. At the prosecution's urging, the
commission withdrew to deliberate. Later, it announced that,

"after further consideration, the Commission reverses that ruling [of November 1] and
affirms its prerogative of receiving and considering affidavits or depositions, if it chooses
to do so, for whatever probative value the Commission believes they may have, without
regard to the presentation of some partially corroborative oral testimony."

It then added:

"The Commission directs the prosecution again to introduce the affidavits or depositions
then in question, and other documents of similar nature which the prosecution stated
has been prepared for introduction."

(Emphasis added.)

Thereafter, this type of evidence was consistently received, and again by the
undisputed statement of counsel, as the sole proof of many of the specifications of the
bills a procedure which they characterized correctly, in my view, as having, "in effect,
stripped the proceeding of all semblance of a trial, and converted it into an ex
parte investigation."

[Footnote 2/20]

This perhaps consisted in the showing of the so-called "propaganda" film, "Orders from
Tokyo," portraying scenes of battle destruction in Manila, which counsel say "was not, in
itself, seriously objectionable." Highly objectionable, inflammatory and prejudicial,
however, was the accompanying sound track with comment that the film was "evidence
which will convict," mentioning petitioner specifically by name.

[Footnote 2/21]

Innumerable instances of hearsay, once or several times removed, relating to all

manner of incidents, rumors, reports, etc., were among these. Many instances, too, are
shown of the use of opinion evidence and conclusions of guilt, including reports made
after ex parte investigations by the War Crimes Branch of the Judge Advocate General's
Department, which it was and is urged had the effect of "putting the prosecution on the
witness stand" and of usurping the commission's function as judge of the law and the
facts. It is said also that some of the reports were received as the sole proof of some of
the specifications.

[Footnote 2/22]

Also with Paragraph 82 of the Rules of I and Warfare.

[Footnote 2/23]

Typical of the items are allegations that members of the armed forces of Japan under
the command of the accused committed the acts

"[d]uring the months of October, November, and December, 1944 [of] brutally
mistreating and torturing numerous unarmed noncombatant civilians at the Japanese
Military Police Headquarters located at Cortabitarte and Mabini Streets, Manila,"

and,

"On or about 19 February 1945, in the Town of Cuenca, Batangas Province, brutally
mistreating, massacring, and killing Jose M. Laguo, Esteban Magsamdol, Jose Lanbo,
Felisa Apuntar, Elfidio Lunar, Victoriana Ramo, and 978 other persons, all unarmed
noncombatant civilians, pillaging and unnecessarily, deliberately, and wantonly
devastating, burning, and destroying large areas of that town."

[Footnote 2/24]

The supplemental bill contains allegations similar to those set out in the original
bill. See note 23. For example, it charged that members of the armed forces of Japan
under the command of the accused "during the period from 9 October 1944 to about 1
February 1945 at Cavite City, Imus, and elsewhere in Cavite Province," were permitted
to commit the acts of "brutally mistreating, torturing, and killing or attempting to kill,
without cause or trial, unarmed noncombatant civilians."

[Footnote 2/25]
See note 39 and text, 327 U. S.

[Footnote 2/26]

In support of the motion, counsel indicated surprise by saying that, though it was
assumed two or three new specifications might be added, there had been no
expectation of 59 "about entirely new persons and times." The statement continued:

"We have worked earnestly seven days a week in order to prepare the defense on 64
specifications. And when I say 'prepare the defense,' sir, I do not mean merely an
affirmative defense, but to acquaint ourselves with the facts so that we could properly
cross-examine the Prosecution's witnesses."

". . . 'In advance of trial' means: sufficient time to allow the defense a chance to prepare
its defense."

"We earnestly state that we must have this time in order adequately to prepare the
defense. I might add, sir, we think this is important to the accused, but far more
important than any rights of this accused, we believe, is the proposition that this
Commission should not deviate from a fundamental American concept of fairness. . . ."

[Footnote 2/27]

The commission went on to question the need for all of the six officers representing the
defense to be present during presentation of all the case, suggested one or two would
be adequate and others "should be out of the courtroom" engaged in other matters, and
strongly suggested bringing in additional counsel in the midst of the trial, all to the end
that "need to request continuance may not arise."

[Footnote 2/28]

See note 9.

[Footnote 2/29]

Article 25 is as follows:

"A duly authenticated deposition taken upon reasonable notice to the opposite party
may be read in evidence before any military court or commission in any case not
capital, or in any proceeding before a court of inquiry or a military board, if such
deposition be taken when the witness resides, is found, or is about to go beyond the
State, Territory, or district in which the court, commission, or board is ordered to sit, or
beyond the distance of one hundred miles from the place of trial or hearing, or when it
appears to the satisfaction of the court, commission, board, or appointing authority that
the witness, by reason of age, sickness, bodily infirmity, imprisonment, or other
reasonable cause, is unable to appear and testify in person at the place of trial or
hearing: Provided, That testimony by deposition may be adduced for the defense in
capital cases."

(Emphasis added.) 10 U.S.C. 1496.

Article 38 reads:

"The President may, by regulations, which he may modify from time to time, prescribe
the procedure, including modes of proof, in cases before courts-martial, courts of
inquiry, military commissions, and other military tribunals, which regulations shall,
insofar as he shall deem practicable, apply the rules of evidence generally recognized in
the trial of criminal cases in the district courts of the United States: Provided, That
nothing contrary to or inconsistent with these articles shall be so prescribed: Provided
further, That all rules made in pursuance of this article shall be laid before the Congress
annually."

(Emphasis added.) 10 U.S.C. 1509.

[Footnote 2/30]

Another revision of the Articles of War took place in 1920. At this time, Article 15 was
slightly amended.

In 1916 Article 15, 39 Stat. 653, was enacted to read:

"The provisions of these articles conferring jurisdiction upon courts-martial shall not be
construed as depriving military commissions, provost courts, or other military
tribunals of concurrent jurisdiction in respect of offenders or offenses that, by the law of
war, may be lawfully triable by such military commissions, provost courts, or other
military tribunals."

(Emphasis added.)

The 1920 amendment put in the words "by statute or" before the words "by the law of
war" and omitted the word "lawfully."

[Footnote 2/31]

Speaking at the Hearings before the Committee on Military Affairs, House of

Representatives, 62nd Cong., 2d Sess., printed as an Appendix to S.Rep.229, 63rd
Cong., 2d Sess., General Crowder said:

"The next article, No. 15, is entirely new, and the reasons for its insertion in the code are
these: in our War with Mexico, two war courts were brought into existence by orders of
Gen. Scott, viz., the military commission and the council of war. By the military
commission, Gen. Scott tried cases cognizable in time of peace by civil courts, and by
the council of war, he tried offenses against the laws of war. The council of war did not
survive the Mexican War period, and, in our subsequent wars, its jurisdiction has been
taken over by the military commission, which, during the Civil War period, tried more
than 2,000 cases. While the military commission has not been formally authorized by
statute, its jurisdiction as a war court has been upheld by the Supreme Court of the
United States. It is an institution of the greatest importance in a period of war, and
should be preserved. In the new code, the jurisdiction of courts-martial has been
somewhat amplified by the introduction of the phrase 'Persons subject to military law.'
There will be more instances in the future than in the past when the jurisdiction of
courts-martial will overlap that of the war courts, and the question would arise whether
Congress having vested jurisdiction by statute the common law of war jurisdiction was
not ousted. I wish to make it perfectly plain by the new article that, in such cases, the
jurisdiction of the war court is concurrent."

S.Rep. No.229, 63rd Cong., 2d Sess., p. 53. (Emphasis added.)

And later, in 1916, speaking before the Subcommittee on Military Affairs of the Senate
at their Hearings on S.3191, a project for the revision of the Articles of War, 64th Cong.,
1st Sess., printed as an Appendix to S.Rep.230, 64th Cong., 1st Sess., General
Crowder explained at greater length:

"Article 15 is new. We have included in article 2 as subject to military law a number of

persons who are also subject to trial by military commissions. A military commission is
our common law war court. It has no statutory existence, though it is recognized by
statute law. As long as the articles embraced them in the designation 'persons subject
to military law,' and provided that they might be tried by court-martial, I was afraid that,
having made a special provision for their court-martial, it might be held that the provision
operated to exclude trials by military commission and other war courts; so this new
article was introduced. . . ."

"It just saves to these war courts the jurisdiction they now have and makes it a
concurrent jurisdiction with courts-martial, so that the military commander in the field in
time of war will be at liberty to employ either form of court that happens to be
convenient. Both classes of courts have the same procedure. For the information of the
committee and in explanation of these war courts to which I have referred, I insert here
an explanation from Winthrop's Military Law and Precedents --"

" The military commission -- a war court -- had its origin in G.O. 20, Headquarters of the
Army at Tampico, February 19, 1847 (Gen. Scott). Its jurisdiction was confined mainly to
criminal offenses of the class cognizable by civil courts in time of peace committed by
inhabitants of the theater of hostilities. A further war court was originated by Gen. Scott
at the same time, called 'council of war,' with jurisdiction to try the same classes of
persons for violations of the laws of war, mainly guerillas. These two jurisdictions were
united in the later war court of the Civil War and Spanish War periods, for which the
general designation of 'military commission' was retained. The military commission was
given statutory recognition in section 30, act of March 3, 1863, 12 Stat. 736, and in
various other statutes of that period. The United States Supreme Court has
acknowledged the validity of its judgments (Ex parte Vallandingham, 1 Wall. 243
and Coleman v. Tennessee, 97 U. S. 509). It tried more than 2,000 cases during the
Civil War and reconstruction period.Its composition, constitution, and procedure follows
the analogy of courts-martial. Another war court is the provost court, an inferior court
with jurisdiction assimilated to that of justices of the peace and police courts, and other
war courts variously designated 'courts of conciliation,' 'arbitrators,' 'military tribunals'
have been convened by military commanders in the exercise of the war power as
occasion and necessity dictated."

" Yet, as I have said, these war courts never have been formally authorized by statute."

" Senator Colt: They grew out of usage and necessity?"

" Gen. Crowder: Out of usage and necessity. I thought it was just as well, as inquiries
would arise, to put this information in the record."

S.Rep. No.130, 64th Cong., 1st Sess. (1916) p. 40. (Emphasis added.)

Article 15 was also explained in the "Report of a committee on the proposed revision of
the articles of war, pursuant to instructions of the Chief of Staff, March 10, 1915,"
included in Revision of the Articles of War, Comparative Prints, Etc., 1904-1920.
J.A.G.O., as follows:

"A number of articles . . . of the revision have the effect of giving courts-martial
jurisdiction over certain offenders and offenses which, under the law of war or by
statute, are also triable by military commissions, provost courts, etc. Article 15 is
introduced for the purpose of making clear that, in such cases, a court martial has only
a concurrent jurisdiction with such war tribunals."

[Footnote 2/32]

Of course, Articles 25 and 38, at the same time that they gave protection to defendants
before military commissions, also provided for the application by such tribunals of
modern rules of procedure and evidence.

[Footnote 2/33]

Winthrop, speaking of military commissions at the time he was writing, 1896, says:

"The offences cognizable by military commissions may thus be classed as follows: (1)
Crimes and statutory offences cognizable by State or U.S. courts, and which would
properly be tried by such courts if open and acting; (2) Violations of the laws and
usages of war cognizable by military tribunals only; (3) Breaches of military orders or
regulations for which offenders are not legally triable by court-martial under the Articles
of War."
(Emphasis added.) Winthrop at *1309. And cf. Fairman, The Law of Martial Rule (2d
ed.1943):

"Military commissions take cognizance of three categories of criminal cases:offenses

against the laws of war, breaches of military regulations, and civil crimes which, where
the ordinary courts have ceased to function, cannot be tried normally."

(Emphasis added.) Fairman, 265-266. See also Davis, A Treatise on the Military Law of
the United States (1915) 309, 310.

[Footnote 2/34]

Note 31.

[Footnote 2/35]

In addition to the statements of General Crowder with relation to Article 15, set out
in note 31, supra, see the following statements made with reference to Article 25 in
1912 at a hearing before the Committee on Military Affairs of the House:

"We come now to article 25, which relates to the admissibility of depositions. . . . It will
be noted further that the application of the old article has been broadened to include
military commissions, courts of inquiry, and military boards."

"Mr. SWEET. Please explain what you mean by military commission."

"Gen. CROWDER. That is our common law of war court, and was referred to by me in a
prior hearing. [The reference is to the discussion of Article 15.] This war court came into
existence during the Mexican War, and was created by orders of Gen. Scott. It had
jurisdiction to try all cases usually cognizable in time of peace by civil courts. Gen. Scott
created another war court, called the 'council of war,' with jurisdiction to try offenses
against the laws of war. The constitution, composition, and jurisdiction of these
courts have never been regulated by statute. The council of war did not survive the
Mexican War period, since which its jurisdiction has been taken over by the military
commission. The military commission received express recognition in the reconstruction
acts, and its jurisdiction has been affirmed and supported by all our courts. It was
extensively employed during the Civil War period and also during the Spanish-American
War. It is highly desirable that this important war court should be continued to be
governed as heretofore, by the laws of war, rather than by statute."

S.Rep. No.229, 63d Cong., 2d Sess., 59; cf. S.Rep. 130, 64th Cong., 1st Sess., 54-55.
(Emphasis added.) See also Hearings before the Subcommittee of the Committee on
Military Affairs of the Senate on Establishment of Military Justice, 66th Cong., 1st Sess.,
1182-1183.
Further evidence that procedural provisions of the Articles were intended to apply to all
forms of military tribunal is given by Article 24, 10 U.S.C. 1495, which provides against
compulsory self-incrimination "before a military court, commission, court of injury, or
board, or before any officer conducting an investigation." This article was drafted so that
"The prohibition should reach all witnesses, irrespective of the class of military
tribunal before which they appear. . . ." (Emphasis added.) Comparative Print showing
S.3191 with the Present Articles of War and other Related Statutes, and Explanatory
Notes, Printed for use of the Senate Committee on Military Affairs, 64th Cong., 1st
Sess., 17, included in Revision of the Articles of War, Comparative Prints, Etc., 1904-
1920, J.A.G.O.

[Footnote 2/36]

We are informed that Japan has not ratified the Geneva Convention. Seediscussion of
Article 82 in the paragraphs below. We are also informed, however -- and the record
shows this at least as to Japan -- that, at the beginning of the war, both the United
States and Japan announced their intention to adhere to the provisions of that treaty.
The force of that understanding continues, perhaps with greater reason, if not effect,
despite the end of hostilities. See note 40 and text.

Article 82 provides:

"The provisions of the present Convention must be respected by the High Contracting
Parties under all circumstances."

"In case, in time of war, one of the belligerents is not a party to the Convention, its
provisions shall nevertheless remain in force as between the belligerents who are
parties thereto."

It is not clear whether the Article means that, during a war, when one of the belligerents
is not a party to the Convention, the provisions must nevertheless be applied by all the
other belligerents to the prisoners of war not only of one another, but also of the power
that was not a party thereto, or whether it means that they need not be applied to
soldiers of the nonparticipating party who have been captured. If the latter meaning is
accepted, the first paragraph would seem to contradict the second.

"Legislative history" here is of some, if little, aid. A suggested draft of a convention on

war prisoners drawn up in advance of the Geneva meeting by the International
Committee of the Red Cross (Actes de la Conference Diplomatique de Geneve, edited
by Des Gouttes, pp. 21-34) provided in Article 92 that the provisions of the Convention

"ne cesseront d'etre obligatories qu'au cas ou l'un des Etats belligerents participant a la
Convention se trouve avoir a combattre les forces armees d'un autre Etat que n'y serait
par parties at a l'egard de cet Etat seulement."
See Rasmussen, Code des Prisonniers de Guerre (1931) 70. The fact that this
suggested article was not included in the Geneva Convention would indicate that the
nations in attendance were avoiding a decision on this problem. But I think it shows
more -- that is, it manifests an intention not to foreclose a future holding that, under the
terms of the Convention, a state is bound to apply the provisions to prisoners of war of
nonparticipating state. And not to foreclose such a holding is to invite one. We should, in
my opinion, so hold, for reasons of security to members of our own armed forces taken
prisoner, if for no others.

Moreover, if this view is wrong and the Geneva Convention is not strictly binding upon
the United States as a treaty, it is strong evidence of and should be held binding as
representing what have become the civilized rules of international warfare. Yamashita is
as much entitled to the benefit of such rules as to the benefit of a binding treaty which
codifies them. See U.S. War Dep't Basic Field Manual, Rules of Land Warfare (1940),
par. 5-b.

[Footnote 2/37]

Title III of the Convention, which comprises Articles 7 to 67, is called "Captivity." It
contains Section I, "Evacuation of Prisoners of War" (Articles 7, 8); Section II,
"Prisoners-of-War Camps" (Articles 9-26); Section III, "Labor of Prisoners of War"
(Articles 27-34); Section IV, "External Relations of Prisoners of War" (Articles 35-41),
and Section V, "Prisoners' Relations with the Authorities" (Articles 42-67). Thus, Title III
regulates all the various incidents of a prisoner of war's life while in captivity.

Section V, with which we are immediately concerned, is divided into three chapters.
Chapter 1 (Article 42) gives a prisoner of war the right to complain of his condition of
captivity. Chapter 2 (Articles 43-44) gives prisoners of war the right to appoint agents to
represent them. Chapter 3 is divided into three subsections, and is termed "Penalties
Applicable to Prisoners of War." Subsection 1 (Articles 45-53) contains various
miscellaneous articles to be considered in detail later. Subsection 2 (Articles 54-59)
contains provisions with respect to disciplinary punishments. And subsection 3 (Articles
60-67), which is termed "Judicial Suits," contains various provisions for protection of a
prisoner's rights in judicial proceedings instituted against him.

Thus, subsection 3, which contains Articles 60 and 63, as opposed to subsection 2, of

Chapter 3, is concerned not with mere problems of discipline, as is the latter, but with
the more serious matters of trial leading to imprisonment or possible sentence of
death; cf. Brereton, The Administration of Justice Among Prisoners of War by Military
Courts (1935) 1 Proc. Australian & New Zealand Society of International Law 143, 153.
The Court, however, would have the distinction between subsection 2 and subsection 3
one between minor disciplinary action against a prisoner of war for acts committed while
a prisoner and major judicial action against a prisoner of war for acts committed while a
prisoner. This narrow view not only is highly strained, confusing the different situations
and problems treated by the two subdivisions. It defeats the most important protections
subsection 3 was intended to secure, for our own as well as for enemy captive military
personnel.

At the most, there would be logic in the Court's construction if it could be said that all of
Chapter 3 deals with acts committed while a prisoner of war. Of course, subsection 2
does, because of the very nature of its subject matter. Disciplinary action will be taken
by a captor power against prisoners of war only for acts committed by prisoners after
capture.

But it is said that subsection 7 deals exclusively with acts committed by a prisoner of
war after having become a prisoner, and this indicates subsection 3 is limited similarly.
This ignores the fact that some of the articles in subsection 1 appear, on their face, to
apply to all judicial proceedings for whatever purpose instituted. Article 46, for example,
provides in part:

"Punishments other than those provided for the same acts for soldiers of the national
armies may not be imposed upon prisoners of war by the military authorities and courts
of the detaining Power."

This seems to refer to war crimes as well as to other offenses, for surely a country
cannot punish soldiers of another army for offenses against the law of war when it
would not punish its own soldiers for the same offences. Similarly, Article 47 in
subsection 1 appears to refer to war crimes as well as to crimes committed by a
prisoner after his capture. It reads in part:

"Judicial proceedings against prisoners of war shall be conducted as rapidly as the

circumstances permit; preventive imprisonment shall be limited as much as possible."

Thus, at the most, subjection 1 contains, in some of its articles, the same ambiguities,
and is open to the same problem, that we are faced with in construing Articles 60 and
63. It cannot be said therefore that all of chapter 3, and especially subsection 3, relate
only to acts committed by prisoners of war after capture, for the meaning of subsection
3, in this argument, is related to the meaning of subsection 1, and subsection 1 is no
more clear restricted to punishments and proceedings in disciplinary matters than is
subsection 3.

[Footnote 2/38]

Article 60 pertinently is as follows:

"At the opening of a judicial proceeding directed against a prisoner of war, the detaining
Power shall advise the representative of the protecting Power thereof as soon as
possible, and always before the date set for the opening of the trial."

"This advice shall contain the following information:"

"a) Civil state and rank of prisoner;"

"b) Place of sojourn or imprisonment;"

"c) Specification of the [count] or counts of the indictment, giving the legal provisions
applicable."

"If it is not possible to mention in that advice the court which will pass upon the matter,
the date of opening the trial, and the place where it will take place, this information must
be furnished to the representative of the protecting Power later, as soon as possible,
and at all events at least three weeks before the opening of the trial."

Article 63 reads:

"Sentence may be pronounced against a prisoner of war only by the same courts and
according to the same procedure as in the case of persons belonging to the armed
forces of the detaining Power."

[Footnote 2/39]

Item 89 charged the armed forces of Japan with subjecting to trial certain named and
other prisoners of war

"without prior notice to a representative of the protecting power, without opportunity to

defend, and without counsel; denying opportunity to appeal from the sentence rendered;
failing to notify the protecting power of the sentence pronounced, and executed a death
sentence without communicating to the representative of the protecting power the
nature and circumstances of the offense charged."

[Footnote 2/40]

Nations adhere to international treaties regulating the conduct of war at least in part
because of the fear of retaliation. Japan no longer has the means of retaliating.

[Footnote 2/41]

There can be no limit either to the admissibility or the use of evidence if the only test to
be applied concerns probative value and the only test of probative value, as the
directive commanded and the commission followed out, lies "in the Commission's
opinion," whether that be concerning the assistance the "evidence" tendered would give
in proving or disproving the charge or as it might think would "have value in the mind of
a reasonable man." Nor is it enough to establish the semblance of a constitutional right
that the commission declares, in receiving the evidence, that it comes in as having only
such probative value, if any, as the commission decides to award it and this is accepted
as conclusive.
[Footnote 2/42]

2 The Complete Writings of Thomas Paine (edited by Foner, 1945) 588.

Barcelona Traction, Light and Power Company, Limited (Belgium v. Spain

Belgium had ceased pursuing the aforementioned case on account of efforts to

negotiate a friendly settlement. The negotiations broke down, however, and
Belgium filed a new Application on 19 June 1962. The following March, Spain filed
four preliminary objections to the Courts jurisdiction, and on 24 July 1964 the
Court delivered a Judgment dismissing the first two but joining the others to the
merits. After the filing, within the time-limits requested by the Parties, of the
pleadings on the merits and on the objections joined thereto, hearings were held
from 15 April to 22 July 1969. Belgium sought compensation for the damage
claimed to have been caused to its nationals, shareholders in the Barcelona
Traction, Light and Power Company, Ltd., as the result of acts contrary to
international law said to have been committed by organs of the Spanish State.
Spain, on the other hand, submitted that the Belgian claim should be declared
inadmissible or unfounded. In a Judgment delivered on 5 February 1970, the
Court found that Belgium had no legal standing to exercise diplomatic protection
of shareholders in a Canadian company in respect of measures taken against that
company in Spain. It also pointed out that the adoption of the theory of
diplomatic protection of shareholders as such would open the door to competing
claims on the part of different States, which could create an atmosphere of
insecurity in international economic relations. Accordingly, and in so far as the
companys national State (Canada) was able to act, the Court was not of the
opinion that jus standi was conferred on the Belgian Government by
considerations of equity. The Court accordingly rejected Belgiums claim.

BELGIUM
v.
SPAIN

JUDGMENT
[p6]
The Court,
composed as above,
delivers the following Judgment:

1. In 1958 the Belgian Government filed with the International Court of Justice an
Application against the Spanish Government seeking reparation for damage
allegedly caused to the Barcelona Traction, Light and Power Company, Limited, on
account of acts said to be contrary to international law committed by organs of the
Spanish State. After the filing of the Belgian Memorial and the submission of
preliminary objections by the Spanish Government, the Belgian Government gave
notice of discontinuance of the proceedings, with a view to negotiations between the
representatives of the private interests concerned. The case was removed from the
Court's General List on 10 April 1961.

2. On 19 June 1962, the negotiations having failed, the Belgian Government

submitted to the Court a new Application, claiming reparation for the damage
allegedly sustained by Belgian nationals, shareholders in the Barcelona Traction
company, on account of acts said to be contrary to international law committed in
respect of the company by organs of the Spanish State. On 15 March 1963 the
Spanish Government raised four preliminary objections to the Belgian Application.

3. By its Judgment of 24 July 1964, the Court rejected the first two preliminary
objections. The first was to the effect that the discontinuance, under Article 69,
paragraph 2, of the Court's Rules, of previous proceedings relative to the same
events in Spain, disentitled the Belgian Government from bringing the present
proceedings. The second was to the effect that even if this was not the case, the
Court was not competent, because the necessary jurisdictional basis requiring Spain
to submit to the jurisdiction of the Court did not exist. The Court joined the third
and fourth objections to the merits. The third was to the effect that the claim is
inadmissible because the Belgian Government lacks any jus standi to intervene or
make a judicial claim on behalf of Belgian interests in a Canadian company,
assuming that the Belgian character of such interests were established, which is
denied by the Spanish Government. The fourth was to the effect that even if the
Belgian Government has the necessary jus standi, the claim still remains
inadmissible because local remedies in respect of the acts complained of were not
exhausted.

4. Time-limits for the filing of the further pleadings were fixed or, at the request of
the Parties, extended by Orders of 28 July 1964, 11 June 1965, 12 January 1966, 23
November 1966, 12 April 1967, 15 September 1967 and 24 May 1968, in the last-
mentioned of which the Court noted with regret that the time-limits originally fixed
by the Court for the filing of the pleadings had not been observed, whereby the
written proceedings had been considerably prolonged. The written proceedings
finally came to an end on 1 July 1968 with the filing of the Rejoinder of the Spanish
Government. [p.7]

5. Pursuant to Article 31, paragraph 3, of the Statute, Mr. Willem Riphagen,

Professor of International Law at the Rotterdam School of Economics, and Mr.
Enrique C. Armand-Ugon, former President of the Supreme Court of Justice of
Uruguay and a former Member of the International Court of Justice, were chosen by
the Belgian and Spanish Governments respectively to sit as judges ad hoc.

6. Pursuant to Article 44, paragraph 2, of the Rules of Court, the pleadings and
annexed documents were, after consultation of the Parties, made available to the
Governments of Chile, Peru and the United States of America. Pursuant to
paragraph 3 of the same Article, the pleadings and annexed documents were, with
the consent of the Parties, made accessible to the public as from 10 April 1969.

7. At 64 public sittings held between 15 April and 22 July 1969 the Court heard oral
arguments and replies by Chevalier Devadder, Agent, Mr. Rolin, co-Agent and
Counsel, Mrs. Bastid, Mr. Van Ryn, Mr. Grgoire, Mr. Mann, Mr. Virally, Mr.
Lauterpacht, and Mr. Pattillo, Counsel, on behalf of the Belgian Government and by
Mr. Castro-Rial, Agent, Mr. Ago, Mr. Carreras Mr. Gil-Robles, Mr. Guggenheim,
Mr. Jimenez de Archaga, Mr. Malintoppi, Mr. Reuter, Mr. Sureda, Mr. Uria, Sir
Humphrey Waldock and Mr. Weil, Counsel or Advocates, on behalf of the Spanish
Government.

***

8. The Barcelona Traction, Light and Power Company, Limited, is a holding

company incorporated in 1911 in Toronto (Canada), where it has its head office. For
the purpose of creating and developing an electric power production and distribution
system in Catalonia (Spain), it formed a number of operating, financing and
concession-holding subsidiary companies. Three of these companies, whose shares
it owned wholly or almost wholly, were incorporated under Canadian law and had
their registered offices in Canada (Ebro Irrigation and Power Company, Limited,
Catalonian Land Company, Limited and International Utilities Finance Corporation,
Limited); the others were incorporated under Spanish law and had their registered
offices in Spain. At the time of the outbreak of the Spanish Civil War the group,
through its operating subsidiaries, supplied the major part of Catalonia's electricity
requirements.

9. According to the Belgian Government, some years after the First World War
Barcelona Traction's share capital came to be very largely held by Belgian
nationalsnatural or juristic personsand a very high percentage of the shares has
since then continuously belonged to Belgian nationals, particularly the Socit
Internationale d'Energie Hydro-Electrique (Sidro), whose principal shareholder, the
Socit Financire de Transports et d'Entreprises Industrielles (Sofina), is itself a
company in which Belgian interests are preponderant. The fact that large blocks of
shares were for certain periods transferred to American nominees, to [p.8]protect
these securities in the event of invasion of Belgian territory during the Second
World War, is not, according to the Belgian contention, of any relevance in this
connection, as it was Belgian nationals, particularly Sidro, who continued to be the
real owners. For a time the shares were vested in a trustee, but the Belgian
Government maintains that the trust terminated in 1946. The Spanish Government
contends, on the contrary, that the Belgian nationality of the shareholders is not
proven and that the trustee or the nominees must be regarded as the true
shareholders in the case of the shares concerned.

10. Barcelona Traction issued several series of bonds, some in pesetas but
principally in sterling. The issues were secured by trust deeds, with the National
Trust Company, Limited, of Toronto as trustee of the sterling bonds, the security
consisting essentially of a charge on bonds and shares of Ebro and other subsidiaries
and of a mortgage executed by Ebro in favour of National Trust. The sterling bonds
were serviced out of transfers to Barcelona Traction effected by the subsidiary
companies operating in Spain.

11. In 1936 the servicing of the Barcelona Traction bonds was suspended on
account of the Spanish civil war. In 1940 payment of interest on the peseta bonds
was resumed with the authorization of the Spanish exchange control authorities
(required because the debt was owed by a foreign company), but authorization for
the transfer of. the foreign currency necessary for the servicing of the sterling bonds
was refused and those interest payments were never resumed.

12. In 1945 Barcelona Traction proposed a plan of compromise which provided for
the reimbursement of the sterling debt. When the Spanish authorities refused to
authorize the transfer of the necessary foreign currency, this plan was twice
modified. In its final form, the plan provided, inter alia, for an advance redemption
by Ebro of Barcelona Traction peseta bonds, for which authorization was likewise
required. Such authorization was refused by the Spanish authorities. Later, when the
Belgian Government complained of the refusals to authorize foreign currency
transfers, without which the debts on the bonds could not be honoured, the Spanish
Government stated that the transfers could not be authorized unless it was shown
that the foreign currency was to be used to repay debts arising from the genuine
importation of foreign capital into Spain, and that this had not been established.

13. On 9 February 1948 three Spanish holders of recently acquired Barcelona

Traction sterling bonds petitioned the court of Reus (Province of Tarragona) for a
declaration adjudging the company bankrupt, on account of failure to pay the
interest on the bonds. The petition was admitted by an order of 10 February 1948
and a judgment declaring the company bankrupt was given on 12 February. This
judgment included provisions appointing a commissioner in bankruptcy and an
interim [p.9] receiver and ordering the seizure of the assets of Barcelona Traction,
Ebro and Compaa Barcelonesa de Electricidad, another subsidiary company.
14. The shares of Ebro and Barcelonesa had been deposited by Barcelona Traction
and Ebro with the National Trust company of Toronto as security for their bond
issues. All the Ebro and the Barcelonesa ordinary shares were held outside Spain,
and the possession taken of them was characterized as "mediate and constructive
civil possession", that is to say was not accompanied by physical possession.
Pursuant to the bankruptcy judgment the commissioner in bankruptcy at once
dismissed the principal management personnel of the two companies and during the
ensuing weeks the interim receiver appointed Spanish directors and declared that the
companies were thus "normalized". Shortly after the bankruptcy judgment the
petitioners brought about the extension of the taking of possession and related
measures to the other subsidiary companies.

15. Proceedings in Spain to contest the bankruptcy judgment and the related
decisions were instituted by Barcelona Traction, National Trust, the subsidiary
companies and their directors or management personnel. However, Barcelona
Traction, which had not received a judicial notice of the bankruptcy proceedings,
and was not represented before the Reus court in February, took no proceedings in
the courts until 18 June 1948. In particular it did not enter a plea of opposition
against the bankruptcy judgment within the time-limit of eight days from the date of
publication of the judgment laid down in Spanish legislation. On the grounds that
the notification and publication did not comply with the relevant legal requirements,
the Belgian Government contends that the eight-day time-limit had never begun to
run.

16. Motions contesting the jurisdiction of the Reus court and of the Spanish courts
as a whole, in particular by certain bondholders, had a suspensive effect on the
actions for redress; a decision on the question of jurisdiction was in turn delayed by
lengthy proceedings brought by the Genora company, a creditor of Barcelona
Traction, disputing Barcelona Traction's right to be a party to the proceedings on the
jurisdictional issue. One of the motions contesting jurisdiction was not finally
dismissed by the Barcelona court of appeal until 1963, after the Belgian Application
had been filed with the International Court of Justice.

17. In June 1949, on an application by the Namel company, with the intervention of
the Genora company, the Barcelona court of appeal gave a judgment making it
possible for the meeting of creditors to be convened for the election of the trustees
in bankruptcy, by excluding the necessary procedure from the suspensive effect of
the motion contesting jurisdiction. Trustees were then elected, and procured
decisions that new shares of the subsidiary companies should be created, cancelling
the shares located outside Spain (December 1949), and that the head offices of Ebro
and Catalonian Land should henceforth be at Barcelona and not [p.10]Toronto.
Finally in August 1951 the trustees obtained court authorization to sell "the totality
of the shares, with all the rights attaching to them, representing the corporate
capital" of the subsidiary companies, in the form of the newly created share
certificates. The sale took place by public auction on 4 January 1952 on the basis of
a set of General Conditions and became effective on 17 June 1952. The purchaser
was a newly formed company, Fuerzas Elctricas de Catalua, S.A. (Fecsa), which
thereupon acquired complete control of the undertaking in Spain.

18. Proceedings before the court of Reus, various courts of Barcelona and the
Spanish Supreme Court, to contest the sale and the operations which preceded or
followed it, were taken by, among others, Barcelona Traction, National Trust and
the Belgian company Sidro as a shareholder in Barcelona Traction, but without
success. According to the Spanish Government, up to the filing of the Belgian
Application, 2,736 orders had been made in the case and 494 judgments given by
lower and 37 by higher courts. For the purposes of this Judgment it is not necessary
to go into these orders and judgments.

19. After the bankruptcy declaration, representations were made to the Spanish
Government by the British, Canadian, United States and Belgian Governments.

20. The British Government made representations to the Spanish Government on 23

February 1948 concerning the bankruptcy of Barcelona Traction and the seizure of
its assets as well as those of Ebro and Barcelonesa, stating its interest in the
situation of the bondholders resident in the United Kingdom. It subsequently
supported the representations made by the Canadian Government.

21. The Canadian Government made representations to the Spanish Government in

a series of diplomatic notes, the first being dated 27 March 1948 and the last 21
April 1952; in addition, approaches were made on a less official level in July 1954
and March 1955. The Canadian Government first complained of the denials of
justice said to have been committed in Spain towards Barcelona Traction, Ebro and
National Trust, but it subsequently based its complaints more particularly on
conduct towards the Ebro company said to be in breach of certain treaty provisions
applicable between Spain and Canada. The Spanish Government did not respond to
a Canadian proposal for the submission of the dispute to arbitration and the
Canadian Government subsequently confined itself, until the time when its
interposition entirely ceased, to endeavouring to promote a settlement by agreement
between the private groups concerned.

22. The United States Government made representations to the Spanish Government
on behalf of Barcelona Traction in a note of 22 July 1949, in support of a note
submitted by the Canadian Government the previous day. It subsequently continued
its interposition through the diplomatic channel and by other means. Since
references were made by the United States Government in these representations to
the presence of [p.11] American interests in Barcelona Traction, the Spanish
Government draws the conclusion that, in the light of the customary practice of the
United States Government to protect only substantial American investments abroad,
the existence must be presumed of such large American interests as to rule out a
preponderance of Belgian interests. The Belgian Government considers that the
United States Government was motivated by a more general concern to secure
equitable treatment of foreign investments in Spain, and in this context cites, inter
alia, a note of 5 June 1967 from the United States Government.

23. The Spanish Government having stated in a note of 26 September 1949 that
Ebro had not furnished proof as to the origin and genuineness of the bond debts,
which justified the refusal of foreign currency transfers, the Belgian and Canadian
Governments considered proposing to the Spanish Government the establishment of
a tripartite committee to study the question. Before this proposal was made, the
Spanish Government suggested in March 1950 the creation of a committee on
which, in addition to Spain, only Canada and the United Kingdom would be
represented. This proposal was accepted by the United Kingdom and Canadian
Governments. The work of the committee led to a joint statement of 11 June 1951
by the three Governments to the effect, inter alia, that the attitude of the Spanish
administration in not authorizing the transfers of foreign currency was fully
justified. The Belgian Government protested against the fact that it had not been
invited to nominate an expert to take part in the enquiry, and reserved its rights; in
the proceedings before the Court it contended that the joint statement of 1951,
which was based on the work of the committee, could not be set up against it, being
res inter alios acta.

24. The Belgian Government made representations to the Spanish Government on

the same day as the Canadian Government, in a note of 27 March 1948. It continued
its diplomatic intervention until the rejection by the Spanish Government of a
Belgian proposal for submission to arbitration (end of 1951). After the admission of
Spain to membership in the United Nations (1955), which, as found by the Court in
1964, rendered operative again the clause of compulsory jurisdiction contained in
the 1927 Hispano-Belgian Treaty of Conciliation, Judicial Settlement and
Arbitration, the Belgian Government attempted further representations. After the
rejection of a proposal for a special agreement, it decided to refer the dispute
unilaterally to this Court.

***

25. In the course of the written proceedings, the following submissions were
presented by the Parties: [p. 12]

On behalf of the Belgian Government, the Application:

"May it please the Court

1. to adjudge and declare that the measures, acts, decisions and omissions of the
organs of the Spanish State described in the present Application are contrary to
international law and that the Spanish State is under an obligation towards Belgium
to make reparation for the consequential damage suffered by Belgian nationals,
natural and juristic persons, shareholders in Barcelona Traction;

2. to adjudge and declare that this reparation should, as far as possible, annul all the
consequences which these acts contrary to international law have had for the said
nationals, and that the Spanish State is therefore under an obligation to secure, if
possible, the annulment of the adjudication in bankruptcy and of the judicial and
other acts resulting therefrom, obtaining for the injured Belgian nationals all the
legal effects which should result for them from this annulment; further, to determine
the amount of the compensation to be paid by the Spanish State to the Belgian State
by reason of all the incidental damage sustained by Belgian nationals as a result of
the acts complained of, including the deprivation of enjoyment of rights and the
expenses incurred in the defence of their rights;

3. to adjudge and declare, in the event of the annulment of the consequences of the
acts complained of proving impossible, that the Spanish State shall be under an
obligation to pay to the Belgian State, by way of compensation, a sum equivalent to
88 per cent of the net value of the business on 12 February 1948; this compensation
to be increased by an amount corresponding to all the incidental damage suffered by
the Belgian nationals as the result of the acts complained of, including the
deprivation of enjoyment of rights and the expenses incurred in the defence of their
rights";

the Memorial:

"May it please the Court

I. to adjudge and declare that the measures, acts, decisions and omissions of the
organs of the Spanish State described in the present Memorial are contrary to
international law and that the Spanish State is under an obligation towards Belgium
to make reparation for the consequential damage suffered by Belgian nationals,
natural and juristic persons, shareholders in Barcelona Traction;

II. to adjudge and declare that this reparation should, as far as possible, annul all the
consequences which these acts contrary to international law have had for the said
nationals, and that the Spanish State is therefore under an obligation to secure, if
possible, the annulment by administrative means of the adjudication in bankruptcy
and of the judicial and other acts resulting therefrom, obtaining for the said injured
Belgian nationals all the legal effects which should result for them from this
annulment; further, to determine the amount of the compensation to be paid by the
Spanish State to the Belgian State by reason of all the incidental damage sustained
by Belgian nationals as a result of the acts complained of, including the deprivation
of enjoyment of rights and the expenses incurred in the defence of their rights;
[p.13]

III. to adjudge and declare, in the event of the annulment of the consequences of the
acts complained of proving impossible, that the Spanish State shall be under an
obligation to pay to the Belgian State, by way of compensation, a sum equivalent to
88 per cent of the sum of $88,600,000 arrived at in paragraph 379 of the present
Memorial, this compensation to be increased by an amount corresponding to all the
incidental damage suffered by the said Belgian nationals as the result of the acts
complained of, including the deprivation of enjoyment of rights, the expenses
incurred in the defence of their rights and the equivalent in capital and interest of the
amount of Barcelona Traction bonds held by Belgian nationals and of their other
claims on the companies in the group which it was not possible to recover owing to
the acts complained of";

in the Reply:

"May it please the Court, rejecting any other submissions of the Spanish State which
are broader or to a contrary effect,
to adjuge and declare

(1) that the Application of the Belgian Government is admissible;

(2) that the Spanish State is responsible for the damage sustained by the Belgian
State in the person of its nationals, shareholders in Barcelona Traction, as the result
of the acts contrary to international law committed by its organs, which led to the
total spoliation of the Barcelona Traction group;

(3) that the Spanish State is under an obligation to ensure reparation of the said
damage;

(4) that this damage can be assessed at U.S. $78,000,000, representing 88 per cent.
of the net value, on 12 February 1948, of the property of which the Barcelona
Traction group was despoiled;

(5) that the Spanish State is, in addition, under an obligation to pay, as an all-
embracing payment to cover loss of enjoyment, compensatory interest at the rate of
6 per cent. on the said sum of U.S. $78,000,000, from 12 February 1948 to the date
of judgment;
(6) that the Spanish State must, in addition, pay a sum provisionally assessed at U.S.
$3,800,000 to cover the expenses incurred by the Belgian nationals in defending
their rights since 12 February 1948;

(7) that the Spanish State is also liable in the sum of 433,821 representing the
amount, in principal and interest, on 4 January 1952, of the Barcelona Traction
sterling bonds held by the said nationals, as well as in the sum of U.S. $1,623,127,
representing a debt owed to one of the said nationals by a subsidiary company of
Barcelona Traction, this sum including lump-sum compensation for loss of profits
resulting from the premature termination of a contract;
that there will be due on those sums interest at the rate of 6 per cent, per annum, as
from 4 January 1952 so far as concerns the sum of 433,821, and as from 12
February 1948 so far as concerns the sum of U.S. $1,623,127; both up to the date of
judgment;
(8) that the Spanish State is also liable to pay interest, by way of interest on a sum
due and outstanding, at a rate to be determined by [p.14] reference to the rates
generally prevailing, on the amount of compensation awarded, from the date of the
Court's decision fixing such compensation up to the date of payment;

(9) in the alternative to submissions (4) to (6) above, that the amount of the
compensation due to the Belgian State shall be established by means of an expert
enquiry to be ordered by the Court; and to place on record that the Belgian
Government reserves its right to submit in the course of the proceedings such
observations as it may deem advisable concerning the object and methods of such
measure of investigation;

(10) and, should the Court consider that it cannot, without an expert enquiry, decide
the final amount of the compensation due to the Belgian State, have regard to the
considerable magnitude of the damage caused and make an immediate award of
provisional compensation, on account of the compensation to be determined after
receiving the expert opinion, the amount of such provisional compensation being
left to the discretion of the Court."

On behalf of the Spanish Government, in the Counter-Memorial:

"May it please the Court to adjudge and declare

I. that the Belgian claim which, throughout the diplomatic correspondence and in
the first Application submitted to the Court, has always been a claim with a view to
the protection of the Barcelona Traction company, has not changed its character in
the second Application, whatever the apparent modifications introduced into it;

that even if the true subject of the Belgian claim were, not the Barcelona Traction
company, but those whom the Belgian Government characterizes on some occasions
as 'Belgian shareholders' and on other occasions as 'Belgian interests' in that
company, and the damage allegedly sustained by those 'shareholders' or 'interests', it
would still remain true that the Belgian Government has not validly proved either
that the shares of the company in question belonged on the material dates to
'Belgian shareholders', or, moreover, that there is in the end, in the case submitted to
the Court, a preponderance of genuine 'Belgian interests';

that even if the Belgian claim effectively had as its beneficiaries alleged
'shareholders' of Barcelona Traction who were 'Belgian', or yet again alleged
genuine 'Belgian interests' of the magnitude which is attributed to them, the general
principles of international law governing this matter, confirmed by practice which
knows of no exception, do not recognize that the national State of shareholders or
'interests', whatever their number or magnitude, may make a claim on their behalf in
reliance on allegedly unlawful damage sustained by the company, which possesses
the nationality of a third State;
that the Belgian Government therefore lacks jus standi in the present case;

II. that a rule of general international law, confirmed both by judicial precedents and
the teachings of publicists, and reiterated in Article 3 of the Treaty of Conciliation,
Judicial Settlement and Arbitration of 19 July 1927 between Spain and Belgium,
requires that private persons [p.15] allegedly injured by a measure contrary to
international law should have used and exhausted the remedies and means of redress
provided by the internal legal order before diplomatic, and above all judicial,
protection may be exercised on their behalf;

that the applicability of this rule to the present case has not been disputed and that
the prior requirement which it lays down has not been satisfied;

III. that the organic machinery for financing the Barcelona Traction undertaking, as
conceived from its creation and constantly applied thereafter, placed it in a
permanent state of latent bankruptcy, and that the constitutional structure of the
group and the relationship between its members were used as the instrument for
manifold and ceaseless operations to the detriment both of the interests of the
creditors and of the economy and law of Spain, the country in which the
undertaking was to carry on all its business;

that these same facts led, on the part of the undertaking, to an attitude towards the
Spanish authorities which could not but provoke a fully justified refusal to give
effect to the currency applications made to the Spanish Government;

that the bankruptcy declaration of 12 February 1948, the natural outcome of the
conduct of the undertaking, and the bankruptcy proceedings which ensued, were in
all respects in conformity with the provisions of Spanish legislation on the matter;
and that moreover these provisions are comparable with those of other statutory
systems, in particular Bel-gian legislation itself;

that the complaint of usurpation of jurisdiction is not well founded where the
bankruptcy of a foreign company is connected in any way with the territorial
jurisdiction of the State, that being certainly so in the present case;

that the Spanish judicial authorities cannot be accused of either one or more denials
of justice in the proper sense of the term, Barcelona Traction never having been
denied access to the Spanish courts and the judicial decisions on its applications and
appeals never having suffered unjustified or unreasonable delays; nor is it possible
to detect in the conduct of the Spanish authorities the elements of some breach of
international law other than a denial of justice;

that the claim for reparation, the very principle of which is disputed by the Spanish
Government, is moreover, having regard to the circumstances of the case, an abuse
of the right of diplomatic protection in connection with which the Spanish
Government waives none of its possible rights;
IV. that, therefore, the Belgian claim is dismissed as inadmissible or, if not, as
unfounded";

in the Rejoinder:

"May it please the Court to adjudge and declare

that the claim of the Belgian Government is declared inadmissible or, if not,
unfounded."

In the course of the oral proceedings, the following text was presented as final
submissions [p.16]

on behalf of the Belgian Government,

after the hearing of 9 July 1969:

"1. Whereas the Court stated on page 9 of its Judgment of 24 July 1964 that 'The
Application of the Belgian Government of 19 June 1962 seeks reparation for
damage claimed to have been caused to a number of Belgian nationals, said to be
shareholders in the Barcelona Traction, Light and Power Company, Limited, a
company under Canadian law, by the conduct, alleged to have been contrary to
international law, of various organs of the Spanish State in relation to that company
and to other companies of its group';
Whereas it was therefore manifestly wrong of the Spanish Government, in the
submissions in the Counter-Memorial and in the oral arguments of its counsel, to
persist in the contention that the object of the Belgian claim is to protect the
Barcelona Traction company;

2. Whereas Barcelona Traction was adjudicated bankrupt in a judgment rendered by

the court of Reus, in Spain, on 12 February 1948;

3. Whereas that holding company was on that date in a perfectly sound financial
situation, as were its subsidiaries, Canadian or Spanish companies having their
business in Spain;

4. Whereas, however, the Spanish Civil War and the Second World War had, from
1936 to 1944, prevented Barcelona Traction from being able to receive, from its
subsidiaries operating in Spain, the foreign currency necessary for the service of the
sterling loans issued by it for the financing of the group's investments in Spain;

5. Whereas, in order to remedy this situation, those in control of Barcelona Traction

agreed with the bondholders in 1945, despite the opposition of the March group, to
a plan of compromise, which was approved by the trustee and by the competent
Canadian court; and whereas its implementation was rendered impossible as a result
of the opposition of the Spanish exchange authorities, even though the method of
financing finally proposed no longer involved any sacrifice of foreign currency
whatever for the Spanish economy;

6. Whereas, using this situation as a pretext, the March group, which in the
meantime had made further considerable purchases of bonds, sought and obtained
the judgment adjudicating Barcelona Traction bankrupt;

7. Whereas the bankruptcy proceedings were conducted in such a manner as to lead

to the sale to the March group, which took place on 4 January 1952, of all the assets
of the bankrupt company, far exceeding in value its liabilities, in consideration of
the assumption by the purchaser itself of solely the bonded debt, which, by new
purchases, it had concentrated into its own hands to the extent of approximately 85
per cent., while the cash price paid to the trustees in bankruptcy, 10,000,000
pesetas approximately $250,000, being insufficient to cover the bankruptcy
costs, did not allow them to pass anything to the bankrupt company or its
shareholders, or even to pay its unsecured creditors;

8. Whereas the accusations of fraud made by the Spanish Government against the
Barcelona Traction company and the allegation that that company was in a
permanent state of latent bankruptcy are devoid of all [p.17]relevance to the case
and, furthermore, are entirely unfounded;

9. Whereas the acts and omissions giving rise to the responsibility of the Spanish
Government are attributed by the Belgian Government to certain administrative
authorities, on the one hand,' and to certain judicial authorities, on the other hand;
Whereas it is apparent when those acts and omissions are examined as a whole that,
apart from the defects proper to each, they converged towards one common result,
namely the diversion of the bankruptcy procedure from its statutory purposes to the
forced transfer, without compensation, of the undertakings of the Barcelona
Traction group to the benefit of a private Spanish group, the March group;

I
Abuse of rights, arbitrary and discriminatory attitude of certain adminiustrative
authorities

Considering that the Spanish administrative authorities behaved in an improper,

arbitrary and discriminatory manner towards Barcelona Traction and its
shareholders, in that, with the purpose of facilitating the transfer of control over the
property of the Barcelona Traction group from Belgian hands into the hands of a
private Spanish group, they in particular

(a) frustrated, in October and December 1946, the implementation of the third
method for financing the plan of compromise, by refusing to authorize Ebro, a
Canadian company with residence in Spain, to pay 64,000,000 pesetas in the
national currency to Spanish residents on behalf of Barcelona Traction, a non-
resident company, so that the latter might redeem its peseta bonds circulating in
Spain, despite the fact that Ebro continued uninterruptedly to be granted periodical
authorization to pay the interest on those same bonds up to the time of the
bankruptcy;

(b) on the other hand, accepted that Juan March, a Spanish citizen manifestly
resident in Spain, should purchase considerable quantities of Barcelona Traction
sterling bonds abroad;

(c) made improper use of an international enquiry, from which the Belgian
Government was excluded, by gravely distorting the purport of the conclusions of
the Committee of Experts, to whom they attributed the finding of irregularities of all
kinds such as to entail severe penalties for the Barcelona Traction group, which
enabled the trustees in bankruptcy, at March's instigation, to bring about the
premature sale at a ridiculously low price of the assets of the Barcelona Traction
group and their purchase by the March group thanks to the granting of all the
necessary exchange authorizations;

II

Usurpation of jurisdiction

Considering that the Spanish courts, in agreeing to entertain the bankruptcy of

Barcelona Traction, a company under Canadian law with its registered office in
Toronto, having neither registered office nor commer [p.18]cial establishment in
Spain, nor possessing any property or carrying on any business there, usurped a
power of jurisdiction which was not theirs in international law;

Considering that the territorial limits of acts of sovereignty were patently

disregarded in the measures of enforcement taken in respect of property situated
outside Spanish territory without the concurrence of the competent foreign
authorities;

Considering that there was, namely, conferred upon the bankruptcy authorities,
through the artificial device of mediate and constructive civil possession, the power
to exercise in Spain the rights attaching to the shares located in Canada of several
subsidiary and sub-subsidiary com-panies on which, with the approval of the
Spanish judicial authorities, they relied for the purpose of replacing the directors of
those companies, modifying their terms of association, and cancelling their
regularly issued shares and replacing them with others which they had printed in
Spain and delivered to Fecsa at the time of the sale of the bankrupt company's
property, without there having been any effort to obtain possession of the real shares
in a regular way;
Considering that that disregard is the more flagrant in that three of the subsidiaries
were companies under Canadian law with their registered offices in Canada and that
the bankruptcy authorities purported, with the approval of the Spanish judicial
authorities, to transform two of them into Spanish companies, whereas such
alteration is not permitted by the law governing the status of those companies;

III

Denials of justice Lato Sensu

Considering that a large number of decisions of the Spanish courts are vitiated by
gross and manifest error in the application of Spanish law, by arbitrariness or
discrimination, constituting in international law denials of justice lato sensu;

Considering that in particular

(1) The Spanish courts agreed to entertain the bankruptcy of Barcelona Traction in
flagrant breach of the applicable provisions of Spanish law, which do not permit
that a foreign debtor should be adjudged bankrupt if that debtor does not have his
domicile, or at least an establishment, in Spanish territory;

(2) Those same courts adjudged Barcelona Traction bankrupt whereas that company
was neither in a state of insolvency nor in a state of final, general and complete
cessation of payments and had not ceased its payments in Spain, this being a
manifest breach of the applicable statutory provisions of Spanish law, in particular
Article 876 of the 1885 Commercial Code;

(3) The judgment of 12 February 1948 failed to order the publication of the
bankruptcy by announcement in the place of domicile of the bankrupt, which
constitutes a flagrant breach of Article 1044 (5) of the 1829 Commercial Code;

(4) The decisions failing to respect the separate estates of Barcelona Traction's
subsidiaries and sub-subsidiaries, in that they extended to their property the
attachment arising out of the bankruptcy of the parent [p.19] company, and thus
disregarded their distinct legal personalities, on the sole ground that all their shares
belonged to Barcelona Traction or one of its subsidiaries, had no legal basis in
Spanish law, were purely arbitrary and in any event constitute a flagrant breach of
Article 35 of the Civil Code, Articles 116 and 174 of the 1885 Commercial Code
(so far as the Spanish companies are concerned) and Article 15 of the same Code
(so far as the Canadian companies are concerned), as well as of Article 1334 of the
Civil Procedure Code;

If the estates of the subsidiaries and sub-subsidiaries could have been included in
that of Barcelona Tractionquod non, it would have been necessary to apply to
that company the special r!!!egime established by the imperative provisions of
Articles 930 et seq. of the 1885 Commercial Code and the Acts of 9 April 1904 and
2 January 1915 for the event that public-utility companies cease payment, and this
was not done;
(5) The judicial decisions which conferred on the bankruptcy authorities the
fictitious possession (termed "mediate and constructive civil possession") of the
shares of certain subsidiary and sub-subsidiary companies have no statutory basis in
Spanish bankruptcy law and were purely arbitrary; they comprise moreover a
flagrant breach not only of the general principle recognized in the Spanish as in the
majority of other legal systems to the effect that no person may exercise the rights
embodied in negotiable securities without having at his disposal the securities
themselves but also of Articles 1334 and 1351 of the Civil Procedure Code and
Article 1046 of the 1829 Commercial Code, which require the bankruptcy
authorities to proceed to the material apprehension of the bankrupt's property;

(6) The bestowal on the commissioner by the bankruptcy judgment of power to

proceed to the dismissal, removal or appointment of members of the staff,
employees and management, of the companies all of whose shares belonged to
Barcelona Traction or one of its subsidiaries had no statutory basis in Spanish law
and constituted a gross violation of the statutory provisions referred to under (4),
first sub-paragraph, above and also of Article 1045 of the 1829 Commercial Code;

(7) The Spanish courts approved or tolerated the action of the trustees in setting
themselves up as a purported general meeting of the two Canadian subsidiaries and
in transforming them, in that capacity, into companies under Spanish law, thus
gravely disregarding the rule embodied in Article 15 of the 1885 Commercial Code
to the effect that the status and internal functioning of foreign companies shall be
governed in Spain by the law under which they were incorporated;

(8) The Spanish courts approved or tolerated the action of the trustees in setting
themselves up as purported general meetings and modifying, in that capacity, the
terms of association of the Ebro, Catalonian Land, Union Elctrica de Catalua,
Electricista Catalana, Barcelonesa and Saltos del Segre companies, cancelling their
shares and issuing new shares; they thus committed a manifest breach of Article 15
of the 1885 Commercial Code (so far as the two Canadian companies were
concerned) and Articles 547 et seq. of the same code, which authorize the issue of
duplicates only in the circumstances they specify; they also gravely disregarded the
clauses of the trust deeds concerning voting-rights, in [p.20]flagrant contempt of the
undisputed rule of Spanish law to the effect that acts performed and agreements
concluded validly by the bankrupt before the date of the cessation of payments as
determined in the judicial decisions shall retain their effects and their binding force
in respect of the bankruptcy authorities (Articles 878 et seq. of the 1885
Commercial Code);

(9) The Spanish courts decided at one and the same time to ignore the separate legal
personalities of the subsidiary and sub-subsidiary companies (so as to justify the
attachment of their property in Spain and their inclusion in the bankrupt estate) and
implicitly but indubitably to recognize those same personalities by the conferring of
fictitious possession of their shares on the bankruptcy authorities, thus giving
decisions which were vitiated by an obvious self-contradiction revealing their
arbitrary and discriminatory nature;

(10) The general meeting of creditors of 19 September 1949 convened for the
purpose of appointing the trustees was, with the approval of the Spanish judicial
authorities, held in flagrant breach of Articles 300 and 1342 of the Civil Procedure
Code, and 1044 (3), 1060, 1061 and 1063 of the 1829 Commercial Code, in that (a)
it was not convened on cognizance of the list of creditors; (b). when that list was
prepared, it was not drawn up on the basis of particulars from the balance-sheet or
the books and documents of the bankrupt company, which books and documents
were not, as the Spanish Government itself admits, in the possession of the
commissioner on 8 October 1949, while the judicial authorities had not at any time
sent letters rogatory to Toronto, Canada, with the request that they be put at his
disposal ;

(11) By authorizing the sale of the property of the bankrupt company when the
adjudication in bankruptcy had not acquired irrevocability and while the
proceedings were suspended, the Spanish courts flagrantly violated Articles 919,
1167, 1319 and 1331 of the Civil Procedure Code and the general principles of the
right of defence;

In so far as that authorization was based on the allegedly perishable nature of the
property to be sold, it constituted a serious disregard of Article 1055 of the 1829
Commercial Code and Article 1354 of the Civil Procedure Code, which articles
allow the sale only of movable property which cannot be kept without deteriorating
or spoiling; even supposing that those provisions could be applied in general to the
property of Barcelona Traction, its subsidiaries and sub-subsidiariesquod non,
there would still have been a gross and flagrant violation of them, inasmuch as that
property as a whole was obviously not in any imminent danger of serious
depreciation ; indeed th only dangers advanced by the trustees, namely those
arising out of the threats' of prosecution contained in the Joint Statement, had not
taken shape, either by the day on which authorization to sell was requested or by the
day of the sale, in any proceedings or demand by the competent authorities and did
not ever materialize, except to an insignificant extent;

The only penalty which the undertakings eventually had to bear, 15 months after the
sale, was that relating to the currency offence, which had occasioned an embargo for
a much higher sum as early as April 1948;

(12) The authorization to sell and the sale, in so far as they related to the shares of
the subsidiary and sub-subsidiary companies without delivery of the certificates,
constituted a flagrant violation of Articles [p.21] 1461 and 1462 of the Spanish Civil
Code, which require delivery of the thing sold, seeing that the certificates delivered
to the successful bidder had not been properly issued and were consequently
without legal value; if the authorization to sell and the sale had applied, as the
respondent Government wrongly maintains, to the rights attaching to the shares and
bonds or to the bankrupt company's power of domination over its subsidiaries, those
rights ought to have been the subject of a joint valuation, on pain of flagrant
violation of Articles 1084 to 1089 of the 1829 Commercial Code and Article 1358
of the Civil Procedure Code: in any event, it was in flagrant violation of these last-
named provisions that the commissioner fixed an exaggeratedly low reserve price
on the basis of a unilateral expert opinion which, through the effect of the General
Conditions of Sale, allowed the March group to acquire the auctioned property at
that reserve price;

(13) By approving the General Conditions of Sale on the very day on which they
were submitted to them and then dismissing the proceedings instituted to contest
those conditions, the judicial authorities committed a flagrant violation of numerous
ordre public provisions of Spanish law; thus, in particular, the General Conditions
of Sale

(a) provided for the payment of the bondholder creditors, an operation which, under
Article 1322 of the Civil Procedure Code, falls under the fourth section of the
bankruptcy, whereas that section was suspended as a result of the effects attributed
to the Boter motion contesting jurisdiction, no exemption from that suspension
having been applied for or obtained in pursuance of the second paragraph of Article
114 of the Civil Procedure Code;

(b) provided for the payment of the debts owing on the bonds before they had been
approved and ranked by a general meeting of the creditors on the recommendation
of the trustees, contrary to Articles 1101 to 1109 of the 1829 Commercial Code and
to Articles 1266 to 1274, 1286 and 1378 of the Civil Procedure Code;

(c) in disregard of Articles 1236, 1240, 1512 and 1513 of the Civil Procedure Code,
did not require the price to be lodged or deposited at the Court's disposal;

(d) conferred on the trustees power to recognize, determine and declare effective the
rights attaching to the bonds, in disregard, on the one hand, of Articles 1101 to 1109
of the 1829 Commercial Code and of Articles 1266 to 1274 of the Civil Procedure
Code, which reserve such rights for the general meeting of creditors under the
supervision of the judge, and, on the other, of Articles 1445 and 1449 of the Civil
Code, which lay down that the purchase price must be a definite sum and may not
be left to the arbitrary decision of one of the contracting parties;

(e) in disregard of Articles 1291 to 1294 of the Civil Procedure Code, substituted
the successful bidder for the trustees in respect of the payment of the debts owing on
the bonds, whilst, in violation of the general principles applicable to novation,
replacing the security for those debts, consisting, pursuant to the trust deeds, of
shares and bonds issued by the subsidiary and sub-subsidiary companies, with the
deposit of a certain sum with a bank or with a mere banker's guarantee limited to
three years; [p.22]
(f) delegated to a third party the function of paying certain debts, in disregard of
Articles 1291 and 1292 of the Civil Procedure Code, which define the functions of
the trustees in this field and do not allow of any delegation;
(g) ordered the payment of the debts owing on the bonds in sterling, whereas a
forced execution may only be carried out in local currency and in the case of
bankruptcy the various operations which it includes require the conversion of the
debts into local currency on the day of the judgment adjudicating bankruptcy, as is
to be inferred from Articles 883 and 884 of the 1885 Commercial Code;

IV

Denials of justice Stricto Sensu

Considering that in the course of the bankruptcy proceedings the rights of the
defence were seriously disregarded; that in particular

(a) the Reus court, in adjudicating Barcelona Traction bankrupt on an ex parte

petition, inserted in its judgment provisions which went far beyond finding the
purported insolvency of or a general cessation of payments by the bankrupt
company, the only finding, in addition to one on the capacity of the petitioners, that
it was open to it to make in such proceedings;
This disregard of the rights of the defence was particularly flagrant in respect of the
subsidiary companies, whose property was ordered by the court to be attached
without their having been summonsed and without their having been adjudicated
bankrupt;

(b) the subsidiary companies that were thus directly affected by the judgment of 12
February 1948 nevertheless had their applications to set aside the order for
attachment which concerned them rejected as inadmissible on the grounds of lack of
capacity;

(c) the pursuit of those remedies and the introduction of any other such proceedings
were also made impossible for the subsidiary companies by the discontinuances
effected each time by the solicitors appointed to replace the original solicitors by the
new boards of directors directly or indirectly involved; these changes of solicitors
and discontinuances were effected by the new boards of directors by virtue of
authority conferred upon them by the interim receiver simultaneously with their
appointment;

(d) the proceedings for relief brought by those in control of the subsidiary
companies who had been dismissed by the commissioner were likewise held
inadmissible by the Reus court when they sought to avail themselves of the specific
provisions of Article 1363 of the Civil Procedure Code, which provide for
proceedings to reverse decisions taken by the commissioner in bankruptcy;

(e) there was discrimination on the part of the first special judge when he refused to
admit as a party to the bankruptcy the Canadian National Trust Company, Limited,
trustee for the bankrupt company's two sterling loans, even though it relied upon the
security of the mortgage which had been given to it by Ebro, whereas at the same
time he admitted to the proceedings the Bondholders' Committee [p.23]appointed
by Juan March, although National Trust and the Committee derived their powers
from the same trust deeds;

(f) the complaints against the General Conditions of Sale could be neither amplified
nor heard because the order which had approved the General Conditions of Sale was
deemed to be one of mere routine; Considering that many years elapsed after the
bankruptcy judgment and even after the ruinous sale of the property of the
Barcelona Traction group without either the bankrupt company or those co-
interested with it having had an opportunity to be heard on the numerous complaints
put forward against the bankruptcy judgment and related decisions in the opposition
of 18 June 1948 and in various other applications for relief;

Considering that those delays were caused by the motion contesting jurisdiction
fraudulently lodged by a confederate of the petitioners in bankruptcy and by
incidental proceedings instituted by other men of straw of the March group, which
were, like the motion contesting jurisdiction, regularly admitted by the various
courts;

Considering that both general international law and the Spanish-Belgian Treaty of
1927 regard such delays as equivalent to the denial of a hearing;

Considering that the manifest injustice resulting from the movement of the
proceedings towards the sale, whilst the actions contesting the bankruptcy judgment
and even the jurisdiction of the Spanish courts remained suspended, was brought
about by two judgments delivered by the same chamber of the Barcelona court of
appeal on the same day, 7 June 1949: in one of them it confirmed the admission,
with two effects, of the Boter appeal from the judgment of the special judge
rejecting his motion contesting jurisdiction, whereas in the other it reduced the
suspensive effect granted to that same appeal by excluding from the suspension the
calling of the general meeting of creditors for the purpose of appointing the trustees
in bankruptcy;

Damage and Reparation

Considering that the acts and omissions contrary to international law attributed to
the organs of the Spanish State had the effect of despoiling the Barcelona Traction
company of the whole of its property and of depriving it of the very objects of its
activity, and thus rendered it practically defunct;

Considering that Belgian nationals, natural and juristic persons, shareholders in

Barcelona Traction, in which they occupied a majority and controlling position, and
in particular the Sidro company, the owner of more than 75 per cent, of the
registered capital, on this account suffered direct and immediate injury to their
interests and rights, which were voided of all value and effectiveness;

Considering that the reparation due to the Belgian State from the Spanish State, as a
result of the internationally unlawful acts for which the latter State is responsible,
must be complete and must, so far as possible, reflect the damage suffered by its
nationals whose case the Belgian State has taken up; and that, since restitutio in
integrum is, in the circumstances [p.24]of the case, practically and legally
impossible, the reparation of the damage suffered can only take place in the form of
an all-embracing pecuniary idemnity, in accordance with the provisions of the
Spanish-Belgian Treaty of 1927 and with the rules of general international law;

Considering that in the instant case the amount of the indemnity must be fixed by
taking as a basis the net value of the Barcelona Traction company's property at the
time of its adjudication in bankruptcy, expressed in a currency which has remained
stable, namely the United States dollar;

Considering that the value of that property must be determined by the replacement
cost of the subsidiary and sub-subsidiary companies' plant for the production and
distribution of electricity at 12 February 1948, as that cost was calculated by the
Ebro company's engineers in 1946;

Considering that, according to those calculations, and after deduction for

depreciation through wear and tear, the value of the plant was at that date U.S.
$116,220,000; from this amount there must be deducted the principal of Barcelona
Traction's bonded debt and the interest that had fallen due thereon, that is to say,
U.S. $27,619,018, which leaves a net value of about U.S. $88,600,000, this result
being confirmed

(1) by the study submitted on 5 February 1949 and on behalf of Ebro to the Special
Technical Office for the Regulation and Distribution of Electricity (Catalonian
region) (Belgian New Document No. 50);

(2) by capitalization of the 1947 profits;

(3) by the profits made by Fecsa in 1956the first year after 1948 in which the
position of electricity companies was fully stabilized and the last year before the
changes made in the undertaking by Fecsa constituted an obstacle to any useful
comparison;

(4) by the reports of the experts consulted by the Belgian Government;

Considering that the compensation due to the Belgian Government must be

estimated, in the first place, at the percentage of such net value corresponding to the
participation of Belgian nationals in the capital of the Barcelona Traction company,
namely 88 per cent.;

Considering that on the critical dates of the bankruptcy judgment and the filing of
the Application, the capital of Barcelona Traction was represented by 1,798,854
shares, partly bearer and partly registered; that on 12 February 1948 Sidro owned
1,012,688 registered shares and 349,905 bearer shares; that other Belgian nationals
owned 420 registered shares and at least 244,832 bearer shares; that 1,607,845
shares, constituting 89.3 per cent. of the company's capital, were thus on that date
in. Belgian hands; that on 14 June 1962 Sidro owned 1,354,514 registered shares
and 31,228 bearer shares; that other Belgian nationals owned 2,388 registered shares
and at least 200,000 bearer shares; and that 1,588,130 shares, constituting 88 per
cent. of the company's capital, were thus on that date in Belgian hands;

Considering that the compensation claimed must in addition cover all incidental
damage suffered by the said Belgian nationals as a result of the acts complained of,
including the deprivation of enjoyment of rights, the expenses incurred in the
defence of their rights and the equivalent, in capital and interest, of the amount of
the Barcelona Traction bonds held by Belgian nationals, and of their other claims on
the companies in the [p.25]group which it was not possible to recover owing to the
acts complained of;

Considering that the amount of such compensation, due to the Belgian State on
account of acts contrary to international law attributable to the Spanish State, cannot
be affected by the latter's purported charges against the private persons involved,
those charges furthermore not having formed the subject of any counterclaim before
the Court;

VI

Objection derived from the alleged lack of Jus Standi of the Belgian Government

Considering that in its Judgment of 24 July 1964 the Court decided to join to the
merits the third preliminary objection raised by the Spanish Government;

Considering that the respondent Government wrongly denies to the Belgian

Government jus standi in the present proceedings;

Considering that the object of the Belgian Government's Application of 14 June

1962 is reparation for the damage caused to a certain number of its nationals, natural
and juristic persons, in their capacity as shareholders in the Barcelona Traction,
Light and Power Company, Limited, by the conduct contrary to international law of
various organs of the Spanish State towards that company and various other
companies in its group;

Considering that the Belgian Government has established that 88 per cent. of
Barcelona Traction's capital was in Belgian hands on the critical dates of 12
February 1948 and 14 June 1962 and so remained continuously between those dates,
that a single Belgian company, Sidro, possessed more than 75 per cent. of the
shares; that the Belgian nationality of that company and the effectiveness of its
nationality have not been challenged by the Spanish Government;

Considering that the fact that the Barcelona Traction registered shares possessed by
Sidro were registered in Canada in the name of American nominees does not affect
their Belgian character; that in this case, under the applicable systems of statutory
law, the nominee could exercise the rights attaching to the shares entered in its name
only as Sidro's agent;

Considering that the preponderence of Belgian interests in the Barcelona Traction

company was well known to the Spanish authorities at the different periods in which
the conduct complained of against them occurred, and has been explicitly admitted
by them on more than one occasion;

Considering that the diplomatic protection from which the company benefited for a
certain time on the part of its national Government ceased in 1952, well before the
filing of the Belgian Application, and has never subsequently been resumed;

Considering that by depriving the organs appointed by the Barcelona Traction

shareholders under the company's terms of association of their power of control in
respect of its subsidiaries, which removed from the company the very objects of its
activities, and by depriving it of the whole of its property, the acts and omissions
contrary to international law attributed to the Spanish authorities rendered the
company practically defunct and directly and immediately injured the rights and
interests [p.26]attaching to the legal situation of shareholder as it is recognized by
international law; that they thus caused serious damage to the company's Belgian
shareholders and voided the rights which they possessed in that capacity of all
useful content;

Considering that in the absence of reparation to the company for the damage
inflicted on it, from which they would have benefited at the same time as itself, the
Belgian shareholders of Barcelona Traction thus have separate and independent
rights and interests to assert; that they did in fact have to take the initiative for and
bear the cost of all the proceedings brought through the company's organs to seek
relief in the Spanish courts; that Sidro and other Belgian shareholders, after the sale
of Barcelona Traction's property, themselves brought actions the dismissal of which
is complained of by the Belgian Government as constituting a denial of Justice;

Considering that under the general principles of international law in this field the
Belgian Government has jus standi to claim through international judicial
proceedings reparation for the damage thus caused to its nationals by the
internationally unlawful acts and omissions attributed to the Spanish State;
VII

Objection of Non-Exhaustion of Local Remedies

Considering that no real difference has emerged between the Parties as to the scope
and significance of the rule of international law embodied in Article 3 of the Treaty
of Conciliation, Judicial Settlement and Arbitration concluded between Spain and
Belgium on 19 July 1927, which makes resort to the procedures provided for in that
Treaty dependant on the prior use, until a judgment with final effect has been
pronounced, of the normal means of redress which are available and which offer
genuine possibilities of effectiveness within the limitation of a reasonable time;

Considering that in this case the Respondent itself estimates at 2,736 the number of
orders alone made in the case by the Spanish courts as of the date of the Belgian
Application;

Considering that in addition the pleadings refer to more than 30 decisions by the
Supreme Court;
Considering that it is not contended that the remedies as a whole of which
Barcelona Traction and its co-interested parties availed themselves and which gave
rise to those decisions were inadequate or were not pursued to the point of
exhaustion;

Considering that this circumstance suffices as a bar to the possibility of the fourth
objection being upheld as setting aside the Belgian claim;

Considering that the only complaints which could be set aside are those in respect of
which the Spanish Government proved failure to make use of means of redress or
the insufficiency of those used;
Considering that such proof has not been supplied;

1. With Respect to the Complaints Against the Acts of the Administrative

Authorities

Considering that the Spanish Government is wrong in contending that the Belgian
complaint concerning the decisions of October and [p.27] December 1946 referred
to under I (a) above is not admissible on account of Barcelona Traction's failure to
exercise against them the remedies of appeal to higher authority and contentious
administrative proceedings;

Considering that the remedy of appeal to higher authority was inconceivable in this
case, being by definition an appeal which may be made from a decision by one
administrative authority to another hierarchically superior authority namely the
Minister, whereas the decisions complained of were taken with the co-operation and
approval of the Minister himself, and even brought to the knowledge of those
concerned by the Minister at the same time as by the competent administrative
authority;

Considering that it was likewise not possible to envisage contentious administrative

proceedings against a decision which patently did not fall within the ambit of
Article 1 of the Act of 22 June 1894, which recognizes such a remedy only against
administrative decisions emanating from administrative authorities in the exercise of
their regulated powers and "infringing a right of an administrative character
previously established in favour of the applicant by an Act, a regulation or some
other administrative provision", which requirements were patently not satisfied in
this case;

2. With Respect to the Complaint concerning the Reus Court's Lack of Jurisdiction
to Declare the Bankruptcy of Barcelona Traction

Considering that the Spanish Government is wrong in seeking to derive an argument

from the fact that Barcelona Traction and its co-interested parties supposedly failed
to challenge the jurisdiction of the Reus court by means of a motion contesting its
competence, and allowed the time-limit for entering opposition to expire without
having challenged that jurisdiction;

Considering that in fact a motion contesting jurisdiction is not at all the same thing
as a motion contesting competence ratione materiae and may properly be presented
cumulatively with the case on the merits;

Considering that the bankrupt company contested jurisdiction at the head of the
complaints set out in its opposition plea of 18 June 1948;

Considering that it complained again of lack of jurisdiction in its application of 5

July 1948 for a declaration of nullity and in its pleading of 3 September 1948 in
which it confirmed its opposition to the bankruptcy judgment;

Considering that National Trust submitted a formal motion contesting jurisdiction in

its application of 27 November 1948 for admission to the bankruptcy proceedings;

Considering that Barcelona Traction, after having as early as 23 April 1949 entered
an appearance in the proceedings concerning the Boter motion contesting
jurisdiction, formally declared its adherence to that motion by a procedural
document of 11 April 1953;

Considering that the question of jurisdiction being a matter of ordre public, as is the
question of competence ratione materiae, the complaint of belatedness could not be
upheld, even in the event of the expiry of the allegedly applicable time-limit for
entering a plea of opposition;

3. With Respect to the Complaints concerning the Bankruptcy Judgment and

Related Decisions
Considering that the Spanish Government is wrong in contending that the said
decisions were not attacked by adequate remedies pursued to [p.28] the point of
exhaustion or for a reasonable length of time;

Considering that in fact, as early as 16 February 1948, the bankruptcy judgment was
attacked by an application for its setting aside on the part of the subsidiary
companies, Ebro and Barcelonesa;
Considering that while those companies admittedly confined their applications for
redress to the parts of the judgment which gave them grounds for complaint, the
said remedies were nonetheless adequate and they were brought to nought in
circumstances which are themselves the subject of a complaint which has been set
out above;

Considering that, contrary to what is asserted by the Spanish Government, the

bankrupt company itself entered a plea of opposition to the judgment by a
procedural document of 18 June 1948, confirmed on 3 September 1948;

Considering that it is idle for the Spanish Government to criticize the summary
character of this procedural document, while the suspension decreed by the special
judge on account of the Boter motion contesting jurisdiction prevented the party
entering opposition from filing, pursuant to Article 326 of the Civil Procedure Code,
the additional pleading developing its case;

Considering that likewise there can be no question of belatedness, since only

publication of the bankruptcy at the domicile of the bankrupt company could have
caused the time-limit for entering opposition to begin to run, and no such
publication took place;

Considering that the bankruptcy judgment and the related decisions were moreover
also attacked in the incidental application for a declaration of nullity submitted by
Barcelona Traction on 5 July 1948 and amplified on 31 July 1948;

4. With Respect to the Complaints concerning the Blocking of the Remedies

Considering that the various decisions which instituted and prolonged the
suspension of the first section of the bankruptcy proceedings were attacked on
various occasions by numerous proceedings taken by Barcelona Traction, beginning
with the incidental application for a declaration of nullity which it submitted on 5
July 1948;

5. With Respect to the Complaint concerning the Dismissal of the Officers of the
Subsidiary Companies by Order of the Commissioner

Considering that this measure was also attacked by applications for its setting aside
on the part of the persons concerned, which were quite improperly declared
inadmissible; and that the proceedings seeking redress against those decisions were
adjourned until 1963;

6. With Respect to the Failure to Observe the No-Action Clause

Considering that this clause was explicitly referred to by National Trust in its
application of 27 November 1948 for admission to the proceedings;

7. With Respect to the Measures Preparatory to the Sale and the Sale

Considering that the other side, while implicitly admitting that adequate proceedings
were taken to attack the appointment of the trustees and the authorization to sell, is
wrong in contending that this was supposedly not so in respect of[p.29]

(1) The failure to draw up a list of creditors prior to the convening of the meeting of
creditors for the appointment of the trustees, whereas this defect was complained of
in the procedural document attacking the appointment of the trustees and in the
application that the sale be declared null and void;

(2) Certain acts and omissions on the part of the trustees, whereas they were referred
to in the proceedings taken to attack the authorization to sell and the decision
approving the method of unilateral valuation of the assets;

(3) The conditions of sale, whereas they were attacked by Barcelona Traction in an
application to set aside and on appeal, in the application of 27 December 1951 for a
declaration of nullity containing a formal prayer that the order approving the
conditions of sale be declared null and void, and in an application of 28 May 1955
(New Documents submitted by the Belgian Government, 1969, No. 30); the same
challenge was expressed by Sidro in its action of 7 February 1953 (New Documents
submitted by the Spanish Government, 1969) and by two other Belgian shareholders
of Barcelona Traction, Mrs. Mathot and Mr. Duvi-vier, in their application of 26
May 1955 (New Documents submitted by the Belgian Government, 1969, No. 29);

8. With Respect to the Exceptional Remedies

Considering that the Spanish Government is wrong in raising as an objection to the

Belgian claim the allegation that Barcelona Traction did not make use of certain
exceptional remedies against the bankruptcy judgment, such as application for
revision, action for civil liability and criminal proceedings against the judges, and
application for a hearing by a party in default;

Considering that the first of these remedies could patently not be contemplated, not
only on account of the nature of the bankruptcy judgment, but also because until
1963 there was an opposition outstanding against that Judgment and,
superabundantly, because Barcelona Traction, its subsidiaries and co-interested
parties would not have been in a position to prove the facts of subornation, violence
or fraudulent machination which alone could have entitled such proceedings to be
taken;

Considering that the remedies of an action for civil liability and criminal
proceedings against the judges were not adequate, since they were not capable of
bringing about the annulment or setting aside of the decisions constituting denials of
justice;

Considering that similarly the remedy of application for a hearing accorded by

Spanish law to a party in default was patently in this case neither available to
Barcelona Traction nor adequate;

For These Reasons, and any others which have been adduced by the Belgian
Government in the course of the proceedings,

May it please the Court, rejecting any other submissions of the Spanish State which
are broader or to a contrary effect,

To uphold the claims of the Belgian Government expressed in the submissions [in]
the Reply."[p.30]

The following final submissions were presented

on behalf of the Spanish Government,

at the hearing of 22 July 1969:

"Considering that the Belgian Government has no jus standi in the present case,
either for the protection of the Canadian Barcelona Traction company or for the
protection of alleged Belgian 'shareholders' of that company;

Considering that the requirements of the exhaustion of local remedies rule have not
been satisfied either by the Barcelona Traction company or by its alleged
'shareholders';

Considering that as no violation of an international rule binding on Spain has been

established, Spain has not incurred any responsibility vis--vis the applicant State
on any account; and that, in particular

(a) Spain is not responsible for any usurpation of jurisdiction on account of the
action of its judicial organs;

(b) the Spanish judicial organs have not violated the rules of international law
requiring that foreigners be given access to the courts, that a decision be given on
their claims and that their proceedings for redress should not be subjected to
unjustified delays;
(c) there have been no acts of the Spanish judiciary capable of giving rise to
international responsibility on the part of Spain on account of the content of judicial
decisions; and
(d) there has not been on the part of the Spanish administrative authorities any
violation of an international obligation on account of abuse of rights or
discriminatory acts;

Considering that for these reasons, and any others expounded in the written and oral
proceedings, the Belgian claims must be deemed to be inadmissible or unfounded;

The Spanish Government presents to the Court its final submissions:

May it please the Court to adjudge and declare that the Belgian Government's
claims are dismissed."

***

26. As has been indicated earlier, in opposition to the Belgian Application the
Spanish Government advanced four objections of a preliminary nature. In its
Judgment of 24 July 1964 the Court rejected the first and second of these (see
paragraph 3 above), and decided to join the third and fourth to the merits. The latter
were, briefly, to the effect that the Belgian Government lacked capacity to submit
any claim in respect of wrongs done to a Canadian company, even if the
shareholders were Belgian, and that local remedies available in Spain had not been
exhausted.

27. In the subsequent written and oral proceedings the Parties supplied the Court
with abundant material and information bearing both on the preliminary objections
not decided in 1964 and on the merits of the case. In this connection the Court
considers that reference should be made to the unusual length of the present
proceedings, which has been due to the [p.31] very long time-limits requested by the
Parties for the preparation of their written pleadings and in addition to their repeated
requests for an extension of these limits. The Court did not find that it should refuse
these requests and thus impose limitations on the Parties in the preparation and
presentation of the arguments and evidence which they considered necessary. It
nonetheless remains convinced of the fact that it is in the interest of the authority
and proper functioning of international justice for cases to be decided without
unwarranted delay.

28. For the sake of clarity, the Court will briefly recapitulate the claim and identify
the entities concerned in it. The claim is presented on behalf of natural and juristic
persons, alleged to be Belgian nationals and shareholders in the Barcelona Traction,
Light and Power Company, Limited. The submissions of the Belgian Government
make it clear that the object of its Application is reparation for damage allegedly
caused to these persons by the conduct, said to be contrary to international law, of
various organs of the Spanish State towards that company and various other
companies in the same group.

29. In the first of its submissions, more specifically in the Counter-Memorial, the
Spanish Government contends that the Belgian Application of 1962 seeks, though
disguisedly, the same object as the Application of 1958, i.e., the protection of the
Barcelona Traction company as such, as a separate corporate entity, and that the
claim should in consequence be dismissed. However, in making its new
Application, as it has chosen to frame it, the Belgian Government was only
exercising the freedom of action of any State to formulate its claim in its own way.
The Court is therefore bound to examine the claim in accordance with the explicit
content imparted to it by the Belgian Government.

30. The States which the present case principally concerns are Belgium, the national
State of the alleged shareholders, Spain, the State whose organs are alleged to have
committed the unlawful acts complained of, and Canada, the State under whose
laws Barcelona Traction was incorporated and in whose territory it has its registered
office ("head office" in the terms of the by-laws of Barcelona Traction).

31. Thus the Court has to deal with a series of problems arising out of a triangular
relationship involving the State whose nationals are shareholders in a company
incorporated under the laws of another State, in whose territory it has its registered
office; the State whose organs are alleged to have committed against the company
unlawful acts prejudicial to both it and its shareholders; and the State under whose
laws the company is incorporated, and in whose territory it has its registered office.

*[p.32]
32. In these circumstances it is logical that the Court should first address itself to
what was originally presented as the subject-matter of the third preliminary
objection: namely the question of the right of Belgium to exercise diplomatic
protection of Belgian shareholders in a company which is a juristic entity
incorporated in Canada, the measures complained of having been taken in relation
not to any Belgian national but to the company itself.

33. When a State admits into its territory foreign investments or foreign nationals,
whether natural or juristic persons, it is bound to extend to them the protection of
the law and assumes obligations concerning the treatment to be afforded them.
These obligations, however, are neither absolute nor unqualified. In particular, an
essential distinction should be drawn between the obligations of a State towards the
international community as a whole, and those arising vis-a-vis another State in the
field of diplomatic protection. By their very nature the former are the concern of all
States. In view of the importance of the rights involved, all States can be held to
have a legal interest in their protection; they are obligations erga omnes.
34. Such obligations derive, for example, in contemporary international law, from
the outlawing of acts of aggression, and of genocide, as also from the principles and
rules concerning the basic rights of the human person, including protection from
slavery and racial discrimination. Some of the corresponding rights of protection
have entered into the body of general international law (Reservations to the
Convention on the Prevention and Punishment of the Crime of Genocide, Advisory
Opinion, I.C.J. Reports 1951, p. 23); others are conferred by international
instruments of a universal or quasi-universal character.

35. Obligations the performance of which is the subject of diplomatic protection are
not of the same category. It cannot be held, when one such obligation in particular is
in question, in a specific case, that all States have a legal interest in its observance.
In order to bring a claim in respect of the breach of such an obligation, a State must
first establish its right to do so, for the rules on the subject rest on two suppositions:

"The first is that the defendant State has broken an obligation towards the national
State in respect of its nationals. The second is that only the party to whom an
international obligation is due can bring a claim in respect of its breach."
(Reparation for Injuries Suffered in the Service of the United Nations, Advisory
Opinion, I.C.J. Reports 1949, pp. 181-182.)

In the present case it is therefore essential to establish whether the losses allegedly
suffered by Belgian shareholders in Barcelona Traction were the consequence of the
violation of obligations of which they were the beneficiaries. In other words: has a
right of Belgium been violated on account [p.33] of its nationals' having suffered
infringement of their rights as shareholders in a company not of Belgian nationality?

36. Thus it is the existence or absence of a right, belonging to Belgium and

recognized as such by international law, which is decisive for the problem of
Belgium's capacity.

"This right is necessarily limited to intervention [by a State] on behalf of its own
nationals because, in the absence of a special agreement, it is the bond of nationality
between the State and the individual which alone confers upon the State the right of
diplomatic protection, and it is as a part of the function of diplomatic protection that
the right to take up a claim and to ensure respect for the rules of international law
must be envisaged." (Panevezys-Saldutiskis Railway, Judgment, 1939, P.C.I.J.,
Series A/B, No. 76, p. 16.)

It follows that the same question is determinant in respect of Spain's responsibility

towards Belgium. Responsibility is the necessary corollary of a right. In the absence
of any treaty on the subject between the Parties, this essential issue has to be
decided in the light of the general rules of diplomatic protection.

*
37. In seeking to determine the law applicable to this case, the Court has to bear in
mind the continuous evolution of international law. Diplomatic protection deals
with a very sensitive area of international relations, since the interest of a foreign
State in the protection of its nationals confronts the rights of the territorial
sovereign, a fact of which the general law on the subject has had to take cognizance
in order to prevent abuses and friction. From its origins closely linked with
international commerce, diplomatic protection has sustained a particular impact
from the growth of international economic relations, and at the same time from the
profound transformations which have taken place in the economic life of nations.
These latter changes have given birth to municipal institutions, which have
transcended frontiers and have begun to exercise considerable influence on
international relations. One of these phenomena which has a particular bearing on
the present case is the corporate entity.

38. In this field international law is called upon to recognize institutions of

municipal law that have an important and extensive role in the international field.
This does not necessarily imply drawing any analogy between its own institutions
and those of municipal law, nor does it amount to making rules of international law
dependent upon categories of municipal law. All it means is that international law
has had to recognize the corporate entity as an institution created by States in a
domain essentially within their domestic jurisdiction. This in turn requires that,
whenever legal issues arise concerning the rights of States with regard to the treat
[p. 34] ment of companies and shareholders, as to which rights international law has
not established its own rules, it has to refer to the relevant rules of municipal law.
Consequently, in view of the relevance to the present case of the rights of the
corporate entity and its shareholders under municipal law, the Court must devote
attention to the nature and interrelation of those rights.

39. Seen in historical perspective, the corporate personality represents a

development brought about by new and expanding requirements in the economic
field, an entity which in particular allows of operation in circumstances which
exceed the normal capacity of individuals. As such it has become a powerful factor
in the economic life of nations. Of this, municipal law has had to take due account,
whence the increasing volume of rules governing the creation and operation of
corporate entities, endowed with a specific status. These entities have rights and
obligations peculiar to themselves.

40. There is, however, no need to investigate the many different forms of legal
entity provided for by the municipal laws of States, because the Court is concerned
only with that exemplified by the company involved in the present case: Barcelona
Tractiona limited liability company whose capital is represented by shares. There
are, indeed, other associations, whatever the name attached to them by municipal
legal systems, that do not enjoy independent corporate personality. The legal
difference between the two kinds of entity is that for the limited liability company it
is the overriding tie of legal personality which is determinant; for the other
associations, the continuing autonomy of the several members.

41. Municipal law determines the legal situation not only of such limited liability
companies but also of those persons who hold shares in them. Separated from the
company by numerous barriers, the shareholder cannot be identified with it. The
concept and structure of the company are founded on and determined by a firm
distinction between the separate entity of the company and that of the shareholder,
each with a distinct set of rights. The separation of property rights as between
company and shareholder is an important manifestation of this distinction. So long
as the company is in existence the shareholder has no right to the corporate assets.

42. It is a basic characteristic of the corporate structure that the company alone,
through its directors or management acting in its name, can take action in respect of
matters that are of a corporate character. The underlying justification for this is that,
in seeking to serve its own best interests, the company will serve those of the
shareholder too. Ordinarily, no individual shareholder can take legal steps, either in
the[p.35] name of the company or in his own name. If the shareholders disagree
with the decisions taken on behalf of the company they may, in accordance with its
articles or the relevant provisions of the law, change them or replace its officers, or
take such action as is provided by law. Thus to protect the company against abuse
by its management or the majority of shareholders, several municipal legal systems
have vested in shareholders (sometimes a particular number is specified) the right to
bring an action for the defence of the company, and conferred upon the minority of
shareholders certain rights to guard against decisions affecting the rights of the
company vis--vis its management or controlling shareholders. Nonetheless the
shareholders' rights in relation to the company and its assets remain limited, this
being, moreover, a corollary of the limited nature of their liability.

43. At this point the Court would recall that in forming a company, its promoters are
guided by all the various factors involved, the advantages and disadvantages of
which they take into account. So equally does a shareholder, whether he is an
original subscriber of capital or a subsequent purchaser of the company's shares
from another shareholder. He may be seeking safety of investment, high dividends
or capital appreciation or a combination of two or more of these. Whichever it is,
it does not alter the legal status of the corporate entity or affect the rights of the
shareholder. In any event he is bound to take account of the risk of reduced
dividends, capital depreciation or even loss, resulting from ordinary commercial
hazards or from prejudice caused to the company by illegal treatment of some kind.

44. Notwithstanding the separate corporate personality, a wrong done to the

company frequently causes prejudice to its shareholders. But the mere fact that
damage is sustained by both company and shareholder does not imply that both are
entitled to claim compensation. Thus no legal conclusion can be drawn from the fact
that the same event caused damage simultaneously affecting several natural or
juristic persons. Creditors do not have any right to claim compensation from a
person who, by wronging their debtor, causes them loss. In such cases, no doubt, the
interests of the aggrieved are affected, but not their rights. Thus whenever a
shareholder's interests are harmed by an act done to the company, it is to the latter
that he must look to institute appropriate action; for although two separate entities
may have suffered from the same wrong, it is only one entity whose rights have
been infringed.

45. However, it has been argued in the present case that a company represents
purely a means of achieving the economic purpose of its members, namely the
shareholders, while they themselves constitute in fact the reality behind it. It has
furthermore been repeatedly emphasized [p.36] that there exists between a company
and its shareholders a relationship describable as a community of destiny. The
alleged acts may have been directed at the company and not the shareholders, but
only in a formal sense: in reality, company and shareholders are so closely
interconnected that prejudicial acts committed against the former necessarily wrong
the latter; hence any acts directed against a company can be conceived as directed
against its shareholders, because both can be considered in substance, i.e., from the
economic viewpoint, identical. Yet even if a company is no more than a means for
its shareholders to achieve their economic purpose, so long as it is in esse it enjoys
an independent existence. Therefore the interests of the shareholders are both
separable and indeed separated from those of the company, so that the possibility of
their diverging cannot be denied.

46. It has also been contended that the measures complained of, although taken with
respect to Barcelona Traction and causing it direct damage, constituted an unlawful
act vis--vis Belgium, because they also, though indirectly, caused damage to the
Belgian shareholders in Barcelona Traction. This again is merely a different way of
presenting the distinction between injury in respect of a right and injury to a simple
interest. But, as the Court has indicated, evidence that damage was suffered does not
ipso facto justify a diplomatic claim. Persons suffer damage or harm in most varied
circumstances. This in itself does not involve the obligation to make reparation. Not
a mere interest affected, but solely a right infringed involves responsibility, so that
an act directed against and infringing only the company's rights does not involve
responsibility towards the shareholders, even if their interests are affected.

47. The situation is different if the act complained of is aimed at the direct rights of
the shareholder as such. It is well known that there are rights which municipal law
confers upon the latter distinct from those of the company, including the right to any
declared dividend, the right to attend and vote at general meetings, the right to share
in the residual assets of the company on liquidation. Whenever one of his direct
rights is infringed, the shareholder has an independent right of action. On this there
is no disagreement between the Parties. But a distinction must be drawn between a
direct infringement of the shareholder's rights, and difficulties or financial losses to
which he may be exposed as the result of the situation of the company.
48. The Belgian Government claims that shareholders of Belgian nationality
suffered damage in consequence of unlawful acts of the Spanish authorities and, in
particular, that the Barcelona Traction shares, though they did not cease to exist,
were emptied of all real economic content. It accordingly contends that the
shareholders had an [p.37] independent right to redress, notwithstanding the fact
that the acts complained of were directed against the company as such. Thus the
legal issue is reducible to the question of whether it is legitimate to identify an
attack on company rights, resulting in damage to shareholders, with the violation of
their direct rights.

49. The Court has noted from the Application, and from the reply given by Counsel
on 8 July 1969, that the Belgian Government did not base its claim on an
infringement of the direct rights of the shareholders. Thus it is not open to the Court
to go beyond the claim as formulated by the Belgian Government and it will not
pursue its examination of this point any further.

50. In turning now to the international legal aspects of the case, the Court must, as
already indicated, start from the fact that the present case essentially involves
factors derived from municipal lawthe distinction and the community between the
company and the shareholderwhich the Parties, however widely their
interpretations may differ, each take as the point of departure of their reasoning. If
the Court were to decide the case in disregard of the relevant institutions of
municipal law it would, without justification, invite serious legal difficulties. It
would lose touch with reality, for there are no corresponding institutions of
international law to which the Court could resort. Thus the Court has, as indicated,
not only to take cognizance of municipal law but also to refer to it. It is to rules
generally accepted by municipal legal systems which recognize the limited
company whose capital is represented by shares, and not to the municipal law of a
particular State, that international law refers. In referring to such rules, the Court
cannot modify, still less deform them.

51. On the international plane, the Belgian Government has advanced the
proposition that it is inadmissible to deny the shareholders' national State a right of
diplomatic protection merely on the ground that another State possesses a
corresponding right in respect of the company itself. In strict logic and law this
formulation of the Belgian claim to jus standi assumes the existence of the very
right that requires demonstration. In fact the Belgian Government has repeatedly
stressed that there exists no rule of international law which would deny the national
State of the shareholders the right of diplomatic protection for the purpose of
seeking redress pursuant to unlawful acts committed by another State against the
company in which they hold shares. This, by emphasizing the absence of any
express denial of the right, conversely implies the admission that there is no rule of
international law which expressly confers such a right on the shareholders' national
State.[p.38]

52. International law may not, in some fields, provide specific rules in particular
cases. In the concrete situation, the company against which allegedly unlawful acts
were directed is expressly vested with a right, whereas no such right is specifically
provided for the shareholder in respect of those acts. Thus the position of the
company rests on a positive rule of both municipal and international law. As to the
shareholder, while he has certain rights expressly provided for him by municipal
law as referred to in paragraph 42 above, appeal can, in the circumstances of the
present case, only be made to the silence of international law. Such silence scarcely
admits of interpretation in favour of the shareholder.

53. It is quite true, as was recalled in the course of oral argument in the present case,
that concurrent claims are not excluded in the case of a person who, having entered
the service of an international organization and retained his nationality, enjoys
simultaneously the right to be protected by his national State and the right to be
protected by the organization to which he belongs. This however is a case of one
person in possession of two separate bases of protection, each of which is valid
(Reparation for Injuries Suffered in the Service of the United Nations, Advisory
Opinion, I.C.J. Reports 1949, p. 185). There is no analogy between such a situation
and that of foreign shareholders in a company which has been the victim of a
violation of international law which has caused them damage.

54. Part of the Belgian argument is founded on an attempt to assimilate interests to

rights, relying on the use in many treaties and other instruments of such expressions
as property, rights and interests. This is not, however, conclusive. Property is
normally protected by law. Rights are ex hypothesi protected by law, otherwise they
would not be rights. According to the Belgian Government, interests, although
distinct from rights, are also protected by the aforementioned conventional rules.
The Court is of the opinion that, for the purpose of interpreting the general rule of
international law concerning diplomatic protection, which is its task, it has no need
to determine the meaning of the term interests in the conventional rules, in other
words to determine whether by this term the conventional rules refer to rights rather
than simple interests.

*
55. The Court will now examine other grounds on which it is conceivable that the
submission by the Belgian Government of a claim on behalf of shareholders in
Barcelona Traction may be justified.

56. For the same reasons as before, the Court must here refer to municipal law.
Forms of incorporation and their legal personality have[p.39] sometimes not been
employed for the sole purposes they were originally intended to serve; sometimes
the corporate entity has been unable to protect the rights of those who entrusted
their financial resources to it; thus inevitably there have arisen dangers of abuse, as
in the case of many other institutions of law. Here, then, as elsewhere, the law,
confronted with economic realities, has had to provide protective measures and
remedies in the interests of those within the corporate entity as well as of those
outside who have dealings with it: the law has recognized that the independent
existence of the legal entity cannot be treated as an absolute. It is in this context that
the process of "lifting the corporate veil" or "disregarding the legal entity" has been
found justified and equitable in certain circumstances or for certain purposes. The
wealth of practice already accumulated on the subject in municipal law indicates
that the veil is lifted, for instance, to prevent the misuse of the privileges of legal
personality, as in certain cases of fraud or malfeasance, to protect third persons such
as a creditor or purchaser, or to prevent the evasion of legal requirements or of
obligations.

57. Hence the lifting of the veil is more frequently employed from without, in the
interest of those dealing with the corporate entity. However, it has also been
operated from within, in the interest ofamong othersthe shareholders, but only
in exceptional circumstances.

58. In accordance with the principle expounded above, the process of lifting the
veil, being an exceptional one admitted by municipal law in respect of an institution
of its own making, is equally admissible to play a similar role in international law. It
follows that on the international plane also there may in principle be special
circumstances which justify the lifting of the veil in the interest of shareholders.

59. Before proceeding, however, to consider whether such circumstances exist in

the present case, it will be advisable to refer to two specific cases involving
encroachment upon the legal entity, instances of which have been cited by the
Parties. These are: first, the treatment of enemy and allied property, during and after
the First and Second World Wars, in peace treaties and other international
instruments; secondly, the treatment of foreign property consequent upon the
nationalizations carried out in recent years by many States.

60. With regard to the first, enemy-property legislation was an instrument of

economic warfare, aimed at denying the enemy the advantages to be derived from
the anonymity and separate personality of corporations. Hence the lifting of the veil
was regarded as justified ex necessitate and was extended to all entities which were
tainted with enemy character, even the nationals of the State enacting the
legislation. The provisions of the peace treaties had a very specific function: to
protect allied property, and to seize and pool enemy property with a view to
covering reparation [p.40] claims. Such provisions are basically different in their
rationale from those normally applicable.

61. Also distinct are the various arrangements made in respect of compensation for
the nationalization of foreign property. Their rationale too, derived as it is from
structural changes in a State's economy, differs from that of any normally applicable
provisions. Specific agreements have been reached to meet specific situations, and
the terms have varied from case to case. Far from evidencing any norm as to the
classes of beneficiaries of compensation, such arrangements are sui generis and
provide no guide in the present case.

62. Nevertheless, during the course of the proceedings both Parties relied on
international instruments and judgments of international tribunals concerning these
two specific areas. It should be clear that the developments in question have to be
viewed as distinctive processes, arising out of circumstances peculiar to the
respective situations. To seek to draw from them analogies or conclusions held to be
valid in other fields is to ignore their specific character as lex specialis and hence to
court error.

63. The Parties have also relied on the general arbitral jurisprudence which has
accumulated in the last half-century. However, in most cases the decisions cited
rested upon the terms of instruments establishing the jurisdiction of the tribunal or
claims commission and determining what rights might enjoy protection; they cannot
therefore give rise to generalization going beyond the special circumstances of each
case. Other decisions, allowing or disallowing claims by way of exception, are not,
in view of the particular facts concerned, directly relevant to the present case.

64. The Court will now consider whether there might not be, in the present case,
other special circumstances for which the general rule might not take effect. In this
connection two particular situations must be studied: the case of the company
having ceased to exist and the case of the company's national State lacking capacity
to take action on its behalf.

65. As regards the first of these possibilities the Court observes that the Parties have
put forward conflicting interpretations of the present situation of Barcelona
Traction. There can, however, be no question but that Barcelona Traction has lost
all its assets in Spain, and was placed in receivership in Canada, a receiver and
manager having been appointed. It is common ground that from the economic
viewpoint the company has been entirely paralyzed. It has been deprived of all its
Spanish sources of income, and the Belgian Government has asserted that the
company [p.41] could no longer find the funds for its legal defence, so that these
had to be supplied by the shareholders.

66. It cannot however, be contended that the corporate entity of the company has
ceased to exist, or that it has lost its capacity to take corporate action. It was free to
exercise such capacity in the Spanish courts and did in fact do so. It has not become
incapable in law of defending its own rights and the interests of the shareholders. In
particular, a precarious financial situation cannot be equated with the demise of the
corporate entity, which is the hypothesis under consideration: the company's status
in law is alone relevant, and not its economic condition, nor even the possibility of
its being "practically defunct"a description on which argument has been based but
which lacks all legal precision. Only in the event of the legal demise of the company
are the shareholders deprived of the possibility of a remedy available through the
company; it is only if they became deprived of all such possibility that an
independent right of action for them and their government could arise.

67. In the present case, Barcelona Traction is in receivership in the country of

incorporation. Far from implying the demise of the entity or of its rights, this much
rather denotes that those rights are preserved for so long as no liquidation has
ensued. Though in receivership, the company continues to exist. Moreover, it is a
matter of public record that the company's shares were quoted on the stock-market
at a recent date.

68. The reason for the appointment in Canada not only of a receiver but also of a
manager was explained as follows:

"In the Barcelona Traction case it was obvious, in view of the Spanish bankruptcy
order of 12 February 1948, that the appointment of only a receiver would be useless,
as positive steps would have to be taken if any assets seized in the bankruptcy in
Spain were to be recovered." (Hearing of 2 July 1969.)

In brief, a manager was appointed in order to safeguard the company's rights; he has
been in a position directly or indirectly to uphold them. Thus, even if the company
is limited in its activity after being placed in receivership, there can be no doubt that
it has retained its legal capacity and that the power to exercise it is vested in the
manager appointed by the Canadian courts. The Court is thus not confronted with
the first hypothesis contemplated in paragraph 64, and need not pronounce upon it.

69. The Court will now turn to the second possibility, that of the lack of capacity of
the company's national State to act on its behalf. The first question which must be
asked here is whether Canadathe third apex of [p.42] the triangular relationship
is, in law, the national State of Barcelona Traction.

70. In allocating corporate entities to States for purposes of diplomatic protection,

international law is based, but only to a limited extent, on an analogy with the rules
governing the nationality of individuals. The traditional rule attributes the right of
diplomatic protection of a corporate entity to the State under the laws of which it is
incorporated and in whose territory it has its registered office. These two criteria
have been confirmed by long practice and by numerous international instruments.
This notwithstanding, further or different links are at times said to be required in
order that a right of diplomatic protection should exist. Indeed, it has been the
practice of some States to give a company incorporated under their law diplomatic
protection solely when it has its seat (siege social) or management or centre of
control in their territory, or when a majority or a substantial proportion of the shares
has been owned by nationals of the State concerned. Only then, it has been held,
does there exist between the corporation and the State in question a genuine
connection of the kind familiar from other branches of international law. However,
in the particular field of the diplomatic protection of corporate entities, no absolute
test of the "genuine connection" has found general acceptance. Such tests as have
been applied are of a relative nature, and sometimes links with one State have had to
be weighed against those with another. In this connection reference has been made
to the Nottebohm case. In fact the Parties made frequent reference to it in the course
of the proceedings. However, given both the legal and factual aspects of protection
in the present case the Court is of the opinion that there can be no analogy with the
issues raised or the decision given in that case.

71. In the present case, it is not disputed that the company was incorporated in
Canada and has its registered office in that country. The incorporation of the
company under the law of Canada was an act of free choice. Not only did the
founders of the company seek its incorporation under Canadian law but it has
remained under that law for a period of over 50 years. It has maintained in Canada
its registered office, its accounts and its share registers. Board meetings were held
there for many years; it has been listed in the records of the Canadian tax
authorities. Thus a close and permanent connection has been established, fortified
by the passage of over half a century. This connection is in no way weakened by the
fact that the company engaged from the very outset in commercial activities outside
Canada, for that was its declared object. Barcelona Traction's links with Canada are
thus manifold.

72. Furthermore, the Canadian nationality of the company has received general
recognition. Prior to the institution of proceedings before the Court, three other
governments apart from that of Canada (those of the United Kingdom, the United
States and Belgium) made representa-[p.43]
tions concerning the treatment accorded to Barcelona Traction by the Spanish
authorities. The United Kingdom Government intervened on behalf of bondholders
and of shareholders. Several representations were also made by the United States
Government, but not on behalf of the Barcelona Traction company as such.

73. Both Governments acted at certain stages in close co-operation with the
Canadian Government. An agreement was reached in 1950 on the setting-up of an
independent committee of experts. While the Belgian and Canadian Governments
contemplated a committee composed of Belgian, Canadian and Spanish members,
the Spanish Government suggested a committee composed of British, Canadian and
Spanish members. This was agreed to by the Canadian and United Kingdom
Governments, and the task of the committee was, in particular, to establish the
monies imported into Spain by Barcelona Traction or any of its subsidiaries, to
determine and appraise the materials and services brought into the country, to
determine and appraise the amounts withdrawn from Spain by Barcelona Traction
or any of its subsidiaries, and to compute the profits earned in Spain by Barcelona
Traction or any of its subsidiaries and the amounts susceptible of being withdrawn
from the country at 31 December 1949.

74. As to the Belgian Government, its earlier action was also undertaken in close
co-operation with the Canadian Government. The Belgian Government admitted the
Canadian character of the company in the course of the present proceedings. It
explicitly stated that Barcelona Traction was a company of neither Spanish nor
Belgian nationality but a Canadian company incorporated in Canada. The Belgian
Government has even conceded that it was not concerned with the injury suffered
by Barcelona Traction itself, since that was Canada's affair.

75. The Canadian Government itself, which never appears to have doubted its right
to intervene on the company's behalf, exercised the protection of Barcelona Traction
by diplomatic representation for a number of years, in particular by its note of 27
March 1948, in which it alleged that a denial of justice had been committed in
respect of the Barcelona Traction, Ebro and National Trust companies, and
requested that the bankruptcy judgment be cancelled. It later invoked the Anglo-
Spanish treaty of 1922 and the agreement of 1924, which applied to Canada. Further
Canadian notes were addressed to the Spanish Government in 1950, 1951 and 1952.
Further approaches were made in 1954, and in 1955 the Canadian Government
renewed the expression of its deep interest in the affair of Barcelona Traction and its
Canadian subsidiaries.

76. In sum, the record shows that from 1948 onwards the Canadian Government
made to the Spanish Government numerous representations which cannot be viewed
otherwise than as the exercise of diplomatic [p.44] protection in respect of the
Barcelona Traction company. Therefore this was not a case where diplomatic
protection was refused or remained in the sphere of fiction. It is also clear that over
the whole period of its diplomatic activity the Canadian Government proceeded in
full knowledge of the Belgian attitude and activity.

77. It is true that at a certain point the Canadian Government ceased to act on behalf
of Barcelona Traction, for reasons which have not been fully revealed, though a
statement made in a letter of 19 July 1955 by the Canadian Secretary of State for
External Affairs suggests that it felt the matter should be settled by means of private
negotiations. The Canadian Government has nonetheless retained its capacity to
exercise diplomatic protection; no legal impediment has prevented it from doing so:
no fact has arisen to render this protection impossible. It has discontinued its action
of its own free will.

78. The Court would here observe that, within the limits prescribed by international
law, a State may exercise diplomatic protection by whatever means and to whatever
extent it thinks fit, for it is its own right that the State is asserting. Should the natural
or legal persons on whose behalf it is acting consider that their rights are not
adequately protected, they have no remedy in international law. All they can do is to
resort to municipal law, if means are available, with a view to furthering their cause
or obtaining redress. The municipal legislator may lay upon the State an obligation
to protect its citizens abroad, and may also confer upon the national a right to
demand the performance of that obligation, and clothe the right with corresponding
sanctions. However, all these questions remain within the province of municipal law
and do not affect the position internationally.

79. The State must be viewed as the sole judge to decide whether its protection will
be granted, to what extent it is granted, and when it will cease. It retains in this
respect a discretionary power the exercise of which may be determined by
considerations of a political or other nature, unrelated to the particular case. Since
the claim of the State is not identical with that of the individual or corporate person
whose cause is espoused, the State enjoys complete freedom of action. Whatever the
reasons for any change of attitude, the fact cannot in itself constitute a justification
for the exercise of diplomatic protection by another government, unless there is
some independent and otherwise valid ground for that.

80. This cannot be regarded as amounting to a situation where a violation of law

remains without remedy: in short, a legal vacuum.[p. 45]There is no obligation upon
the possessors of rights to exercise them. Sometimes no remedy is sought, though
rights are infringed. To equate this with the creation of a vacuum would be to equate
a right with an obligation.

81. The cessation by the Canadian Government of the diplomatic protection of

Barcelona Traction cannot, then, be interpreted to mean that there is no remedy
against the Spanish Government for the damage done by the allegedly unlawful acts
of the Spanish authorities. It is not a hypothetical right which was vested in Canada,
for there is no legal impediment preventing the Canadian Government from
protecting Barcelona Traction. Therefore there is no substance in the argument that
for the Belgian Government to bring a claim before the Court represented the only
possibility of obtaining redress for the damage suffered by Barcelona Traction and,
through it, by its shareholders.

82. Nor can the Court agree with the view that the Canadian Government had of
necessity to interrupt the protection it was giving to Barcelona Traction, and to
refrain from pursuing it by means of other procedures, solely because there existed
no link of compulsory jurisdiction between Spain and Canada. International judicial
proceedings are but one of the means available to States in pursuit of their right to
exercise diplomatic protection (Reparation for Injuries Suffered in the Service of the
United Nations, Advisory Opinion, I.C.J. Reports 1949, p. 178). The lack of a
jurisdictional link cannot be regarded either in this or in other fields of international
law as entailing the non-existence of a right.

83. The Canadian Government's right of protection in respect of the Barcelona

Traction company remains unaffected by the present proceedings. The Spanish
Government has never challenged the Canadian nationality of the company, either
in the diplomatic correspondence with the Canadian Government or before the
Court. Moreover it has unreservedly recognized Canada as the national State of
Barcelona Traction in both written pleadings and oral statements made in the course
of the present proceedings. Consequently, the Court considers that the Spanish
Government has not questioned Canada's right to protect the company.

84. Though, having regard to the character of the case, the question of Canada's
right has not been before it, the Court has considered it necessary to clarify this
issue.

85. The Court will now examine the Belgian claim from a different point of view,
disregarding municipal law and relying on the rule that in inter-State relations,
whether claims are made on behalf of a State's national or on behalf of the State
itself, they are always the claims of the [p.46]
State. As the Permanent Court said,

"The question, therefore, whether the . . . dispute originates in an injury to a private

interest, which in point of fact is the case in many international disputes, is
irrelevant from this standpoint." (Mavrom-matis Palestine Concessions, Judgment
No. 2, 1924, P.C.I.J., Series A, No. 2, p. 12. See also Nottebohm, Second Phase,
Judgment, I.C.J. Reports 1955, p. 24.)
86. Hence the Belgian Government would be entitled to bring a claim if it could
show that one of its rights had been infringed and that the acts complained of
involved the breach of an international obligation arising out of a treaty or a
generalrule of law. The opinion has been expressed that a claim can accordingly be
made when investments by a State's nationals abroad are thus prejudicially affected,
and that since such investments are part of a State's national economic resources,
any prejudice to them directly involves the economic interest of the State.

87. Governments have been known to intervene in such circumstances not only
when their interests were affected, but also when they were threatened. However, it
must be stressed that this type of action is quite different from and outside the field
of diplomatic protection. When a State admits into its territory foreign investments
or foreign nationals it is, as indicated in paragraph 33, bound to extend to them the
protection of the law. However, it does not thereby become an insurer of that part of
another State's wealth which these investments represent. Every investment of this
kind carries certain risks. The real question is whether a right has been violated,
which right could only be the right of the State to have its nationals enjoy a certain
treatment guaranteed by general international law, in the absence of a treaty
applicable to the particular case. On the other hand it has been stressed that it must
be proved that the investment effectively belongs to a particular economy. This is,
as it is admitted, sometimes very difficult, in particular where complex undertakings
are involved. Thus the existing concrete test would be replaced by one which might
lead to a situation in which no diplomatic protection could be exercised, with the
consequence that an unlawful act by another State would remain without remedy.

88. It follows from what has already been stated above that, where it is a question of
an unlawful act committed against a company representing foreign capital, the
general rule of international law authorizes the national State of the company alone
to make a claim.

89. Considering the important developments of the last half-century, the growth of
foreign investments and the expansion of the international activities of corporations,
in particular of holding companies, which are [p.47] often multinational, and
considering the way in which the economic interests of States have proliferated, it
may at first sight appear surprising that the evolution of law has not gone further
and that no generally accepted rules in the matter have crystallized on the
international plane. Nevertheless, a more thorough examination of the facts shows
that the law on the subject has been formed in a period characterized by an intense
conflict of systems and interests. It is essentially bilateral relations which have been
concerned, relations in which the rights of both the State exercising diplomatic
protection and the State in respect of which protection is sought have had to be
safeguarded. Here as elsewhere, a body of rules could only have developed with the
consent of those concerned. The difficulties encountered have been reflected in the
evolution of the law on the subject.

90. Thus, in the present state of the law, the protection of shareholders requires that
recourse be had to treaty stipulations or special agreements directly concluded
between the private investor and the State in which the investment is placed. States
ever more frequently provide for such protection, in both bilateral and multilateral
relations, either by means of special instruments or within the framework of wider
economic arrangements. Indeed, whether in the form of multilateral or bilateral
treaties between States, or in that of agreements between States and companies,
there has since the Second World War been considerable development in the
protection of foreign investments. The instruments in question contain provisions as
to jurisdiction and procedure in case of disputes concerning the treatment of
investing companies by the States in which they invest capital. Sometimes
companies are themselves vested with a direct right to defend their interests against
States through prescribed procedures. No such instrument is in force between the
Parties to the present case.

91. With regard more particularly to human rights, to which reference has already
been made in paragraph 34 of this Judgment, it should be noted that these also
include protection against denial of justice. However, on the universal level, the
instruments which embody human rights do not confer on States the capacity to
protect the victims of infringements of such rights irrespective of their nationality. It
is therefore still on the regional level that a solution to this problem has had to be
sought; thus, within the Council of Europe, of which Spain is not a member, the
problem of admissibility encountered by the claim in the present case has been
resolved by the European Convention on Human Rights, which entitles each State
which is a party to the Convention to lodge a complaint against any other
contracting State for violation of the Convention, irrespective of the nationality of
the victim.

*[p.48]

92. Since the general rule on the subject does not entitle the Belgian Government to
put forward a claim in this case, the question remains to be considered whether
nonetheless, as the Belgian Government has contended during the proceedings,
considerations of equity do not require that it be held to possess a right of
protection. It is quite true that it has been maintained that, for reasons of equity, a
State should be able, in certain cases, to take up the protection of its nationals,
shareholders in a company which has been the victim of a violation of international
law. Thus a theory has been developed to the effect that the State of the
shareholders has a right of diplomatic protection when the State whose
responsibility is invoked is the national State of the company. Whatever the validity
of this theory may be, it is certainly not applicable to the present case, since Spain is
not the national State of Barcelona Traction.

93. On the other hand, the Court considers that, in the field of diplomatic protection
as in all other fields of international law, it is necessary that the law be applied
reasonably. It has been suggested that if in a given case it is not possible to apply
the general rule that the right of diplomatic protection of a company belongs to its
national State, considerations of equity might call for the possibility of protection of
the shareholders in question by their own national State. This hypothesis does not
correspond to the circumstances of the present case.

94. In view, however, of the discretionary nature of diplomatic protection,

considerations of equity cannot require more than the possibility for some protector
State to intervene, whether it be the national State of the company, by virtue of the
general rule mentioned above, or, in a secondary capacity, the national State of the
shareholders who claim protection. In this connection, account should also be taken
of the practical effects of deducing from considerations of equity any broader right
of protection for the national State of the shareholders. It must first of all be
observed that it would be difficult on an equitable basis to make distinctions
according to any quantitative test: it would seem that the owner of 1 per cent. and
the owner of 90 per cent. of the share-capital should have the same possibility of
enjoying the benefit of diplomatic protection. The protector State may, of course, be
disinclined to take up the case of the single small shareholder, but it could scarcely
be denied the right to do so in the name of equitable considerations. In that field,
protection by the national State of the shareholders can hardly be graduated
according to the absolute or relative size of the shareholding involved.

95. The Belgian Government, it is true, has also contended that as high a proportion
as 88 per cent. of the shares in Barcelona Traction belonged to natural or juristic
persons of Belgian nationality, and it has used this as an argument for the purpose
not only of determining the amount of the damages which it claims, but also of
establishing its right of action on behalf of the Belgian shareholders. Nevertheless,
this does[p.49] not alter the Belgian Government's position, as expounded in the
course of the proceedings, which implies, in the last analysis, that it might be
sufficient for one single share to belong to a national of a given State for the latter to
be entitled to exercise its diplomatic protection.

96. The Court considers that the adoption of the theory of diplomatic protection of
shareholders as such, by opening the door to competing diplomatic claims, could
create an atmosphere of confusion and insecurity in international economic
relations. The danger would be all the greater inasmuch as the shares of companies
whose activity is international are widely scattered and frequently change hands. It
might perhaps be claimed that, if the right of protection belonging to the national
States of the shareholders were considered as only secondary to that of the national
State of the company, there would be less danger of difficulties of the kind
contemplated. However, the Court must state that the essence of a secondary right is
that it only comes into existence at the time when the original right ceases to exist.
As the right of protection vested in the national State of the company cannot be
regarded as extinguished because it is not exercised, it is not possible to accept the
proposition that in case of its non-exercise the national States of the shareholders
have a right of protection secondary to that of the national State of the company.
Furthermore, study of factual situations in which this theory might possibly be
applied gives rise to the following observations.

97. The situations in which foreign shareholders in a company wish to have

recourse to diplomatic protection by their own national State may vary. It may
happen that the national State of the company simply refuses to grant it its
diplomatic protection, or that it begins to exercise it (as in the present case) but does
not pursue its action to the end. It may also happen that the national State of the
company and the State which has committed a violation of international law with
regard to the company arrive at a settlement of the matter, by agreeing on
compensation for the company, but that the foreign shareholders find the
compensation insufficient. Now, as a matter of principle, it would be difficult to
draw a distinction between these three cases so far as the protection of foreign
shareholders by their national State is concerned, since in each case they may have
suffered real damage. Furthermore, the national State of the company is perfectly
free to decide how far it is appropriate for it to protect the company, and is not
bound to make public the reasons for its decision. To reconcile this discretionary
power of the company's national State with a right of protection falling to the
shareholders' national State would be particularly difficult when the former State
has concluded, with the State which has contravened international law with regard
to the company, an agreement granting the company compensation which the
foreign shareholders find inadequate. If, after such a settlement, the national State of
the foreign shareholders could in its turn put forward [p.50] a claim based on the
same facts, this would be likely to introduce into the negotiation of this kind of
agreement a lack of security which would be contrary to the stability which it is the
object of international law to establish in international relations.

98. It is quite true, as recalled in paragraph 53, that international law recognizes
parallel rights of protection in the case of a person in the service of an international
organization. Nor is the possibility excluded of concurrent claims being made on
behalf of persons having dual national-ity, although in that case lack of a genuine
link with one of the two States may be set up against the exercise by that State of
the right of protection. It must be observed, however, that in these two types of
situation the number of possible protectors is necessarily very small, and their
identity normally not difficult to determine. In this respect such cases of dual
protection are markedly different from the claims to which recognition of a general
right of protection of foreign shareholders by their various national States might
give rise.

99. It should also be observed that the promoters of a company whose operations
will be international must take into account the fact that States have, with regard to
their nationals, a discretionary power to grant diplomatic protection or to refuse it.
When establishing a company in a foreign country, its promoters are normally
impelled by particular considerations; it is often a question of tax or other
advantages offered by the host State. It does not seem to be in any way inequitable
that the advantages thus obtained should be balanced by the risks arising from the
fact that the protection of the company and hence of its shareholders is thus
entrusted to a State other than the national State of the shareholders.

100. In the present case, it is clear from what has been said above that Barcelona
Traction was never reduced to a position of impotence such that it could not have
approached its national State, Canada, to ask for its diplomatic protection, and that,
as far as appeared to the Court, there was nothing to prevent Canada from
continuing to grant its diplomatic protection to Barcelona Traction if it had
considered that it should do so.

101. For the above reasons, the Court is not of the opinion that, in the particular
circumstances of the present case, jus standi is conferred on the Belgian
Government by considerations of equity.

102. In the course of the proceedings, the Parties have submitted a great amount of
documentary and other evidence intended to substantiate [p.51] their respective
submissions. Of this evidence the Court has taken cognizance. It has been argued on
one side that unlawful acts had been com-mitted by the Spanish judicial and
administrative authorities, and that as a result of those acts Spain has incurred
international responsibility. On the other side it has been argued that the activities of
Barcelona Traction and its subsidiaries were conducted in violation of Spanish law
and caused damage to the Spanish economy. If both contentions were substantiated,
the truth of the latter would in no way provide justification in respect of the former.
The Court fully appreciates the importance of the legal problems raised by the
allegation, which is at the root of the Belgian claim for reparation, concerning the
denials of justice allegedly committed by organs of the Spanish State. However, the
possession by the Belgian Government of a right of protection is a prerequisite for
the examination of these problems. Since no jus standi before the Court has been
established, it is not for the Court in its Judgment to pronounce upon any other
aspect of the case, on which it should take a decision only if the Belgian
Government had a right of protection in respect of its nationals, shareholders in
Barcelona Traction.

*****

103. Accordingly,

The Court

rejects the Belgian Government's claim by fifteen votes to one, twelve votes of the
majority being based on the reasons set out in the present Judgment.

Done in French and in English, the French text being authoritative, at the Peace
Palace, The Hague, this fifth day of February, one thousand nine hundred and
seventy, in three copies, one of which will be placed in the Archives of the Court
and the others transmitted to the Government of the Kingdom of Belgium and to the
Government of the Spanish State, respectively.

(Signed) J.L. Bustamante Y Rivero,

President.

(Signed) S. Aquarone,
Registrar.
[p.52]

JUDGE PETREN AND JUDGE ONYEAMA MAKE THE FOLLOWING JOINT

DECLARATION:

We agree with the operative provision and the reasoning of the Judgment subject to
the following declaration:

With regard to the nationality of Barcelona Traction, the Judgment refers to the
existence of opinions to the effect that the absence of a genuine connection between
a company and the State claiming the right of diplomatic protection of the company
might be set up against the exercise of such a right. In this context the Judgment
also mentions the decision in the Nottebohm case to the effect that the absence of a
genuine connecting link between a State and a natural person who has acquired its
nationality may be set up against the exercise by that State of diplomatic protection
of the person concerned. The present Judgment then concludes that given the legal
and factual aspects of protection in the present case there can be no analogy with the
issues raised or the decision given in the Nottebohm case.

Now in the present case the Spanish Government has asserted and the Belgian
Government has not disputed that, Barcelona Traction having been incorporated
under Canadian law and having its registered office in Toronto, it is of Canadian
nationality and Canada is qualified to protect it.
Canada's right of protection being thus recognized by both Parties to the
proceedings, the first question which the Court has to answer within the framework
of the third preliminary objection is simply whether, alongside the right of
protection pertaining to the national State of a company, another State may have a
right of protection of the shareholders of the company who are its nationals. This
being so, the Court has not in this case to consider the question whether the genuine
connection principle is applicable to the diplomatic protection of juristic persons,
and, still less, to speculate whether, if it is, valid objections could have been raised
against the exercise by Canada of diplomatic protection of Barcelona Traction.

JUDGE LACHS MAKES THE FOLLOWING DECLARATION:

I am in full agreement with the reasoning and conclusions of the Judgment, but
would wish to add the following observation:

The Court has found, in the light of the relevant elements of law and of fact, that the
Applicant, the Belgian Government, has no capacity in the present case. At the same
time it has stated that the Canadian Government's right of protection in respect of
the Barcelona Traction company has remained unaffected by the proceedings now
closed.[p.53]

I consider that the existence of this right is an essential premise of the Court's
reasoning, and that its importance is emphasized by the seriousness of the claim and
the particular nature of the unlawful acts with which it charges certain authorities of
the respondent State.

President Bustamante Y Rivero, Judges Sir Gerald Fitzmaurice, Tanaka, Jessup,

Morelli, Padilla Nervo, Gros and Ammoun append Separate Opinions to the
Judgment of the Court.

Judge ad hoc Riphagen appends a Dissenting Opinion to the Judgment of the Court.

(Initialled) J. L. B.-R.
(Initialled) S. A.

[p.286]
SEPARATE OPINION OF JUDGE AMMOUN

[Translation]

1. At the beginning of his separate opinion in the Corfu Channel case, Judge A.
Alvarez, alluding to the fundamental changes which have taken place in every
sphere of human activity in recent decades, and especially in international affairs
and international law, wrote:

"It is therefore necessary to consider what is the present state of that law. We must
examine it in connection with the questions raised by the dispute submitted to the
Court. That does not mean that this Court should pronounce on all the legal issues
which those questions connote; but it seems desirable that one of the judges, at least,
should examine them, and that is the task I have set myself in this individual
opinion." (I.C.J. Reports 1949, p. 39.)

I subscribe to this statement, the more so since the legal questions raised by the case
which has been submitted to the Court cannot but feel the effects of the great
renovating movement in international law which is evident in the relations between
nations and in the activities of inter-national institutions. The development which
the modern world is witnessing affects the very structures of international law
including the concept of sovereigntyand even its main sources, namely treaties,
custom and the general principles of law recognized by the nations. More than one
concept, principle or legal norm of the older classical law has been called into
question anew since international co-operation has become common practice, since
law has become imbued with morality, anda point of particular importance
since a considerable number of States have acquired independence and sovereignty,
or have siezed them by main force, and have entered into the world community of
nations. Linked to this development, which it will be necessary to touch upon, to
this dynamism of the law which, it has been said, is a continual creation, is the idea
which must be formed of the international responsibility of States, and its corollary,
diplomatic protection, upon which the Court is called upon to pronounce.

2. In order to make an exhaustive study of Belgium's jus standi in judicio which had
been the subject of a preliminary objection, it was recognized by the Judgment of 24
July 1964 as indispensable to refer to certain points of fact and of law relating to the
merits of the case, al-though jus standi does not thereby lose its character as an
objection.

Belgium has however questioned whether, in view of the subject of the

[p.287]dispute between the Parties, which it contends deals only with the conditions
and limits of the international responsibility of a State towards the foreign
shareholders in a commercial holding company, it is possible to speak of a
preliminary objection on this point. In other words, what is being debated as a
preliminary issue is, it is said, international responsibility, rather than diplomatic
protection.

In order to reply to this question, it is sufficient to add to the arguments appearing in

the aforementioned Judgment that the right of diplomatic protection, so far as it
materializes in a legal action, is to be distinguished from the substantive right which
the applicant State claims to have reestablished. The question thus involves the
distinction between the subject-matter of the action and the subject-matter of the
right claimed, a distinction about which legal writers are generally in agreement
FN1. An objection, considered in opposition to the setting in motion of a legal
action, should not be confused with a defence concerning the right at issue. There
would in fact be an internal contradiction in the fact of confusing two different
things in the concept of a claim, namely its admissibility and its validity. Proof that
an applicant has the status required to exercise legal power, or that he has a right
entitling him to bring the matter before a court, may, as in the present case, involve
raising questions which are not unrelated to the merits, but it cannot have any
influence on the nature of the action, or the nature of the objection to the exercise
thereof.

-----------------------------------------------------------------------------------------------------
----------------
FN1 Solus and Perrot, Droit judiciaire priv, Vol. I, pp. 94-107, and the Italian and
German writers on Continental law to whom they refer.
-----------------------------------------------------------------------------------------------------
----------------

At all events, the joinder of the objection to the merits justifies, so far as this may be
necessary, extending the present study beyond diplomatic protection to include
international responsibility.

3. That much having been said, the solution to the problem of jus standi, which calls
in question the principle of international responsibility and the rules of diplomatic
and judicial protection designed to give effect to that principle, is clearly linked to
the overall problem of the development of modern international law in the face of
recent transformations in international life. This is a burning question of today, the
more complex in that it is conditioned by the essential needs of various peoples,
ever since nations have emerged from dependence with inter-ests which are
manifold and often difficult to reconcile among themselves or with those of the
other nations of the world. This problem must therefore not be lost sight of
throughout the present opinion.

***

The radical transformations which have occurred in economic affairs in the last
half-century, the constantly increasing expansion which has marked the recent
decades in a world undergoing rapid social and political development, and the new
problems to which these changes have given rise, call for a corresponding
development of juridical structures. The [p. 288] law, a rigid conservative kind of
law, cannot adapt the emerging reality to sacrosanct rules rooted in the remote past.
It must, on the contrary, adapt itself to the imperious needs of an international
society which is moving towards universalism; it must adapt itself thereto in order
to avoid confrontation between peoples, and lest it lose its footing in the upward
march of progress towards better justice and the common aspiration towards the
ideals of prosperity and peace.

It is well known that the established lead taken by facts and events over the law has
had to be corrected more than once in the past FN2. In the sphere of international
law, the adaptation of law to factual situations, rendered necessary by the political
change which had world-wide repercussions in the middle of this century, was
largely accomplished by the solemn enunciation of the principles and purposes of
the United Nations. The implementation of these has however been more effective
within the political organs of the world Organization than it has been in the domain
of international tribunals where problems have arisen on the legal level as a result of
the breach between law and social reality. Thus it is in the interests of justice and of
law that these problems should be approached with a clear vision of the meaning of
history and an overall picture of a world from which no-one should henceforth be
excluded, no matter how late he has come on the scene.

-----------------------------------------------------------------------------------------------------
----------------
FN2 In Rome, by the intervention of the Praetor whose edict, idealistic in outlook,
supplemented the formalistic quiritary law, which had lagged behind the
development of the quasi-international structures of the Emipire; by the blossoming
of Moslem law, freed from all outgrown formalism and all illusory symbolism,
which set its seal on the basic transformation of legal concepts in most of the
countries under its sway; and nearer to our own day, in the United Kingdom and
those countries which adopted its law, with the institution of equity which plays an
important part in making up for the insufficiencies of the common law; lastly, by the
complete renewal of law in the Socialist countries in order to keep pace with the
advent of a new ideology and a new way of life which have broken radically with
the past.
-----------------------------------------------------------------------------------------------------
----------------

This situation could however not escape the foresight of the International Court of
Justice. Thus the Advisory Opinion which it delivered in 1949, in connection with
the reparation for injuries suffered in the service of the United Nations, must be
given its full significance; it stated that: "Throughout its history, the development of
international law has been influenced by the requirements of international life FN3.

-----------------------------------------------------------------------------------------------------
----------------
FN3 I.C.J. Reports 1949, p. 178.
-----------------------------------------------------------------------------------------------------
----------------

This observation is more topical than ever. International life is being influenced by
those States which have now rounded out the circle of the community of nations,
increasing the number thereof almost threefold. International law cannot leave out
of account the aspirations of the world in which henceforth it has its existence, and
it is significant that these States are manifesting a certain amount of impatience
tinged with apprehension.
We shall see later what their attitude has been with regard to the rules concerning
the responsibility of States and diplomatic protection.[p.289]

4. The problems confronting the world, now that a large-scale political

emancipation of the dependent peoples has been carried out, are those relating to the
establishment of economic and social justice and to development. According to one
of the great African leaders, President L. S. Senghor, "legal independence without
economic independence is but a new form of dependency, worse than the first
because it is less obvious" FN4. The Director-General of FAO recently warned the
world about the dangers of a world-wide famine in the next 24 to 28 years, unless
production is increased in the developing countries. And more recently the
Symposium of African archbishops and bishops, which was brought to a close on 1
August 1969 by the Sovereign Pontiff, roundly denounced the increase in the riches
of some through the exploitation of the poverty of others FN5.

-----------------------------------------------------------------------------------------------------
----------------
FN4 Extract from his address to the United Nations General Assembly in New York
on 31 October 1961 (Official documents of the General Assembly, Plenary
Meetings, Vol. II, p. 540).
See in this connection I. Brownlie, Principles of Public International Law, 1966, p.
485. He writes:
". . . The concept of self-determination has been applied in the different context of
economic self-determination."

G. I. Tunkin considers that:

". . . respect for State sovereignty finds itself compatible with . .. a de facto
dependence of the smaller States upon the bigger ones, since their economic
dependence means that their sovereignty is merely formal". (Droit international
public, published in co-operation with the Centre franais de la recherche
scientifique, p. 237 [Translation by the Registry].)

FN5 Le Monde, 2 August 1969.

Reference may also be made to the conclusions of E. McWhinney who writes:

"It becomes clear that the development and completion of a viable system of
international ordre public in the last third of the century will depend to a
considerable extent upon the efforts made to bridge the gap in prosperity that exists
between on the one hand the countries of the Soviet bloc and the West, and the
Third World on the other" (Latin America, Africa and Asia). Revue gnrale de
droit international public, 1968, p. 341. [Translation by the Registry]).
-----------------------------------------------------------------------------------------------------
----------------

This problem arises particularly in connection with the great economic, commercial
and financial undertakings which have multiplied and grown beyond the confines of
their respective countries in such a way as to necessitate a parallel development of
international law. International law should certainly avoid trying to fit their action
into outworn forms; it should work to bring about a just protection of their interests
in the bitter but beneficient struggle of international competition FN6.

-----------------------------------------------------------------------------------------------------
----------------
FN6 Cf. what was said by Mr. Haroldo Vallado, the then President of the Session
of the Institut de droit international, referring to

"the power of the international companies with investments in the developing

countries, [which] has given rise to a special treatment for such investments".
(Annuaire de l'Institut de droit international, 1967, II, p. 432 [Translation by the
Registry].)
-----------------------------------------------------------------------------------------------------
----------------

On the other hand, the law should be no less concerned with the interests of the
countries to which those powerful undertakings and the companies controlling
themtrusts or holding companies of pyramidal structureextend their activities,
thereby certainly rendering appreciable [p.290] service to the economy of the host
countries, but also exposing that weaker economy to dangers which it ought to be
spared. The States of the Third World showed insight when they agreed to insert in
the 1960 Declaration on the Grant of Independence the provision:

"affirming that peoples may, for their own ends, freely dispose of their natural
wealth and resources without prejudice to any obligations arising out of
international economic co-operation, based upon the principle of mutual benefit and
international law". (UN Doc. A/4684, p. 66.)

One cannot help thinking, in this connection, of the large companies which continue
to undertake the exploitation of the natural resources of the less developed
countries, including their agricultural, timber and mineral wealth, their oil
production, and also their transport and other public or municipal services. An
equitable sharing of the profits is mandatory. The anxieties of the countries whose
resources are being exploited by means of foreign technical and financial co-
operation are deeply felt, as will be seen below in connection with the application of
diplomatic protection and its possible extension, as in the present case, to new
situations, with a view to the increased protection of foreign interests.

The development of international law cannot therefore have as its sole or principal
object the protection of foreign nationals and of the international economic activities
of the industrialized Powers. It must set itself an objective which is more
comprehensive and more just, and a more equitable and more humanitarian ideal, in
which the material and intangible interests of the weaker and deprived peoples are
factors to be taken into account.

***

5. In this connection, it is essential to stress the trends of Latin-American law and

that of Asia and Africa, and their undeniable influence on the development of
traditional international law.

It seems indeed that among the principles and norms which have sprung from the
regional law peculiar to Latin America are the norms and principles whose aim is to
protect countries in that part of the world against the more powerful industrialized
States of North America and Europe.

An Afro-Asian law also seems to be developing as a result of the same

preoccupations, springing from the same causes. In the field of the responsibility of
States and of diplomatic protection, the same points of view have been adopted in
the countries of the three continents, thus initiating a form of co-operation which
will not be of slight effect on the renewal of law FN6a.[p.291]

-----------------------------------------------------------------------------------------------------
----------------
FN6a This co-operation received an initial implementation, as regards the effect of
economic facts on international law, at the United Nations Conference on Trade and
Development held in Geneva in 1964, where 77 Latin American, African and Asian
States resolved to meet and negotiate through the intermediary of common
spokesmen.
-----------------------------------------------------------------------------------------------------
----------------

The first reaction to the rules of traditional law came however from the countries of
Latin America; witness the vehement speech made by Mr. Seijas, a former
Venezuelan minister, at the 1891 Session of the Institut de droit international at
Hamburg, which was no mere display of bad temper. Evidence of this too is the
appearance of the Calvo Clause, excluding recourse to international adjudication in
favour of internal remedies, on which the jurists of Latin America have never
compromised, because of their lack of confidence in diplomatic protection as
conceived by traditional law and the practices of western nations. This reaction on
the part of the Latin American States would, moreover, explain their opposition
from 1948 onwards to the draft insurance guarantee agreement proposed by the
United States, providing for the exercise of diplomatic protection by that power
without local remedies having been exhausted FN7.

-----------------------------------------------------------------------------------------------------
----------------
FN7 Mexico had been forced to agree in the 1923 Convention with the United
States not to avail itself of the condition of the prior exhaustion of local remedies.
See in this connection the relevant speeches to the Institut de droit international by
Mr. Haroldo Valladao and Mr. Kamil Yasseen and by Mr. Jimnez de Archaga,
who rightly points to the discrimination which the exclusion of prior recourse to
local remedies would entail (Annuaire de l'Institut de droit international, 1967, II
pp. 431, 432, 435-436).
-----------------------------------------------------------------------------------------------------
----------------

This attitude on the part of the Hispanic States, which is shared by the Afro-Asian
States, is the more readily understandable if the extra-legal forms and means to
which diplomatic protection formerly had recourse are borne in mind. It will be
recalled that the claims of great States and their nationals abroad often led, during
the period preceding the renewal of the law consequent upon two world wars and
the creation of a means of international adjudication, to acute conflicts and to acts of
deliberate violence going so far as armed intervention and permanent occupation
FN8, or to demonstrations of force FN9, against which the Drago doctrine, which
was endorsed by the Pan-American Conference of 1906 and has since become one
of the basic principles of Latin American international law, has, since 1926, reacted
not without success. Recourse to force, subject to an offer of arbitration, was
nevertheless tolerated by The Hague Peace Conference of 1907, which admitted
intervention sub modo by virtue of the Porter Convention, against which
Convention Drago and his Latin American colleagues vainly protested at the
Conference. This was not the [p 292] least of the contradictions which attended it,
contradictions which bespeak the still predominant influence of the colonialist era.
Accordingly, one is entitled to suspect certain arbitral decisions of having been
agreed to or accepted under duress, those decisions having been preceded by
ultimata or menaces or by a deployment of force more or less in the spirit of the said
Conference, which was struggling to free itself from a tyrannical tradition FN10.

-----------------------------------------------------------------------------------------------------
----------------
FN8 Occupation of China's western provinceswhich brought on the Boxer
Rebellion of 1900, of Tunisia from 1881 to 1956, of Egypt from 1882 to 1954 and
of Mexico from 1859 to 1866, the conquest of which took the form of the
installation of the ephemeral Mexican Empire (P. C. Jessup, A Modern Law of
Nations, p. 113).
FN9 Against more than one Latin American State: Argentina, Paraguay, Mexico,
Brazil, Cuba, Nicaragua, Colombia, Haiti, the Dominican Republic, Venezuela, etc.
The Ottoman Empire was also an example (referred to in footnote 64 below).
FN10 Of the 44 States which took part in the 1907 Conference, there were only four
Asian States and one African State.
-----------------------------------------------------------------------------------------------------
----------------

If the Drago doctrine has finally triumphed, and if the Porter Convention, on the
insistence of Mexico, expressing Latin American opinion at the Chapultepec
Conference in 1945, is now recognized as incompatible with the terms of Article
103 of the United Nations Charter, it is nevertheless the case that many decisions
have not avoided all confusion between reparation sticto sensu, as in private
municipal law, and the "satisfaction" demanded by powerful States, which gives
reparation lato sensu the character of a measure aimed at deterrence or punishment
FN10a. This right to punish, which is arrogated to themselves by certain States, and
to which such eminent writers as Bluntschli, Liszt and Fau-chille, as well as a 1927
resolution of the Institut de droit international have lent their authority, seems to
have been rejected by Anzilotti, who noted that in all forms of reaction against the
unlawful act there were present ". .. an element of satisfaction and an element of
reparation, the notion of punishment of the unlawful act and that of reparation for
the wrong suffered"FN11. Thus, the opposition of Latin American or Afro-Asian
jurists to the western conception of responsibility and diplomatic protection is
founded not only on memories of a painful past, but also on serious apprehensions.

-----------------------------------------------------------------------------------------------------
----------------
FN10a See in this connection the report by Mr. Garcia Amador to the 13th Session
of the International Law Commission. (Yearbook of the I.L.C., 1961, Vol. II, paras.
4 to 6, 17, 26, 53, 56, 75, 102, 140, 142 and 145.)
See also the dissenting opinion in the Corfu Channel case of Judge Azevedo, who
regarded measures of satisfaction as reminiscent of ultimata of a "mediaeval" nature
(I.C.J. Reports 1949, p. 114).
FN11 Cours de droit international [Translation by the Registry from] Fr. trans. by
G. Gidel, 1929, p. 522.
-----------------------------------------------------------------------------------------------------
----------------

The development of Latin American thought concerning diplomatic protection and

its limits must be particularly stressed in the present discussion, on account of the
influence which it can have on the development of that institution. This thought is at
present centred on the following aspects of the problem:

A. The 20 States of South and Central America all reject the rule laid down by Vatel
and endorsed by the Permanent Court of International Justice, according to which
the right of diplomatic protection is "to ensure, in the person of its subjects, respect
for the rules of international law". They hold it to be a fiction, which one of their
most eminent jurists,[p. 293]
Garcia Robles, has described as "a product of Hegelian influence, resulting from the
expansionism of the nineteenth century"FN12. And all these States, at inter-
American conferences, in the writings of publicists, in the positions adopted by
governments, are united in their efforts for its elimination, on the understanding that
the individual's status as a subject of the law is to be recognized, thus enabling him
to seek legal redress himself, and not under the cloak of his national StateFN12a.
But before what tribunal? Before an American regional tribunal. The resolution
submitted to the Inter-American Conference at Buenos Aires and adopted almost
unanimously reads: "American legal controversies should be decided by American
judges . . . and a correct understanding of acts pertaining to the Americas is more
readily to be obtained by Americans themselves".

-----------------------------------------------------------------------------------------------------
----------------
FN12 At the Third Session of the Inter-American Bar Association, Mr. Garcia
Robles won over to the Latin American cause Mr. F. R. Coudert, the North
American President of the Association, and all its members.

FN12a The status of the individual as a subject of the law, which has its supporters
outside America, was to a certain extent recognized in the 1926 award by the
Mexican-American Commission in the North American Dredging Company case.
-----------------------------------------------------------------------------------------------------
----------------

Since the same causes produce the same effects, the States of the Organization of
African Unity wrote into the Addis Ababa Charter the same objective of the creation
of a regional tribunal FN13.
-----------------------------------------------------------------------------------------------------
----------------
FN13 E. McWhinney has pointed out that

"there has in the past been a notable reluctance on the part of numerous States, and,
in particular, of the new States, to accept the compulsory jurisdiction of the
International Court of Justice, because those States have felt that the Court would
apply the old rules, in the elaboration and development of which they had not
participated and a great number of which they regarded as unreasonable or unjust"
(op. cit., p. 331 [Translation by the Registry]).
-----------------------------------------------------------------------------------------------------
----------------

The countries of Latin America have gone further still. In 1948 they unanimously
adopted a resolution at Bogota whereby they undertook not to bring a claim before a
court of international jurisdiction, not excluding the International Court of
JusticeFN13a.
-----------------------------------------------------------------------------------------------------
----------------
FN13a"The High Contracting Parties bind themselves not to make diplomatic
representations in order to protect their nationals, or to refer a controversy to a court
of international jurisdiction for that purpose, when the said nationals have had
available the means to place their case before competent domestic courts of the
respective State." (Art. VII of the Pact of Bogota, 1948.)
-----------------------------------------------------------------------------------------------------
----------------

B. The States of Latin America remain firmly attached to the Calvo Clause, which
they habitually insert in contracts entered into with foreign undertakings. Their
constitutions and laws generally make it compulsory. Their doctrine with regard
thereto, founded upon the two principles of equality between States and non-
intervention, was forcefully expressed by Judge Guerrero, a former President of the
Court, in the report which he submitted on behalf of the Subcommittee set up by the
Committee of Experts of the League of Nations to study the responsibility of States.
Several non-American countries were not hostile to this point of view. China,
Holland and Finland were frankly favourable to it.[p294]

Finally, the United States, which had found in Borchard a vigorous defender of the
thesis that the individual cannot dispose of a right which, according to Vatelian
doctrine, is that of the State and not his own, allowed itself to be won over, with the
inauguration of the "good neighbour" policy of F. D. Roosevelt, to the doctrine of
its southern neighbours FN14.

-----------------------------------------------------------------------------------------------------
----------------
FN14 See also the important award in the North American Dredging Company case
in 1926 between the United States and Mexico, which took a clear step in this
direction and has since become an authoritative precedent. The Calvo Clause was
unanimously upheld in order to dismiss the claim, notwithstanding the provisions of
the 1923 Treaty exonerating the claimant from having to exhaust local remedies.
The scope of the clause is, however, limited to the individual's right and leaves
untouched that of the State in the event of a violation of international law.
-----------------------------------------------------------------------------------------------------
----------------

C. The Calvo clause, which on the other side of the Atlantic is regarded merely as a
compromise, was destined to prepare the way for the adoption of the Calvo doctrine,
which is aimed at nothing less than the abolition of unilateral diplomatic protection
in order to substitute for it a protection exercised by the collectivity on the basis of
human rights.

The path towards this unconcealed objective is certainly a long and arduous one; its
success seems bound up with the progress of mankind towards an inter-American or
international organization less removed than the United Nations from the concept of
the Super-State.

It was the more necessary to recall these features of American law in that other
States are treading the same path towards the limitation of diplomatic protection.
The States of Africa and of Asia, since they too have come to participate in
international life, share the same concerns, as witness the proceedings of the
International Law Commission. At its Ninth Session in 1957, Mr. Padilla Nervo
stated that:

"... the history of the institution of State responsibility was the history of the
obstacles placed in the way of the new Latin American countriesobstacles to the
defence of their . . . independence, to the ownership and development of their
resources, and to their social integration".

And he added:

"With State responsibility . . . international rules were established, not merely

without reference to small States but against them FN15."

-----------------------------------------------------------------------------------------------------
----------------
FN15 Yearbook of the International Law Commission, 1957, Vol. I, p. 155.
-----------------------------------------------------------------------------------------------------
----------------

And Mr. El-Erian, of the United Arab Republic, stressed the twofold consequence
of the privileged condition accorded to nationals of Western countries in their
relations with the countries of Africa or Asia, which on[p295] the one hand had led
to the system of capitulations and on the other afforded a pretext for intervention in
the domestic affairs of States FN16.

-----------------------------------------------------------------------------------------------------
----------------
FN16 Ibid., p. 161. See also S. Prakash Sinha, New Nations and the Law of Nations,
pp. 91-93 and 140.
-----------------------------------------------------------------------------------------------------
----------------

The similarity of the essential views and objectives of the States of the three
continents of America, Africa and Asia, and the action they are able to take to
develop a positive international law of world-wide ambit, will tend to direct them
toward a universalist concept of law and bring them back to a system of
international adjudication which will no longer be of an exclusive nature but will,
through its effective composition, meet the wishes expressed in the United Nations
Charter, which would have it represent the main legal systems and principal forms
of civilization of the world.

It is in the light of these preliminary considerations that the connected problem of

diplomatic protection and the jus standi of the applicant State should have been
approached.

6. It is generally recognized that the attribution of nationality to a company, or the

recognition of its legal allegiance, on the basis of its siege social or of the law of the
place of formation or registration, confer upon the national State of the company, by
virtue of a rule of law enshrined in jurisprudence and of a constant practice FN17,
the right to take action for the reparation of damage resulting, to the prejudice of the
company, from an international tort.

-----------------------------------------------------------------------------------------------------
----------------
FN17 This practice goes back to the beginning of the nineteenth century, when the
United Kingdom intervened with the Kingdom of the Two Sicilies on behalf of 19
companies, and it was endorsed by the Committee of Experts of the League of
Nations in 1927. With respect to the jurisprudence, in addition to a number of
arbitral awards at the turn of the century, see the Panevezys-Saldutiskis Railway
case, P.C.I.J., Series A/B, No. 76, p. 16.
-----------------------------------------------------------------------------------------------------
----------------

Is it, however, necessary in addition that there should exist between the national
State and the company a link of effectiveness, consisting of a substantial
participation in the company by national capital or of control of the company's
management? Since intervention by a State in favour of its nationals is a
discretionary act, the practice of States which take up a case for their nationals only
on this condition does not give rise to a legal obligation. Furthermore, no less than a
dozen arbitral awards reported by Mr. J. de Hochepied FN18 have held that the
nationality of the company alone justified diplomatic intervention. As for those
arbitral or judicial decisions that might be cited in support of the concept of
effectiveness or connection (Canevaro, I'm Alone, Nottebohm cases), they do not
amount to precedents affording any analogy based upon essential factors with the
question of the nationality of companies in international law. It will be observed in
particular that the Nottebohm Judgment had to determine a conflict of a particular
kind, that of dual nationality. It was based upon concrete facts peculiar to the
situation of the former German citizen Nottebohm and his endeavours to "substitute
for his status as a national [p 296] of a belligerent State that of a national of a
neutral State, with the sole aim of thus coming within the protection of
Liechtenstein"FN18a. Does not this reasoning in the Judgment seem to fall into line
with the practice of the courts or of the administration, taking into account the
motive for the act, of ignoring changes of nationality effected for the purpose of
obtaining, for example, a divorce, or changes of religion or belief in order to
overcome an obstacle to a marriage or to an election, in a State where seats in the
elected chambers are distributed between members of the country's various religions
and beliefs.

-----------------------------------------------------------------------------------------------------
----------------
FN18 La protection diplomatique des socits et des actionnaires, pp. 95-101.

FN18a I.C.J. Reports 1955, p. 26.

-----------------------------------------------------------------------------------------------------
----------------

***

The right of protection of the company by its national State being the rule, does this
right leave room, in appropriate circumstances, for an action by the national State of
the shareholders?

This question relates, within the framework of the third preliminary objection, to the
basic legal condition governing the exercise of international judicial protection, in
other words, to the existence of a rule of law which would, in the instant case,
authorize recourse to a judicial action. It is of a preliminary nature in relation to the
fourth preliminary objection, concerning the exhaustion of local remedies, as well as
to the other questions raised by the third objection, namely the nationality of the
claim and the connected question of the continuity of the nationality and that of
legal owners and nominees. It is in fact the legal rule which, in appropriate cases,
gives access to the Court. In the absence of this rule, access to the judicial tribunal is
denied the claimant, even if his claim be absolutely justified from the point of view
of such other questions as might be raised at this preliminary stage of the
proceedings.

Since, however, the Court has affirmed the preliminary character of the question of
the possible existence of the legal rule, could it embark upon one or other of the
subsidiary questions and yet manage to avoid, in the rigour of would-be logical
reasoning, disregarding its first decision and, as it were, going back on itself? That
decision had the unavoidable consequence of putting an end to the proceedings, and
it is not open to anyone to restore it to life in order to embark upon a new discussion
which would not only be obiter dicta, but would be reasoning based upon an
hypothesis which the Court has already rejected, and which would introduce an
internal contradiction into the judgment.

This being my point of view on the problem, my separate opinion will deal only
with the legal question the solution of which has of itself, to my mind, led to the
rejection of Belgium's Application.

7. The question occasions no difficulty if the members of the company or

shareholders complain, ut singuli, of direct damage, as is generally the case in
municipal law; if, in other words, he is injured with respect to his subjective
interests, as distinct from those of the company: e.g., in
[p 297] the case of individual despoilment or discriminatory measures. He is then in
the position of any individual claiming the diplomatic or jurisdictional protection of
the State of which he is a national FN19.

-----------------------------------------------------------------------------------------------------
----------------
FN19 Cf. I. Brownlie, op. cit., p. 401.
-----------------------------------------------------------------------------------------------------
----------------

But what will be the position if the shareholder's claim relates to an indirect injury
resulting from a measure which affects the company as such? The charges which
may be expressed as denials of justice, abuse of right or misuse of power are those
which, according to Belgium, affected the company, beginning with the refusal to
allocate foreign currency and the bankruptcy judgment. It is no longer a question of
the corporate action to be exercised on behalf of the company, but of proceedings
limited to the right or legal interest of the shareholder, to the extent that he is
indirectly injured as a result of a measure affecting the company.

***

Since the theory of the reality of the personality of companies has generally been
abandoned in favour of the theory of artificial or juridical personality, it has seemed
to certain writers that arbitral awards have taken a line which, whilst rejecting this
fiction to the extent that it is absolute or excessive, has opened a fresh perspective
which is in conformity with the international character assumed by numerous
companies. As between the right and the fiction, which thus stand opposed to each
other, which must give way? Are we not faced with one of those cases where the
adjustment of law to the reality of human affairs and to the sense of justice must
carry the day?

There is no doubt that the personality attributed to the group of corporate interests
was so attributed with a view to giving to the elements contained therein and
bonded together thereby, common means of action and effective protection.
Accordingly, the moment that that protection proves insufficient, or even harmful,
in the field of international relationships, should not legal personality give way, to
the extent that this is necessary and possible, in favour of a more realistic concept
and one which is more in accordance with the nature of things, that of corporate
reality, in order to leave individuals and capital appropriately revealed, in the
interest of the community and in their own interest?

Is there not ground for thinking that it is above all in the world of fiction that value-
judgments, applied to the law, should be based upon teleological considerations?
Jhering stated that: "The end in view is the creator of all law." Let us also recall the
proposition of Saleilles, put forward half a century ago, and which is more
mandatory than ever: "Nothing is important", he wrote, "other than the object to be
attained; often our most learned constructions serve only to compromise the
realization thereof." Curiously enough, one of those learned constructions is the
legal fiction. A fiction is indeed "a representation which is contrary to the truth". P.
Roubier, to whom I owe this formula, recommends[p 298]"direct enquiry as to what
is the object of the legal rule which has thus been laid down in this dissimulated
form FN20".

-----------------------------------------------------------------------------------------------------
----------------
FN20 P. Roubier, Theorie gnrale du droit, p. 116. [Translation by the Registry.]
-----------------------------------------------------------------------------------------------------
----------------

It might therefore be considered that the fact of maintaining the fiction of juristic
personality contrary to the avowed interest of its component parts would create a
situation contrary to the object thereof.

And in fact, however stubborn the fiction of juristic personality may be, as fictions
generally are, the diplomatic practice of the creditor Powers and of capital-exporting
countries, as well as certain arbitral decisions, have not, after the hesitation prior to
the First World War, been slow in accepting, though not without a certain amount of
circumspection, the rule which permits the interests of members or shareholders to
be dissociated from the abstract personality covering them and given independent
considerationthough only where, since the company has the nationality of the
respondent State, an action in the name of the company could naturally not be
brought against the latter except by local means of redress.

8. However, this arbitral jurisprudence, upon which international courts have not yet
had to pronounce, is neither unanimous nor decisive on all points.

In the first place, we must leave out of consideration awards given ex aequo et bono,
which are not merely without relevance to the present case, but are clearly out of
place in this discussion. Thus, it should be recalled that the Special Agreement
between the United States and Chile in the Alsop case empowered the arbitrator to
decide in equity and as amiable compositeur. The same was the case with the
awards delivered on the basis of the 1923 General Convention between the United
States and Mexico, which empowered the arbitral tribunals it set up to decide in
accordance with justice and equity, a customary expression for authorizing
decisions ex aequo et bono.

Nor can account be taken of awards dealing with partnerships, since the personality
of the members is not absorbed into the corporate personality, as the personality of
the shareholders would be in the case of a joint-stock company FN21; nor of awards
dealing with companies described as "defunct", or which were obligatorily judged
according to the terms of the Special Agreement FN22, nor, finally, of awards
couched in uncertain or ambiguous terms, nor of awardsin particular those given
by heads of State FN23where the absence of reasons for the decision deprives
such awards of any absolute relevance.[p 299]

-----------------------------------------------------------------------------------------------------
----------------
FN21 Thus, there must be excluded from this discussion the opinion expressed by
Mr. Huber in the report of the Mohammed Ziat, Ben Kiran case, which related to a
partnership.

FN22 The awards in the Delagoa Bay Railway Company, Standard Oil, Pierce Oil
and Sun Oil cases.

FN23 The award of President Grover Cleveland of the United States in the Cerruti
case and the award of King George V of Great Britain in the Alsop case
-----------------------------------------------------------------------------------------------------
----------------

The same should be the case for awards suspected of having been given under the
influence of other than juridical motives, or which were preceded by a
demonstration of power, or by threats on the part of a State which trusted in the
force of its arms at least as much as in the force of its rights FN24.

-----------------------------------------------------------------------------------------------------
----------------
FN24 Supra, Section 5.
-----------------------------------------------------------------------------------------------------
----------------

***

In any case, arbitral precedents and diplomatic practice, supported by part of

Western legal writing, do not amount to, as has been said, "a coherent body of
doctrine", and consequently do not seem to constitute a custom to the effect that
diplomatic protection, and its judicial sequel, might cover damage caused by the
national State of a company to shareholders who were aliens in relation to the
company. Thus it appears that it is in treaty law that the protection of foreign
investments must be sought, whether it be a question of companies which have been
obliged to adopt the nationality of the host country, or of nationalizations, "the
scandal of the beginning of the century", which followed one another at a rapid rate
ever since the First World War, on the part of almost all countries.

9. Be this first hypothesis as it may, namely that of the shareholders who have
suffered from the activities of the national State of the company, the problem now to
be approached is that of whether diplomatic protection of shareholders is capable of
being extended to the situation where the damge is attributable to a third State, as in
the present case.

It is of course necessary to exclude at the very outset the possibility of the national
State of the shareholders substituting itself for the national State of the company for
the defence of the latter, as Belgium claimed to do in its Application filed on 23
September 1958. A bond of legal alle-giance connecting the company to the
protecting State is a sine qua non FN25, and this does not exist in this case. The
problem must be kept confined within the field of protection of the shareholders
themselves. International jurisprudence could not adopt the diplomatic practice by
which Belgium seems first to have been inspired, which was that which has been
tried more than once by certain Powers, and which may not be unconnected with the
outdated theory of control: first by the United States in the Chilean Alsop Company,
in which the award was given in 1911; then by the same Government in the Armes
automatiques Lewis case, since from 1927 to 1933 Great Britain had untiringly
opposed the action of the United States, which was the national State of the
shareholders, acting for the protection of the company, which had been formed
under Belgian law; then again by Germany when in 1935 it claimed the right to
protect a Mexican company, and finally by France and Great Britain in the [p 300]
dispute concerning the nationalization of the Suez Canal in 1956, when those two
powers thought they could intervene, as national States of the shareholders, in
defence of a company whose original regime attributed Egyptian nationality to it. In
each of these cases, this was to disregard the essential condition of the bond of
nationality or allegiance between the State intervening and the entity in whose name
it was intervening. The concept of effectiveness, which is not legally required for
attribution of nationality to a company, as a condition of diplomatic protection,
cannot operate either to transfer to the national State of the shareholders the right of
diplomatic protection of the company itself, which right is an attribute of the
company's national State. It has of course been pointed out that it was with
shareholders' representatives that the United Arab Republic negotiated an agreement
concerning the Egyptian Suez Canal Company, as Mr. E. Lauterpacht reports. But
those negotiations do not involve recognition of the right to bring an action at law;
they amount to an ex gratia action, not implying any legal responsibility, as was the
case of the provisions of the Agreement of 8 September 1923 between the United
States and Mexico which set up the Special Claims Commission.

-----------------------------------------------------------------------------------------------------
----------------
FN25 Above Section 6 and note 17.
-----------------------------------------------------------------------------------------------------
----------------

Thus Belgium refrained, in its Application of 19 June 1962, from claiming to

protect the Barcelona Traction company, contrary to what it had done in its first
Application, already quoted, of 23 September 1958, and limited its claim from then
on to the protection of the shareholders of its own nationality. Since this latter
Application was deemed to have lapsed as a result of its withdrawal by the applicant
Government, and that Government furthermore made no mention of it in its final
submissions, the Court only has to deal with the new Application, in-dependently of
the earlier one. This was the effect of the decision of the German-Mexican
Commission when it accepted the fresh submissions presented by Germany on
behalf of German shareholders, after the error which it had made by claiming the
right to protect the Mexican company itself FN26.

-----------------------------------------------------------------------------------------------------
----------------
FN26 A. Feller, The Mexican Claims Commission, 1935, p. 118.

-----------------------------------------------------------------------------------------------------
----------------

10. Since the right of the State to protect its nationals who have been injured by
acts, decisions, omissions or measures contrary to international law, and imputable
to another State, is undeniable, it would be useful to seek to ascertain the nature or
legal foundation thereof, in order to deduce from it the legal consequences and the
extent of its application raised by the present case. The question upon which it
would be useful to pronouce is that of whether diplomatic protection derives from a
general principle of law recognized by the nations (Article 38, para. 1 (c), of the
Court's Statute) or from an international custom (para. 1 (b) of that Article).

The Judgment of the Permanent Court of International Justice of 1924 in the

Mavrommatis Palestine Concessions case FN27 does not seem to have [p 301]
taken any stand on this point, when it stated, with some emphasis, in an axiomatic
form that diplomatic protection "is an elementary principle of international law".
One cannot hazard a guess as to the sense in which the expression "elementary
principle" was taken, given as it is without any other qualification. And when other
judgments have referred to this precedent, they do not seem to have been any more
explicit. The terminology of the two international Courts does not permit of there
being attributed to them, on this point, an opinion which they seem designedly to
have kept in petto, following a prudent practice which has already been remarked on
FN28.

-----------------------------------------------------------------------------------------------------
----------------
FN27 P.C.I.J., Series A, No. 2, p. 12.
FN28 Separate opinion of the writer, I.C.J. Reports 1969, p. 138. See also separate
opinion of Judge Alvarez in the Fisheries case, I.C.J. Reports 1951, p. 148.
-----------------------------------------------------------------------------------------------------
----------------

It is true that a special tribunal, the Mixed Claims Commission (United States and
Germany), set up as a result of the First World War, decided in more than one
casenamely the Vinland, Standard Oil, Sun Oil and Pierce Oil casesthat the
intervention of the national State of the shareholders "is based on a general principle
which such State would have relied on even in the absence of preliminary
agreement". However, that Commission did not explain whether it understood by
"general principle" a general principle of law recognized by the nations, or a
principle drawn directly from the idea of law. It is nonetheless the case that its
jurisprudence, although approved by some authors, though not many, has not been
corroborated by other jurisdictions. The opinions of legal writers are also divided.
Nor was this the first nor the only time that a rule of international law has been
considered by some to be a customary norm, and by others to be a general principle
of law recognized by the nations, and by others again to be a principle drawn
directly from the idea of law. The problem would obviously not be resolved were
one to content oneself with the observation that the frontiers between these various
concepts are still blurred or uncertain. This is the case of the rule of exhaustion of
local remedies, which is the subject-matter of the fourth preliminary objection in the
present case, and which is based now on the one, now on the other, of the first two
concepts FN29. Furthermore, the principle of protection of human rights, which will
be referred to below, has been considered to be capable of constituting a legal norm
at one and the same time on the basis of the three principal sources of international
law, namely: international conventions, international custom, and the general
principles of law FN30.

-----------------------------------------------------------------------------------------------------
----------------
FN29 Cf. the report of Max Huber in the Mohammed Ziat, Ben Kiran case in 1924,
and the decision of the French-Mexican Claims Commission in the Pinson case, of
18 October 1928.

FN30 Dissenting opinion of Judge Tanaka annexed to the Judgment of 18 July

1966, in the South West Africa cases, Second Phase, I.C.J. Reports 1966, p. 300.
-----------------------------------------------------------------------------------------------------
----------------

11. If my view is accepted, that diplomatic protection and the possible right of the
shareholder do not derive from a principle of international law recognized by the
nations, it remains to be considered whether the [p 302] international-law custom,
upon which diplomatic protection would then, according to predominant opinion, be
based, is called upon to extend to all interests which have been injured, in the
present case those of the shareholders in a company attached to a third State.

Here we touch on the essence of the problem, the decisive, if not the only, question
being that relating to the state of the custom, as it emerges from the conduct of the
nations as a whole, and from their declared will.

To this end, it is necessary to re-examine treaty practice, international jurisprudence,

the practice of States, and the trend of legal writing, which are the principal
constitutive elements of custom.
I would observe, in addition, that the positions taken up by the delegates of States in
international organizations and conferences, and in particular in the United Nations,
naturally form part of State practice. It is true that some of the great Powers, five or
six of which legislated for the whole world up to the beginning of the twentieth
century, generally refuse nowadays to admit that resolutions voted in the United
Nations framework by a majority of, or even by practical unanimity among, the
member States, have any obligatory effect. An attempt at San Francisco by the
Philippines to have conferred upon the Assembly, possibly with the concurrence of
the Security Council, power to lay down binding legal norms, was rejected.
Nonetheless a marked trend in legal writing is becoming apparent, reflecting the
new aspects of international life, which is in favour of attributing to the resolutions,
and in particular to the declarations of the United Nations General Assembly, the
status of at least a subsidiary source of international law, to be added to the classic
sources in Article 38 of the Court's Statute FN 31.

-----------------------------------------------------------------------------------------------------
----------------
FN31 See the views to this effect of Messrs. Lachs, Mohammed Sami Abdelhamid,
Falk, Pechota, McWhinney, Asomoah.
-----------------------------------------------------------------------------------------------------
----------------

Certain writers, for their part, see in this an interpretation based upon an argument
drawn from the actual text of the Charter, strengthened by a teleological
interpretation of that international constitutional instrument, which presupposes the
existence of rights and liberties of man which "are not only moral ones, [but].. . also
have a legal character by the nature of the subject-matter313 ". They add that such
an interpretation should take into account the functioning of the Charter in practice
FN32. The General Assembly itself adopts this point of view, as appears from its
resolution of 11 December 1963, in which it "confirms the interpretation of free
self-determination which it gave in its resolution [p 303] of 1960 on the grant of
independence". This is also the case of the 1969 Vienna Convention on the Law of
Treaties, Article 31 of which provides that a treaty is to be interpreted "in the light
of its object and purpose" and that for purposes of interpretation of a treaty, the
context comprises "any subsequent practice".

-----------------------------------------------------------------------------------------------------
----------------
FN31a Dissenting opinion of Judge Tanaka, South West Africa cases, I.C.J. Reports
1966, pp. 289-290.
FN32 See to this effect the dissenting opinion of Judge Alvarez, Competence of the
General Assembly, I.C.J. Reports 1950, p. 21; that of Judge De Visscher,
International Status of South West Africa, I.C.J. Reports 1950, pp. 189-190; G. I.
Tunkin, op. cit., pp. 106 and 111, who quotes the declaration of 14 December 1960
on the granting of independence as an example of interpretation of the principles of
the Charter
-----------------------------------------------------------------------------------------------------
----------------

Others again deduce the authority of the principles of the Charter from the fact that
they are, in their view, general principles of law in the sense of Article 38,
paragraph 1 (c), of the Court's Statute, linked at once with the jus naturale of Roman
law, and with world law, the common law of mankind according to Jenks, or
transnational law according to Jessup, a term which has become standard in
international law FN33.

-----------------------------------------------------------------------------------------------------
----------------
FN33 This view is developed in the dissenting opinion of Judge Tanaka annexed to
the Judgment of 18 July 1966 in the South West Africa cases (I.C.J. Reports 1966,
pp. 292-296).
-----------------------------------------------------------------------------------------------------
----------------

In any case, to return to State practice as manifested within international

organizations and conferences, it cannot be denied, with regard to the resolutions
which emerge therefrom, or better, with regard to the votes expressed therein in the
name of States, that these amount to precedents contributing to the formation of
custom. It is as it were an established fact of which legal writers take note FN34.
What is more, those who hold the views which have just been expressed do not
hesitate to accept this concept conjointly with their own views. It has also just been
confirmed by Article 38 of the Convention on the Law of Treaties quoted above.

-----------------------------------------------------------------------------------------------------
----------------
FN34 This is what is observed by Professor Mohammed Sami Abdelhamid in the
Revue gyptienne de droit international, 1968, pp. 127-128 of the Arabic text.
See also R. Higgins in The Development of International Law through the Political
Organs of the United Nations, p. 5, who says :

"... the body of resolutions as a whole, taken as indications of a general customary

law, undoubtedly provides a rich source of evidence."

Mr. Srensen too, in his course of lectures at the Hague Academy of International
Law, Recueil des cours 1960, p. 38, states as follows:

"If the international organization is made up of representatives of States, it is clear

that the positions taken up by such representatives may, in principle, contribute to
the formation of a custom. On this hypothesis, what is involved is acts attributable
to the States, acting through their representatives, rather than acts attributable to the
international organization as such." [Translation by the Registry.]
-----------------------------------------------------------------------------------------------------
----------------

Policy does of course crop up under the veil of resolutions or declarations in the
United Nations Assembly. However, it will be conceded that to seek at all costs to
erect a partition between policy and law is calculated to bring about this result
which is contrary to reality: what is at stake is the attempt to isolate the rule from its
social origins, and to snap the link of unity with its historic context. Policy, the
policy of the great powers and the colonialist powers, dominated classic traditional
law; it cannot be dissociated from law, today any more than yesterday; but it is a
new policy, one which does not escape the influence of the [p 304] great principles
which are destined to govern the relationships of modern nations. The 1969 Vienna
Conference took this consideration fully into account when it adopted numerous
solutions to meet the suggestions included in individual opinions and proposals by
new members of the international community.

Thus, through an already lengthy practice of the United Nations, the concept of jus
cogens obtains a greater degree of effectiveness, by ratifying, as an imperative norm
of international law, the principles appearing in the preamble to the Charter. From
the domain of theory or legal writing, in which some of these principles, and not the
least important thereof, had as it were remained confined, they are passing into the
domain of objective existence and practice FN35. Thus it was that U Thant could
say, at the 1969 session of the Organization of African Unity, held at Addis Ababa
in the presence of 17 African Heads of State, that the United Nations "had widened
the concept of the right of self-determination and independence, so as to cover the
recognition of the lawfulness of the struggle carried on by such nations for the
exercise and enjoyment of that right in practice FN36 ". He might have quoted in
addition the principle of equality and that of non-discrimination on racial grounds
which follows therefrom, both of which principles, like the right of self-
determination, are imperative rules of law FN37.

-----------------------------------------------------------------------------------------------------
----------------
FN35 See I. Brownlie, op. cit., pp. 483-486. For Mr. Brownlie, the following are
imperative rules of law: the right of self-determination, racial equality, sovereignty
of peoples over their natural resources, the Genocide Convention, the prohibition of
aggressive war, of the slave trade, piracy, and all other crimes against humanity.

FN36 Le Figaro, 8 September 1969 [Translation by the Registry].

Cf. I. Brownlie, op. cit., pp. 417, 484 and 485, where one reads: "Intervention
against a liberation movement may be unlawful, and assistance to the movement
may be lawful."
Also R. A. Tuzmukhamedov, for whom the 1960 declaration of the United Nations
General Assembly concerning the granting of independence is a de facto recognition
of the movements for national liberation.
FN37 Racial equality is an imperative rule of law, particularly since the adoption by
the United Nations General Assembly of the declaration of 20 November 1963 on
racial non-discrimination (Resolution 1904 (XVIII)).
See in particular Mr. J. Spiropoulos, who upheld this point of view (Sixth
Committee of the General Assembly, 7 December 1948).
-----------------------------------------------------------------------------------------------------
----------------

12. The documents of the greatest probative force in international treaty law are, in
the present case, the Peace Treaties, signed by the Allied Powers and their
associates with the Central Powers and their allies, in 1919 at Versailles, Saint-
Germain, Neuilly and Trianon, in 1921 and 1922 at Vienna and Budapest, in 1923 at
Lausanne; and finally the agreements of 1922 and 1924 to which the United States
were parties.

According to the provisions of these Treaties, shareholders who were nationals of

the allied countries, holding shares in companies of enemy allegiance, had the right
to reparations, without any distinction being made between direct and indirect
injury.[p 305]

A quarter of a century later, the provisions of these Treaties just quoted were
adopted in the Peace Treaties which brought to an end the war of 1939-1945, which
were signed in 1947, as well as in the State Treaty signed in 1955 with Austria.

What value as a customary law precedent may we attribute to these provisions?

It is legitimate to consider that the inclusion of an obligatory clause in a treaty

indicates that that clause is not yet an integral part of positive law. In particular, this
is what may be deduced from the Judgment of this Court in the Asylum case FN38.
This reference does not of course relate to multilateral treaties of which the
particular objective, as regards the majority of their provisions, is the codification of
certain rules of international law, such as the 1958 Geneva Convention on the High
Seas, and the Vienna Conventions of 1961 on Diplomatic Relations, of 1963 on
Consular Relations, and of 1969 on the Law of Treaties.

-----------------------------------------------------------------------------------------------------
----------------
FN38 I.C.J. Reports 1950, pp. 276-277.
-----------------------------------------------------------------------------------------------------
----------------

Conventions which do not contemplate the codification of existing rules can

nonetheless amount to elements of a nascent international custom, which is what
may be said with fair certainty of the Conventions which resulted from the Hague
Peace Conferences of 1897 and 1907, of the Treaty of London on Maritime Law of
1909, of the Protocol of 1925 prohibiting the use of asphyxiating gas FN39, and of
the 1958 Geneva Convention on the Continental Shelf FN40.

-----------------------------------------------------------------------------------------------------
----------------
FN39 The 1899, 1907 and 1909 Conventions, and the 1925 Protocol, were so little
declaratory of law that during two great world wars, and other comparatively minor
wars, and despite their clear prohibitive terms, they were no obstacle to massive
bombardments of open cities; deliberate "break up" of entire populations, attempts
at genocide before the term was invented; attacks on merchant ships belonging to
neutral countries as well as enemy countries, which were sunk with all hands.
FN40 Judgment of this Court of 1969, and separate and dissenting opinions annexed
thereto.
-----------------------------------------------------------------------------------------------------
----------------

So far as the Peace Treaties more particularly are concerned, whether these be
bilateral or multilateral, they are not such as to amount ipso facto to an element of
custom. The clauses of these treaties, imposed upon the defeated States, must be
respected by virtue of the rule pacta sunt servanda. But can the reasoning be pressed
so far as to say that their provisions reflect the consent of, or the genuine and
effective acceptance by, the defeated State, which acceptance or consent would, on
this hypothesis, give rise to the opinio juris?.

It will be observed first of all that the clauses concerning war reparations only apply
against one party, for the benefit of the party which imposed them. Of course it
could not be otherwise in a treaty marking the end of a victorious war, even one
which was waged for just cause. However, does this mean that such clauses are
elements of a legal custom governing the relationships between free and sovereign
States? In other words, can a practice amount to a customary precedent if it does not
show a [p 306] conviction, a conviction of law, in the minds of the dominant parties,
as well as in the minds of the servient parties, to the effect that they have each of
them accepted the practice as a rule of law, the application whereof they will not
thereafter be able to evade?

13. When replying in the negative to this question, one should also observe, it is
true, that other treaties, quite unconnected with war or peace between nations, were
concluded during the inter-war period, which recognize the same rights of the
shareholders independently of the company. The object thereof was to resolve
claims arising from revolutions or riots, or from nationalizations, which commenced
in Latin America, and which were not long in extending to the West, to Eastern
Europe, and to the economically weak countries or developing countries:
agreements between Switzerland and socialist States, agreements between various
States and Latin American States.

The multiplicity of these treaties, upon which the applicant State relies, is as it were
a double-edged weapon. The Applicant argues therefrom in order to support its
contention, and deduces, from the existence of this treaty-practice, the appearance
of a rule of international law.

However it is a question of bilateral treaties the effect of which-apart from the

rights of the contracting partieswas only, at the most, to contribute to the eventual
formation of custom.

Must it not also be stressed, from a logical point of view, that treaties are the less to
be considered as declaratory law in that the States concerned have recourse thereto
despite the existence of earlier treaties containing the same provisions? This would
be the case, if this point of view is accepted, for the successive treaties concluded,
despite treaty precedents, on the occasion of revolutions, riots or nationalizations, as
well as for the Peace Treaties of the two world wars, which reproduce similar
provisions. Consequently, the concept enunciated by all these treaties would be of
no less transitory a nature than the control theory, established in the course of the
two wars. In fact, it would appear to be related thereto, if it is observed that the
provisions appearing in the Peace Treaties apply, as do those contained in laws and
regulations setting up the control test, to nationals of so-called enemy States.

It is true that a certain body of opinion sees no objection to deducing lasting legal
effects from the control theory. But what does that theory amount to, if not to
exceptional measures born of the circumstances of first one and then a second war,
which circumstances disappeared, reappeared, and then again disappeared: in short,
measures which are an integral part of methods of economic warfare, or simply of
warfare tout court. Is it the characteristic mark of a legal norm to be as unstable as
this, or rather to be capable of taking up or laying down its life according to the
demands of ephemeral events? It could not even amount to a customary-law
precedent, unaccompanied as it is by the conditions of generality, continuity, or
constancy which are postulated for a con-[p 307] stitutive element of custom. Thus
recent agreements have specified that it is only by virtue of the agreement itself that
a company is considered to be a non-national of the State to which it relates,
because of the control exercised over it FN41.

-----------------------------------------------------------------------------------------------------
----------------
FN41 Inter alia, the Agreement signed by Mauritania and the Socit des mines de
Mauritanie, Article 50 of which provides: "The Company is considered, by
agreement, to be a non-national of the Muslim Republic of Mauritania, because of
the control exercised over it by foreign interests." [Translation by the Registry.]
-----------------------------------------------------------------------------------------------------
----------------

14. One last category of treaties deserves examination: this is that of agreements
generally called treaties of friendship, establishment and commerce.

A certain number of these treaties, subsequent to the Second World War, touch on
the problem, but from standpoints which are different from, and sometimes opposite
to each other. Provisions may be gleaned from these which imply the right of
protection of the national State of the shareholders. It will however not fail to be
noticed that the formulae which these treaties use relate to very diverse concepts:
that of majority interest or substantial interest of nationals, that of direct or indirect
control by the shareholders, or mixed control; whereas provisions in no less recent
treaties do not provide for either of these concepts.

No uniform tradition has therefore become established which permits of some of

these bilateral treaty commitments being adopted as customary precedents.

In order to make an end of these treaties, I would observe that diplomatic protection
of the shareholders was apparently included in some of them because of special
political circumstances. The Treaty of 1955 between France and Switzerland is,
according to Mr. Vignes, to be explained by the fact that Tunisia had not yet
obtained political independence, and enjoyed merely a regime of autonomy.
Furthermore, the 1936 Treaty between France and Germany had as its object the
settlement of the thorny problem of the Saar. Finally, the 1946 Treaty between the
United States and the Philippines was not unrelated to certain questions raised by
the transitional period following the independence of the latter country.

15. From the foregoing it appears that the number of States which have been parties
to one or the other of the treaties which have been in question, the provisions of
which can be taken into account, so far as consistent with each other, is not such as
to attain the degree of generality which is constitutive of custom as provided for in
Article 38, paragraph 1 (b), of the Court's Statute. It must also be stressed that many
States are in open opposition to obligations resulting from imposed, or unequal
treaties FN42, or treaties concluded without their participation, [p 308]
before they were admitted into the international community FN 43. In particular
they are hostile to the extension of diplomatic protection other than by way of
agreement, and within the relationship of the contracting States alone. And it is
sufficiently well known for it to be unnecessary to dwell on the point, what the
consequences are, for the growth of a custom, of opposition which is not thought to
need to be so massive.

-----------------------------------------------------------------------------------------------------
----------------
FN42 As to unequal treaties to which the Asian and African States are opposed, see
the Asian-African Legal Consultative Committee, Eighth Session, Brief of
Documents, Vol. IV, pp. 471-472, as well as the proposal, mentioned therein, of
Burma, Czechoslovakia, India, Lebanon, Ghana, Madagascar, United Arab
Republic, Nigeria, Syria and Yugoslavia, to the effect that such treaties should be
considered as without validity.
FN43 The socialist view has been set out by Mr. G. I. Tunkin, who considers that
one must avoid imposing on the socialist States and the new States certain norms
which these States have never accepted and which are unacceptable to them (op.
cit., p. 88).
-----------------------------------------------------------------------------------------------------
----------------

16. What in fact were many of these norms, and what complaints did they give rise
to, and do still give rise to, so that one-half of the States of the world dispute
essential stipulations thereof, including the scope of diplomatic protection?

It has become apparent that quite a number of States challenge the legitimacy of
certain trends of this protection, sometimes going so far as to dispute the principle
thereof FN44. This observation is of undeniable importance in connection with the
development of custom in this matter. Consequently the advantage once again
becomes apparent, in view of the circumstances of the case, of re-examining in
some detail the reasons for this opposition, which cannot be dissociated from the
problem of elaboration of custom in general, and its application to the present case
in particular.

-----------------------------------------------------------------------------------------------------
----------------
FN44 Supra, Section 5.
-----------------------------------------------------------------------------------------------------
----------------

Among the treaties which have been in question FN45, it is necessary to go back to
those which organized international society in the eighteenth and nineteenth
centuries, and at the beginning of the twentieth century. It is well known that they
were concluded at the instigation of certain great Powers which were considered by
the law of the time to be sufficiently representative of the community of nations, or
of its collective interests. Moreover, the same was the case in customary law: certain
customs of wide scope became incorporated into positive law when in fact they
were the work of five or six Powers. This was certainly an exercise open to
criticism, and even to serious criticism. In addition, of the norms which had thus
become established, and which survived the recent fundamental transformations of
international society marked by the League of Nations Pact and the Charter of the
United Nations, taking into account the liberal interpretation continually given to
the latter instrument, some, as we have seen, are disputed by the States which did
not take part in their elaboration, and which consider them to be contrary to their
vital interests.

-----------------------------------------------------------------------------------------------------
----------------
FN45 Supra, Section 12.
-----------------------------------------------------------------------------------------------------
----------------

17. It will be recalled that the great European States of nationalist tendencies
withdrew their support for the universalist theory of the first [p 309]
internationalists, such as Vittoria and Suarezthat is, if they had ever recognized it.
Thus, Mably was able to enlarge on the notion of a European public law, from the
benefits of which other nationsfree or independenthad been excluded since the
sixteenth century. A closed community, as Sereni most conscientiously put it. The
Treaty of Paris, signed at the conclusion of the 1856 Conference, stated for the first
time in the history of international relations that one such nation, the Sublime Porte,
was "admitted to participate in the advantages of the Public Law ... of Europe". This
term was, however, to be displaced in subsequent treaties entered into by Western
countries, in 1885, in 1904, in 1921 and in the Statute of the Permanent Court of
International Justice by another no less discriminatory term, that of "civilized
nations". The Statute of the International Court of Justice has adopted this last form
of words, although the Charter of the United Nations abandoned it in favour of the
sovereign equality of all the nations of the international community FN46. And N.
Politis, who wrote just after the First World War that "the law . . . must, if it is to
retain its value, be a faithful reflection of life, change with it, model itself
unceasingly upon it . . .", still limited the area of application of this realistic
conception of the relationship between life and the law to Europe and to Europe's
interests, just as he restricted thereto the horizons of his penetrating study of
international morality FN47. Politis was nevertheless inspired throughout his book
by the Roman-Phoenician jurisconsult Ulpian, rightly regarding him as the founder
of international law on account of his remarkable contribution to the development of
jus gentium FN48, one of the ancient fields of development of this law.

-----------------------------------------------------------------------------------------------------
----------------
FN46 Until just before the San Francisco Conference in 1945, the Atlantic Charter
of 1942 was regarded by most of its interpreters as intended for the use of Western
countries.
FN47 The Harvard Law School understood the need to delete the word "civilized"
from its revised draft concerning State responsibility. Sir Gerald Fitzmaurice
approved the deletion of this word, opting, however, for a different form of words
from that of the Harvard Draft (Yearbook of the International Law Commission
1960, I, p. 270, para. 56). See in addition the writer's separate opinion in I.C.J.
Reports 1969, para. 33.
FN48 A third of Justinian's Digest is borrowed from the writings of Ulpian
(Encyclopaedia Britannica, s.v. "Ulpian").
-----------------------------------------------------------------------------------------------------
----------------

18. Moreover, in the imposing mass of legal norms which make up the modern
structure of international law, a number of rules have crept in which owe their
origins to duress or illegality; in particular those rules often enshrined in solemn
treatiesjustifying racial discrimination, slavery, and, until the middle of the
twentieth century, conquest, annexation and colonization in all its forms: colonies of
exploitation or of settlement, suzerainty, protectorates, mandates or trusteeships
FN49, the two latter forms disguising, by means of a verbal fiction, a colonialist
practice and doctrine, the unlawfulness of which has been stigmatized at the United
Nations and condemned by that body. This attitude on the [p 310] part of the World
Organization has been reflected, at the judicial level, in the proceedings on the
Advisory Opinions of 1950, 1955 and 1956, requests for which were made to the
International Court of Justice with regard to supervision of the implementation of
the Mandate for Namibia.

-----------------------------------------------------------------------------------------------------
----------------
FN49 Dissenting opinion of Judge V. M. Koretsky in the South West Africa cases,
I.C.J. Reports 1966, pp. 239 ff.
-----------------------------------------------------------------------------------------------------
----------------

19. It thus becomes easier to understand the fears of a broad range of new States in
three continents, who dispute the legitimacy of certain rules of international law, not
only because they were adopted without them, but also because they do not seem to
them to correspond to their legitimate interests, to their essential needs on emerging
from the colonialist epoch, nor, finally, to that ideal of justice and equity to which
the international community, to which they have at long last been admitted, aspires.
What the Third World wishes to substitute for certain legal norms now in force are
other norms profoundly imbued with the sense of natural justice, morality and
humane ideals FN50. It is, in short, a matter of a change of course towards natural
law as at present understood, which is nothing other than the natural sense of justice
FN51; a change of course towards a high ideal which sometimes is not clearly to be
discerned in positive law, peculiarly preoccupied as it is with stability: the stability
of treaties and the stability of vested rights. Thus, for example the notion of
effectivenessthe usefulness of which in certain matters is not denied gives a too
unqualified support to the preservation of a status quo ante the unlawful origins of
which are admitted when it is said: "time sometimes effaces illegality, so that only
effectiveness remains" FN52. And this is relevant to the application of this notion to
colonial acquisition, where we see the principle of sovereignty give way to the
presumption of the so-called right of the first occupant FN53; so too with those
treaties already [p 311] described in Roman law as leonine, imposed rather than
concluded in a past era and capable of leaving much room for the implementation of
the rebus sic stantibus clause. In short, these countries wish to take the heritage of
the past only with beneficium inventarii: which lends significance to Westlake's
observation: "The geography of international law has changed considerably."
Nevertheless, although the old law has been pruned of many sequelae of a past of
inequality and domination, in particular by the adoption of the principles of the San
Francisco Charter and of those of Bogota and Addis Ababa, those same principles
are not yet imposed without restriction or reservation, nor have any developed all
their potentialities. While tribute should be paid to the promoters of declarations
concerning great humane principles of a universal nature, from the Wilson
Declaration in 1917 with its memorable Point 4, the Atlantic Charter of 1942 and
the report of the Dumbarton Oaks Conference in 1944, up to the United Nations
Charter, it must be admitted that enthusiasm for the principles proclaimed was not
of long duration. There is a gap, which must be filled, between theory and practice.
Thus, among these principles there is the right of self-determinationdemanded for
centuries by the nations which successively acquired their independence in the two
Americas, beginning with the 13 Confederate States in North America, and in
Central and Eastern Europe; many times proclaimed since the First World War;
enshrined finally in the Charter of the United Nations FN54, added to and clarified
by the General Assembly's resolution of 16 December 1952 on the right of self-
determination and the historic Declaration by the Assembly on 14 December 1960
on the Granting of Independence to Colonial Countries and Peoples, the
consequences of which have not yet fully unfolded. The international lawmaking
nature of these declarations and resolutions cannot be denied, having regard to the
fact that they reflect well-nigh universal public feeling FN55. They were, moreover,
preceded by the similarly worded Pact of Bogota adopted by the American States in
1948 and the resolutions of the 1955 Bandung Conference, just as they were
followed by the Addis Ababa Charter of African Unity of 1963 FN56 and the
resolutions of the Belgrade Conference in 1961 and the Cairo Conference in 1964 of
Non-Aligned Countries, the latter comprising the majority of the Members of the
United Nations, and, finally, by the declaration of 21 December 1965 by the
General Assembly on the inadmissibility of intervention in the domestic affairs of
States and the protection of their independence and sovereignty. Notwithstanding
this, uninterrupted sequence of precedents [p 312] in the life of nations, Western
writers, with some few exceptions FN57, persist in refusing to concede to this
rightthough referred to as a "droit" in the French text of the Charter, and in the
resolutions and declarations of the General Assemblythe attributes of an
imperative juridical norm. The partisans of this doctrine seem to look back
nostalgically to the era when it was still possible with impunity, and without
infringing "European public law", to deny the right of self-determination to peoples
seeking to free themselves from the yoke of the States which had subjected and
colonized them. Against the defenders of the last bastions of traditional law, there
thus stand arrayed, once again, with the support of a Western minority, the serried
ranks of the jurists, thinkers and men of action of the Latin American and Afro-
Asian countries, as well as of the socialist countries. For all of them self-
determination is now definitely part of positive international law. As is known,
furthermore, a majority of States, through their representatives at the 1969 Vienna
Conference on the Law of Treaties, pronounced in favour of a solution to the
problem of jus cogens capable of giving definitive sanction to the principles of the
Charter, regarded by them as imperative juridical norms FN58. It thus seemed
appropriate that those principlesnot excepting those deriving originally from the
spirit of the American or French Revolutionsthe religious inspiration of which is
not unknown, should be solemnly reaffirmed. They were so in the very heart of
Africa by the head of the Catholic church. Addressing himself to the peoples of
Africa and, beyond them, to the entire world, His Holiness Paul VI, resuming a
tradition, on 2 August 1969, in Kampala, before five Heads of State, denounced
racial discrimination, reaffirming the equality [p 313] of peoples and the rights of
each of them to a free and decent life FN59.

-----------------------------------------------------------------------------------------------------
----------------
FN50 See the writer's separate opinion previously referred to, section 33, bottom of
p. 134 and top of p. 135; section 35, bottom of p. 136; section 36, p. 137.
Was not Voltaire giving a definition of natural law when he said: "Morality is in
nature"?
FN51 Sisnett, Chief Justice of British Honduras and arbitrator in the Shufeldt case,
took the view that international law should be bound by nothing but natural justice.
See too the separate opinion of Judge Carneiro in the Minquiers and Ecrehos case,
I.C.J. Reports 1953, p. 109.
FN52 The time factor, which has the attribute in private law of consolidating
existing situations under certain conditions which generally do not exclude good
faith, cannot purely and simply be transposed into international law. It ought not to
prevail over manifest rights, whether those of indigenous peoples to their own
territories, or those of the community of mankind to res communis or res nullius,
such as the high seas, the sea-bed, the polar regions or outer space.
FN53 See the dissenting opinion of Judge H. Klaestad appended to the 1960
Judgment of this Court on the Right of Passage over Indian Territory case, a
judgment still influenced by the static view of law. India, basing itself on the 1960
Declaration on the Granting of Independence to Colonial Countries and Peoples,
maintained before the Security Council that in terms of that Declaration Portugal
had lost all claim to sovereignty over Goa and, consequently, all right to protest
against the reoccupation of that territory, which constituted an act of liberation, the
Security Council preserving a significant silence.
FN54 Article 1 read with Articles 55 and 56.
FN55 See Section 11 above.
FN56 It should be noted that the Addis Ababa Charter accepted the "purposes" of
the preamble to the San Francisco Charter as "principles" or rules of imperative law,
leaving no further room for doubt that they definitely constitute jus cogens.
FN57 The whole problem was, however, already solved in an affirmative sense in
1950 by one of the precursors of the new concept, who wrote: "It is already the law,
at least for Members of the United Nations, that respect for human dignity and
fundamental human right is obligatory." (P. C. Jessup, A Modern Law of Nations,
1950, p. 91.)
Writing a few years later, Prof. G. I. Tunkin noted that: "The representatives of the
colonial powers, despite lip-service to this principle, have done their utmost to pare
it away to vanishing point, to water it down and to reduce its emancipating tendency
to nothing. Sometimes they even deny its existence in international law." (Op. cit.,
p. 45 [Translation by the Registry].)
FN58 Such had been the opinion expressed in the report concerning State
responsibility submitted to the International Law Commission (Yearbook of the
International Law Commission 1957, Vol. II, pp. 113-114, paras. 2 to 7).
Furthermore, a joint proposal by Burma, Cameroon, Ghana, India, the Lebanon,
Madagascar, Syria, the United Arab Republic and Yugoslavia provided that "Any
treaty which is in conflict with the Charter of the United Nations shall be invalid,
and no State shall invoke or benefit from such treaties" (Doc. UN A/AC. 125/L.35,
para. 2). Article 64 of the 1969 Convention on the Law of Treaties endorsed the
principle of this proposal by providing: "If a new peremptory norm of general
international law emerges, any existing treaty which is in conflict with that norm
becomes void and terminates."
FN59 Le Monde, 3 August 1969.
-----------------------------------------------------------------------------------------------------
----------------

20. To conclude this necessary digression, it should be recalled that the progress
achieved in the effective application of the principles of the Charter is to a large
extent due to the contribution of the representatives at the United Nations of the
countries of the Third World, which have espoused a reasonable interpretation of
Article 2, paragraph 7, of the Charter, concerning the reserved domain FN60.

-----------------------------------------------------------------------------------------------------
----------------
FN60 Cf. M. S. Rajan, United Nations and Domestic Jurisdiction, pp. 521-524.
-----------------------------------------------------------------------------------------------------
----------------

It is well known that the wording of that paragraph, despite the opposition of
Belgium, departed from the strictness of Article 15, paragraph 8, of the Covenant of
the League of Nations, and that it was given its present form on the insistence of the
United States, no doubt in order to take account of that evolution in the law that was
already perceptible to those attending the San Francisco conference. A consensus
was then reached that it was for the organs of the United Nations themselves to
interpret the provisions of the Charter they applied. And the application of this new
text was subsequently to be adapted to the growing internationalization of the life of
the peoples of the world, involving a corresponding constant loss of ground by the
concept of absolute sovereignty FN61.

-----------------------------------------------------------------------------------------------------
----------------
FN61 See, among, other separate opinions of Judge A. Alvarez, all of which were
orientated towards what he regarded as the inevitable future, his dissenting opinion
appended to the Advisory Opinion on the Competence of the General Assembly
delivered in 1950 by the International Court of Justice, in which he said:
"The psychology of peoples has undergone a great change; a new universal
international conscience is emerging, which calls for reforms in the life of peoples.
This circumstance, in conjunction with the crisis which classic international law has
been traversing for some time past, has opened the way to a new international law."
(I.CJ. Reports 1950, p. 12.)
-----------------------------------------------------------------------------------------------------
----------------
It is remarkable to note that the Permanent Court of International Justice was so
well aware of this that it stated in its Advisory Opinion in 1923 with regard to The
Nationality Decrees Issued in Tunis and Morocco:

"The question whether a certain matter is or is not solely within the jurisdiction of a
State is an essentially relative question; it depends upon the development of
international relations." (P.C.I.J., Series B, No. 4, p. 24.)

But the same Court nevertheless continued faithful to a certain positivism which
culminated in the Judgment in 1927 in the Lotus case and constantly influenced its
subsequent Judgments. It stated in its Judgment in 1932 in the case of The Free
Zones of Upper Savoy and the District of Gex that "in case of doubt a limitation of
sovereignty must be construed restrictively FN62".[p 314]

-----------------------------------------------------------------------------------------------------
----------------
FN62 P.C.I.J. Series A/B, No. 46, p. 167.
In his dissenting opinion in the Anglo-Iranian Oil Co. case, Judge Read, on the other
hand, adopted an approach that took into account the already perceptible evolution
in the concept of sovereignty. He wrote:

"The making of a declaration is an-exercise of State sovereignty, and not, in any

sense, a limitation. It should therefore be construed in such a manner as to give
effect to the intention of the State, as indicated by the words used; and not by a
restrictive interpretation, designed to frustrate the invention of the State in
exercising this sovereign power." (I.C.J. Reports 1952, p. 143.)
-----------------------------------------------------------------------------------------------------
----------------

It is in this field in particular that the organs of the United Nations, strengthened by
the presence of the new countries yearning for a new law, outstripping judicial
bodies apparently still attached to tradition, have blazed a trail towards renovation.
The General Assembly and the Security Council, when dealing with questions of
concern to the international community or touching upon the great principles of the
Charter, have, after long debates, session after session, finally overridden the
objection based on Article 2, paragraph 7, thanks to a reasonable and extensive
interpretationexpress or tacitof its words FN63. The road was long and arduous
between 1946, when Egypt was unsuccessful in obtaining a decision, against the
occupying Power, of the Security Council, and the 1960 Declaration on the
Granting of Independence to Colonial Countries and Peoplesa declaration upon
which the peoples struggling for their liberation have, not without success, since
relied, and which the Security Council decided to confirm by its resolution of 20
November 1965 endorsing Southern Rhodesia's right to independence and its right
to decide its own future.
-----------------------------------------------------------------------------------------------------
----------------
FN63 This was the case with respect to the demand of Tunisia and Morocco for
independence from 1951, that of Cyprus and of West Irian from 1954, of Algeria
from 1955, of Angola from 1960, of Rhodesia from 1961, and, finally, in 1963, of
all the countries occupied by Portugal. The same is the case with respect to the
human rights of persons of Indian origin in South Africa since 1946, and with
respect to apartheid since 1948.

It will be noticed, however, that those Powers which firmly opposed United Nations
intervention in the foregoing cases rejected the objection based on Article 2, para. 7,
in respect of interventions in Spain in 1946, in the case of Greece v. Albania,
Bulgaria and Yugoslavia in 1948, in Czechoslovakia in 1948 and in Hungary in
1956. In this connection, Mr. B. Rajan has stressed the fact that political
considerations and the effects of the cold war exercised an undesirable influence in
these cases (United Nations and Domestic Jurisdiction, pp. 177-178).
-----------------------------------------------------------------------------------------------------
----------------

***

It has been necessary to mention this long series of facts in order to elucidate a new
aspect of the evolution of international law in general and of its two great sources in
particular. That which has been admitted in respect of treaties since the
condemnation of the theory of representativity and the increased efficacity of the
principles of the Charterthanks to the ever less strict interpretation of Article 2,
paragraph 7, must probably be admitted in respect of international custom and its
application in the present case. [p 315]

It is by taking into consideration the foregoing and the conclusions that emerge
therefrom that it will be seen to what extent the custom of diplomatic protection is
capable of receiving a sufficient number of adherences to cover new hypotheses
such as that which is now submitted for the consideration of this Court.

21. After this indispensable excursion in to the argument raised by the new aspects
of the development of custom, and turning now to international case-law, it will be
seen that it provides but few precedents which support the right of diplomatic
protection in the case of shareholders who complain of indirect injury.

International case-law is itself only an auxiliary source of law and does not take the
place of the principal sources, which are treaties and custom. But, considered as an
element of the latter, it seems that it does not in the instant case fulfil the conditions
necessary for it to be regarded as a precedent establishing a custom.

In point of fact, those precedents which relate more or less directly to the question
under consideration have so far, it is hardly necessary to reiterate, only been the
work of arbitral tribunals. Judicial tribunals have not been called upon to pronounce
upon this matter until the present case. Furthermore, arbitral tribunals, because of
the cases submitted to them, have up to the present considered only cases where
action was brought in favour of the members or shareholders of a company to which
its own national state had caused the damage. Decided cases thus do not, any more
than does treaty practice, assist the argument that diplomatic protection extends to
shareholders indirectly injured by a State other than the national State of the
company.

22. So far as concerns the practice of States, it cannot be denied that numerous
positions have been adopted which denote an intention to include within the
framework of diplomatic protection the claims of shareholders in a company of a
third nationality.

To what extent can the positions thus adopted contribute to the formation of a
custom?

In the first place, it is plain that such attitudes can only be counted as precedents
creating international custom if those who adopt them do not depart therefrom after
having relied thereon. Now, in the analysis of such precedents, more than one State
can be found against which there can be levelled the criticism that it has adopted
attitudes which are self-contradictory, and thus deprived of any legal effect. The
constancy of French practice and, since the turn of the century, of that of the United
States, does not suffice to establish a custom supposed to be universal. And this is
still more so in that a practice only contributes to the for-mation of a customary rule
if, as has already been said, both the State which avails itself thereof or seeks to
impose it and the State which submits to or undergoes it regard such practice as
expressing a legal obligation which neither may evade.

An expression of a State's will which is contested by the other party [p 316] remains
an isolated act without effect. And how often the attitudes of States have met with
resistance from opposing parties! This happened, merely by way of example, to
France in the following cases: Socit des quais, docks et entrepts de
Constantinople FN64; Socit Limanova; Socit du chemin de fer de Tirnovo;
Compagnie royale des chemins de fer portugais; Socit lettone de chemins de fer;
and, finally, various companies in Mozambique. So too, the United States, in the
following cases: Kunhardt; Alsop; Ruden; Delagoa Bay Railway Company;
Vacuum Oil Company of Hungary; Romano-Americana and Tlahualilo. The United
Kingdom in the cases already referred to of the Delagoa Bay Railway Company and
Tlahualilo, and in the Mexican Eagle Co. case. Switzerland, in the cases of the
Compaa Argentina de Electricidad and of the Compaa Italo-Argentina de
Electricidad. The Netherlands in the Baasch and Rmer case and in that of Mexican
Eagle Co. Finally, Italy in the Cane-varo and Cerutti cases.

-----------------------------------------------------------------------------------------------------
----------------
FN64 The opposition of the Sublime Porte was so firm that the French Government
threatened to seize the Customs of Mitylene, to administer them and to retain the net
revenue until complete satisfaction had been obtained (Documents diplomatiques
franais, Second Series, Vol. I, Nos. 349, 364, 455 and 497, and also the statement
by M. Delcass, Minister for Foreign Affairs, in the Chamber of Deputies on 4
November 1901).
-----------------------------------------------------------------------------------------------------
----------------

It is not without interest, moreover, to remark that opposition to such diplomatic

protection came, in almost 90 per cent. of the cases, from developing countries.

23. It remains to be seen, with regard to the development of custom, what are the
current teachings in respect of the questions which arise.

The views there expressed do not consist solely of proposals de lege ferenda. They
often constitute a statement of the rules of positive law. They are even sometimes
one of the auxiliary factors in its formation, as, following a centuries-old practice,
Article 38, paragraph 1 (d), of the Statute of the Court confirms. One cannot but
refer in this regard to the lasting influence on the development of international law
of many of the doctrines advanced in the past by Ulpian, and, in modern times, by
Vittoria and Suarez, by Bodin, Grotius, Vatel, Calvo, Anzilotti and Politis, to
mention only some of the best-known publicists.

I hasten to add that legal teaching is not represented solely by the writings of the
publicists. Such teaching is also expressed, as we know, in the works of legal
conferences and of institutions, institutes or associations of international law. Nor
must we neglect to seek such teaching and I would stress thisin the separate
opinions of judges, to which I have so frequently felt bound to refer. I must
emphasize in the first place that the authority of the precedents of the two
international courts derives, inter alia, from the very fact that their judgments
include the dissenting or separate opinions of their members. This is no paradox;
for, in order to assess the value of a judicial decision, it is necessary to [p 317] be
able to ascertain the extent to which it expresses the opinion of the Court, and what
objections judges no less qualified than those who supported it were able to bring
against it. Such would seem to be the case with the judgments of the superior courts
in the Anglo-American system, where the value of dissenting opinions is not greatly
outweighed by the recognized authority of case-law. It is probably this which led
Charles Evans Hughes, a former judge of the Permanent Court and subsequently
Chief Justice of the United States, as Judge Jessup recalled in his well-reasoned
dissenting opinion appended to this Court's Judgment of 18 July 1966, to say:

"A dissent in a court of last resort is an appeal to the brooding spirit of the law, to
the intelligence of a future day, when a later decision may possibly correct the error
into which the dissenting judge believes the court to have been betrayed." (I.C.J.
Reports 1966, p. 323.)
And do not the opinions of the judges of the two International Courts derive
increased authority from the fact that those judges were elected, according to Article
9 of the Statute of both Courts, so as to assure "in the body as a whole the
representation of the main forms of civilization and of the principal legal systems of
the world"?

This authority is nothing other than that of particularly well-qualified jurists and
takes its place in the general context of legal teaching. Thus, Mr. St. Korowicz, in a
study of the opinion of the seven dissenting judges in the Customs Regime between
Germany and Austria case, places it under the head of "the teachings of publicists",
which are regarded in Article 38, paragraph 1 (d), of the Statute of the Court as
"subsidiary means for the determination of rules of law".

And, it is hardly necessary to add, what authority as teaching must be enjoyed by

the concordant opinions of the dissenting judges when the judgment has been
delivered by an equally divided number of votes, thanks to the President's casting
votein other words, with all the respect due to it, by a "technical or statutory"
majority, as Judge Padilla Nervo emphasized in his dissenting opinion appended to
the aforementioned Judgment of 18 July 1966.

To come back to the question under discussion concerning the present position of
legal teachings regarding the formation of custom in connection with the points
raised in the present case, it goes without saying that the teachings invoked must
represent, if not a fairly general consensus, at least a predominant current of
opinion. Now, in the case of the diplomatic protection of shareholders injured by a
third State, teachings are strongly divided, as are also, as to its legal basis, those
writers who. admit such protection, as has been observed FN65.

-----------------------------------------------------------------------------------------------------
----------------
FN65 See section 10 above.
-----------------------------------------------------------------------------------------------------
----------------

24. I would add, solely for the purposes of discussion, that if it were [p 318]
possible to follow the opinion which sees in the diplomatic protection of
shareholders a departure from and a tempering of the rule of respect for the juristic
personality of a company, it would still be necessary to enquire whether that
exception to the rule could be extended by analogy to the case with which we are
concerned.

It is a well-known fact that where the company is of the nationality of the

respondent State, corporate action can only be brought against that State in its
domestic courts, international action on the claim of the company itself against the
State of which it possesses the nationality being ruled out. There can be no
assimilation, in the absence of specific provision to that effect, to the law of the
European Community. It is consequently the legal impossibility of bringing an
international action against the State of the company's nationality that is said to have
opened the way to suppletory action by the shareholders indirectly injured, and to
have made its exercise lawful.

These circumstances are not present in the case of injury caused by a State of a third
nationality. For since the exercise of diplomatic protection is a matter of unfettered
competence, the absence of action by the national State of the company is not the
consequence of a legal obstacle and may be only temporary. That State, e.g.,
Canada, enjoys in this connection a discretionary power. There is consequently no
ground for enquiring why it refrained from seising the Court concurrently with
Belgium, not whether its abstention is final. Whatever its attitude may have been or
may possibly be, this does not affect the question whether or not the national State
of the shareholders enjoys the right to take up their claim on account of harm which
the company itself is alleged to have suffered. This question is a purely legal one, on
which the possible wishes of the company's national State would not have any
effect.

One should furthermore consider, from a practical point of view, the consequences
that the subsequent exercise by the national State of the company of its manifest
right as the latter's protecting State would involve. If it decided to seise an
international tribunal after the national State of the shareholders had done so, it is
not likely that it could in its turn obtain compensation for the injury caused to the
company, the compensation that would be due to it having already been awarded to
the other State. Not only would the analogy not be logically justified, having regard
to the essential difference between the two hypotheses, but its consequences would
in addition run counter to the proper administration of justice.

25. The exception which authorizes action by the national State of the shareholders
might, however, be extended to cases where the company has ceased to exist. The
impossibility of action on its behalf by its national State is again present, though for
a different reason, as it is in the case where it has the nationality of the State to
which the damage is attributed. There would furthermore be no risk of a conflict
between the compensation that could be claimed, in respect of the same complaint,
[p 319] by the national State of the company and by that of the shareholders. The
shareholder's claim would then be justified by a right of his own since, after
payment of the shareholders and other creditors, the residue of the company's assets
goes directly to the shareholders.

These circumstances would not, however, apply in the present case. A bankruptcy
adjudication, like an order for judicial administration or for a receivership, has not
the immediate effect of putting an end to the life of the company, at any rate in most
legal systems, including those of the two Parties to the case, Spain and Belgium. A
bankruptcy judgment, whilst involving immediate effects with respect to the
dispossession of the bankrupt and the administration of the company, the collation
of debts owing to and owed by the company, and the fact that such debts become
immediately payable, may nevertheless finally result in a composition, under the
terms of which the company, which has not ceased to exist, resumes the course of
its normal life.

Since Barcelona Traction's bankruptcy had no legal effects other than those just
mentioned, it consequently does not authorize an action ut singuli by that company's
shareholders.

26. The Applicant nevertheless maintains that Barcelona Traction ceased to exist in
consequence of certain measures taken by the Spanish judicial authorities, which it
describes as denials of justice, usurpation of jurisdiction, abuse of right or misuse of
power. The company is said to be "practically defunct", to use the words employed
in the arbitral award in the Delagoa Bay Railway Company case and subsequently
adopted in the El Triunfo case. It is thus no longer a question of the legal effects of
the bankruptcy adjudication, but of an event pertaining to the merits, which can be
considered at this stage of the proceedings in consequence of the joinder to the
merits of the preliminary objection relating to jus standi.

It is first of all necessary to exclude these two precedents from the discussion; for in
both the Delagoa Bay Railway Company case and in the El Triunfo case it was held
that the company had ceased to exist in consequence of the cancellation of the
concession which constituted its object. This is not so in the case of Barcelona
Traction, the activities of which have not ceased.

But if that company has not ceased to exist for lack of an object, can it reasonably
be alleged that the measures referred to have in fact resulted in its disappearance? It
does not seem so.

Those measures are said to be the following, in particular:

The declaration of the bankruptcy of a foreign company having no real domicile in

Spain, and the dismissal of proceedings to oppose the judgment declaring the
bankruptcy notwithstanding the fact that the time-limit therefore had not yet
expired; the extension of the effects of the bankruptcy of the holding company to
the subsidiary companies, in disregard of their separate legal personalities, on the
pretext of their unipersonal nature; the attachment of the shares of the subsidiary [p
320] company Ebro and the extension of that attachment to shares that were in a
foreign country, in violation of the sovereignty of that country and without regard
for the rights of the company holding the above-mentioned shares as security; the
powers conferred by the Reus judge on the bankruptcy authorities for the purpose of
dismissing the directors of the subsidiary companies and appointing new ones: all
these measures, according to the Applicant, constituting a prelude to the realization
of the objective in view, which is alleged to have been the transfer at a derisory
price to a Spanish group, Fuerzas Elctricas de Catalua, of the shares belonging to
Barcelona Traction's shareholders. This transfer is alleged to have been effected by
the trustees in bankruptcy, who, constituting themselves a general meeting of Ebro,
are alleged to have decided:

(a) that the share register kept at Toronto should thenceforward be kept and retained
at Ebro's new corporate domicile, transferred from Toronto to Barcelona;

(b) that the said company would recognize as shareholders only those mentioned in
the said share register created in June 1951:

(c) the creation of new shares in substitution for the former ones and their entry in
the register kept at Barcelona;

(d) the transfer by judicial decision of the new shares to the Spanish group
represented by Fuerzas Elctricas de Catalua.

If such were the measures of which the applicant State complains, effected for the
purposes of the said transfer, can it be alleged that they involved the extinction of
the Barcelona Traction company?

The forced transfer of shares, like a voluntary or amicable transfer, is by no means

something calculated to affect the company's existence. The shares of a limited
company, such as Barcelona Traction, whether such shares be bearer or registered
shares, are specifically designed by law to be transferable during the company's life.
A transfer of the litres which is void or illegal may, as appropriate, give rise to
judicial proceedings to establish that the transfer was void or to have it set aside, but
it cannot have any effect on the existence of the company the shares of which have
passed into other hands.

Thus, Barcelona Traction was so far from being "practically defunct" that it was
able, without losing its juristic personality in consequence of the bankruptcy
adjudication, or of the other measures taken against it, to seek and to obtain the
diplomatic protection of Canada, of the United States, of the United Kingdom and
of Belgium, as well as the judicial protection of the last-named country on the basis
of its first Application, that of 1958.

27. In short, since the right claimed by the national State of the shareholder, that of
taking up his claim against a third country, does not constitute an exception to a
legal rule, the extension of which to a new case is asked for, but such right can
derive from the possible existence of [p 321]
an international custom, it is to be concluded that the elements which constitute the
latter, to be drawn in various degrees from treaty or State practice, from
international decisions or from legal literature, are not of such a nature as to lend
support to this new case.

28. While it appears that diplomatic protection depends not on a general principle of
law recognized by nations but on international customary law, it would nevertheless
be permissible, in considering the possibility of extending this protection to the
shareholders of a company, to have recourse to the analogy which the problem
might present in the framework of the relationships for which municipal law and
international law make provision. In doing so it would not be a matter of abstracting
from municipal legal systems a general principle of law, but of seeking, in
accordance with the rules of legal logic, to ascertain the consequences of those
relationships on the formation of custom in its various elements.

29. It should be noted at this stage of the discussion that the applicability of
categories of municipal law to international law raises the important question of
determining whether a State is only obliged to grant aliens those rights which it
guarantees to its own nationals or whether it must ensure for them a minimum
treatment in accordance with an "international standard of justice", which may, in
certain cases or in certain countries, be more advantageous than that enjoyed by
nationals themselves FN66.

-----------------------------------------------------------------------------------------------------
----------------
FN66 As we know, there are those who also envisage the possibility of granting
mostfavoured-nation treatment, or merely fair compensation, or equitable or
reasonable treatment, or, finally, of adopting a compromise solution based on the
enjoyment of individual rights and guarantees identical with those enjoyed by
nationals and which must not "be less than the 'fundamental human rights'
recognized and defined in contemporary instruments". (Yearbook of the
International Law Commission, 1957, II, p. 113.)
-----------------------------------------------------------------------------------------------------
----------------

It is well known that in Latin American public international law, equality of

treatment is linked with the Latin American jurists' conception of the responsibility
of States and diplomatic protection. Those jurists, who regard it as one of the pillars
of their concept of international law, argued in favour of it at the 1930 Hague
Conference, basing it upon equality between States and the need for their countries
to protect themselves against the interference of powers which were strong
politically, militarily and economically. Seventeen jurists of various nationalities
supported this doctrine. But the upholders of traditional law, who formed the
majority at the Conference, carried the day, and the failure of the Latin American
States only reinforces their attachment to their own doctrine. Thus, at the 9th session
of the International Law Commission, Mr. Padilla Nervo came forward as its
authorized spokesman, and concluded that "[the] international rules [on the point]
were based almost entirely on the unequal relations between great Powers and small
States"FN66a. [p 322]

-----------------------------------------------------------------------------------------------------
----------------
FN66a Yearbook of the International Law Commission, 1957, I, p. 155.
-----------------------------------------------------------------------------------------------------
----------------

This was also the conception of the African and Asian countries. The Chinese
delegate to the 1930 Hague Conference was one of the leading spokesmen therefor,
following the jurists of Latin America. And at the same session of the International
Law Commission mentioned above, Mr. Matine-Daftary, of Iran, supported "the . ..
Latin American theory of the equality of nationals and aliens"FN66b. Finally, the
representatives of the States of Africa and Asia who were called upon to participate
in the legal conferences supported the same conception.

-----------------------------------------------------------------------------------------------------
----------------
FN66b Ibid., p. 160.
-----------------------------------------------------------------------------------------------------
----------------

***

The question is no doubt a fairly complex one. In principle, if a State is bound only
to establish equality between its nationals and aliens its municipal law must be
considered and its benefits extended to aliens. But it should be noticed right away
that the rights to be granted them on the basis of equality are substantive rights. The
solution would be quite different with respect to jurisdictional rights, according to
which every State is bound to secure domestic judicial remedies to foreigners by
adequate laws and an adequate judicial structure in conformity with international
standards, failing which international proceedings would be possible.

Now this is indeed the solution that prevails in respect of substantive rights,
particularly from the view-point of new or economically handicapped States. It rests
upon the principle of the equality of nations proclaimed in the Charter of the United
Nations and upon the resolution adopted by the General Assembly on 21 December
1952 concerning the right of peoples freely to exploit their natural wealth and
resourcesFN67.

-----------------------------------------------------------------------------------------------------
----------------
FN67 See S. Prakash Sinha, op. cit., pp. 94-96, and the speeches in the International
Law Commission by the representatives of India, Iran, the United Arab Republic,
Syria and Thailand referred to by him.
See too Article 12 of the draft principles concerning the treatment of aliens drawn
up by the Asian-African Legal Consultative Committee, quoted by Doctor Mustafa
Kamil Yasseen, in Annuaire franais de droit international, 1964, p. 665.
-----------------------------------------------------------------------------------------------------
----------------
30. Mention of this solution leads one to wonder whether it is not established, in the
legal systems of the generality of nations, that a shareholderin addition to his own
right of action for reparation for a direct injury suffered ut singuli which damages
his legally protected interests possesses a right of action which he can exercise in
all circumstances, concurrently with the organs of the company, in consequence of
an injury suffered by the latter that affects him only indirectly or in mediate fashion.

Ought not international law, following the same reasoning as that just invoked in the
preceding section, to align itself on this point with the generality of systems of
municipal law, from which, in addition to the legal institutions of the commercial-
law system, there derive the concept of juristic personality and the limits assigned
thereto? It is true that those [p 323] systems sometimes differ from one country to
another. What would however be both necessary and sufficient would be to prove
the existence of a common fund, as between these systems, of such essential rights,
not excluding those on which Belgium in particular can rely, namely:

(a) the right to address claims and applications to the authorities on behalf of the
company;

(b) the right to seek judicial or administrative remedies in substitution for and in
place of the company, or to defend proceedings brought against it;

(c) the right to claim compensation on the grounds of a denial of justice or an abuse
of right suffered by the company.

Do these different rights appear among those constituting the common fund of the
generality of municipal legal systems? Or, on the contrary, do they go beyond the
rights generally assigned to the shareholder by those legal systemsand, in
particular, the legal systems of Canada, of Belgium and of Spainthese being:

(a) the right to vote at general meetings, either in respect of decisions affecting the
company, or for the appointment of directors and the control of their conduct of the
company's affairs and, in appropriate cases, in order to bring action against those
same directors in consequence of alleged wrongful conduct by them in the exercise
of their powers;

(b) the right to dispose of the shares owned by them;

(c) the right to dividends and to a proportionate share in the assets in the event of the
company's liquidation;

(d) that of benefiting from any offers of shares, and of receiving duplicates in the
event of loss of their share certificates FN68.

-----------------------------------------------------------------------------------------------------
----------------
FN68 The decision of the Arbitral Commission in 1965 in the Brincard case referred
to most, if not all, of these rights. The new Lebanese Commercial Code, Article 105,
gives a more complete list, including in particular the right to transfer the share.
-----------------------------------------------------------------------------------------------------
----------------

I am inclined to answer in the negative. Subject to one reservation, however, which

is that the company should not have been dissolved. This reservation has already
been dealt with FN69, and it does not apply in the case of Barcelona Traction.

-----------------------------------------------------------------------------------------------------
----------------
FN69 Section 25 above.
-----------------------------------------------------------------------------------------------------
----------------

A further conclusion emerges from this discussion, which can be expressed in

interrogative form as follows: since the shareholder does not have, according to
local legislation, any possibility of taking action before the courts in order to put
forward rights which are peculiar to the company, the objection of non-exhaustion
of local remedies cannot be set up against him. If he were nevertheless permitted to
exercise such rights before an international tribunal, would he not have been granted
greater right than the company itself? [p 324]

31. The Applicant nevertheless maintains that the specific legal nature of rights and
interests of the private parties who have suffered injury is of no importance from the
point of view of the right of protection by their national State.

There is no doubt that in international proceedings the applicant State is "asserting

its own right". It is not intervening in favorem tertii. But is it any less true that that
right is "to ensure, in the person of its subjects, respect for the rules of international
law"? Both these phrases are to be found in the oft-cited judgment of the Permanent
Court of International Justice in 1924 in the Mavrommatis case FN70. Is not this
tantamount to saying that the right of the applicant State is measured according to
the individual right violated and, consequently, subject to the same conditions for its
exercise?

-----------------------------------------------------------------------------------------------------
----------------
FN70 P.C.I.J., Series A, No. 2, p. 12.
-----------------------------------------------------------------------------------------------------
----------------

It is hardly necessary to add that the responsibility of a State is of course not

necessarily restricted to the hypothesis of an injury caused to its nationals. But
where an injury lies at the origin of such responsibility, the individual injury cannot
be without its effect on the exercise of that responsibility.

32. Is it possible, in order to grant the national State of the shareholders the right to
institute judicial proceedings, to have recourse, as the Applicant also argues, if not
to a formal right, at least to the notion of interest?

Belgium's charges against Spain, as set forth in the course of the oral argument on
the merits, are some of them classified by the Applicant as denials of justice, the
others as abuses of right. Abuse of right, like denial of justice, is an international
tort, contrary to the opinion which the Spanish Government seems to espouse. This
is enshrined in a general principle of law which emerges from the legal systems of
all nations FN71. The Applicant further sees in certain of these manifestations a
misuse of power (dtournement de pouvoir), of which international law should take
account, on the ground that the rights the abuse of which is condemned by
international case-law are, as in municipal administrative law, powers or
competences. This doctrine cannot but be endorsed. But does it follow that in the
international field the institution of abuse of right is aimed, as is misuse of power in
municipal law, at protecting a right or an objective interest distinct from the right or
subjective interest of the State considered individually FN72? As complete as
possible a study of the notion of an interest is necessary for the solution of this
question, and in order to determine, in so doing, the respective fields in international
law of the two concepts of objective interest and subjective interest. [ p 325]

-----------------------------------------------------------------------------------------------------
----------------
FN71 See the writer's separate opinion previously referred to, para. 35, bottom of p.
136.
FN72 Cf., the reference by Professor Rolin in his oral argument on 16 April 1969 to
the course delivered by Professor Guggenheim in 1949 at the Academy of
International Law.
-----------------------------------------------------------------------------------------------------
----------------

33. In private law, the old adage is relied on: "no interest, no action", though there is
attributed to it a meaning somewhat different from that which the institution of
actiones legis gave to it in Roman quiritary law. More correctly, it is asserted that
"the interest is the measure of the action". But whatever formula be invoked, this
does not of course mean to say that the fate of the action is so intimately bound up
with the interest of the plaintiff that it can be deduced therefrom that any interest is
capable of giving rise to an action. On the contrary, at the international level as in
municipal law, is it not the case that, in order for an action to lie, the interest must,
as Jhering puts it, be an interest protected by the law, or, more correctly, as it has
been put in the most recent decisions under municipal law, a legally protected
lawful interest?
Furthermore, if in private law the interest must, in principle, be direct and personal,
must it also be so in international law in order to authorize a judicial action?

This would amount to saying that diplomatic protection is subject to two conditions:
that the claimant's interest be a legally protected lawful interest and that, at the same
time, it be direct and personal.

34. In order to answer these two questions and clear the way for a solution of the
case of shareholders, it seems that it is necessary to recall the various actions to
which a right or interest may give rise, namely:

(a) an individual action exercised on the basis of a subjective interest or right;

(b) a corporate action, on behalf of a company endowed with juristic personality,

similarly exercised on the basis of a subjective interest or rightthat of the
company itself;

(c) an action brought in defence of a collective or general interest, the objective

being to safeguard legality or the respect due to principles of an international or
humane nature, translated into imperative legal norms (jus cogens).

This distinction has seemed to me essential for the purposes of this discussion, in
particular in order to avoid the confusion between individual interest and general
interest, to which the Respondent has pointed, in the award in the El Triunfo case
and in the judgment relating to the Northern Cameroons.

***

It is generally recognized that the existence of a legally protected right or interest is

a condition for the exercise of any of the above actions. The question is not open to
doubt in private law, whether with respect to a natural person or to a juristic person.
It will consequently be agreed that it would be paradoxical for international law, one
of the functions of [p 326] which, when appropriate, is to make up, in the relations
between States, for the weaknesses of their municipal laws, to be able to give a State
which takes up the claim of its nationals access to international tribunals on the
ground of an interest which is not legally protected under the lex fori. And by an
undoubted analogy, a State which acts proprio motu for the defence of a personal
interest or of a collective interest, must nevertheless prove the existence of a lawful
interest which is legally protected.

There is consequently an identity of views to be noticed on this point that of a

legally protected lawful interestbetween the national and the international legal
order, dealing respectively with the subjective and the objective aspects of the
notion of interest.

The question that remains to be discussed is thus that of proof that the interest on
which Belgium relies is a legally protected lawful interest. No such proof can be
produced in the present case since it is necessary to go back to the lex fori, which
does not afford legal protection to such an interest.

35. Does the identity of views noticed above also exist so far as concerns the
necessity of a personal and direct interest?

Were it a question of the third action referred to abovethat based on a general

interest, or an international or humane interest of an objective naturethe
fulfilment of this condition would not be demanded, as is clear from the aforesaid
Judgment of 21 December 1962 and the opinions of the dissenting judges in the
Judgment of 18 July 1966. That 1962 Judgment constituted a definitive judgment,
as was amply demonstrated by the dissenting judges, and it might also be regarded
as a judgment on a point of principle, which lays down the concept of the general or
collective interest which justifies the action that a member State of an international
organization, such as in former times the League of Nations and today the United
Nations, may bring in defence of the purposes of that Organization which concern
its members, as a whole, whose interests are often one with those of all mankind
FN73. The principle which that Judgment enshrines, which underlies many
conventions, from Article 22 of the Treaty of Versailles and the instruments of
mandate, to the treaties concerning minorities and the Convention on the Prevention
and Punishment of Genocide, and is expressly confirmed by the practice of the
United Nations FN74, is also to be found in the Advisory Opinion delivered by this
Court in 1951 with regard to reservations to that Convention, when it stated: "the
contracting States do not have any interests of their own; they merely have, one and
all, a common interest FN75." Thus Judge Forster was able to protest vigorously
against the idea that "legal interest [p 327] can be straight-jacketed into the narrow
classical concept of the individual legal interest of the applicant State FN76".

-----------------------------------------------------------------------------------------------------
----------------
FN73 In his dissenting opinion referred to above, Judge Forster rightly describes as
an abuse of power South Africa's actions contrary to the purpose of the Mandate for
South West Africa or Namibia. (I.C.J. Reports 1966, p. 481.)
FN74 See Section 20 above.
FN75 I.C.J. Reports 1951, p. 23.
FN76 Dissenting opinion annexed to the Judgment of 18 July 1966, cited above,
I.C.J. Reports 1966, p. 478.
-----------------------------------------------------------------------------------------------------
----------------

36. If, on the other hand, the applicant State is not acting to protect a collective
interest, but is complaining of an injury it has suffered as an individual subject of
law, it goes without saying that it will only have access to an international tribunal
to claim a subjective right on the basis of a personal and direct interest.
To this hypothesis must be assimilated that where a State has taken up the claim of a
national, as this Court, following the Permanent Court of International Justice,
stated in its Judgment of 6 April 1955 in the Nottebohm case, declaring:

"... by taking up the case of one of its subjects and by resorting to diplomatic action
or international judicial proceedings on his behalf, a State is in reality asserting its
own rightsits right to ensure, in the person of its subjects, respect for the rules of
international law FN77".

-----------------------------------------------------------------------------------------------------
----------------
FN77 I.C.J. Reports 1955, p. 24.
-----------------------------------------------------------------------------------------------------
----------------

In other words, it is on the basis of a subjective right or interest that the State acts
when taking up the claim of one of its nationals, even if that national be a juristic
person such as a commercial company. For the corporate action of the latter is not in
any way to be assimilated to the action based on a collective interest. Whilst the
company represents a bundle of individual interests the State is nevertheless acting
as an individual subject of the law in taking up its case. Where, on the other hand, it
purposes to take up the defence of the general interests of the international
community or of humanity as a collectivity, it intervenes in the capacity of a
member of that community or of that collectivity.

37. It has been said that Belgium's action must be founded on a lawful interest
which is legally protected FN78, just like an action on behalf of the collectivity.
But, unlike the latter, it must be based on a personal and direct interest.

-----------------------------------------------------------------------------------------------------
----------------
FN78 See Section 34 above.
-----------------------------------------------------------------------------------------------------
----------------

Neither of these conditions is met by Belgium's request for authorization to extend

judicial protection to the shareholders in Barcelona Traction.

According to the lex fori to which it is necessary to have reference in this matter
i.e., the law of the commercial legal ordera shareholder in a joint-stock company
has, as we know, no personal and direct right of action instead of and in place of the
corporate action ut universi if the alleged injury has been inflicted on the company
as such. What interest might be substituted for this purported right, if not the
shareholder's interest in having the undertaking run in such fashion as to ensure its
prosperity, and in the safeguarding of the economic value embodied in [p 328] the
shares. Does it follow that he would have the right to act on behalf of the company
where the latter has itself suffered damage or loss through unfortunate management?
Such is not the case in municipal law FN79, and it ought not to be otherwise in
international law. The interest of the shareholder and, consequently, that of the State
which takes up his claim, no matter how personal and direct it may be, is
nevertheless, as has just been seen, not legally protected. The Permanent Court of
International Justice has endorsed this view FN80.

-----------------------------------------------------------------------------------------------------
----------------
FN79 See, to this effect, the writings of French publicists and French case-law,
where the bringing of judicial proceedings on account of the depreciation of shares
as a result of a diminution in the company's assets is only allowed in the case of
faute by the directors, as was emphasized in Section 27 above.
Cf. G. Ripert, Droit commercial, 5th edition, by R. Roblot, Vol. I, paras. 1327 and
1328; and Solus and Perrot, op. cit., para. 227, and the decisions to which they refer.
And, in respect of Anglo-American law, E. Beckett, "Diplomatic Claims in Respect
of Injuries to Companies", published in Transactions of the Grotius Society, Vol.
XVII, pp. 192 and 193, who points to the exceptional case of misconduct by
directors as a rule to be found in the laws of most States.
Finally, so far as treaty-law is concerned, mention may be made of the convention
between the Malagasy Republic and the Ugine company, under which the parties
"will not regard as contrary to their mutual obligations any reduction in activity
resulting from chance technical breakdowns of a serious nature or from the
development of the general economic situation". [Translation by the Registry.]
FN80 Judgment in the Oscar Chinn case, P.C.I.J., Series A/B, No. 63, p. 88: "No
enterpriseleast of all a commercial or transport enterprise, the success of which is
dependent on the fluctuating level of prices and ratescan escape from the chances
and hazards resulting from general economic conditions. Some industries may be
able to make large profits during a period of general prosperity, or else by taking
advantage of a treaty of commerce or of an alteration in customs duties; but they are
also exposed to the danger of ruin of extinction if circumstances change."
-----------------------------------------------------------------------------------------------------
----------------

38. Turning to the argument which postulates the cumulative use of the corporate
action and the individual action of the shareholders, which is advanced by Belgium,
I can only remark the lack of relevance of the examples put forward to support it,
namely that drawn from the Advisory Opinion of this Court concerning Reparation
for Injuries Suffered in the Service of the United Nations, and that of a motor car or
aeroplane accident. In the instant case, both these examples encounter the objection
raised by the existence, in terms of municipal legislation, of the company's legal
personality, which covers the interests of the shareholders and ensures their
representation.

So far as the Advisory Opinion is concerned, it is true that a claim by the

International Organization for reparation for injuries constitutes no obstacle to a
claim by the State of which the United Nations official is a national. It has been
rightly said that a single action is capable of involving international responsibility
on the part of its author towards various legal personae if it simultaneously injures
their respective rights. But the doctrine enunciated in the Advisory Opinion is
essentially different from the argument advanced by the Applicant concerning the [p
329] claim of a shareholder concurrently with that which a commercial company
might submit in respect of an injury of which it itself has suffered the consequences.
Any analogy is ruled out by an essential difference between the two cases, resulting
from the existence of the juristic person-ality of the company, which personifies the
interests of the shareholders; so that the injury which it suffers is the very same one
as that of which the shareholders might complain.

Can it in point of fact be deduced from the consideration that two legal personae,
the United Nations and the national State of an official of that organization, have
simultaneously been affected by the injury which the latter suffered, that, according
to the meaning of the Advisory Opinion, there was only one single head of damage?
It would appear not. The same act caused two distinct heads of damage, reparation
for which can be cumulative, as in the case of the accident already mentioned. It is
however a single injury which affects the company, which can only give rise to a
single reparation, which can be claimed either by the company, or by a partner or
shareholder under the conditions already dealt with.

Is there any need to add that Article 62 of the Court's Statute, which provides for
intervention, is irrelevant. What is in question in the present case is not a rule of
procedure, but the right of action on the basis of one and the same internationally
unlawful act.

39. At the end of this discussion, everything goes to show that the diplomatic
protection of shareholders injured by a third State does not constitute an
international custom that is unequivocally and unambiguously demonstrated by the
web of precedents which form the material element, and definitively established by
the conjunction of that element with the psychological element of opinio juris.

This conclusion is reinforced by the opinion, already mentioned, held by a multitude

of Statesnew States and other, very numerous, developing Stateswith regard to
the application of diplomatic protection, the rules of which are only accepted by
them to the extent that they take account of their state of underdevelopment,
economic subordination and social and cultural stagnation, in which the colonial
powers left them and in which they are in danger of remaining for a long time, in
the face of Powers strong in industry, know-how and culture.

This opinion was expressed at one and the same time by the representatives of the
States of the Third World in the General Assembly of the United Nations (Sixth
Committee), in the International Law Commission, in the Asian-African Legal
Consultative Committee, in the Institute of International Law, and in the works of
legal authors FN81. [p 330]
-----------------------------------------------------------------------------------------------------
----------------
FN81 S. Prakash Sinha, op. cit., pp. 92-94; and J. N. Hazard in American Journal of
International Law, Vol. 55, 1961, at p. 118, where he writes: ". . . Some of the states
where investment has long existed have come to relate these investments in their
minds with conditions now politically abhorred."
-----------------------------------------------------------------------------------------------------
----------------

Thus the Asian-African Legal Consultative Committee, when it met in 1966 in

Bangkok, stressed the importance of this problem by recalling the remarks of a
number of delegates to the Sixth Committee of the General Assembly in 1964, to
the effect that
"The rules relating to state responsibility and to the protection of foreign
investments, profoundly affected the situation of the new or economically weak
States and had been established, in part, contrary to their interests FN82."

-----------------------------------------------------------------------------------------------------
----------------
FN82 Brief of Documents, Vol. IV, p. 269.
-----------------------------------------------------------------------------------------------------
----------------

As for the Institut de droit international, at its Nice session in 1967 it had to study
the problem of investment in developing countries. The jurists of the Afro-Asian
group who took part in the proceedings of that session expressed the opinion of their
group by replying in the negative to the question whether "shareholders are entitled
to ask for diplomatic protection of their State in cases in which the company in
which they have invested cannot or will not ask for it itself, as against the
developing country FN83".

-----------------------------------------------------------------------------------------------------
----------------
FN83 Annuaire de l'Institut de droit international, 1967, I, pp. 464, 471, 519 and
526, with the opinions of India (Mr. Nagendra Singh), Iraq (Mr. Kami! Yasseen)
and Turkey (Mr. Nihat Erim).

The following observation of Professor Rolin at the same session of the Institut
should be noted :

"Thus what the Institut should aim at is not the protection of capital as such, but it is
bound to encourage investments for the benefit of developing countries, by giving
guarantees on both sides, both to those countries themselves in order to avoid a form
of economic neo-colonialism, which would bring about their subjection to the rich
countries, and in order to put investors out of reach of certain risks" (ibid., p. 414
[Translation by the Registry]).
-----------------------------------------------------------------------------------------------------
----------------

40. It seems definitively established that the precedents that can be prayed in aid to
support the attempt to extend diplomatic protection to shareholders indirectly
injured by a third State are manifestly insufficient. It is of course clear from the
explicit terms of Article 38, paragraph 1 (b), of the Statute of the Court, that the
practice from which it is possible to deduce a general custom is that of the
generality of States and not of all of them; but we are far from even this, having
regard to the abstentions or opposition referred to above when analysing diplomatic
or treaty practice or discussing teachings FN84. It certainly does not appear that the
generality of States have already accepted such a custom. A fortiori is this so if
account be taken, as it should, of the massive opposition of the new or developing
States, which constitute the majority of the members of the international
community. A general custom, I am persuaded, can henceforward no longer be
received into international law without taking strict account of the opinion or
attitude of the States of the Third World. FN84 [p 331]

-----------------------------------------------------------------------------------------------------
----------------
FN84 Supra, Sections 12 to 20, 22 and 23.
-----------------------------------------------------------------------------------------------------
----------------

41. Two other questions have been discussed:

A. That whether the national State of the shareholders may take action to defend its
national wealth, of which shares in companies form an element.

B. Whether it can do so in the sphere of the legal protection of the interests which
the State has in international trade.

In each of these cases, the State would enjoy a twofold right of action: that resulting
from the fiction, conceived by legal authors and accepted by case-law, to the effect
that the State which takes up the case of its nationals exercises its own right; and
that which would be attributed to it inasmuch as it is protecting its national wealth
or the interests of international trade.

Does this twofold action postulate two heads of damage, for which the State would
present cumulative claims, or a single head of damage, for which the State would be
claiming reparation on a twofold ground?

Since shares in a company belonging to nationals are among the elements making
up the national wealth, the action of the State to protect the rights of its nationals,
and that aimed at the protection of the national wealth, would be motivated by a
single head of damage, affecting the same subject-matter envisaged from two
different standpoints, i.e., the part or the whole.

On the basis of this observation, the State could not claim two different heads of
reparation, one for the injury caused to its nationals, the other in favour of the
nationthe body made up of those same nationals whose economy had been
affected. It is a case for saying, as before FN85, that cumulative actions which
would grant, for one and the same injury, first one and then another head of
reparation, would be inconceivable.

-----------------------------------------------------------------------------------------------------
----------------
FN85 Supra, Section 38.
-----------------------------------------------------------------------------------------------------
----------------

Furthermore, this alleged right of action would give rise to the same objections as
mentioned above, concerning the alleged right of action in the name of shareholders
injured by a third State, namely the nonexistence of a received rule of international
law authorizing it.

The opposition of the new or developing States, whose determinant influence on the
development of international law and on the formation of its rules is already well-
known, would in addition be much stronger as to the admission of a legal rule which
would authorize the extension of diplomatic protection, beyond the interests of
shareholders who have suffered injury by the act of a third State, to the interest of
the general economy of the national State of the latter, or to the interest it has in
international trade.

It is well-known that J. L. Brierly, without venturing so far as G. Scelle, or as the

Latin American jurists, was in favour of recognition, in certain cases, of the
international personality of the individual. He said that

"The orthodox doctrine, by insisting that only States can have [p 332] international
rights or duties, leads one to think that injury caused to an individual citizen in a
foreign State is an injury caused to his own country .. . and that mysterious, though
powerful, abstraction, 'national honour' is easily involved therein FN86."

-----------------------------------------------------------------------------------------------------
----------------
FN86 J. L. Brierly, Recueil des cours de l'Acadmie de droit international, 1928,
Vol. III, p. 531 [Translation by the Registry].
-----------------------------------------------------------------------------------------------------
----------------

And Mr. P. C. Jessup adopted Mr. Brierly's conclusion, observing that the
recognition of the rights of the individual would also tend to check "the grave
menace of the promotion by States of private economic interests with which they
identify national interests FN87". And indeed it seems that this identification and
the concept of national honour were in the background, if they were not the
governing motive, of the armed interventions which have taken place in the course
of history in Latin America, Africa and Asia.

-----------------------------------------------------------------------------------------------------
----------------
FN87 P. C. Jessup, A Modem Law of Nations, p. 99.
-----------------------------------------------------------------------------------------------------
----------------

Would not the menace be still more grave if the State, while supporting the
individual interests of its nationals, were to put forward their claim cumulatively
with that attributed to the nation for the defence of its economic interests, or its
general interests in international trade?

42. Failing a rule of positive law validating Belgium's jus standi, the latter State
turns to equity to seek therein a justification for its claim.

The applicant Party is mistaken in thinking that in the awards made in application of
the General Convention of 1923 between the United States and Mexico, there may
be discerned a reference to equity comparable to that mentioned in the Judgment of
this Court in 1969 concerning the North Sea Continental Shelf. The Convention just
referred to called upon the arbitral tribunals which it set up to base themselves upon
justice and equity. This expression, justice and equity, which has appeared in
numerous general and special arbitration agreements, has always been considered to
imply an authorization to decide ex aequo et bono; whereas obviously the reference
to equity contained in the Judgment of the Court mentioned above should only be
understood, and this is explained in one of the separate opinions annexed thereto
FN88, as meaning equity praeter legem in the sense which Papinian, the author of
that expression, gave to it; in other words, not an extra-judicial activity, as is the
settlement of a dispute ex aequo et bono according to the terms of Article 38, in
fine, of the Court's Statute, with a view to filling a social gap in law, but a
subsidiary source of international law taken, as a general principle of law, from
paragraph 1 (c) of that Article, appeal to which is made in order to remedy the
insufficiencies of international law and fill in its logical lacunae.

-----------------------------------------------------------------------------------------------------
----------------
FN88 See the writer's separate opinion, I.C.J. Reports 1969, para. 37, p. 139.
-----------------------------------------------------------------------------------------------------
----------------

If the study of the facts of the present case had shown a logical lacuna [p 333] in the
law, the Court would have been called upon to remedy this in the interest of justice.
The solution would probably have been to have recourse, as has just been stated, to
equity praeter legem and a general principle of law emerging from national legal
systems. But the Court is not faced with a logical lacuna in the law, since
international legal systems do not provide for a right granted, on the facts, to the
shareholders to be rendered licit. The lacuna which the argument of the applicant
Party would be calculated to fill would be no more than a social insufficiency,
which only a special agreement conferring jurisdiction ex aequo et bono, which
does not exist in the present case, could have remedied.

The system of Equity of the common-law countries has also been referred to in the
present case.

It goes without saying that there is no question of identifying Equity of English

origin with l'rquit or aequitas of Romano-Mediterranean origin. But if a parallel
may be drawn between these two institutions, as to their respective effects, it is with
equity contra legem or infra legem that it may be drawn. In fact, it is said in Snell's
Equity that equity may be defined as a portion of natural justice FN89. This
conception of Equity, which really consists of a possible derogation from general
law in a particular case, has never been applied in international law. An
international court which conferred such jurisdiction upon itself would appoint itself
a legislator. Its decision would create an atmosphere of uncertainty which would
drive States away from a tribunal as to which they could not foresee, with any
degree of probability, what law would be applied by it. Furthermore, who is better
placed to judge of this than the British Government, which wrote to the United
States Government to the effect that: "... No shareholder has any right to any item of
property owned by the company, for he has no legal or equitable interests therein .
..FN90." In fact, Equity, like equity contra legem or infra legem, cannot serve as
basis for a judicial solution which is contrary to the rules of law which it seeks to
modify, unless it be by agreement of the parties to accept a decision ex aequo et
bono.

-----------------------------------------------------------------------------------------------------
----------------
FN89"It is possible to define equity as a portion of natural justice ..." Snell's
Principles of Equity, 4th edition by R. E. Megarry and P. V. Baker, p. 9.
FN90 Note of 5 July 1928 concerning the Romano-Americana case, Hackworth,
Digest, V, p. 843.
-----------------------------------------------------------------------------------------------------
----------------

***

While I subscribe to the Court's Judgment, such are the supplementary remarks
which I have thought I should add to the grounds thereof.
(Signed) Fouad Ammoun.

[p 334]

DISSENTING OPINION OF JUDGE RIPHAGEN

[Translation]

1. To my great regret I find myself unable to concur in the decision of the Court,
and I wish to avail myself of my right under Article 57 of the Statute to state the
reasons for my dissent.

2. In my opinion the legal reasoning followed by the Court fails to appreciate the
very nature of the rules of customary public international law applicable in the
instant case.

The Belgian State has asserted that the Spanish State is internationally responsible
for the treatment which the administrative and judicial authorities of Spain afforded
to a private non-Spanish company, the Barcelona Traction, Light and Power
Company, Limited. The Court has recognized that:

"When a State admits into its territory foreign investments or foreign nationals,
whether natural or juristic persons, it is bound to extend to them the protection of
the law and assumes obligations concerning the treatment to be afforded them."
(Paragraph 33.)

Nevertheless, the Court has refused to examine whether the treatment afforded to
Barcelona Traction by the administrative and judicial authorities of Spain was or
was not in conformity with Spain's international obligations, since:

". . . the possession by the Belgian Government of a right of protection is a

prerequisite for the examination of these problems. Since no jus standi before the
Court has been established . .." (paragraph 102).

In other words, Spain does indeed have international obligations with respect to the
treatment afforded to Barcelona Traction, but those obligations are, it is said, not
obligations towards Belgium.

Throughout its Judgment, the Court has in view the hypothesis that a greater or
lesser part of Barcelona Traction's shares was, during the whole of the relevant
period, in the hands of Belgian nationals, whether natural or juristic persons. This
hypothesis is contested; the question, which is not dealt with in the Judgment, will
be reverted to below.

On the basis of this hypothesis, and without drawing any distinction according to
the size and nature of this participation by Belgian natural or juristic persons in the
capital and management of the Barcelona Traction Company, the outcome for the
Court is that the Belgian [p 335] State has no right at the international level capable
of being infringed by the conduct of the Spanish authorities towards the Barcelona
Traction Company.

This conclusion is based solely on considerations concerning what the Court calls
(paragraph 38) the nature and interrelation of the rights of the company and the
rights of the shareholders under municipal law. It is by examining rules of
municipal law which are to a great extent common to those legislative systems
which recognize the institution of companies limited by shares that the Court
reaches the conclusion that, under municipal law, the rights of the shareholders are
not affected by measures taken against the company. It follows, according to the
Judgment, that the State of which the shareholders in a company are nationals has
also no right that might be injured on the international plane by measures taken by
another State against the said company.

3. It is in making the rights and obligations of States under customary public

international law depend purely and simply on the rules of municipal law
concerning the rights and obligations of private persons in their relations inter se,
that the Judgment seems to me to fail to appreciate the nature of the rules of
customary international law, including the rules of international law concerning the
rights and obligations of States in the field known as "the treatment of aliens".

It is, however, well established that international responsibility is a responsibility of

State to State, and that consequently, the conditions under which the international
responsibility of a State arises, as well as the conditions under which another State
is entitled to require reparation for an injury caused to it, are in principle completely
independent of the content of the municipal law of the States in question.

"Diplomatic protection and protection by means of international judicial

proceedings constitute measures for the defence of the rights of the State. As the
Permanent Court of International Justice has said and has repeated, 'by taking up the
case of one of its subjects and by resorting to diplomatic action or international
judicial proceedings on his behalf, a State is in reality asserting its own rights its
right to ensure, in the person of its subjects, respect for the rules of international
law' (P.C.I.J., Series A, No. 2, p. 12, and Series A/B, Nos. 20-21, p. 17)."
(Nottebohm (Second Phase), Judgment, I.C.J. Reports 1955, p. 24) [my italics].

"It is a principle of international law that the reparation of a wrong may consist in an
indemnity corresponding to the damage which the nationals of the injured State
have suffered as a result of the act which is contrary to international law. This is
even the most usual form of reparation; it is the form selected by Germany in this
case and the admissibility of it has not been disputed. The reparation due by one
State to another does not however change its character by reason of the fact that it
takes the form of an indemnity for the [p 336] calculation of which the damage
suffered by a private person is taken as the measure. The rules of law governing the
reparation are the rules of international law in force between the two States
concerned, and not the law governing relations between the State which has
committed a wrongful act and the individual who has suffered damage. Rights or
interests of an individual the violation of which rights causes damage are always in
a different plane to rights belonging to a State, which rights may also be infringed
by the same act. The damage suffered by an individual is never therefore identical in
kind with that which will be suffered by a State; it can only afford a convenient
scale for the calculation of the reparation due to the State." (Judgment No. 13 of the
P.C.I.J., Series A, No. 17, pp. 27-28) (my italics).

4. This complete separation between the rules of customary international law

concerning responsibility for the treatment of aliens, and the rules and principles of
municipal law, is much more than a mere legal construct permitting of the
substitution of legal relations between States for the legal relations between the
government and the private citizen or between private citizens inter se.

It reflects a reality of international life: it determines the very content of the rights
and obligations of States on the international plane.

It is in fact indisputable that the State has a real interest in the development of its
international commerce, of which investment in foreign undertakings and the
establishment of undertakings in foreign countries constitute manifestations. Thus,
apart from countries which practise the system of State trading, international
economic relations are in general heavily controlled by the public authorities.
Furthermore, this international commercial activity of a State necessarily affects the
economy, and thus the public interest, of the receiving State; it normally also
involves contacts with the municipal legal system and with the public authorities of
that State. It is thus genuinely a matter of ensuring a proper balance between the
interests of States, a traditional task of the rules of public international law.

This task is fundamentally different from that laid upon the rules of municipal law,
and in particular municipal private law. The considerations which determine the
choice of a particular system of municipal private law With respect to what the
Court has called "the nature and interrelation" of "the rights of the corporate entity
and its shareholders" are completely foreign to the problems which are the concern
of the rules of public international law relating to responsibility for the treatment of
aliens.

5. It is true that international commercial activities are to a very large extent carried
on under municipal law forms (acquisition of ownership, contracts, concessions,
collection of rates and taxes). But it is not the legal relationships of municipal law
resulting therefromthe relationships between private persons inter se or between a
public authority and a [p 337] private person-with which customary international
law is concerned. The latter does not tend in any way to unify the different
municipal legal orders, even partially or indirectly, into a common legal order
applicable to cases of diversity of citizenship.
The international responsibility of a State is not based upon rules of any such
common legal order; nor is the right of the State which asserts such responsibility
derived from the rights which a private person would obtain under such a common
legal order. The approach of the rules of customary international law is completely
different; they are concerned rather with the activity, as such, of the persons
carrying on the international commerce of a State, on the one hand, and the public
authorities of the receiving State, on the other, as well as with the interrelation of
those activities. That is why international responsibility for the treatment of aliens is
essentially a responsibility for "denial of justice" lato sensu. That is also why the
State which relies upon such responsibility does not represent the injured person but
is asserting its own interest in that person's activities in international commerce.
That is why, finally, it is indispensable, for the determination of the existence or
inexistence of international responsibility on the part of one State towards another
State in a specific case, to take into consideration all the activities, as a whole, of the
public authorities of the State whose responsibility has been alleged, as well as all
the injured private person's activities, as a whole, in international commerce.

6. The notion of "international commerce" must not be given a purely economic

interpretation. In actual fact, customary international law protects the interest which
a State has in its international commerce because international commerce in the
broad sense of the term is of interest to the entire international community. As Sohn
and Baxter rightly remark in their commentary on the Draft Convention on the
International Responsibility of States for Injuries to Aliens: "The law of State
responsibility is directed to the maintenance of freedom of communications and of
movement between nations."

On the same lines, customary international law recognizesin particular since the
Second World Warrespect for fundamental human freedoms as an interest of the
international community. In fact, even before and between the two World Wars the
idea of the protection of "human rights" by public international law was never
absent from international decisions concerning the responsibility of States for the
treatment of aliens. Here, as in the protection of international commerce, it is not a
matter of creating a common legal order determining the legal relationships between
the public authorities and private persons or between private persons inter se, but of
"checking" the application of the municipal legal order in order to sanction the
unlawful use of force, arbitrary discrimination and usurpation of jurisdiction, which
violate a human being's "right to existence". Here, as in the protection of inter [p
338] national commerce, the different methods adopted by the municipal law of
different countries are irrelevant to the attainment of the objectives of the rules of
customary international law.

7. At this point I must make a digression. The Judgment seems to be based on the
idea of a "reference" by the rules of international law to the rules of municipal law.
It is stated, in particular, in paragraph 38 of the Judgment that "international law has
had to recognize the corporate entity as an institution created by States in a domain
essentially within their domestic jurisdiction. This in turn requires that, whenever
legal issues arise concerning the rights of States with regard to the treatment of
companies and shareholders, as to which rights international law has not established
its own rules, it has to refer to the relevant rules of municipal law". The legislative
technique of reference or renvoi from one rule of law to another rule of law, or to
the results of its application, is an operation well known in legal science. So far as
international law in particular is concerned, this technique is of frequent application
in the written rules of law, i.e., in treaties. Thus, several treaties, when defining the
obligations of the Contracting Parties, contain a reference to the municipal law of a
specific State. This is, for example, the case with treaties concerning conflict of
laws and reciprocal judicial assistance, including the recognition and execution of
foreign judgments. But this kind of renvoi is wholly unrelated to the situation with
which the present case is concerned.

In the first place, in the Barcelona Traction case it is a matter of applying the rules
of general customary international law. A renvoi by such rules to the municipal law
of a specific State would seem a priori to be improbable. Furthermore, the present
case does not concern the recognition of, or the effect to be given to, the decisions,
judicial and otherwise, of the Spanish authorities, within the framework of the legal
system of another State. On the contrary, it is a matter of determining whether those
decisions constitute a denial of justice in the broad meaning of the term, i.e.,
unlawful use of force, arbitrary discrimination, or a usurpation of jurisdiction,
amounting to infringement of the rights of another State. In this domain there cannot
be a "renvoi" to the rules of municipal law of the State whose international
responsibility is alleged, nor, moreover, to the municipal law of any other State, nor
to any "common rules" that might be derived from a comparative law study of
different national legislations.

8. The distinction of principle drawn by the present Judgment between

(a) the obligations of a State "when [it] admits into its territory foreign investments
or foreign nationals, whether natural or juristic persons" (paragraph 33), obligations
"arising ... in the field of diplomatic protection" (ibid.);[p 339]

(b) the obligations of a State resulting from "the outlawing of acts of aggression"
(paragraph 34);

(c) the obligations of a State resulting "from the principles and rules concerning the
basic rights of the human person" (paragraph 34); and

(d) the protection of the economic interests resulting from investments made by a
foreigner (paragraph 87);

seems very artificial and cannot in any case justify the essential legal consequences
which the Judgment attaches to this distinction.
In the first place, it seems impossible to make any distinction between categories (a)
and (d). The present Judgment even observes (paragraph 37), and rightly, that the
institution known as the diplomatic protection of foreigners has "from its origins
[been] closely linked with international commerce". How then can it on the one
hand recognize that "when a State admits into its territory foreign investments . . . it
. . . assumes obligations concerning the treatment to be afforded them" (paragraph
33 of the Judgment) and, on the other, deny to the State whose nationals have made
such investments all protection at the international level apart from "treaty
stipulations" (paragraph 90 of the Judgment)? It is true, as the Court says (paragraph
87), that "when a State admits into its territory foreign investments . . . it . . . does
not thereby become an insurer of that part of another State's wealth which those
investments represent". No one has ever employed such a formula to define the
obligations of the receiving State. It is in any event not the basis upon which
Belgium bases its claims against Spain in the present case! The problem of the
extent of the protection which the rules of international law give to the interest of a
State is one question, the determination of the State or States whose interest is
protected is another.

Nor is this all. In all the cases enumerated above, general public international law
protects the rights of States by imposing obligations on other States, for the good
reason that it is an essential interest of the international community as a whole that
such rights should be respected.

It is true, from the moral point of view, that it is difficult to compare the gravity of
an infringement of the territorial integrity and political independence of a State with
that of an infringement of the fundamental freedoms of the human person, or with
that of an injury to international commerce lato sensu.

Nevertheless, from the legal point of view, in each of these three cases it is a matter
of State interests protected by the imposition of obligations on other States.
Obviously, the details of the protection are different in each of the three cases, both
with respect to the definition of the in-fringements prohibitedi.e., the extent of the
protectionand with respect to the designation of the State or States entitled to
apply, or demand the application of, sanctions in the event of such conduct.[p 340]

It is to this latter context that the question of the jus standi of a State relates.

The Judgment seems to draw a distinction between obligations of a State erga

omnes, obligations of a State which exist towards certain other States under general
international law, and obligations of a State which only exist towards a State with
which it has entered into "treaty stipulations". This distinction can of course be
drawn. But it is still difficult to hold that this distinction would necessarily
correspond to an a priori classification in accordance with the nature of the interests
protected by such obligations, a classification which is already in itself a fairly
doubtful one.
In other words, it seems impossible to say a priori that the economic interests of a
State can be protected through obligations on other States only by virtue of "treaty
stipulations", just as it would obviously have been incorrect to say that every State
has jus standi in cases where the territorial integrity or the political independence of
another State is infringed, otherwise than by armed attack, or in cases where the
national of another State is the victim of a violation of his individual freedoms.

9. No one denies, moreover, that a State's jus standi under the rules of customary
international law concerning the treatment of aliens depends on the existence of a
link between such State and the situation that has been adversely affected in the case
in question by the conduct of another State.

In this connection it should be noted that in those matters governed by customary

public international law it is a priori improbable that there will be watertight
divisions between the solutions adopted for the various theoretically separate
elements of which this legal rule is made up. It is the interrelation between the
conduct imputed to a State and the conduct imputed to another State which is the
subject of the rules of customary international law, manifesting itself in the creation
of "obligations" and "rights" of States in their mutual relations. In these
circumstances, it is impossible, in particular, totally to disregard the nature and
effect of this interrelation in the actual case in question when determining the
"responsibility" of the one State and the "jus standi" of the other.

10. This is one more reason for not attaching too much importance to the highly
abstract and theoretical distinction between "rights" and "mere interests" which
seems to form the sole basis of the reasoning in the Judgment.

This distinction is only meaningful within the framework of a concrete body of

known and undisputed rules of law.

When such a body of rules is under analysis, it can be observed, a posteriori, that a
failure to comply with an obligation may entail certain injurious consequences for
certain interests, without the possessor of those interests being empowered by this
body of rules of law to demand reparation from the party which has failed to fulfil
this obligation. The [p 341] conclusion can then be drawn therefrom that the victim
had indeed a "mere interest" but not a "right" that was violated.

This is in fact the conclusion which the Judgment draws when analysing the rules of
municipal private law with respect to the legal situation of shareholders with regard
to acts directed against the company.

But in the case decided by the Judgment it is a matter neither of the obligations of
the Spanish authorities on the level of municipal law nor of the legal opportunities
which the shareholders might have of asserting that responsibility, by asking for the
cancellation of the measures taken, or for compensation.
It concerns, on the contrary, quite another body of rules, namely the rules of
customary public international law concerning the obligations and the rights of
States in their mutual relations.

Now these two bodies of rules answer quite different requirements; their objects and
purposes are different; they have developed in different contexts.

The body of rules of customary public international law concerning the treatment of
aliens draws its inspiration, as we have seen, from the interest of the international
community in respect for the fundamental freedoms of the human person as well as
in respect for the freedom of international commerce.

It is in relation to these two principles that both the obligations and the rights of
States in their mutual relations fall to be determined. In the instant case it is above
all the second of these two principles that is involved.

11. In order to be able to describe a concrete activity in international commerce as

forming part of the international commerce of a specific State, it is obviously
necessary that there be a link between that activity and that State. That link can only
be established through the medium of one or more of three elements of the State: its
nationals, its territory and its government. Where the international commercial
activity takes the form of a natural person's establishing himself abroad, it is
traditionally the nationality of that natural person which determines the link between
that activity and a specific State. Furthermore, right from the beginning of the
development of international commerce it will be found that the State has concerned
itself with the treatment accorded by other States to "its" products, i.e., products
originating in its territory, as well as to "its" ships, i.e., ships upon which its
government has conferred the right to fly the national flag. (Sometimes the various
manifestations of international commercial activity were not clearly distinguished.
A typical example of this is afforded by the treaties the interpretation of which was
in question in the Court's Judgment of 27 July 1952 (Rights of Nationals of the
United States of America in Morocco, Judgment, I.C.J. Reports 1952, p. 176.)
Those treaties, dating from the turn of the century, were aimed primarily at
preventing any differential treatment by a State of the nationals of the other States
parties to the said treaties. But the[p 342] Court did not hesitate to interpret the
treaties as also prohibiting any discrimination in favour of the importation of goods
coming from the territory of one of those States (I.C.J. Reports 1952, pp. 183-186),
thus recognizing that the treaties in question had as their object the protection of all
the international commercial activities of each Contracting State.)

The techniques of international commerce have developed since then, in particular

with the entry on the scene of limited companies as a legal form for the organization
of private economic activities.

For purposes of the determination of the link between an international commercial

activity and a particular State, this development poses two distinct problems, the
one relating to the relationship between the activity and a person, and the other
relating to the relationship between that person and a State.

In fact, in "classic" cases of diplomatic protection the interest of a State in "its"

international commerce merges with its interest in the welfare of its nationals,
natural persons, both in respect of their personal safety and fundamental freedoms
and in respect of their power to administer their property and their right to draw
profits therefrom.

The elements of "the undertaking" are thus united in one single indivisible natural
person, and that person's appurtenance to a specific State does not normally pose
any problems.

The employment of the legal form of the limited company (with its own legal
personality, in private municipal law) complicates the situation.

12. In the first place, it is hard to recognize that a limited company as such can have
personal safety or fundamental freedoms. (We may leave aside the question of
whether under municipal law the company as such might complain of an
infringement of the personal safety or fundamental freedoms of the natural persons
which "represent" it.) It is thus solely a matter of the undertaking's "economic"
interests: its activities and its property. Now in reality the legal form of the limited
company lends itself to fairly varied kinds of organization of the economic interests
of the undertaking. There is the type of company in which legal personality
corresponds to economic independence of the undertaking; the administration of the
undertaking is in the hands of independent directors and the profits are in principle
appropriated to the undertaking itself, i.e., generally re-invested (after the deduction,
in suitable cases, of a certain remuneration for the capital already invested). But
there is also the type of company which is in reality a form of organization for co-
operation in an undertaking by shareholders who not only furnish the capital but
also effectively administer the undertaking and draw the profits themselves. Finally,
there is a third type of company, in which the undertaking is integrated into another
more extensive undertaking, belonging to another company which dominates it.
Obviously these are types of companies (corresponding to different types of [p 343]
shareholders), and not categories separated by water-tight divisions. Of course, the
municipal private law applicable to these three types of company is generally the
same. On the other hand, in the field of municipal tax law, several countries
recognize the fundamental difference between these three types by affording them
different treatment.

On the plane of customary international law, i.e., both in order to determine what is
affected by the conduct of a State towards a limited company, and in order to
determine the link between what is affected and another State, it seems a priori
necessary to take account of the reality of the differences between these three types
of companies. As has already been pointed out, international law is concerned with
the rights and obligations of States in their mutual relations and not with the
municipal law relations between the company and other private persons, nor even
with the municipal law relations between the company, its shareholders and officers,
and the public authorities of a State.

The nature of rights, like that of obligations, is different in international law,

because such obligations and rights correspond to the specific requirements of the
international community. It is consequently not possible to regard the company's
legal personality under municipal law as an exclusive touchstone.

One can neither regard the company as always being the only entity affected by any
measure whatsoever directedon the plane of municipal lawagainst the
company, nor always equate the company, purely and simply, with a natural person
so far as concerns its "nationality", i.e., its link with a specific State.

Both these matters are moreover recognized in international jurisprudence and

practice.

Of course this jurisprudence and practice are not uniform. On the one hand, they are
often inspired by ad hoc considerations; on the other, they do not take sufficient
account of the variety of cases that can arise.

Nevertheless, they do show a sufficient degree of recognition of the inapplicabilty

of the legal fiction of municipal private law on the plane of public international law.
The company's juristic personality is not by any means the last word either on the
obligations or on the rights of States in the matter of the "treatment of aliens".

The Judgment recognizes this, moreover, when examining "... other grounds on
which it is conceivable that the submission by the Belgian Government of a claim . .
. may be justified" (paragraph 55). However, the Judgment seems to persist in
regarding such other grounds as the application of transposition on to the plane of
international law of the rules of municipal law concerning the status of a company
and its shareholders (paragraph 56).

It has already been explained above why this approach seems contrary to the very
nature and function of the rules of customary public international law. It is not the
rights and the obligations of the shareholders [p 344] that are in issue in the present
case, but the obligations and the rights of States; it is not only a question of different
legal personae but also of a different subject-matter.

13. That is also why it does not seem justifiable to disregard as irrelevant the
international practice and jurisprudence which relate to measures taken with respect
to enemy property and nationalizations (paragraphs 59 to 62 of the Judgment). On
the contrary, these are two phenomena at the international level which directly
concern international commerce as well as the links between an international
commercial activity and a specific State. The measures taken with regard to enemy
property have the twofold purpose of excluding enemy control of management from
the national economy, and of confiscating enemy property by way of reparations. It
is highly significant that in connection with this twofold objective the distinct
personality of the company does not constitute an obstacle to the recognition of the
true state of affairs. But how then can the link between an activity, and private
property, and a State be accepted when it is a matter of measures to be taken against
that State, and the existence of such a link be disregarded, as a matter of principle,
when it is a matter of the rights of that State?

In the case of the nationalization of undertakings belonging to a company it is

obviously a question of measures of another nature. Nevertheless, here again many
international agreements concluded in order to resolve the consequences of those
measures recognize that such measures which put an end to an international
commercial activitydo not affect only the State whose "nationality" the company
as a distinct person is deemed to possess.

In both casesmeasures against enemy property and measures of nationalization

it is a question of an interferencefor different reasons with an international
commercial activity taken as a whole; the object and the purpose of such measures
concern the undertaking as such, even though they obviously affect the ownership
of, and other rights over, individual items of property.

14. It is from this point of viewan interference with the foreign undertaking rather
than with an isolated right belonging to a foreign private personthat one must also
consider the cases in which international jurisprudence and practice have recognized
a State other than the one under whose municipal law the company was formed as
having an interest which is legally protected by the rules of international law. Such
cases are in particular those in which the company had gone into liquidation, or was
"practically defunct", in consequence of measures taken by the State whose
international responsibility was in question. Thus they were cases in which the
company had been forced to suspend or to cease its activities: in other words, in
which the undertaking as such was affected. Writers have sometimes attempted to
explain such cases by seeing in them an application of the notion of municipal
private law to the effect that on liquidation of a company the shareholders take back
their [p 345] share of the company's property (see, for example, Reuter, Droit
international public, 1958, p. 166).

But this explanation is unsatisfactory. On the level of municipal private law, it is not
the company's going into liquidation which causes a right to arise for each
shareholder, namely a right to a part of the company's property: it is only at the end
of the liquidation that any surplus there may be is distributed among the
shareholders. Furthermore, the liquidation was always subsequent to the measures
taken by the State which was held responsible on the international plane, so that
those measures could not have infringed the rights of the shareholders on the
municipal private law plane.
These two arguments remain valid a fortiori in cases in which the company, without
having gone into liquidation, was "dormant", "practically defunct" or "destroyed".
The Judgment (paragraphs 64-68), while recognizing "special circumstances for
which the general rule" [i.e., the rule that only the State under the municipal law of
which the company was formed would have jus standi] "might not take effect"
(paragraph 64) admits the existence of a special circumstance in the present context
only where "the corporate entity of the company has ceased to exist" and has
"become incapable in law of defending its own rights and the interests of the
shareholders" (paragraph 66). In so doing, the Judgment consequently rejects any
exception based upon the company's going into liquidation or becoming entirely
paralysed (paragraph 65) on account of the measures with respect to which the
international responsibility of a State is asserted.

The Judgment thus once again makes the extent of the international obligations and
rights of States dependent on the rules of municipal private law concerning the
status of companies. The Judgment observes (paragraph 66) that "only in the event
of the legal demise of the company are the shareholders deprived of the possibility
of a remedy available through the company". The Judgment does not explain how in
such a case, after the legal demise of the company, the action of a government other
than "the company's government" might be compatible with the rule of continuity!
In reality, the legally protected interest of such other State, and consequently also
the obligations towards it of the State which took the measures of which complaint
is made must exist on the international plane before and independently of the
company's demise on the plane of municipal law, a demise which is but one of the
possible subsequent consequences of those measures.

15. The Judgment observes (paragraph 65) ". . . that from the economic viewpoint
the company [i.e., Barcelona Traction] has been entirely paralyzed" and that it "has
been deprived of all its Spanish sources of income".

It is indisputable that the measures taken by the Spanish authorities affected the
undertaking as such. The essential point is thus the existence or non-existence of a
link between the undertaking and the Belgian State sufficient for it to be considered
on the international plane that the inter [p 346] national commerce of the latter State
is affected by those measures. It is thus the second question referred to above which
is raised by the entry upon the scene of limited companies in international
commerce: that of the link between what is affected by the conduct of a State, and
another State. In this connection too it seems impossible to disregard the difference
between the three types of companies and shareholders referred to above.

16. So far as concerns the international commerce of a State which takes place
through the medium of natural persons, it is undisputed, as the Judgment recalls
(paragraph 36), that in principle it is the bond of nationality between the State and
the individual which counts. There are, however, exceptions to this general rule. On
the one hand, as the Court recalled in its Advisory Opinion of 11 April 1949 (I.C.J.
Reports 1949, p. 181):

". . . there are important exceptions to the rule, for there are cases in which
protection may be exercised by a State on behalf of persons not having its
nationality".

These are, in particular, cases of "functional" protection (members of the crew of a

vessel flying the flag of the State; members of the armed forces of a State; agent of
the United Nations); the protection of the activity as a whole, linked as such with a
State, extends to persons who participate in that whole, irrespective of their
nationality.

On the other hand, the bond of nationality between the State and the individual is
not always sufficient. In the Nottebohm case the Court held that Liechtenstein was
not entitled to extend its protection to Nottebohm as against Guatemala, on the basis
of a negative answer to the question

". . . whether the factual connection between Nottebohm and Liechtenstein in the
period preceding, contemporaneous with and following his naturalization appears to
be sufficiently close, so preponderant in relation to any connection which may have
existed between him and any other State, that it is possible to regard the nationality
conferred upon him as real and effective . . ." (I.C.J. Reports 1955, p. 24).

Here again a "functional" approach may be observed. Mr. Notte-bohm's

naturalization not having in any way altered his activities as a whole (what the
Court calls his "manner of life", ibid., p. 26), Guatemala's alleged injury to this
"undertaking" was not regarded as affecting, on the international plane, a legally
protected interest of Liechtenstein.

17. A true bond of nationality, such as exists between a State and its nationals who
are natural persons, is obviously inconceivable for juristic persons as such. In order
to assimilate a limited company to a national who is a natural person it is
consequently necessary to have recourse to [p 347] other connecting factors. In this
connection, from an abstract point of view, three courses are open:

(a) to take account of the nationality of the natural persons to whom the company
"belongs";

(b) to take account of the fact that juristic personality was "conferred" on the
company by the authorities of a particular State;

(c) to take account of the fact that the company, as an economic entity, is
"implanted" in the territory of a particular State.

In the practice of States, including treaties concluded between two or more States,
and in international jurisprudence, sometimes one and sometimes another of these
courses is adopted, or the connecting factors deriving from two or all three of these
approaches are combined or balanced against one another.
18. This is explained by the fact that the three solutions correspond more or less to
the three different types of companies and shareholders. If, for example, it is a
matter of a company all of whose shares are held by two or three natural persons,
who have thus combined their capital in an undertaking which they manage
themselves, it seems quite natural to refer to the well-known views expressed by
Max Huber in his Report of 1 May 1925 in the case concerning British Property in
Spanish Morocco:

". . . the protection of individuals covers all their legitimate interests. The fact that
those interests happen to be more or less closely connected with those of a corporate
legal entity cannot ipso facto deprive them of the protection which they would
otherwise be given by virtue of belonging to a protected person" (U.N.R.I.A.A.,
Vol. II, p. 661).
"International law which, in this field, draws its inspiration essentially from the
principles of equity, has not laid down any formal criterion for the granting or
refusing diplomatic protection to national interests linked to interests belonging to
persons of different nation-alities" (ibid., p. 729).

These considerations apply also in cases in which corporate personality has been
conferred on a company by the municipal law of the State whose responsibility is
asserted, even though the company has been implanted in the territory of that State.

Moreover, the connecting factor under (b) above (the fact that the company was
granted juristic personality by the authorities of a particular State) corresponds
rather to the type of company whose undertaking is independent, and whose shares
are scattered among persons who have nothing to do with the management of the
undertaking, but simply receive such dividends as are declared, or make profits by
the purchase and sale of those shares on the market.

In reality this connecting factor is, in a certain sense, comparable to the [ p 348] link
between a State and a ship to which that State has granted the right to fly its national
flag. It loses much of its meaning when the incorporation of a company under the
municipal law of a State is effected without any active intervention by the public
authorities of that State and does not require the establishment of any real bond
between the company and the territory or nationals of that State.

Thus it is understandable that in State practice and in international jurisprudence

this connecting factor does not play a preponderant part unless there are other links
between the company and the State in which it has been incorporated, as, for
example, the fact that the administrative control of the company is actually
exercised in the territory of that State. (In certain treaties even the nationality of the
natural persons who manage a company is a factor in determining the link between
a State and that company. According to information given by Foighel in
Nationalization and Compensation, 1963, p. 235, this is the case in a treaty, with an
attached aide-memoire, of 27 September 1948 between Switzerland and
Yugoslavia.)
Finally, the connecting factor mentioned in (c) above (the fact that the company, as
an economic entity, has been implanted in the territory of a particular State) reflects
the recognition of the growing importance of the economyand therefore of its
undertakingsfor the very existence of the State. From this point of view the State
in whose territory a company has been implanted is necessarily interested in the
expansion of that company's business abroad, whether through isolated activities, or
through the establishment of subsidiary companies, or through holdings in other
companies which it controls and whose business activity forms an integral part of its
own.
In sum, this connecting factor has its application most particularly in cases
involving the third type of shareholder and company mentioned above.
19. In the context of the application of the rules of customary international law
relating to responsibility as regards the treatment of aliens, the relative importance
of the three connecting factors should be judged not only by taking into account the
type of company and shareholders in question in the given case, but also in relation
to the nature of the injury which the conduct complained of on the part of the State
whose responsibility is alleged is said to have done to the international commercial
activity. It is clear that in this respect injury to an isolated piece of pro-perty
belonging to a company cannot be put on the same plane as an injury to the very
personality of the company or an injury to the whole of the activity of that company
in the State whose responsibility is alleged.

The present Judgment seems to deny the relevance, so far as the jus standi of an
applicant State is concerned, of the distinctions drawn above concerning the nature
of the injury, the type of company and shareholders in question, and the nature and
relative importance of the possible forms of connection between a State and a
company. Only the dis- [p 349] tinction in private municipal law between the rights
of a company and the direct rights of the shareholder, as well as the separate
corporate personality of the company under the municipal law of the State in which
it was incorporated, are recognized as relevant in the Judgment. It is true that the
Judgment doesthough without laying down the conditions under which a given
State, other than the one according to whose municipal law the company was
incorporated, may have jus standiexamine various "special circumstances" and
possible "grounds" which might lead to the non-application of the simple and strict
rule which it lays down. But in point of fact those special circumstances and reasons
are always expressed by the Judgment in relation to the separate personality of the
company under municipal law. Thus the Judgment considers "the case of the
company having ceased to exist" (paragraphs 64-68) solely from the point of view
of legal existence under municipal law, without taking any account of the object of
the company, which is the under-taking.

The other possibility dealt with in the Judgment (paragraphs 69-84) is "that of the
lack of capacity of the company's national State to act on its behalf".

Here again the Judgment reaches the conclusion that the creation of a corporate
entity by the municipal law of a particular State is alone relevant, without however
explaining how such a formality can of itself give rise, on the plane of international
law, to a legally protected interest of that State in the business of the company.

The Judgment does of course mention (paragraph 71) certain other factors, but in
the first place those factors are partly formalities which necessarily follow from the
incorporation of the company in accordance with the rules of the relevant private
municipal law, and in the second place they do not carry much weight in
comparison with the relationship of the company with other States. Furthermore, it
appears from paragraph 70 of the Judgment that the Court does not in any way
consider them to be legally relevant.

20. The reasoning followed in the Judgment logically leads to the theory that a State
whose nationals make investments abroad in the legal form of the incorporation of a
company according to the rules of the municipal law of a foreign State, or in the
form of holdings in the capital of such a company, loses its interest in the treatment
given to those investments.
This theory, based on the distinction between the "rights" of the company and the
"mere interests" of the shareholders, is necessarily applicable also in cases where it
is a question of the treatment given by the State under whose municipal law the
company was incorporated.
The reasoning set forth in paragraphs 85-90 of the Judgment does not admit of any
exception.

21. The following paragraphs of the Judgment do however seem to envisage the
possibility of appeal being made to "considerations of [p 350] equity" so as to
permit international law to "be applied reasonably". These considerations seem to
be that in the case of a foreign investment some foreign government ought to exist
which can exercise diplomatic protection. Such a consideration seems, however,
contrary to the very nature of the rules of customary international law, according to
which in exercising diplomatic protection a State is asserting its own rights. There is
thus no question of finding some government or other which can act as the
shareholder's "claims agent".

Such a system would, moreover, not ensure any improvement in the shareholder's
position, having regard to the complete freedom of every government to accede or
to refuse the shareholder's request for protection, as well as to pass on or not to pass
on to him any compensation it may receive.

If then international practice and jurisprudence admit action by the State whose
nationals have invested their capital in a company formed under the municipal law
of another State in the event of unlawful conduct by that latter State, it is because
they recognize the existence of a legally protected interest of the first State in that
company's activities, an interest which is by no means destroyed by the formation of
the company or participation therein, and which also does not devolve upon the
State where the company was formed.
22. It follows from the foregoing that conduct by a State which, on the plane of
municipal law, affects a company's property, personality or undertaking can, on the
plane of international law, infringe a legally protected interest of a State other than
that under the municipal law of which the company was incorporated. This also
means that, in certain circumstances, the same conduct by a State may affect the
legally protected interests of two or more States.

Such a legal situation is by no means excluded by the rules of international law. It

suffices in this connection to refer to the Advisory Opinion of 11 April 1949
(Reparation for Injuries Suffered in the Service of the United Nations, I.C.J. Reports
1949, p. 174).

The present Judgment (paragraphs 96 and 97) seems, however, to seek to exclude
the possibility of concurrent diplomatic claims on account of the complications to
which this gives rise.

In this connection it should be noticed, first that one must not exaggerate the
number of cases in which a company is truly international, in the sense that
connecting factors of equal importance exist with several States.

In a very great number of cases the three connecting factors mentioned above
connect the company with one State only. That is precisely why international
practice has generally accepted diplomatic protection on the part of the State under
whose municipal law the company was in-corporated.

Furthermore, concurrent claims, even though emanating from different [p 351]

States, always have the same object, that is to say, to prevent, bring to and end, or
have corrected by restitutio in integrum the unlawful acts of another State.

It is only at the stage of monetary compensation in lieu of restitutio in integrum that

it is necessary to determine the amount to be paid to each State. In its Advisory
Opinion referred to above, the Court observed in this connection:

"International tribunals are already familiar with the problem of a claim in which
two or more national States are interested, and they know how to protect the
defendant State in such a case." (I.C.J. Reports 1949, p. 186.)

Consequently it does not seem that the possibility of concurrent claimswhich,

moreover, occurred at the diplomatic stage of the present casecreates that
"atmosphere of confusion and insecurity" to which reference is made in paragraph
96 of the Judgment. If there are com-plications they are not insurmountable; they
are moreover the consequence of the ever-increasing interdependence of States in
the modern world, a fact to which no international tribunal can close its eyes.

The same observation holds good for the complications that would result from a
settlement reached between the State responsible and one of the other interested
States (paragraph 97 of the Judgment). Such a settlement, like any other treaty,
could bind only those States which con-cluded it. In international practice
governments are well aware of how to accommodate themselves to this legal rule!
In any event, if the State under whose municipal law a company was incorporated
concluded a settlement with the State responsible for an unlawful act towards that
company, providing for a set-off against the indemnity of any claims which the
latter State might have against the former, it would manifestly be unjust to regard
such a settlement of the affair as excluding a claim on account of the same unlawful
act on the part of a third State which had a legal interest in the company's activities
by virtue of other connecting factors.

The rule of res inter alios acta, and the rule that a State by taking up the case of one
of its nationals is asserting its own rights, both follow from the very structure of
customary public international law.

23. Barcelona Traction clearly belongs to the third type of company described
above, i.e., the type of company whose undertaking is integrated into another
undertaking, that of the Sidro company, the chief shareholder in which is a further
company, Sofina.

The links between Sidro and Sofina have not been made completely clear (it appears
that Sidro was also a shareholder in Sofina).

Nevertheless, throughout the relevant period, the connecting factors [p 352]

between both these companies and Belgium were such that it can hardly be denied
that a sufficient bond exists between the undertaking of these companies and the
Belgian State. It is true that the Parties to the dispute disagree as to the precise
percentages of Sofina shares that were held by natural or juristic persons of various
nationalities. But it does not appear to be contested that Sofina always had a number
of Belgian shareholders and that the company's other shares were scattered among
persons of various nationalities. (One of the counsel for Spain spoke of ". . .
American, British, French, Dutch, Spanish, Swiss and other holdings" (hearing of
22 July 1969).) There is not sufficient evidence for it to be supposed that Sidro and
Sofina were companies whose undertaking was integrated into another undertaking
having links with a State other than Belgium, nor, moreover, for it to be supposed
that those companies belonged to the first type, that of companies effectively run by
their shareholders, natural persons of a nationality other than Belgian. In these
circumstances, the connecting factors of the incorporation of these companies under
Belgian law, and their implantation within Belgian territory, are sufficient to create
the bond between these companies and Belgium which is necessary to justify a
legally protected interest on the part of the Belgian State in Barcelona Traction's
undertaking.
24. It has nevertheless been contended that this bond, an essential element in which
is Sidro's controlling holding in Barcelona Traction, acquired a few years after the
First World War, was broken by the fact that the Barcelona Traction shares
belonging to Sidro were the subject of certain contracts entered into on the approach
and at the outbreak of the Second World War.

During that period, Sidro formed in the United States a company called Securitas
Ltd., as well as the partnership of Charles Gordon & Co. Contracts were entered
into between Sidro and Securitas and between Securitas and Charles Gordon & Co.
It is not disputed that Securitas Limited, as well as the firm of Charles Gordon &
Co., were in reality mere alter egos of Sidro-Sofina, nor that the whole purpose of
the operat-ation was precisely to ensure that Sidro's effective share in the capital and
management of Barcelona Traction might continue despite the occupation of
Belgian territory by the German armed forces, and without being hampered by such
measures as the allied States might take in the context of their wartime legislation
with respect to property belonging to companies resident in enemy-occupied
territory. Nor is it disputed that this objective was in fact attained. This type of
operation is well known in those European countries which were occupied by
German forces during the Second World War, as well as in Allied countries, such as
the United States and Canada, where the principal officers of companies in the
European countries in question found a refuge which enabled them to continue to
run those companies' affairs. The authorities of the Allied host-countries, moreover,
generally afforded the co-operation necessary [p 353] for the achievement of the
operation's purpose. In these circumstances, the events summarized above cannot be
regarded, on the plane of inter-national law, as having broken the bond between the
Belgian State and the Barcelona Traction undertaking. Once again, this conclusion
is independent of the relationships of municipal private law.

It consequently applies both to the period during which Securitas acted as custodian
of the shares belonging to Sidro, and to the period during which it was trustee. In
both capacities Securitas was, in the words of Spanish counsel, nothing but an
"American version of Sidro". Securitas was formed, and the trust relationship
between Sidro and Securitas was created, in order to escape the consequences of the
occupation of Belgian territory. The trust relationship came to an end after the war,
just as, for that matter, Securitas disappeared. The precise date of the end of this
period does not seem to be of crucial importance in the present context, since the
trust relationship was never intended to have and never had the effect of transferring
to someone else the position which Sidro occupied in Barcelona Traction.

25. So far as concerns the registration of the Barcelona Traction shares belonging to
Sidro in the name of Charles Gordon & Co. (subsequently Newman & Co.), it is
sufficient to note that these two firms were never more than nominees of Sidro and
Securitas. Even on the level of the applicable municipal private law, it is recognized
that such nominees are no more than agents for the true shareholders. On the
international level, the fact that a nominee is registered as a shareholder in the
company's official register is of no relevance to the question of who is affected by
measures taken by a State against the company.

26. It has been observed above that in the context of the application of the rules of
customary international law concerning international responsibility for the treatment
of aliens there are no water-tight divisions between the legal problems raised by
such application. In ascertaining whether in a specific case the conduct of State A
injures a legally protected interest of State B, one cannot wholly separate the
considerations relating to the four elements of the question, namely: (1) the
character of State A's conduct; (2) the nature of the injury; (3) the nature of the
interest injured; and (4) the link between that interest and State B.

27. In this connection it is important to notice that in the present case it is not only a
question of an injury to property belonging to the company, nor again of a limitation
placed upon the free conduct of the company's affairs by its principal officers, but of
an injury to the undertaking as such, which has passed in its entirety into the hands
of a Spanish group. One cannot ignore this fact in determining the jus standi of
Belgium, whose interest is founded on the very fact that the Barcelona Traction
undertaking is integrated into that of companies having important connecting factors
with that State.

28. Furthermore, the character of the conduct of the Spanish State of [p 354] which
Belgium complains is also not unrelated to the question of Belgium's jus standi. An
essential element in the Belgian claim is its contention that in the circumstances of
the case the injury to the undertaking was the result of Spanish measures which
necessarily exceeded the limits which international law imposes on the jurisdiction
of any State. The character of such conduct is such as to influence the determination
of the States entitled to demand reparation for the damage suffered by them in
consequence of such measures.

It is certainly not merely bilateral relations that are in issue in such a case, since a
State's obligation to keep within the limits of its jurisdiction on the international
plane is, without any doubt, an obligation erga omnes.

So far as this aspect of the case is concerned, two observations are relevant.

In the first place, it is indisputable that in the present case it is not a matter of a
nationalization of the electricity producing and distributing undertakings in Spain.
It is not the Spanish legislative or executive authorities which have placed
Barcelona Traction's subsidiary companies' public utility undertaking in the hands
of the State; it is the Spanish judicial authorities which, through a bankruptcy
adjudication followed by a forced sale, have placed the property of the parent
company, Barcelona Traction, in the hands of other private persons.

In the second place, it is also not a matter in the present case of a judgment by a
municipal court deciding a dispute between two private persons, or ordering a
simple measure of forced execution. It emerges clearly from the facts that the
bankruptcy petition and everything which followed it had as their purpose and their
effect the reorganization of the Barcelona Traction undertaking in such a way that
that undertaking passed from the control of Barcelona Traction's Belgian
shareholders into the control of a group of Spanish persons who had for that purpose
acquired a number of bonds issued by that company.

This purpose was attained and this effect achieved by means of a threefold
operation, intended, as it were, to remove Barcelona Traction, its property and its
relations with its bondholders, into Spain. First, on the non-payment of debts of the
Barcelona Traction Company was based the taking of possession of the property
and the "normalization" of the subsidiary companies in Spain (see paragraphs 13
and 14 of the Judgment). Secondly, new share certificates in the subsidiary
companies were created in Spain, cancelling the certificates which belonged to
Barcelona Traction and were situated outside Spain, and it was decided that the
head office of Ebro and of Catalonian Land (two subsidiary companies of Barcelona
Traction, incorporated under Canadian law) should thenceforth be at Barcelona and
no longer at Toronto. (See paragraph 17 of the Judgment.) Thirdly, the bankruptcy
decree was [p 355] made on a petition by certain holders of Barcelona Traction
bonds on the grounds of the non-payment of interest (see paragraph 13 of the
Judgment). Now, Barcelona Traction, the parent company, was a company
incorporated and having its head officeunder its byelawsin Canada. All its
property, consisting essentially of shares in subsidiary companies, was in Canada,
deposited with National Trust of Toronto as security for outstanding bonds. The
bonds which were in question in the bankruptcy proceedings were expressed in
pounds sterling, and had from the time of their issue been subject to a trust
(containing a "no-action clause") administered in Canada by National Trust, a
company incorporated in Canada. The non-payment of the interest on the said bonds
had, moreover, led to compromises being effected, before the petition in
bankruptcy, and under the supervision of the Canadian courts, between Barcelona
Traction, the trustee, and the general body of bondholders.

These circumstances, which are relevant to the limits on the jurisdiction of the
Spanish State, cannot be ignored when it comes to the question of whether the
Belgian State has jus standi in the present case, and this essentially for two reasons.
The rules of customary public international law regarding international
responsibility for the "treatment of aliens" have developed precisely in consequence
of the fact that the "aliens" in question find themselves within the jurisdiction of
another State; a fortiori then, they give legal protection against measures which
exceed the limits of the jurisdiction of such a State. In addition, it must be
recognized that in the instant case the measures taken by the Spanish judicial
authorities against Barcelona Traction were only able to achieve their desired effect
as a result of the fact that Barcelona Traction's subsidiary companies possessed
important installations within Spanish territory. In these circumstances, it seems
obvious that account must also be taken of the fact that Barcelona Traction itself is,
as it were, only a "subsidiary company" of Sidro/Sofina, companies which can be
assimilated to Belgian nationals.
29. The limits which international law imposes on the jurisdiction of a State are also
relevant to another aspect of the case, namely the question known as "the exhaustion
of local remedies". Here again it appears to be inadmissible to separate completely
the different elements of the question of the international responsibility of a State
towards another State. The Court, moreover, recognized this, it would seem, in its
Judgment of 24 July 1964 on the preliminary objections raised by Spain. Everything
which took place within the Spanish municipal legal system, including the remedies
sought and those which were not sought, pertains to the facts relevant to the
weighing-up of Spain's obligations as well as of Belgium's rights.

The right of a State, on the international plane, to respect for its international
commerce implies an obligation on the part of its national by whose interposition
such international commerce is carried on to accept the jurisdiction of the host State
by making proper use of the [p 356] means for defending his interests which the
municipal legal system of that State places at his disposal. Even then, it is necessary
that such jurisdiction should exist on the international plane! Here again the
fundamental difference emerges between the rights and obligations of the individual
on the plane of municipal law and the rights of the State on the international plane.

Finally, the limits which international law imposes on the jurisdiction of the State
are also of vital importance for the context within which the responsibility of the
State for the acts of its judicial authorities should be assessed. When it is a question
of acts overstepping such limits, it is the result of the act, rather than the intention,
or the error of the court in the application of the rules of its municipal law, which is
to be taken into account.

30. In its Judgment of 24 July 1964, the Court decided the questions relating to its
jurisdiction. From this point of view, there was consequently nothing to prevent the
Court's examining the merits of the case, that is to say, the rights and obligations of
the States parties to the dispute by virtue of the rules of customary international law.

It is true that the legal notion of the conditions for the admissibility of a claim also
finds a place in the rules of law relating to the procedure before an international
tribunal. Nevertheless, an extensive application of this notion has a tendency to
reduce the efficacity of international adjudication, as well as to confer on the norms
of international law a rigidity which is incompatible with their function in the
community of States.

The 1964 Judgment, which joined the preliminary objections relating to jus standi
and the exhaustion of local remedies to the merits, did so for reasons which laid
stress first on the legal ties between the questions raised and the actual rights and
obligations of States in the matter of the treatment of foreigners, and secondly on
the need to elucidate certain questions of fact. Accordingly, the 1964 Judgment
seems to be based on the considerations set forth above.
The present Judgment, on the other hand, confines itself to rejecting the Belgian
Government's claim on the sole basis that "no jus standi before the Court has been
established" (paragraph 102 of the Judgment), a conclusion which, in its turn, seems
to be derived exclusively from legal considerations regarding the distinct
personality of companies in municipal private law, all of which considerations
might have been put forward in 1964.

I have in this dissenting opinion set forth the legal reasons which have led me to the
conclusion that the Court ought to examine and pronounce upon what it calls the
other aspects of the case, and in particular on the question of whether or not the
conduct of the Spanish authorities was unlawful.

Since, on the one hand, the Court, for the reasons stated in the Judgment, has not
wished to examine those questions of law, and, on the [p 357] other, the questions
of fact in dispute between the Parties to the case have not been subjected to
examination by the Court, it does not seem to me that a dissenting opinion ought by
itself to accomplish a task which, according to that opinion itself, is incumbent on
the Court.

(Signed) W. Riphagen.

[p 54]

SEPARATE OPINION OF PRESIDENT BUSTAMANTE Y RIVERO

[Translation]

I subscribe to the reasons on which the Court has based its Judgment in the
Barcelona Traction case. Nevertheless, certain very special aspects of this case have
prompted me to certain additional reflections concerning the question of the law
applicable, and I feel it right that I should communicate them as concerning matters
of doctrine. I consider, moreover, that the question of the exhaustion of local
remedies, which was raised in the fourth preliminary objection during the first phase
of the proceedings, could have been taken into consideration in the reasons for
judgment and mentioned in the Court's decision. I consequently propose to examine
these two points succinctly in the paragraphs which follow.

1. The Application in the present case stands on the principle of international law
which recognizes that each State has the power, subject to certain conditions, to
exercise diplomatic protection of its nationals who, in a foreign country, have
suffered an injury affecting their persons or their rights in violation of international
law. Relying on this principle, the Belgian Government's Application, filed on 19
June 1962 in behalf of certain Belgian nationals holding shares in Barcelona
Traction, treated of certain responsibilities which, according to the Applicant,
should be imputed to the Spanish Government. These responsibilities were said to
arise, on the one hand, from the bankruptcy adjudication made by the Reus judge on
12 February 1948 against the holding company Barcelona Traction, Light and
Power Co., Limited, of Canadian nationality, which carried on activities in Spain
through the medium of various subsidiary companies. They were said to relate, on
the other hand, to the allegedly improper treatment afforded this group of companies
by the Spanish administrative and judicial authorities before and after the
bankruptcy adjudication.

That Barcelona Traction has the character of a holding company has been
recognized by both Parties; it is established in particular by the documents printed in
Appendices 1 and 2 to Annex 22 and in Annex 23 of the Belgian Memorial.

Accordingly, the Application gives rise to the necessity of investigating, among

other cardinal points, the question of whether the fact of Barcelona Traction's being
a holding company has any particular bearing on [p 55] the conditions for the
diplomatic protection of that company or even on the extent of the responsibility of
the respondent State. Such investigation reveals an almost total absence of specific
rules of general international law or treaty law applicable to transnational holding
companies and shows why, in consequence, judges tend to encounter difficulty in
ascertaining the law applicable in each case and may even be forced to fall back on
debatable analogies drawn from municipal law or on private international law norms
of questionable relevance. A brief analysis of the way holding companies belie the
legally established mechanism of the limited company will doubtless facilitate
appreciation of the problem.

2. The institution of the limited company, which was destined to displace the old
partnership, was a creation of municipal law devised within the purely national
domain for the purpose of expanding the financial potentialities and scope of
activities of business associations. Each legal system consequently laid down the
rules governing the structure and working of commercial companies within the
national territory, but always with the end in view of endowing them with the
character of autonomous legal personae distinct from the personae of their
shareholders. At a certain moment, however, world-wide economic expansion,
under the twofold stimulus of increasing needs and the abundance of investment
capital, multiplied the phenomena of financial interdependence between States,
thereby revealing that the purely national field of action of the classic commercial
company had become insufficient. The holding company then appeared, as a
manifestation of the new transnational character of the company. Thus it was that
the centre of gravity of commercial and stock-exchange business not infrequently
shifted from the field of private law into the international domain.

Nevertheless, this practical evolution in contemporary economic life was not

matched on the legislative plane by the appearance of any new form of juridical
institution. In order to achieve it, the already familiar appearance of the limited
company was quite simply borrowed, though the holding company introduced into
that institution a heterogeneous element, one contrary to its very nature, by denying
a truly independent legal personality to the subsidiary companies of the constituent
group and placing them entirely under the authority of the parent or chief company
of the group, the holder of all or a majority of their shares. In fact, this situation
arose without any visible alteration in the structure and functioning of the subsidiary
companies being perceptible from outside: what unites the constituent group is
generally only an invisible bond, a network of hidden links consisting in the
decisions of the central organs of control, which "radiate" to the directors of the
subsidiaries who are charged with their implementation. It is a further advantage of
this system that the central entity of the holding company does not necessarily have
to be registered or be seen to carry on business in the country where the capital is
invested: all that is required is that the subsidiaries may ap-[p 56] pear there in the
guise of independent legal entities. The result is a certain possibility of evading
responsibilities.

3. This de facto reality of the conduct of holding companieswhich represents the

most usual casedoes not, in my opinion, answer the normal requirements of a de
jure situation. The foregoing historical outline shows that (for the reasons indicated)
the concept of the holding company corresponded to a unilateral intention or
concern on the part of investors who, engrossed with their own interests, relegated
to the background the legal situation of the subsidiary companies and the laws of the
country of investment. However, the diplomatic protection of foreigners doing
business in the territory of a given State must be regarded as establishing a bilateral
relationship in which a duality of reciprocal rights and obligations comes into play:
those of the protecting State in relation to those of the State in which the investment
was made. It is hard to see how the terms of this relationship could be defined if no
legal bond has first been established between the holding company which forms the
subject of diplomatic protection and the State whose acts are the subject of
complaint. As soon as the holding company crosses a frontier and penetrates the
territory of another State, it is ipso facto transformed into an institution of private
international law, to ensure the equitable functioning of which would require the
formulation of principles and rules defining the reciprocal interests of the subsidiary
companies and the central entity of the group, as well as the parent company's
relations with and duties towards the States in which the subsidiaries have their
domicile and in which they carry on their business. Any other system of
organization must run counter to the principles of the equality of juristic persons and
of a State's power of imperium over its territory. It is true that a few legal norms
may be found here and there on this subject, but, despite the importance of the
problem, it can be said that neither the legal systems of States nor the law-making
organs of the international community have yet succeeded in grasping this elusive
reality of holding companies so as to bring it within the framework of a sufficiently
explicit and precise body of law. In municipal law, certain precautionary and,
moreover, fairly sporadic measures have been taken, such as obliging parent
companies to submit consolidated balance-sheets that summarize the individual
balance-sheets of the subsidiary companies. The exportation of earnings has also
been made the occasion for measures of control, so as to preclude the evasion of
fiscal requirements by those who do not fulfil the role of either investor or taxpayer.
Finally, certain legal systems require that foreign limited companies be entered in
the national commercial register before engaging in activity within the territory of
the State where the investment is made. But none of these provisions has ever been
more than partially effective, and their sporadic nature stands in the way of any
systemization. With the advent of transnationality, the question of the law
applicable involves problems of a particularly thorny and controversial nature: for
example, that of the apportionment of jurisdictional[p 57] competence among the
States in whose territories the various companies of the group are established.
Other, still graver questions can be posed, moreover, and it may be wondered, for
example, whether a holding company neither registered nor domiciled in the
country of its operations can avail itself of the right of diplomatic protection; and
whether, in such a case, the principle of the responsibility of the State charged with
wrongdoing operates undiminished or only for the benefit of certain subsidiaries. In
short, the whole subject is bedevilled, on the international plane, with the existence
of gaps in the law which it would be desirable to close either by way of treaties
(bilateral or multilateral agreements) or through the possible emergencehardly
likely in the circumstancesof customary law.

4. Meanwhile, in the face of this reality, the only way to try and resolve disputes
resulting from the insufficient development of the law in its present stage of
evolution is to submit them to the appreciation of municipal courts. But as the
number of gaps in legislation increases, so the task of the judge grows more difficult
and more and more resembles a work of legislation, something which is always
dangerous and out of place on his part. It is no doubt for this reason that in the
present case the Barcelona Traction bankruptcy proceedings in Spain have given
rise to numerous controversial episodes in which scathing criticism has been met
with apologetics of a questionable kind. Having regard to the orientation the Court
has given to the Judgment it is delivering, it is not possible to broach the merits of
the dispute in order to examine the charges relating to the denial of justice of which
Belgium complains; in my opinion, however, this does not absolve the international
judge of his obligation to lay stress on the objective position of the question of prin-
ciple, i.e., the existing disparity between the development of certain phenomena in
international economics, such as the grouping of limited companies under what are
known as holding companies, and the evolution of the law applicable. This
evolution has lagged behind; and it is possible that the legal lacunae which have in
consequence made their appearance may hamper the proper working of justice.

*
5. The preliminary question of the exhaustion of the remedies of Spanish municipal
law, though it was joined to the merits by the Judgment delivered by the Court in
1964, did not on that account lose its character of being a preliminary question. The
relevant rule of international law in fact lays it down that a claim based on the
principle of the diplomatic protection of foreign nationals is only amenable to
decision if it is shown that the remedies provided by municipal law have been
exhausted. For this reason, I think the Court might have included an examination of
this question in its Judgment, since, properly speaking, this matter merely
complements the other, concerning Belgium's jus standi. Even supposing [p 58] that
that State had proved its capacity to institute proceedings in behalf of the
shareholders in Barcelona Traction, the essential charges advanced in its
Application could only have been examined by the Court if the exhaustion of local
means of complaint had first been proved.

Due note must at all events be taken of the fact that, even though the question of the
various procedural remedies to be employed is closely bound up with the merits of
the Belgian claim, the Court has decided that, since the Belgian Government has not
been shown to have jus standi, it must refrain from considering in the Judgment the
merits of the dispute. Nevertheless, while respecting this decision, it is still
permissible, where the exhaustion of local remedies rule is concerned, to reason,
while drawing the distinction which is essential in order to preclude, when the time
comes to decide the purely procedural problem, any obtrusion of elements implying
a decision on the merits.

6. The first question to consider in this connection is that of the ascertainment of the
persons obliged to exhaust local remedies in the present case. In principle, this
obligation lies upon those who put forward a complaint on the grounds of damage
allegedly caused in respect of their rights or interests. In 1958 Belgium submitted a
first Application in behalf of Barcelona Traction; but after its discontinuance of
proceedings in 1961 that same State filed a fresh Application in 1962, in behalf, this
time, of the company's shareholders. As from that moment, the burden of the
obligation to exhaust local remedies fell without any doubt on the shareholders
concerned. Nevertheless, in my opinion all the remedies sought by the bankrupt
company before the date of the second Application must, for good legal reasons, be
regarded as having been sought for the benefit of the shareholders. The unlawful
acts with which the Spanish judicial authorities are charged are the same in both
Applications. If the obligation to give the Spanish courts an opportunity to rectify
those acts which is the underlying intention of the rulehad already once been
complied with by the injured company, it seems clear that the seeking of those same
remedies by the claimants under the second Application would not still be
necessary, indeed would be impossible if the time-limits for doing so had lapsed
with the passing of time. In accordance with the logic of this reasoning, the
omissions of the bankrupt company during the first period are opposable to the
shareholders protected by the terms of the second Application.

7. My general impression is as follows: it is beyond doubt that, in the course of the

judicial proceedings which took place in Spain, Barcelona Traction and other
persons and entities which made common cause with it availed themselves of a
considerable number of remedies with a view to having the decisions of the Spanish
authorities which they considered unjust reversed. It is no less true that, on the one
hand, those interested parties did not in all circumstances respect certain general
principles which form the essence of the rule of the exhaustion of local remedies,
and that, on the other, they neglected to seek certain available remedies or [p 59] did
not pursue to the very end other remedies which they had sought but which they did
not take as far as the highest court open to them, and, finally, that certain natural or
juristic persons who had sought various remedies had in law no chance of
succeeding since under Spanish law they were not empowered to bring such actions.
For example: as is well known, in bankruptcy proceedings only the bankrupt and his
creditors have jus standi in judicio, yet persons who did not possess or did not claim
these capacities nevertheless sought certain remedies.

On another point, the law is clear that it is for the judge alone and not for the
interested party to decide whether a remedy provided by law must in practice be
sought or not. In order to be entitled to refrain from doing so, it does not suffice for
such a party to prejudge the result and to regard success as improbable either
because there are adverse precedents or because the courts are presumed partial. It
seems to me that the defence, on the Belgian side, placed much reliance in certain
circumstances on its own judgment in evaluating the relevance or viability of certain
remedies, without leaving such decision to the courts, as ought to have been done.

8. Having recalled these questions of principle, I feel it worthwhile to consider the

chief remedies failure to seek which must, in my opinion, be regarded as an
omission for which the Belgian side would be responsible.

So far as administrative remedies are concerned, those that were omitted concern in
particular the decisions by which the Spanish Institute of Foreign Exchange refused
to grant currency that would have made it possible to implement the various plans
of compromise contemplated between Barcelona Traction and its bondholders, and,
more particularly, its refusal to approve the last plan of compromise, which
providedat the cost of a considerable lossfor the conversion into Spanish
currency of certain bonds expressed in foreign currency. The regulations then in
force in Spain allowed private parties to apply to the competent authorities for the
necessary authorizations: it is consequently evident, in accordance with well-
established principles relating to administrative hierarchies, that all refusals of
authorization of such a nature could form the subject of an appeal to a higher
authority. The refusals of the Spanish Institute of Foreign Exchange ought
consequently to have led to complaints by the interested party to the Minister of
Commerce, to whom the Institute was directly responsible. Furthermore, this type of
appeal, known as a hierarchic appeal, is indispensable if it is desired that it should
subsequently be possible for a contentious-administrative appeal to be admitted.

It has been alleged that no remedy is available against certain administrative

decisions if they fall within the discretionary power of the authority which takes
them, since that power, by virtue of its very nature, excludes all possibility of their
reversal. But the proceedings have shown that precedents are to be found in Spanish
administrative jurisprudence of remedies sought and granted against decisions of
this kind, [p 60] for a discretionary power by no means implies an arbitrary one and
only a higher authority is able to discern whether a subordinate official has
exceeded the limits of a reasonable discretion and ventured into the unlawful
domain of arbitrariness or unjust discrimination.

So far as the remedy of a contentious-administrative appeal is concerned, it can be

said to constitute the culminating point of purely administrative procedure. When
appeals to the administrative authorities have been totally exhausted, the way of
contentious-administrative proceedings remains open and has the advantage that this
matter falls within the purview of the Supreme Court. It is true that in order to have
access to this new remedy it would have been necessary in the present instance for
the party concerned first to appeal to the Minister against the decisions of the
Spanish Institute of Foreign Exchange, in order to obtain a decision from the highest
administrative authority, that is to say, an irrevocable decision. This remedy was not
sought; and it ought to have been, in particular, in connection with the refusal to
authorize the implementation of the last plan of compromise, which provided for the
payment of the bonds in pesetas, for the subsidiary company Ebro maintained in
relation thereto that it had been the subject of unjust discrimination on the part of
the administrative authorities, when compared with other entities.

9. With respect to judicial remedies, I must refer in the first place to the remedy of
"opposition" to the bankruptcy judgment (auto de quiebra), for which provision is
made in Article 1028 of the Spanish Commercial Code and in Article 1326 of the
Code of Civil Procedure. The former article lays down a time-limit of eight days as
from the publication of the bankruptcy judgment within which this remedy may be
sought. On 17 March 1948, no plea of opposition having been entered, the Reus
judge gave a decision declaring the bankruptcy judgment delivered with respect to
Barcelona Traction on 12 February 1948 to be final and res judicata. The pleadings
show that, by extra-judicial means, this Toronto company had knowledge of the
bankruptcy adjudication in Spain two days after the Reus judgment was delivered;
that the newspapers of Toronto, of Montreal and of London published information
on this subject as from 14 February; that representatives of or shareholders in the
company made statements to the press in Toronto and Madrid during the month of
February alluding to the bankruptcy adjudication; that on 1 March the president of
the company, on behalf of the board of directors, addressed to bondholders a
circular letter concerning the bankruptcy adjudication; and that the company on 9
March gave a power of attorney to enter judicial appearance in Spain (see Annex 81
to the Preliminary Objections). There is thus no doubt that from an extra-judicial or
factual point of view Barcelona Traction would have been in a position to take legal
action and enter a plea of opposition to the bankruptcy judgment well before the
decision taken by the Reus judge on 17 March. However, the bankruptcy
proceedings gave rise to a controversy between the Parties with respect to two
points of law: the non-notification of the judgment of 12 February to [p 61] the
bankrupt at its domicile in Toronto (Article 260 of the Code of Civil Procedure),
and the positive irregularity which, according to Belgium, characterized the mode of
publication of the said judgment, which took place only in Spain and never at
Toronto where the bankrupt company had its domicile. The Belgian Government
maintains that in these circumstances the legal time-limit for making use of the
remedy of "opposition" did not begin to run. In fact, Barcelona Traction did not
enter a plea of opposition to the bankruptcy until June 1948. The Spanish
Government takes the view that, since Barcelona Traction's subsidiaries were
domiciled and carried on their activities in Spain, publication abroad was not
warranted. The Court could only have decided these disputed points by examining
the relevant decisions of the municipal courts which upheld the Spanish position, in
order to establish whether or not a denial of justice from the point of view of
international law can be imputed to them: which would have meant deciding the
merits of the case. Since such a pronouncement has been ruled out by the Judgment,
I must refrain from taking up a position on the question of whether the Belgian side
did or did not seek the local remedy of "opposition" to the bankruptcy judgment in
proper fashion and in good time.
10. The judicial order of 17 March 1948, which finally confirmed the effects of the
bankruptcy judgment of 12 February, was no doubt of a very serious nature, for it
opened the way for the sale of the bankrupt's property. The remedies sought by the
subsidiaries against this order were paralysed, in accordance with the law, in
consequence of the Boter declinatoria; it consequently became necessary to seek a
different sort of remedy in order to avoid or postpone the sale. One of the few
remedies capable of having this effect was the remedy of revisin (Articles 1796 et
seq. of the Code of Civil Procedure). According to the law, this remedy may be
sought if a judgment which has become final was delivered "as a result of
subornation, violence or other fraudulent means" (paragraph 4 of the article referred
to). In this connection, the Application speaks of arbitrariness, partiality, contempt
for the principle of the equality of parties, and, in short, of a "deliberate intention"
on the part of certain Spanish judicial authorities "of favouring" the personal "plans"
of the enemies of Barcelona Traction. These defects, in Belgium's opinion, go
beyond mere negligence, flagrant errors or imperfections in the law applicable.
Referring more specifically to the bankruptcy judgment pronounced by the Reus
judge, Belgium has spoken in the Reply of "flagrant connivance" between that judge
and the petitioners in bankruptcy (para-graph 26) and in oral argument of the court's
lack of scruples. It has thus unequivocally maintained that there was dolus or fraud.

Belgium has raised various objections with regard to the appropriateness and
effectiveness of the remedy of revisin.

In the first place, it contends that under Spanish law revisin is only available
against a sentencia firme, i.e., against a judgment finally pronouncing upon an
action or claim, and that in Spanish terminology itself [p 62] a bankruptcy judgment
is only an auto, i.e., a decision which puts an end not to the dispute, as a sentencia or
judgment proper does, but only to an incidental issue or partial aspect of the case.

This assertion might appear justified from a strictly terminological point of view,
but in fact bankruptcy proceedings have in substance a structure all their own,
which differs from that of ordinary proceedings with their three classic stages of
statement of claim and answer thereto, production of evidence and judgment. In
bankruptcy, the proceedings are divided into five "sections", dealt with in separate
"files" (Articles 1321 and 1322 of the Code of Civil Procedure). The first section
concerns the bankruptcy judgment, ancillary provisions concerning its execution,
and compositions; the second deals with the administration of the bankruptcy; the
third with the retroactive effects of the bankruptcy; the fourth with the proving and
ranking of debts; and the fifth with the classification of the bankruptcy and the
discharge of the bankrupt. The subject-matter of each of these sections, each with its
separate file, is kept clearly distinct, and in each of them independent decisions
having the force of res judicata can be delivered. In this sense, it is sound doctrine
that a bankruptcy judgment (auto) can be assimilated to a sentencia, in particular
when that judgment has become final (firme) by express judicial decision, either
through no plea of opposition to it having been entered or through such opposition's
having failed. It is consequently correct to say that in such a case the fate or final
direction of the action is settled. A bankruptcy judgment, once it has become res
judicata, automatically sets in motion all the measures of execution which must
carry the proceedings through to their conclusion: liquidation of the assets, payment
of the liabilities and distribution of the surplus if any. The effects of such a
judgment are those of a true sentencia. Lastly (and this is decisive) an examination
of Title XIII, Book II, of the Code of Civil Procedure enables it to be seen that
Article 1330, with Article 755, gives the name of sentencia to the judge's
pronouncement deciding, after the presentation of evidence, the incidental
proceedings of opposition to the bankruptcy judgment. In terms of the law, a
decision which, in the absence of an entry of opposition, recognizes such judgment
to have the authority of res judicata, has exactly the same character and weight as a
sentencia (see Article 408).

It is consequently my belief that the remedy of revisin is available against an auto

adjudicating bankruptcy, since the latter possesses the characteristics of a true
sentencia. In any event, should any doubt have remained, the rule of exhaustion
required that the remedy be sought by the interested party, for solely a judge can
pronounce upon its admissibility.

Still other reservations have been expressed by Belgium with regard to the
possibility of relying on the ground for revisin to do with the employment of
fraudulent means in the proceedings. Although in the last stage of oral argument
counsel for Belgium attenuated noticeably the accusa-[p 63] tions made in the
pleadings against certain Spanish judicial authorities, there was no formal
withdrawal of them. Those accusations consequently stand and, for the purposes of
the rule of the exhaustion of local remedies, evidence would have had to be supplied
for it to be possible to establish whether the proceedings were or were not vitiated
by such irregularities. It was the more indispensable in the present case in that proof
of the facts alleged would have had as its immediate consequence the annulment of
the tainted procedural acts: in other words, that very correction of the legal position
which is the object of the rule. It will consequently be seen how, from the
international point of view, the results of the remedy of revisin are of capital
importance when it subsequently comes to establishing the existence or non-
existence of the responsibility of the State.
The Belgian side nevertheless foresaw difficulty in obtaining tangible proof of the
accusations of dishonesty. But it always had at its disposal against the authorities
accused the prior remedy of proceedings to establish civil liability (Code of Civil
Procedure, Articles 903 et seq.), which would have made it possible to establish
whether criminal liability was involved or not (Article 918 of the same Code). In the
event of an affirmative answer, the appropriateness of the remedy of revisin would
have been beyond dispute. In short, the omission of this remedy created a legal
vacuity for which the applicant Party must bear the responsibility. The rule of
exhaustion was not complied with.

11. It would also be possible to consider the case of other remedies that were not
sought, or which were sought improperly or out of time, by Barcelona Traction,
Sidro and Sofina, or other entities defending the interests of the bankrupt company.
In this connection an analysis might be made of certain remedies aimed, for
example, at challenging the jurisdiction of the courts or calling in question certain
aspects of the Conditions of the judicial sale. It seems to me, moreover, to have
been proved by the pleadings and oral arguments that some of the remedies sought
on behalf of Barcelona Traction were not pursued to the end, that is to say, so far as
the obtaining of a final decision from the highest court. Others were only exhausted
after the commencement of the international proceedings in this Court. I
nevertheless do not consider it indispensable to enter into detail in this connection: I
would merely stress that the remedies I have just examined were considered simply
as examples, without there being any intention of exhaustively enumerating them;
since this question has in fact been excluded from the Judgment, any more thorough
study of its many aspects would, indeed, serve no practical purpose. The essential
point is that, certain of the local remedies available not having been sought or duly
pursued to the end, the conditions for the continuation of diplomatic protection by
judicial means have not been satisfied.

(Signed) J.L. Bustamante Y Rivero.

[p 64]

SEPARATE OPINION OF JUDGE SIR GERALD FITZMAURICE

Introductory

1. Although (if with some reluctance) I agree and have voted with the majority of
the Court in finding the Belgian claim in this case to be inadmissible, and broadly
for the principal reason on which the Judgment is basednamely that in respect of
an injury done to a company, prima facie the company's government alone can
sustain an international claimI have a somewhat different attitude on various
aspects of the matter, which I wish to indicate. In particular (a) I would go
considerably further than does the Judgment in accepting limitations on the
principle of the "hegemony" of the company and its government; furthermore (b),
though I have felt bound to vote as I have, I nevertheless hold it to be an
unsatisfactory state of the law that obliges the Court to refrain from pronouncing on
the substantive merits of the Belgian claim, on the basis of what is reallyat least
in the actual circumstances of this casesomewhat of a technicality.
2. In addition, there are a number of particular matters, not dealt with or only
touched upon in the Judgment of the Court, which I should like to comment on.
Although these comments can only be in the nature of obiter dicta, and cannot have
the authority of a judgment, yet since specific legislative action with direct binding
effect is not at present possible in the international legal field, judicial
pronouncements of one kind or another constitute the principal method by which the
law can find some concrete measure of clarification and development. I agree with
the late Judge Sir Hersch Lauterpacht FN1 that it is incumbent on international
tribunals to bear in mind this consideration, which places them in a different
position from domestic tribunals as regards dealing withor at least commenting
onpoints that lie outside the strict ratio decidendi of the case.

-----------------------------------------------------------------------------------------------------
----------------
FN1 The necessary references and citations are given in the opening paragraphs of
the separate Opinion of my colleague Judge Jessup in the present case (q.v.),and I
associate myself with the views he expresses in this connection.
-----------------------------------------------------------------------------------------------------
----------------

*
[p 65]

3. In the next part (II) of this opinion (paragraphs 4-34) I propose to indicate the
criteria on the basis of which I have felt obliged to concur in the main conclusion
reached by the Court, but I shall do so in the light of my view that certain of the
considerations of law which compel that conclusion prove, in the international field,
to be unserviceable as soon as they are applied to any situation which is out of the
ordinary. In the succeeding part (IIIparagraphs 35 and 36), I state the conclusions
which I believe ought to be drawn from part II as to the place of equitable
considerations in the international legal field, and the growing need there for a
system of Equity. In the next two parts (IV and V) I propose, as indicated supra in
paragraph 2, to comment on a certain number of matters (also of a more or less
preliminary character) which, though not relevant to the particular point on which
the Court's decision turns, formed part of the long series of questions debated by the
Parties in the course of their arguments, and which accounted, or could have
accounted, for individual rejections of the Belgian claim by certain Members of the
Court. Part IV (paragraphs 37-65) will deal with matters affecting the nationality of
the Barcelona Traction Company's shareholders, and Part V (paragraphs 66-83)
with certain other matters having a preliminary character,viz. the question of
jurisdiction in bankruptcy, and a particular aspect of the local remedies rule. Finally,
in the concluding part (VIparagraphs 84-90)since the subject has evidently
given rise to some misunderstandingI discuss the philosophy of the joinder of
preliminary objections to the merits. There is finally a Postscript on the question of
the length of the proceedings in this and other cases, and certain related matters.

II

The Question of Belgium Locus Standi in Judicio FN2

-----------------------------------------------------------------------------------------------------
----------------
FN2 Although I now agree with my colleague Judge Morelli's view that the
question of Belgium's right to claim on behalf of the Barcelona Traction Company's
shareholders, in so far as Belgian, is really a question of substance not of capacity
(because the underlying issue is what rights do the shareholders themselves have), it
is convenient for immediate purposes to treat the matter as one of Belgian
Government standing.
-----------------------------------------------------------------------------------------------------
----------------

4. Although, as I have said, I reach the same final conclusion as in the Judgment of
the Court, my approach is different. In particular I do not base myself as does the
Judgment to some extent (vide its paragraphs 33-36), and as figured fairly
prominently in the arguments of the Parties, on any consideration turning on the
question of to whom, or to what entity, was the obligation owed in this case, not to
act in a manner [p 66] contrary to international law. This does not seem to me to be
the right question to ask where the issue involved is not one of treaty or other
particular obligations, but of general international law obligations in the sphere of
the treatment of foreigners. If in the latter area a State, either directly or through its
agencies or authorities, acts illicitly, it stands in breach of international law
irrespective of whether any other State is qualified to take the matter up. For
instance if an individual were concerned, he might be stateless. If in the present case
there have been contraventions of international law, they are in no way legitimized,
nor do they become any the less illicit, because Canada has not (or even possibly
could not FN3) pursue the matter, and because Belgium is held to possess no locus
standi in judicio for doing so. Nor is the question of the entity to which the
obligation is due helpful even for the purpose of identifying the party entitled to
claim, for such entity would itself previously need to be identified, and the
discussion would turn in a circle.

-----------------------------------------------------------------------------------------------------
----------------
FN3 i.e., if it were held that no "genuine link" existed between Canada and the
Barcelona Traction Company on the basis of the principle of the Nottebohm case
(vide infra, paragraphs 26-32).
-----------------------------------------------------------------------------------------------------
----------------

5. The material and only pertinent question is who or what entity, if, any is entitled
to claim in respect of damage accruing to shareholders in consequence of illicit
treatment of the company;and in order to answer this since the matter concerns a
company and its shareholdersit is above all necessary to have regard to the
concept and structure of companies according to the systems of their origin, which
are systems of private or domestic law,and furthermore to insist on the principle
that when private law concepts are utilized, or private law institutions are dealt with
in the international legal field, they should not there be distorted or handled in a
manner not in conformity with their true character, as it exists under the system or
systems of their creation. But, although this is so, it is scarcely less important to
bear in mind that conditions in the international field are sometimes very different
from what they are in the domestic, and that rules which these latter conditions fully
justify may be less capable of vindication if strictly applied when transposed onto
the international levelFN4. Neglect of this precaution may result in an opposite
distortion,namely that qualifications or mitigations of the [p 67] rule, provided for
on the internal plane, may fail to be adequately reflected on the international,
leading to a resulting situation of paradox, anomaly and injustice.

-----------------------------------------------------------------------------------------------------
----------------
FN4 In this respect I fully associate myself with the views expressed by Lord
McNair in his South West Africa case (1950) Opinion when, speaking of the United
Nations Trusteeship System, he said (I.C.J. Reports 1950, at p. 148) that private law
institutions could not be imported into the international field "lock, stock and
barrel", just as they were, and that private law rules could only serve as indications
of principle and not as rigid injunctions in the international domain. However, in the
present case there is no question of international law setting up a new international
institution analogous to the private law institution of the limited liability company.
The latter remains a purely private law creation, which international law must take
as it finds it. The complaint I am making in this Opinion is that international law has
indeed taken it as it has found it over part of the ground, but not over the rest,
thereby introducing an unjustified distortion.
-----------------------------------------------------------------------------------------------------
----------------

6. This is what seems to have occurred in the field of the corporate entity at the
international level. Since the limited liability company with share capital is
exclusively a creation of private law, international law is obviously bound in
principle to deal with companies as they are,that is to say by recognizing and
giving effect to their basic structure as it exists according to the applicable private
law concepts FN5. Fundamental to the structure of the company is the ascription to
it, qua corporate entity, of a separate personality over and above that of its
component parts, viz. the shareholders, with resulting carefully drawn distinctions
between the sphere, functions and rights of the company as such, acting through its
management or board, and those of the shareholder. These distinctions must
obviously be maintained at the international level: indeed to do otherwise would be
completely to travesty the notion of a company as a corporate entity. Thus it is that,
just as in domestic courts no shareholder could take proceedings in respect of a tort
or breach of contract committed in respect of the company, but only the latter could
do so, through the action of its management with whom the decision would liea
decision which, broadly speaking, the shareholder must accept,so also if an illicit
act injurious to the company or infringing its rights takes place on the international
plane, it is not the government of the shareholder but, in principle, that of the
company alone, which can make an international claim or bring international
proceedings;the decision whether to do so or not lying with the latter
governmenta decision which again the foreign shareholder must accept, in the
sense that neither he nor his government can require (still less compel) the
company's government to take action.

-----------------------------------------------------------------------------------------------------
----------------
FN5 It is inevitable that these concepts should be referred to herein in very broad
and general terms. The details vary from country to country, and some things may
not be true or may need considerable qualification for certain countries.
-----------------------------------------------------------------------------------------------------
----------------

7. In neither case does it make any difference that the wrong done to the company
recoils or "repercusses" onto the shareholder FN6, e.g., by [p 68] causing the market
value of his shares to fall or the profits of the company to be diminishedwhence
lower dividends; or by causing difficulty as to disposing of the shares(for want of
ready buyers),for while the shareholder has a legal right not to have his shares
cancelled or confiscated without compensation, he has no legal right that they shall
have, or be maintained at, any particular market value,and while the shareholder
has a right to receive a dividend if a dividend is declared, he has no right that it shall
be declared, or (if declared) be for any particular amount FN7,and again, while he
has a right freely to dispose of his shares FN8, the law does not guarantee him either
a buyer or a price.

-----------------------------------------------------------------------------------------------------
----------------
FN6 Suppose that by the tortious negligence of a third party the company's
warehouses are burned down,the shareholder may indirectly be seriously affected,
but he can have no right of action: the property was not his but the company's. It is
the same if his interest is affected by the failure of a third party to carry out a
contract with the company, for he himself is not a party to the contract. It is quite
another matter if the act complained of is directed against, or directly infringes, his
specific rights as a shareholder,if for instance his right freely to dispose of his
shares were illicitly interfered with, or if resolutions duly passed at the general
meeting of shareholders were declared null and void, etc.
FN7 Except of course in the case of fixed interest securities of various kinds.
FN8 As a general rule, that is. Under wartime or other emergency conditions,
owners of certain kinds of securities (e.g., those expressed in foreign currency)
might be required to dispose of them to, or only to, the government or central bank.
-----------------------------------------------------------------------------------------------------
----------------

8. But at this point it becomes clear that something has gone wrong, that the
analogy has broken down,because certain qualifications or modifications, it might
be said mitigations, which, in the domestic field, affect and as it were alleviate the
situation just described, are not, in the present state of the law, reflected, or not
adequately so, in the international domain;for whereas at that level this situation
is one which, as the law now seems to stand, may leave the shareholder powerless to
protect his interests, this is not the case on the domestic plane, where the principle
of the "hegemony" of the company is accompanied by certain balancing elements,
acting as a counterweight, which are only up to a point reflected in the present
condition of international law (vide infra, paragraph 11 and the footnotes thereto).

9. In order to understand this matter, it is necessary to have regard to the underlying

rationale of the "hegemony principle". This resides in something more than the
purely juridical situation resulting from the separate legal personality of the
company, and the fact that, in the type of case now in question, the rights infringed
are those of the company, not of the shareholderthough his pocket may be
affected, actually or potentially(vide supra, paragraph 7 and footnote 6). Nor does
it reside in the practical considerations which, on the domestic plane, at least, must
in all normal circumstances rule out the possibility of separate and independent
action by shareholders in respect of the treatment of the company, as such, by third
parties.

10. The true rationale (outside but underlying the law) of denying to [p 69] the
shareholder the possibility of action in respect of infringements of company rights is
that, normally, he does not need this. The company will act and, by so doing, will
automatically protect not only its own interests but those of the shareholders also.
That is the assumption; namely that the company is both capable of acting and
will do so unless there are cogent reasons why, in the interests of the company and,
hence, indirectly of the shareholders, it should refrain FN9,the decision involved
being one of policy, prima facie for the determination of the management. (It is
precisely here, however, that the beginnings of a profound difference between the
domestic and the international situations can be discerned, for if and when a
government declines or fails to intervene on behalf of a company of its nationality
detrimentally affected by illicit foreign action, the reasons will be the government's
not the company's FN10, and will normally have nothing to do with the company's
interests, which indeed are likely to be adversely affected still further by the
government's refusal or failure, so that no contingent or long-term advantage, or
avoidance of disadvantage, will result, as might be expected if the decision were the
company's. The motivations involved are quite distinct. But all this is to anticipate.)

-----------------------------------------------------------------------------------------------------
----------------
FN9 Because, e.g., too expensive, or likely to have undesirable repercussions, to
offend some powerful interest, interfere with some other objective, involve some
awkward revelation, etc.
FN10 These may, but just as probably may not, have to do with the actual merits of
the claim. For instance a government may well not wish to press a private claim
against another government with which it is conducting difficult negotiations on a
matter of overriding national importance. Many other instances could be given.
-----------------------------------------------------------------------------------------------------
----------------

11. The assumption that the company will act, or will have good reasons for not
doing so(reasons which will be in the eventual interests of the shareholders
also)underlies equally the variously expressed axiom, on the presumed truth of
which so much of the applicable law is basednamely that the fate of the
shareholder is bound up with that of the company; that his fortunes follow the
latter's; that having elected to throw in his lot with the company, he must abide by
the consequences, be they good or bad, so long as he maintains his connection with
it, etc., etc. The idea has been well expressed in a recent work FN11 as follows (my
translation):

"If, in principle, the shareholders must suffer the fate of the company, this is
because the corporate entity is a legal person capable by its corporate action of
protecting the interests which the shareholders have entrusted to it . . . transferring
to the corporate [p 70]entity a part of their personality and rights, with the object of
thereby obtaining a better return and a more effective safeguard. But on that
account, if such is the justification for the indivisibility of the corporate entity, such
is also its limit."

-----------------------------------------------------------------------------------------------------
----------------
FN11 Paul De Visscher, "La Protection Diplomatique des Personnes Morales"
(Diplomatic Protection of Corporate Entities)Recueil [i.e., Collected Courses] of
the Hague Academy of International Law, 1961, Vol. I, at p. 465.
-----------------------------------------------------------------------------------------------------
----------------

The nature and extent of this limit on the international plane will be considered
later. In the domestic sphere it takes two main forms, the external and the internal
the latter being action within the company itself by means of its own processes and
procedures (vide infra, paragraph 12). As to the former, most developed systems of
law contain provisions which have been described in very general terms as being

"intended to protect the interests of shareholders if the company's officers are

considering their own interests rather than the interests of the company, and also to
protect the interests of minorities of shareholders" FN12.

-----------------------------------------------------------------------------------------------------
-------
FN12 Beckett, "Diplomatic Claims in Respect of Injuries to Companies",
Transactions of the Grotius Society, Vol. 17 (1932), at p. 193, footnote (7), citing
(and see also at p. 192) Dutch, English, French and German law. Beckett also cites a
passage from Halsbury's Laws of England. The same passage as it figures in the
later (1954) edition, after stating that normally only the company not shareholders
can sue third parties, continues as follows:

"Where, however, the persons against whom relief is sought hold and control the
majority of the shares, and will not permit an action to be brought in the company's
name, shareholders complaining may bring an action in their own names and on
behalf of the others and they may do so also where the effect of preventing them so
suing would be to enable a company by an ordinary resolution to ratify an
improperly passed special resolution."

See also Mervyn Jones, "Claims on behalf of Nationals who are Shareholders in
Foreign Companies" in British Year Book of International Law, Vol. XXVI (1949),
at pp. 232-234, citing American, Austrian, Belgian, English, French, Italian,
Norwegian, Swedish and Swiss law.

See further as to German law in "La Personnalit Morale et ses Limites" (The
Corporate Entity and its Limits), published by Pichon & Durand-Auzias for the
Institute of Comparative Law of the University of Paris in Librairie Gnrale de
Droit et de Jurisprudence, 1960, at pp. 43-44 (per Dr. Ulrich Drobnig); and, in ibid.,
at p. 150, the following statement of Swiss law (per Prof. J. M. Grossenmy
translation): "There are fortunately other [sanctions] which enable [the
shareholders] to compel the corporate entityor more exactly its managementto
change its attitude."
For analogous provisions of French law see paragraph 11 of my colleague Judge
Gros' separate Opinion.
-----------------------------------------------------------------------------------------------------
-------

Such provisions of course differ from country to country but, without attempting to
particularize, their broad effect is either to enable shareholders to bring an action in
their own names against a third party, in a variety of circumstances involving fraud,
malfeasance, negligence or [p 71] other improper refusal or failure on the part of the
management to act for the protection of the company's interests, or else to enable
shareholders to bring proceedings against the management itself to compel it so to
act. In short, generally speaking, domestic law makes at least some provision for the
case where the basic assumption of action by the company, rendering action by the
shareholders unnecessary, ceases to hold good FN13.

-----------------------------------------------------------------------------------------------------
----------------
FN13 In addition to the passage from Halsbury's Laws of England cited in the first
paragraph of footnote 12 supra, the following sections from the same work also
indicate the position under English law (loc. cit., pp. 222-223, omitting references to
footnotes):

"458. Statutory right of members collectively. The members of a company

collectively have statutory rights, some of which are exercisable by a bare majority,
as, for instance, a resolution at the statutory meeting; others by a particular majority,
as in the case of a reconstruction; and others by a minority, as in the case of a
requisition for a meeting of shareholders, or of an application to the Board of Trade
to appoint an inspector to investigate the company's affairs, or of an application by
an oppressed minority to the court for relief.

Statutory rights cannot be taken away or modified by any provisions of the

memorandum or articles [i.e., of the company]."

"461. Rights under the general law. The rights of a member under the general law
include his right... to restrain directors from acting ultra vires the company or in
excess of their own powers or acting unfairly to the members."
-----------------------------------------------------------------------------------------------------
----------------

12. The other type of possibility which private law affords to shareholders (or at
least to a majority of them; and often even to a minority) if dissatisfied with the
policies of the companyincluding therefore such a thing as a failure to proceed
against a third party in the protection of the company's interestsis to take action
on the internal plane within the confines of the company itself, and through its
normal procedures (shareholders' meetings, voting of resolutions, etc.), directed to
influencing and if necessary changing, those policies or even, in the last resort,
modifying or changing the management itself. In certain circumstances,
reconstructions constitute another possibility.

*
13. The question that now has to be asked is how far these domestic law limitations
on the exclusive power of the management, allowing of independent action by the
shareholders, are reflected at the international level, so as correspondingly to qualify
the principle of the exclusive right of the government of the company to intervene,
and admitting the possibility of intervention by that of the shareholders, even though
the injury is to the company as such, rather than to any independent stricto sensu
shareholding right. This question has to be asked because, if it is [p 72] not right
that international law should distort the structure of the company (an essentially
private law concept) by failing to give all due effect to the logic of its separate
personality, distinct from that of the shareholders,it is no less wrong, and an equal
distortion, if international law fails to give due effect to the limitations on this
principle recognized by the very system which, mutatis mutandis, it is sought to
apply on the international plane. In short, such application should be integral, not
partial. But is it?or is it not rather the case that international law, while purporting
to base itself on, and to be guided by the relevant features of municipal law, really
does so only to a certain extent, departing from it at precisely that point where,
under municipal law the management of the company can in certain circumstances
be compelled by the shareholders to act?

14. It seems that, actually, in only one category of situation is it more or less
definitely admitted that intervention by the government of foreign shareholders is
allowable, namely where the company concerned has the nationality FN14 of the
very State responsible for the acts or damage complained of, and these, or the
resulting circumstances, are such as to render the company incapable de facto of
protecting its interests and hence those of the shareholders FN15. Clearly in this
type of case no intervention or claim on behalf of the company as such can, in the
nature of things, be possible at the international level, since the company has local
not foreign nationality, and since also the very authority to which the company
should be able to look for support or protection is itself the author of the damage.
Consequently, the normal rule of intervention only on behalf of the company by the
company's government becomes not so much inapplicable as irrelevant or
meaningless in the context. The efficacity of the corporate entity and its capability
of useful action has broken down, and the shareholders become as it were
substituted for the management to protect the company's interests by any method
legally open to them. If some of them have foreign nationality, one such way is to
invoke the intervention of their government, and in the circumstances this must be
regarded as admissible. Thus the same [p 73] authority as was cited in paragraph 11
above continues (translation): FN16

". .. From this it necessarily results that if the rational justification for the
mechanism of the corporate entity is brought to a collapse by the act of the very
State whose law governs the status and allegiance of the corporate entity, its
personality is no longer anything but a fiction void of all meaning, in which there
can now be seen nothing but a bundle of individual rights."

-----------------------------------------------------------------------------------------------------
----------------
FN14 For present purposes I am taking the nationality of a company to be that of
the country of incorporation, the laws of which govern the company's constitution
and functioning. However, vide infra paras. 33 and 34.
FN15 If the wrong done to the company, or breach of contract with it, comes not
from another private party but from the authorities of the country, it is again in
principle only the company which can take legal action, to the extent that the local
law allows the government to be sued. If however, as happened for instance in the
El Triunfo case (United Nations Reports of International Arbitral Awards, Vol. XV,
p. 464), the action taken against the company by the authorities has the effect of
completely paralyzing it, then the shareholders can act and, if they are unable to
obtain redress locally, but have foreign nationality, can, according to the view here
discussed as being now more or less generally recognized, invoke the aid and
intervention of their government.
FN16 Loc. cit. in footnote 11 supra.
-----------------------------------------------------------------------------------------------------
----------------

15. Notwithstanding these cogent considerations of principle, the validity of this

exception to or limitation on the rule of non-intervention by the government of the
shareholders in respect of wrongs done to the company, is contested on a variety of
grounds. It is said for instance that this type of intervention on behalf of foreign
shareholders ought only to be permissible where the company itself is also
essentially foreign as to its management and control, and the nature of the interests
it covers, and where its local nationality did not result from voluntary incorporation
locally, but was imposed on it by the government of the country or by a provision of
its local law as a condition of operating there, or of receiving a concession. In such
cases, it is said, the company's nationality is an artificial one that does not
correspond with the underlying realities, and for this reason (but for this reason
only) the local government should not be able to avail itself of the obstacle of its
nationality which it has designedly insisted on interposing between itself and those
realities possibly for the express purpose of preventing foreign intervention.
Where however the local nationality was deliberately assumed by the company as a
matter of choice, then, so it is said, there is no reason for making any such departure
from the basic rule of the company screen.

16. It is doubtless true that it is in the case of such "enforced" local nationality that
situations leading to foreign shareholders in the company invoking the intervention
of their government are most liable to arise. Nevertheless, there does not seem to be
any sufficient reason of principle for drawing the distinction involved. The fact of
local incorporation, but with foreign shareholding, remains the same in both types
of case, whatever the motivations or processes that brought it about. Nor are the
motivations which lead foreign interests to seek or not seek local nationality always
easy to assess: they may be very mixed. Nor again is it always the case that
companies with a large foreign shareholding, and mainly controlled from abroad, do
not voluntarily obtain local incorporation: they often do, and there may be sound
business reasons for it. Yet they are just as liable in practice to be regarded locally
as [p 74] basically foreign, and to suffer from action which may prevent them, as
companies, from acting for themselves.

17. Another objection to be urged was that in so far as the doctrine of a right of
intervention on behalf of foreign shareholders in a locally incorporated company
unable to act for itself, or rendered incapable of so doing, may depend on a number
of precedents deriving from cases decided by international tribunals, it will be found
on a careful examination of those cases that the "company" that was concerned was
usually more in the nature of a firm, partnership, or other similar association of
persons, than of a true separate corporate entity distinct from those persons. Hence,
it is objected, in so far as the latter were admitted, to claim and their governments to
support their claims, they were acting in respect of damage to specific stricto sensu
rights of their own in the association concerned, and not of the rights of the
association as such. Where on the other hand, so it is said, a corporate entity really
was involved, the capacity to claim on behalf of shareholders resulted from the
express terms of the treaty, convention or "compromis" submitting the case to the
tribunal,consequently these cases cannot be cited as implying recognition of any
general principle of law allowing of such claims.

18. It may be true that the exact rationale of a number of the decisions concerned is
not very easy to determine precisely, and lends itself to much controversy, as the
course of the written and oral proceedings in both phases of the present case have
amply demonstrated. Any thorough determination would however take up a
disproportionate amount of space here: nor is it necessary,for the considerations
of principle invoked in previous paragraphs of this Opinion, based on domestic law
analogies, are quite sufficient in themselves to justify the doctrine of a right of
intervention on behalf of shareholders "substituted" for a moribund or incapable
company of local nationality, in order to protect its interests and their own.

19. It is my view therefore, that the legal position is correctly stated in the following
two paragraphs from the same source as was previously cited FN17:

"In sum, in order to weigh the admissibility of the protection of shareholders, it is

necessary to adhere essentially to the idea of the effectiveness of the corporate
entity. It matters little whether, according to internal law criteria, the corporal
personality subsists or not. Even where it does, an international tribunal can admit
the [p 75] diplomatic protection of shareholders from the moment when it finds as a
fact that the damage caused to the corporate entity has had the effect of paralysing
or sterilising the usefulness that the mechanism of corporate personality ought
normally to bring about for the benefit of the shareholders.

-----------------------------------------------------------------------------------------------------
-------
FN17 Loc. cit. in footnote 11 supra, at p. 477.
-----------------------------------------------------------------------------------------------------
-------

In that case, an international tribunal, not being bound by internal law criteria,
'pierces the corporate veil', as it is said, [but] it would be more accurate to say that it
registers the absence of all effective personality, of any effectual intermediary
between the shareholders and the rights infringed."
These two paragraphs moreover, even if only in general terms, almost exactly
describe the situation of the Barcelona Company which, though still subsisting and
formally in existence FN18 has, as to its functioning in Spain, been entirely
paralyzed and rendered incapable of further useful actiona situation not only
admitted but, for their own purposes, considerably insisted upon by the Spanish
side. The Company was indeed crippled to the point where, deprived of all its
Spanish assets and sources of income, it could no longer find the funds for its legal
defence, these having to be supplied by the very same shareholders whose right to
invoke the diplomatic protection of their Government, Spain denies.

-----------------------------------------------------------------------------------------------------
----------------
FN18 I share the view expressed in the passage just cited that the formal keeping
alive of the company does not affect the realities of the matter. However, the
Belgian position would (ironically) have been stronger if the Spanish events had
resulted not merely in the "hispanicization" of the undertaking in Spain, but in
forcing the liquidation or winding up of Barcelona Traction itself,for it would
then have been much more difficult to maintain, through the fiction of the
Company's continued existence, that only the Canadian Government could claim.
-----------------------------------------------------------------------------------------------------
----------------

20. In consequence, had the Company been Spanish by incorporation, instead of

Canadian, I should have had no hesitation in holding that a claim by Belgium on
behalf of the Belgian shareholders in the Company was admissible;and it is
indeed one of the ironies of this case (but not the only one FN19) that the Belgian
Government would have been in a much stronger position as regards the
admissibility of its claim had the Company been Spanish rather than Canadian.

-----------------------------------------------------------------------------------------------------
----------------
FN19 See previous footnote. It may also be thought (see the separate Opinion of my
colleague Judge Gros, paragraph 12) that the Company would have fared better
through an open and avowed nationalisation or expropriation of its Spanish
undertaking, accompanied by the payment of adequate compensation, than it did
through the process of the bankruptcy. But this would have depended on the nature
and amount of the compensation.
-----------------------------------------------------------------------------------------------------
----------------

*[p 76]

21. Must the Canadian nationality of the Company then rule out the Belgian claim?
In the present state of the law it would seem that it must. In connection with this
conclusion, however, a number of points have to be considered in order to show
why, although it is correct on the basis of extant law, this law itself, as it now
stands, is in this respect unsatisfactory.

22. The first of these points is that, as required by the logic of the considerations
indicated in paragraphs 5 to 13 supra, if on the domestic plane there are
circumstances in which some action is open to the shareholders notwithstanding that
it is prima facie the company's position, rather than (directly) their own, that is in
question,then in corresponding circumstances the government of the shareholders
should, on the international plane, be entitled to intervene and claim. One such case
has already been discussed supra in paragraphs 14-20: the company is defunct or
paralyzed and there can be no question of intervention or claim by its government,
for the latter is itself the tortfeasor government, if wrong there has been. Similarly,
if international law is to remain faithful to the concept of the company and, in
dealing with the latter on the international plane, is to give due effect to its essential
elements, then it must provide for the case where the company's government not
being the tortfeasor government (but also not being the government of the majority
of the shareholders)for reasons of its own that have nothing to do with the
interests of the company (see supra paragraph 10) refuses or fails to intervene, even
though there may be a good, or apparently good case in law for doing so, and the
interests of the company require it. Just as on the domestic plane an analogous
failure or refusal on the part of the management of the company would normally
enable the shareholders to act, either (if the element of dolus or culpa were present)
by legal action against the management, or against the tortfeasor or contract-
breaking third party,or else through the internal processes of the company;so
also, on the international plane, ought the inaction of the company's government
enable that of the shareholders to act (and obviously there would be ways of
resolving the practical difficulties of the company's government subsequently
changing its mindif the servants of the law cared to work them out;I think that
in this respect paragraphs 94-98 of the Court's Judgment make too much of this
matter).

23. In fact, international law does not at present allow of this except possibly in
the one case of the company's government being actually disqualified at law from
acting (as to which see infra, paragraphs 26-32). The reasons for this
insufficiencyfor such it ismay be perfectly understandable, but this does not
alter the fact that international law is in this respect an under-developed system as
compared with private law, and that it fails to provide the recourses necessary for
protecting [p 77] on the international plane the interests not merely of the
shareholders but of the company itself. What are these reasons? They are of course
that a government is not in the same position as a company and cannot be made
subject to the same constraints. The management of a company owes a duty, not
only to the company but to the shareholders, and is bound to act in the best interests
of the company, and hence of the shareholders, basing itself on an informed and
well-weighed estimate of what these are. A government is under no such duty. It is
perfectly free on policy grounds to ignore the interests of the company or even to act
in a manner it knows to be contrary to these; and if it does this, there are no
international means of recourse against it, such as there would be against the
management of a company so acting on the internal plane. There is no means,
internationally, of proceeding against a government which refuses to intervene on
behalf of, or support, the claim of one of its nationals or national companies
FN20,nor could such a refusal conceivably entail the breach of any general
international law obligation. Still less of course is there any means of changing or
replacing a government which refuses or fails to act as, internally, the shareholders
may be able to do as regards the company's management.

-----------------------------------------------------------------------------------------------------
----------------
FN20 Theoretically, the internal law of the country concerned might provide a
means of recourse against the government in such circumstances: and political
action might be possible. But in neither case would the essential point be affected.
-----------------------------------------------------------------------------------------------------
----------------

24. All this at present provides an excuse for saying, as the law now does, that if the
company's government does not act no other one can. Instead, it should constitute a
reason for coming to precisely the opposite conclusion. An enlightened rule, while
recognizing that the national government of the company can never be required to
intervene, and that its reasons for not doing so cannot be questioned even though
they may have nothing to do with the merits of the claim, would simply provide that
in such event the government of the shareholders may do so FN21 particularly if,
as is frequently the case, it is just because the shareholding is mainly foreign that the
government of the company feels that no sufficient national interest exists to
warrant intervention on its own [p 78] part FN22. The law's present attitude is based
on predicating for the company's government not merely a prima facie right (which
would be understandable) but an exclusive one (which is not). There is no reason of
principle why, if the law so wills, failure to utilize a right of action by the party
prima facie entitled to do so should not sanction its exercise by another party whose
material interest in the matter may actually be greater. Practical difficulties there
might be; but this is not a serious objection where no inherent necessity of the law
stands in the way. That such a situation of primary and secondary (or latent)
entitlement to act can work, if properly regulated, seems to be indicated by the
shareholders' possibilities of action on the domestic plane, as earlier described.

-----------------------------------------------------------------------------------------------------
----------------
FN21 I am not greatly impressed by the point which comes up in several
connections that the Belgian position, with a big block of majority shareholding, is
peculiar, and that in other cases there might be foreign shareholders of several
nationalities and a consequent multiplicity of claims. This would only go to the
quantum of reparation recoverable by the various governments,and once the
principle of claims on behalf of shareholders had been admitted for such
circumstances, it would not be difficult to work out ways of avoiding a multiplicity
of proceedings, which is what would really matter.
FN22 This is or has been the settled policy of a number of governments. I am not
impressed by the argument that those who acquire shares in companies not of their
own nationality must be deemed to know that this risk exists. That does not seem to
me to affect the principle of the matter.
-----------------------------------------------------------------------------------------------------
----------------

25. International law must in consequence be regarded as deficient and

underdeveloped in this field because, while retaining the rule of the "hegemony" of
the company and its government, it fails to provide those safeguards and alternatives
which private law has instituted for preventing the hegemony of the company's
management leading to abuse. More exactly, what the law enjoins, and the
Judgment of the Court therefore inevitably endorses (see its paragraphs 66-68, 77-
83 and 93), is the by-passing of the difficulty by a sort of "ostrich-act"a hiding of
the face in the sands of the fiction that so long as it remains theoretically possible
for the company's government to act (and however little reality there may be about
this possibility), no other government can do so. Thus the law allows the company's
government eternally to dangle before the foreign shareholder the carrot of a
hypothetical protection that will never be exercised, and tells the hungry fellow that
he must be satisfied with this because, although he will never be allowed to eat that
carrot, it will always remain there to be looked at FN23! International law has of
course to accept the fact that governments cannot[p 79] be compelled to act or be
changed. But it does not have to accept (and even positively decree) that
nevertheless no other government can ever actthat the carrot must be eternally
dangled but never eatenthe maiden ever pursued but never attained!(see
footnote 23 above).

-----------------------------------------------------------------------------------------------------
----------------
FN23 Or, like the nymph pursued by the ephebus, as depicted in the timeless stasis
of the attic vase that inspired the poet Keats' celebrated Ode on a Grecian Urn (verse
2, lines 7-10):
"Bold Lover, never, never canst thou kiss,
Though winning near the goalyet, do not grieve;
She cannot fade, though thou hast not thy bliss,
Forever wilt thou love, and she be fair!"
-----------------------------------------------------------------------------------------------------
----------------

***

The Nottebohm case

26. There remains however a quite different order of point, which is in my view by
far the most important to arise on the question of Belgian locus standi, namely what
the situation would be if Canada, instead of having merely failed to pursue the case,
were actually to be unable to do so because of a legal disability created by
international law itself, disqualifying Canada from acting. It is one thing for the law
to predicate, on the basis of an exclusive right of action for one government, that
even in the event of its not being exercised, no other government may exercise it.
Such a position may be regrettable, for the reasons I have indicated, but is at least
tenable. What would be totally inadmissible would be for the law simultaneously to
confer a right, yet disqualify the indicated government from exercising it in certain
circumstances, and then, when these arise and the disqualification operates, continue
to maintain the rule of exclusivity and the consequent incapacity of the governments
of other parties whose interest in the matter is undeniable. Implicitly the Judgment
takes the same view because an important part of it (see preceding paragraph) rests
on the basis that so long as it is possible for the company's government to claim
(whether it chooses to do so or not) the shareholders are not, at least in law,
deprived of all chance of protection.

27. These aspects are particularly important if consideration is given to what the
ground of Canada's possible disqualification would be, namely (on the basis of
certain previous decisions and other elements FN24) that there was an absence of a
sufficiently close link between the Canadian Government and the Barcelona
Company to give the former an actionable interest at law. Moreover, a major factor
would precisely be the absence of any Canadian shareholding or share capital in the
Company and the fact that most of it was Belgian. In my view, a disqualification
[p 80] at least if it takes place on those groundsmust in logic and in law ipso facto
imply legal capacity for the government of the shareholders whose non-Canadian
status has brought the disqualification about.

-----------------------------------------------------------------------------------------------------
----------------
FN24 In particular the decision of the Court in the Nottebohm case (merits)I.C.J.
Reports 1955, p. 4 et seq.; and the Report of the Commission of Arbitration in the
"I'm Alone" case (U.N. Reports of International Arbitral Awards, Vol. III, p. 1614).
The same sort of questions also arise over the use of flags of convenience; supposed
head-offices that are no more than an address and a letter-box; etc.
-----------------------------------------------------------------------------------------------------
----------------

28. Having regard to the importance of this issue and, consequently, of the possible
applicability to the situation of Canada of the Court's decision in the Nottebohm
case FN25, which obviously could affect the whole outcome of this part of the case,
I consider that it should not have been side-tracked on the basis that neither of the
Parties contested the existence of a Canadian right of intervention and claim. In my
view they should have been asked, in the exercise of the Court's power to act
proprio motu, to present full argument on the matter; and the intervention of the
Canadian Government under Article 62 of the Court's Statute should have been
sought, in order that its views might be made known. If for various reasons, it would
not have been practicable to do this during the normal course of the oral hearing, I
consider that the Parties should have been recalled later for the purpose, after such
interval as might have been thought appropriate for any necessary written exchanges
on the subject. This was not done: yet the Court's Judgment (see paragraph 70 and,
generally, paragraphs 70-76) not only touches on the matter, but gives the reasons
why the Court did not believe that it need consider the Nottebohm case, viz. that
there was no true analogy between the situation in that case and this one. At the
same time, the Court does in fact find affirmatively that there is a sufficient link
between Canada and the Barcelona Company to qualify Canada to sustain a claim if
it chooses to do so,and the Court does so without going into the counter
arguments to be derived from the Nottebohm case. In these circumstances, and
without myself attempting to pronounce on the substance of the matter, I feel
obliged to indicate why the Nottebohm decision unquestionably does have a bearing
on thisone of the main issues dealt with in the Judgment of the Court; and why
indeed there is a strikingly close analogy between the two cases, so that the
principle of the Nottebohm decision could well be regarded as very neatly applying
to the situation obtaining in the present case.

-----------------------------------------------------------------------------------------------------
----------------
FN25 See reference in footnote 24 above.
-----------------------------------------------------------------------------------------------------
----------------

29. In the Nottebohm case, in which Liechtenstein was claiming against Guatemala,
the three main grounds on which the Court found against Liechtenstein's capacity to
put forward the claim of Mr. Nottebohm were:

(i) that this Liechtenstein nationalityacquired by naturalization just before the

outbreak of war in 1939, he being then a German [p 81]nationalwas purely
artificial, in the sense that he had no,t acted from any real desire to identify himself
with Liechtenstein and its fortunes, but with the ulterior object of endeavouring to
divest himself of enemy character by acquiring neutral status;

(ii) that his true connection by residence, domicile and business interests was
Guatemalan; and

(iii) that it was precisely against Guatemala that the claim was being brought.

In these circumstances the Court held that although Mr. Nottebohm was
undoubtedly of Liechtenstein nationality under the law of that State, such
nationality could not be regarded as entitling Liechtenstein to make a claim on his
behalf against GuatemalaFN26;or in other words his claim was not "opposable"
to Guatemala at the instance of Liechtenstein, which meant that Liechtenstein was
in those particular circumstances disqualified.

-----------------------------------------------------------------------------------------------------
----------------
FN26 The Court was extremely careful to limit its finding to the case of a claim
against Guatemala. It did not postulate a general incapacity for Liechtenstein to
claim on behalf of Nottebohmi.e., against some other country. To have done so
would have been virtually to relegate Nottebohm to the category of a stateless
person so far as international claims were concerned.
-----------------------------------------------------------------------------------------------------
----------------

30. If these tests were now to be applied to the case of the Barcelona Company, it
could very cogently be contended that a similar, if not almost identical pattern
emerged: that the Company obtained Canadian incorporation not in order to do
business in Canada (on the contrary), but on account of certain particular
advantages, fiscal and other, that this might bring;that the Company's entire
undertaking was in Spain where, through its subsidiaries, it carried on its sole
business, none being transacted anywhere else;and finally that it would be
precisely against Spain that the Canadian Government would be claiming if it
decided to intervene. The analogy is clearly striking,and if to this is added the
shareholding situation in the Barcelona Company's casenamely that it was not
Canadian, thus rendering the link with Canada still weakerit becomes manifest
that there was here something that required to be gone into,all the more so if it is
correct to say that a finding of Canadian disqualification (if such had been the
outcome FN27) should automatically have entailed a recognition of Belgian
capacity to claim [p 82] on behalf of any person or entity who, at the material times,
was both of Belgian nationality and a shareholder in the Barcelona Company.

-----------------------------------------------------------------------------------------------------
----------------
FN27 There are of course arguments contra,but this only underlines the need for a
full consideration of the matter. It could be asked for instance whether the
Nottebohm case itself was rightly decided, exchanging as it does the certainties of
nationality for the uncertainties of less well-defined criteria?see Brownlie on the
Flegenheimer case in The Principles ofPublic International Law (Oxford, 1966) at p.
328 (case heard before the Italo-United States Claims Commission, International
Law Reports, 25 (1958I), p. 91;and see Brownlie's whole discussion of the
Nottebohm decision in loc. cit., pp. 334-347. It can also be queried whether that
decision is in any event properly applicable to corporate entities as well as to
individuals. These questions, and others, needed to be gone into.
-----------------------------------------------------------------------------------------------------
---------------

*
31. I have already indicated (paragraph 28 above) that the Court was not in my
opinion absolved from going into these very fundamental issues merely because the
Parties did not raise them, and did not for the purposes of these particular
proceedings challenge the ius standi of the Canadian Government. It is true that in
the Nottebohm case the Court relied to some extent on the fact that Guatemala had
never, admitted Liechtenstein's right of intervention,whereas it can be argued that
Spain has admitted that of Canada, and would now be precluded from denying it.
This may be correct, but the notion does not appear to be self-evidently well-
founded. In the first place it rests on mere Spanish non-objection to diplomatic
representations made by Canada on behalf of Barcelona Traction some 20 years
ago,whereas it must be at least doubtful how far this could operate as a positive
admission of a Canadian right now to present a diplomatic claim on behalf of the
Company (if that occurred), in such a way as formally to preclude any Spanish right
of objection under this head. In this context, diplomatic representationswhich
need not necessarily be based on or imply a claim of right, but are often admitted or
received in the absence of any such claim or pretension to itbelong to a different
order of international act from the presentation of a formal claim before an
international tribunal.

32. More important is the fact that, if any preclusion operated as a result of past
Spanish non-objection to Canadian intervention (as it quite possibly might), it could
only operate as against Spain in proceedings brought by Canada against the former.
It could not possibly operate against Belgium in proceedings brought by the latter
against Spain. In contrast to the case of Belgium, Spanish non-objection was at least
significant, for Spain at all times had an interest in objecting to Canada's
intervention, if there were possible legal grounds for so doing. Belgium did not have
any such interest; on the contrary, the true interest of the Belgian shareholders at all
times lay in Canadian intervention on behalf of the Company: it is precisely the lack
of such intervention since about 1952 that has placed the Belgian shareholders in the
position in which [p 83] they now find themselves. Consequently no inference
adverse to Belgium can be drawn from the Belgian non-objection to Canada's ius
standi, for this could not be expected in the circumstances, and was not called for in
proceedings in which the Belgian position essentially was (see paragraph 46 infra)
that irrespective of any Canadian right, Belgium had a right of claim. It was for the
Court, acting proprio motu, as it has the power to do, to go into this cardinal issue,
the silence of the Parties notwithstanding.

**

33. While on this part of the case, another question which in my opinion needed to
be considered was whether, in all the circumstances, the very "nationality" of the
Barcelona Company itself should not be held to be Belgian rather than Canadian.
There has, doctrinally, been much discussion and controversy as to what is the
correct test to apply in order to determine the national status of corporate entities;
and although the better view is that (at least for public as opposed to private
international law and some other purposes) the correct test is that of the State of
incorporation, there is equally no doubt that different tests have been applied for
different purposes, and that an element of fluidity is still present in this field FN28.
This being so, it is surely a highly tenable proposition that the very circumstances
which might lead to the State of incorporation being held to be disqualified from
claiming, because of the absence of a "genuine link" due to the company's
ownership and control and main business interests being elsewhere,might equally
tend to suggest that in such a case a different test of nationality should be applied
FN29. There are also certain other aspects of the matter considered in the opening
paragraphs of my colleague Judge Gros' separate Opinion which are highly
pertinent to the question of the national status of companies.

-----------------------------------------------------------------------------------------------------
----------------
FN28 See the discussions in Beckett, "Diplomatic Claims in respect of Injuries to
Companies", Transactions of the Grotius Society, Vol. 17 (1932), at pp. 180-188;
Paul De Visscher in Hague Recueil, 1961, Vol. I, pp. 446-462; van Hecke, "The
Nationality of Companies Analysed" in Netherlands International Law Review,
1961, Issue 3, pp. 223-239; and Ginther, "Nationality of Corporations" in the
Austrian Public International Law Review, 1966, Vol. XVI 1-2, pp. 27-83.
FN29 Or else that the proper test of the right to claim internationally should be that
of where the real weight of interest lies. On this matter I associate myself (de lege
ferenda however) with much that is contained in paragraphs 57-70 of my colleague
Judge Jessup's Opinion.
-----------------------------------------------------------------------------------------------------
----------------

34. I am of course aware that there are difficulties about this view [p 84] which
would doubtless have been brought out had the matter been properly argued. My
purpose here is to indicate that this is what I think should have occurred. The Parties
should have been requested to present a full argument on the subject. It was not
enough, in my opinion, to proceed on the basis that since neither Party had
contested the Canadian nationality of the Barcelona Company, and both had
proceeded on the assumption that the Company was Canadian, the Court was not
called upon to speculate otherwise. Such an attitude may be quite in order in
domestic courts where, normally, appeals or alternative procedures exist. It is not
appropriate to international proceedings in which, almost always, there are no
possibilities of appeals or other recourses. In this field the principle of caveat actor
can be carried too far, when the point involved is not at all merely incidental but
could be of major importance for the outcome of the case.

III
Equitable Consideration and Equity as a system

35. The general conclusion to be drawn from the considerations set out in part II
supra, is that in cases of this kind, the results to which a strict view of the law
leadsas it stands de lege lataare not satisfactory. By means of a partial
application of domestic law principles connected with the inherent structure of the
corporate entity, necessary and correct so far as it goes, but one-sided, international
law may give rise to situations that cannot, or at any rate do not occur in
corresponding circumstances on the domestic plane; or which, if they did, would
certainly result in remedial legislative action. By failing to take account of various
other domestic law principles directed to enabling the shareholders to act in certain
kinds of cases where the action of the company is unavailable or not forthcoming, or
to influence or change the management or its policy, or by taking account of this
situation only to a somewhat limited extent, the present state of international law
leads to the inadmissible consequence that important interests may go wholly
unprotected, and that what may possibly be grave wrongs will, as a result not be
susceptible even of investigation. As my colleague Judge Jessup reminded me, it
was stated in the award in the Cayuga Indians case (U.N. Reports of International
Arbitral Awards, Vol. VI, at p. 179) that:

"The same considerations of equity that have repeatedly been invoked by the courts
where strict regard to the personality of a corporation would lead to inequitable
results . . . may be invoked here. In such cases courts have not hesitated to look
behind the legal person and consider . . . who were the real beneficiaries." [p 85]

This is consequently surely a situation that calls for the application of the well-
known dictum of President Huber in the much cited Ziat, Ben Kiran case FN30,
where what was involved was an entity of the nationality of the defendant Statea
type of case in which the idea of admitting foreign intervention is really much more
startling, conceptually, than it is in the present type of case. Yet there is a
resemblance, and Huber's dictum is equally apt (my translation):

"International law which, in this field, draws its inspiration essentially from the
principles of equity, has not laid down any formal criterion for granting or refusing
diplomatic protection to national interests linked to interests belonging to persons of
different na-tionality."

-----------------------------------------------------------------------------------------------------
----------------
FN30 U.N. Reports of International Arbitral Awards, Vol. II, p. 729.
-----------------------------------------------------------------------------------------------------
----------------

In the present context the equitable considerations to which the Court refers in
paragraphs 92-101 of the Judgment, stress the need for a less inelastic treatment of
certain of the issues of admissibility involved.

36. The matter can however be put on a broader basis than that merely of the
requirements that may exist in this particular field. As an old authority (Mnignhac)
said in terms even more applicable today "international law is to be applied with
equity". There have been a number of recent indications of the need in the domain
of international law, of a body of rules or principles which can play the same sort of
part internationally as the English system of Equity does, or at least originally did,
in the Common Law countries that have adopted it. Deciding a case on the basis of
rules of equity, that are part of the general system of law applicable, is something
quite different from giving a decision ex aequo et bono, as was indicated by the
Court in paragraph 88 of its Judgment in the North Sea Continental Shelfca.se
(I.C.J. Reports 1969, at p. 48), when introducing the considerations which led it to
found its decision in part on equitable considerations, as it might well have done in
the present case also. Be that as it may, I should like to take this opportunity of
placing on record in a volume of the Court's Reports a classic short statement of the
way in which, historically, the need for a system of Equity makes itself felt,taken
from a standard work FN31 current in the country in which Equity as a juridical
system originated,and in language moreover that might almost have been devised
for the case of international law:

"Equity is that body of rules or principles which form[s] an appendage or gloss to

the general rules of law. It represents the [p 86]attempt... of the ... legal system to
meet a problem which confronts all legal systems reaching a certain stage of
development. To ensure the smooth running of society it is necessary to formulate
general, rules which work well enough in the majority of cases. Sooner or later,
however, cases arise in which, in some unforeseen set of facts the general rules
produce substantial unfairness. When this occurs, justice requires either an
amendment of the rule or, if ... the rule is not freely changeable, a further rule or
body of rules to mitigate the severity of the rules of law."

-----------------------------------------------------------------------------------------------------
----------------
FN31 Snell's Principles of Equity, 26th edition by R. L. Megarry and F. W. Baker,
1966, pp. 5-6.
-----------------------------------------------------------------------------------------------------
----------------

It would be difficult to find words more apt to describe the sort of impasse that
arises in circumstances such as those of the present case, which a system of Equity
should be employed to resolve: and, as the author of the passage cited points out
subsequently, equity is not distinguishable from law "because it seeks a different
end, for both aim at justice But, it might be added, they can achieve it only if they
are allowed to complement one another.

IV
Nationality of the Shareholders and Continuity of Shareholders

37. Since in this and the next part (V) of this Opinion, I shall be discussing certain
matters (described in the second half of paragraph 3 supra) which, having regard to
the particular basis of the Judgment of the Court, did not arise for decision by it, I
should like to state what effect I am intending to give to my observations
concerning these matters. Evidently it would be impossible to comment on them in
total abstraction from the facts and surrounding circumstances of the case itself. But
although I shall be expressing a judicial view on the points of law involved, and
possibly also on some points of fact, I do not wish to be understood (even though I
may use the language of it) as making any judicial pronouncements or findings on
them. These were matters which, although the Court considered them, it did not
need for the particular purposes of the Judgment to go into fully. Had a more ample
collegiate discussion taken place I might have been led to form a different opinion
on some points, and therefore it is by way of analysis that I now give my views.
***
[p 87]

(A) Nationality of Shareholding Claims

38. The third preliminary objection, really had two aspects. The first, namely
whether, in the particular circumstances of this case, a claim is sustainable at all on
behalf of shareholders, whatever their nationality may be, has been answered in the
negative by the Judgment, and this accordingly disposes of the whole claim. Had the
answer been in the affirmative, however, it would still have been necessary, before
the third preliminary objection could be dismissed and the claim be held to be
admissible (so far as this ground of objection was concerned), that its national
character should be established as being that of the claimant State. The two classic
dicta of the Permanent Court may be recalled:

"... it is the bond of nationality which alone confers upon the State the right of
diplomatic protection . . .FN32"

-----------------------------------------------------------------------------------------------------
------
FN32 Panevezys-Saldutiskis Railway case (P.C.I.J., Series A/B, No. 76 (1939), at p.
16).

-----------------------------------------------------------------------------------------------------
-------
and

"By taking up the case of one of its subjects and by resorting to diplomatic action or
international proceedings on his behalf, a State is in reality asserting its own right,
the right to ensure in the person of its subjects respect for the rules of international
law FN33."

-----------------------------------------------------------------------------------------------------
-------
FN33 Mavrommatis Palestine Concessions case (P.C.I.J., Series A, No. 2 (1924), at
p. 12). The passage quoted was repeated in almost identical language in the
Panevezys decision, q.v., loc. cit.
-----------------------------------------------------------------------------------------------------
-------

A true question of capacity as such is here involved FN34, for without the "bond of
nationality" and what it entails, the claimant State would lack the necessary
qualification for intervention and claim, since it could not then be "taking up the
case of one of its subjects", in whose person alone it could be "asserting its own
right... to ensure . . . respect for the rules of international law".

-----------------------------------------------------------------------------------------------------
----------------
FN34 As was observed in footnote 2 supra (part I), the aspect of the third
preliminary objection dealt with in the Judgment of the Court is not really one of the
capacity of the claimant State, but of substance: have shareholders any substantive
rights at all where the injury is to the company as such? But veritable questions of
capacity and admissibility are involved where the nationality, and the status as
shareholders, of the private parties concerned are in issue.
-----------------------------------------------------------------------------------------------------
----------------

39. In terms of the present case, this means establishing in respect of the private
parties concerned that, at all the material dates, and with the necessary degree of
continuity, they were both (a) Belgian and (b) shareholders in the Barcelona
Traction Company. Implied in this, there figured in the present case such questions
as (i) whether it sufficed for a shareholder to be a company having Belgian
nationality by incorpora-[p 88] tion, or must it also be shown that the individual
shareholding in that company was equally Belgian, or at least predominantly so?
also (ii) whether a beneficial owner of shares actually vested in nominees or trustees
of non-Belgian nationality, with whom pro tern lies the legal ownership, still ranks
as a "shareholder" while that situation continues; and, if not, whether this does not
entail such a break in the "ownership of the claim" as to disqualify the private party
concerned, and hence his government;and finally (iii) what are the material times
at which the necessary shareholding status and nationality must exist, and did the
latter in fact do so at these times? Clearly, however, the present discussion must be
confined only to those points that were of especial prominence in the case.

**

(1) Onus of proof, question of quantum, etc.

40. It was naturally maintained on the Spanish side that presumptions of share-
ownership, even if in themselves strong, do not suffice, and that affirmative proof is
required. This is doubtless true in principle, but requires some qualification in the
light of the particular circumstances. There was never any real doubt about the
existence over the years, and probably since at least 1920, of a substantial Belgian
shareholding, or at least interest of some kind, in the Barcelona Company. What
was controversial was, rather, such matters as (a) was the interest concerned strictly
one of shareholding as such, or was it more a mere beneficial interest in shares the
legal ownership of which was vested in non-Belgian hands?(b) how big an
interest was it,did it amount to the 88 per cent, claimed on the Belgian side?(c)
did it exist at the two crucial dates of the original Spanish declaration in bankruptcy
of the Barcelona Company, and the date when proceedings were started before the
Court,and not merely before or after each or either of these dates?

41. Much of the argument was rendered irrelevant by a failure to distinguish clearly
between whether, on the one hand, a basis of claim existed in principle, and, on the
other hand, what would be the quantum of damage or reparation recoverable by the
claimant State if such a basis did exist and the claim was shown to be good. In
theory, if it appeared that there was even one single private party or entity which, at
the material times, both was a shareholder in the Company and had the nationality
of the claimant State, then that State would, in principle, be entitled to claim, since
the validity of the claimits legal merits in itselfcould not depend on the size of
it in terms of the numbers of shareholders, or of the financial values involved. The
latter could, in law, only affect the quantum [p 89] of reparation or damages
recoverable if the claim should be made good FN35. This situation, while it does
not exactly shift the burden of proof entirely, does place it in a different light by
suggesting that in some circumstances, in claims of this kind, the defendant State
could only validly contest the standing of the claimant party if it could show that
there was no evidence of the existence of even one indubitable shareholder of the
latter's nationality, and no reasonable presumption of there being any. This is just
the sort of situation which arises where, as in the present case, the claimant Party
has, over a long period of years, possessed what might be called a "historic interest"
in a case, the existence of which is and always has been a matter of common
knowledge, constantly acted upon by both parties, implicitly recognized, and
scarcely contested, at least formally, until international legal proceedings are started.
In such circumstances there is an almost irresistible inference that a substantial body
of private interests exists belonging to the State concerned. But as will be seen in a
moment (infra, paragraph 43) the matter does not in any way depend on inferences
or presumptions.

-----------------------------------------------------------------------------------------------------
----------------
FN35 Clearly the fact that in practice a government would not normally put forward
a claim in this class of case unless the interests involved were substantial, has no
relevance to the merits of the argument here stated.
-----------------------------------------------------------------------------------------------------
----------------

42. In the present case the attempt to maintain that the Belgian nationality of the
shares had not been established, took a particular form, which involved not so much
denying the existenceor proved existence of any Belgian shareholding at all,
as maintaining that the apparent, or ostensible, Belgian shareholding did not have
the requisite character. Here it is material to note that the shares in the Barcelona
Company fall into three main categories,the bearer shares; the registered (i.e.,
non-bearer) shares standing in the names of various private persons and entities
other than a Belgian incorporated company known as Sidro FN36 for short; and
finally the shares registered in the name of this same Sidro, a company the principal
interest in which is owned by another Belgian registered and incorporated
companySofina FN37. Since this last category, which it will be convenient to
designate as the Sidro-(Sofina) interest, comprised not far short of two-thirds of the
entire issued share capital of the Barcelona Company, and about five-eighths of the
shares allegedly in Belgian hands,then, on the basis of the principle of the
sufficiency of "even a single shareholder", the only practical issue becomes that of
deciding on the character and status of the Sidro-(Sofina) holding;whereas, the
status of the other sharesthe bearer shares and the non-Sidro registered [p 90]
shareswould be a secondary matter which, except as to quantum of damage,
would become important only if the Sidro-(Sofina) holding could be shown to lack
the necessary status and character adequate in itself to sustain a Belgian claim. It is
therefore to this question that I shall now address myself. It has two aspects, first
what was and is the true national character of Sidro-(Sofina)?and secondly, was
this entity at the material dates the actual shareholder?

-----------------------------------------------------------------------------------------------------
----------------
FN36 Standing for "Socit Internationale d'Energie Hydro-Electrique, S.A.".
FN37 Standing for "Socit Financire de Transports et d'Entreprises Industrielles,
S.A."
-----------------------------------------------------------------------------------------------------
----------------

(2) Status of Sidro-(Sofina)

43. Even if it could not otherwise be established, Sidro-(Sofina's) original

ownership of over 1 million of the Barcelona registered shares (this block was
registered in the name of Sidro), constituting a more than majority holding of the
entire Barcelona share issue, is conclusively proved by the fact that in 1939, in
expectation of the outbreak of war, Sidro transferred the entire block first to an
American firm of brokers as nominees, then to an American Trustee Company
known as "Securitas Ltd." and, after the end of the war, to another American
nominee firm, by whom they were eventually re-transferred to Sidro FN38. Since
"nemo dare potest quod non habet", and the. validity of these transfers has never
been questioned(indeed the assumption of such validity was basic to the Spanish
argument on this part of the case)it follows that Sidro-(Sofina) must, at least
originally, have been Barcelona shareholders. The allegation is, however, that by
these transfers Sidro-(Sofina), though retaining as a matter of law the beneficial
interest in the shares, divested themselves of the legal ownershipin fact ceased to
be the actual shareholders, so that thenceforth, and until the eventual re-transfer to
Sidro (which however is alleged to have come only after the main critical date in the
case FN39) the shareholding in the Barcelona Company was non-Belgian so far as
this block of shares was concerned; and so no Belgian claim could now be based on
them. This matter I consider infra in paragraphs 48-59, and in the meantime turn to
the first question indicated at the end of paragraph 42 suprathat of the true
national character of Sidro-(Sofina).

-----------------------------------------------------------------------------------------------------
----------------
FN38 Thus it seems that during the "Securitas" period (as to which see paragraphs
5559 infra) the nominees held for that Company, not Sidro-(Sofina).
FN39 This was 12 February 1948, the date of the original declaration by a Spanish
court of the bankruptcy of the Barcelona Traction Company. There is a certain
difficulty as to the date at which the damage to the Company occurred as it took
several years to complete. However I agree with what Judge Jessup says in
paragraph 75 of his separate Opinion.
-----------------------------------------------------------------------------------------------------
----------------
*[p 91]

44. It was never at any time contended that Sidro and Sofina were other than
Belgian entities in the sense that they were companies incorporated under Belgian
law, having their registered head offices in Belgium, and therefore that, according to
the most generally received canons FN40, not disputed by either Party, they were
companies invested with Belgian nationality. The objection advanceda curious
one to receive Spanish sponsorshipwas that although Sidro-(Sofina) were Belgian
by incorporation, yet if the corporate veil was lifted, it would be found that the
shareholding interest in Sidro-(Sofina) itself was largely non-Belgian. The relevance
of this contention was maintained as existing on two levels, one of these being that
it revealed as being quite unfounded the Belgian contention that the savings of
numerous humble Belgian individuals, channelled into the Barcelona Company via
Sidro-(Sofina), had been detrimentally affected by the Spanish treatment of the
Company,for, so it was alleged on the Spanish side, the ultimate interests in
Sidro-(Sofina) were not Belgian, or at least it had not been established that they
were.

-----------------------------------------------------------------------------------------------------
----------------
FN40 See footnote 14 in part I, supra.
-----------------------------------------------------------------------------------------------------
----------------

45. I do not find it necessary to consider this particular aspect of the matter since the
Belgian contention that the savings of hundreds of small Belgian shareholders were
injuriously affected through their interest in Sidro-(Sofina) goes largely to the
moralities rather than the legalities of the issue. The essential legal question is
differentnamely whether (the Belgian status by incorporation of Sidro-(Sofina)
itself, being established and not contested)there are nevertheless grounds upon
which it can be maintained that the corporate veil must be lifted in order to see what
is the character of the ultimate interests lying behind this veil. It would certainly
seem that whoever else can adopt such an attitude it cannot be Spain,that Spain is
indeed precluded from doing so,because it is precisely Spain which, in relation to
the Barcelona Traction Company maintains that the Canadian nationality of the
Company, by incorporation, is conclusive, and that its corporate veil cannot be lifted
in order to take account of the non-Canadian shareholding lying behind it. Yet,
paradoxically FN41,that is just what Spain has sought to maintain in relation to
Sidro-(Sofina),but not Barcelona. On what basis does this attempt proceed?

-----------------------------------------------------------------------------------------------------
----------------
FN41 This, however, is only one of the many instances of "having it both ways" in
this most paradoxical of cases.
-----------------------------------------------------------------------------------------------------
----------------

46. The argument was that it was Belgium which was precluded from contesting the
lifting of the Sidro-(Sofina) veil, since it was precisely Belgium which maintained,
in relation to the Barcelona Company, that the veil must be lifted in order to reveal
the true Belgian interests underlying the Company. But at this point it becomes clear
that the rival positions, like two mathematical negatives that make a positive, cancel
each other out and leave the objective question of the legitimacy, and [p92]
occasions, of lifting the veil still to be determined. Let it be assumed,
notwithstanding, that a purely "tu quoque" argument might have some validity on a
sort of preclusive basis. Accordingly, it is said, the Belgian case must concede what
it claims: just as it claims that the Canadian nationality of the Barcelona Company is
not conclusive, so must it also concede that the ostensibly Belgian nationality of
Sidro-(Sofina) is not conclusive as to that entity's true character, which must in
consequence be established by reference to the underlying shareholding interests in
it. This seems to me to involve a misunderstanding of the Belgian position, which
does not imply any denial of the Canadian nationality of the Barcelona Company or
the right of the Company and its Government to claim, but merely asserts (failing
such a claim) a "parallel" right of Belgium also to claim on behalf of any
shareholders who are Belgian. If amongst these shareholders there are companies of
Belgian nationality by incorporation, then Belgium asserts a right to claim on their
behalf as Barcelona shareholders. According to this "parallel right" position, what
would have to be conceded by Belgium is something quite different from what the
Spanish argument maintains. Belgium does not have to concede that, if it appears
that most of the shareholding in Sidro-(Sofina) itself is non-Belgian, then Belgium
is disqualified from claiming on behalf of Sidro-(Sofina) as an entity,for she
makes no such assertion as regards Canada's right to claim on behalf of the
Barcelona Company, despite its non-Canadian shareholding. What Belgium would
have to concede, and presumably would have difficulty in conceding, is that if
Belgium refused to claim on behalf of Sidro-(Sofina)it might be because of non-
Belgian interests in that entity, just as it may be that Canada does not claim on
behalf of Barcelona because of the non-Canadian interestthen it would become
legitimate, on the "parallel right" basis, for yet other governmentsthose of the
non-Belgian shareholders in Sidro-(Sofina)to make a claim on behalf of those
shareholders, in the absence of any Belgian claim on behalf of Sidro-(Sofina) as
such. This is the true analogy, and only in this sense, and in such circumstances,
would Belgium's position over Barcelona oblige her to concede a lifting of the veil
of Sidro-(Sofina).

47. It is of course an entirely different question whether Belgium's "parallel right"

position is good in law. According to the Judgment of the Court (which, de lege lata
I agree), it is not. But within the four corners of its premisses, the argument is
entirely logical, and it operates to absolve Belgium from the charge of inconsistency
in asserting a right to claim on [p 93] behalf of Sidro-(Sofina) as an entity of
Belgian nationality by incorporation, irrespective of its detailed composition. In
consequence, the result is the same whichever way the matter is looked at: namely if
a claim on behalf of shareholders is permissible at all, a Belgian claim on behalf of
Sidro-(Sofina) is permissible;for according to the basic Spanish position the veil
of a company can never be lifted save in exceptional circumstances not here
admitted to exist,while according to Belgium the veil can be lifted if the
company's government refuses to claim on its behalf, but Belgium, as the
Government of Sidro-(Sofina), is not refusing to claim on that entity's behalf, so
here also there is no occasion to go behind the corporate facade.

(3) Question of nominees, trustees, etc.

48. The second main challenge to the standing of Sidro-(Sofina) as owners of the
greater part of the Barcelona Traction shares, was based on objections, not as to the
Belgian national character of these entities but as to their character qua Barcelona
shareholders. Over certain periods, it was pointed out, covering dates material to the
validity of the Belgian claim, the Sidro-(Sofina) shares were vested in nominees
and/or trustees of American nationality. The fact is admitted. The effect, according
to the Spanish argument, was that Sidro-(Sofina) while retaining the beneficial
ownership, or the beneficial interest, ceased to be the legal owners of the shares, or
rather, ceased to be the actual shareholders. Consequently, at the time when the
Belgian claim arosethat is to say at the date when the alleged injury to the
Barcelona Company was inflictedthe shareholders were not Belgian, but
American, and therefore the "bond of nationality" postulated by the Permanent
Court (supra, paragraph 38) as being necessary to found a right to claim, did not
exist so far as Belgium was concerned, at least on the basis of this block of shares
FN42.

-----------------------------------------------------------------------------------------------------
----------------
FN42 And as regards all the other sharesi.e., the bearer shares and non-Sidro-
(Sofina) registered shares, the Spanish position was that their alleged Belgian
ownership rested on presumptions and had not been proved
-----------------------------------------------------------------------------------------------------
----------------

49. This Spanish contention is in part related to the "continuity" question: the
transfer of the shares to non-Belgian nominees or trustees caused a break, covering
a material date, in the Belgian ownership or status. In the next section (B) below
certain comments are made on the continuity requirement for international claims,
namely the requirement that the claim must be "owned" by a national of the
claimant State[p 94] both at the time when the act complained of occurred, and
continuously up to the date when an international claim is put forward and
proceedings are commenced(and indeed, strictly, according to one view, up to the
date of judgment or award). At this moment I shall only discuss what, in relation to
a claim of the present kind, is the correct effect to be attributed to the transfer of
shares to foreign nominees, or to foreign trustees, as the case may be. In either case,
does it deprive the transferor of his status as shareholder in relation to the claim, and
hence deprive his government of the right (if right otherwise exists) to make the
claim on his behalf?

50. It should be noted in the first place that from the Belgian standpoint in the
casewhich was throughout that the realities must be looked to rather than the
formthe whole question of the nature of the interest acquired by the American
nominees or trustees was irrelevant, since in any event (and this was common
ground between the Parties) the beneficial ownership of or interest in the shares
remained with Sidro-(Sofina) and, according to the Belgian contention, this was
sufficient per se to found a Belgian claim. However, it was also maintained on the
Belgian side that in any event the effect of the transfers was not to divest Sidro-
(Sofina) of the status of shareholder, and it is this aspect of the matter that I wish to
consider here.

51. I need not set out the facts concerning the vesting of the Sidro registered shares
in American nominees and in the trustee company "Securitas Ltd.", except to say
that the object was of course (in view of war and probable enemy occupation) to
avoid their falling into enemy hands. The details of the various transactions are fully
set out in paragraphs 90 et seq. of Judge Jessup's separate Opinion,and although I
do not draw the same conclusion as he does on the question of the effect of the
"Securitas" transaction, I can associate myself with his statement of the facts. I will
however start with the question of the effect of the nominee transactions.

(a) Nominees
52. The Spanish contention was that the effect of putting the shares into the names
of nominees was to vest in the latter the legal ownership, and moreover that this
result was not affected by the special juridical position of a nominee, whereby his
ownership is, in law, conditioned in various waysso that he cannot deal with the
shares except by direction[p 95] of the "real" owner; but equally, must do so upon
such direction, etc. This, it was said, did not alter the fact that it is the nominee who
appears on the books of the company as the registered owner of the shares, and
therefore, if he is thus the registered shareholder, how can someone else also be the
shareholder? Insistence that the real question at issue was not who "owned" or was
the "owner" of the shares, but who was, or was registered as, the "shareholder",
became increasingly prominent during the course of the oral hearing; but I share
Judge Jessup's view (paragraphs 99 et seq. of his Opinion) that the distinction is
unreal. If a nominee shareholder were in truth "the shareholder", he would be
entitled to exercise the normal rights of a shareholder,but in fact he is not so
entitled: he is even, by law, expressly forbidden from doing so. His is in fact merely
a sort of "twilight" status, according to which he is no more than a pipe-line through
which the supposedly merely beneficial owner continues to exercise all the rights of
legal ownership. In this context the following propositions of Anglo-American-
Canadian law (which is the system constitutive of the nominee position), and which
have not been disputedhave indeed been admitted on the Spanish sideare
pertinent:

(i) a shareholder can freely dispose of his shares: a nominee can do so only with the
consent of the beneficial owner (in effect his "principal")FN43 and at his direction;
(ii) a shareholder can exercise his voting rights at General Meetings according to his
own views: a nominee is obliged to vote as directed by his principal;
(iii) a shareholder has the right to receive any dividends that are declared: a nominee
must pass these on to the principal, who also pays the tax on them;
(iv) shares held by a nominee, as nominee, do not figure in any statement of his
assets;
(v) the principal can direct the nominee to take any steps necessary for the
protection of the shares and, under some systems of law, can himself initiate
proceedings for that purpose;
(vi) the principal can at any time replace or eliminate the nominee, by directing the
latter to have the necessary changes made in the company's register of shareholders
(add to this that, in the case of the transfers made by Sidro, no transfer fee was
payable under the relevant law, because no change of ownership was deemed to
occur).[p96]

-----------------------------------------------------------------------------------------------------
-------
FN43 There is not of course in the formal sense a relationship of principal and
agent, but the use here of the term "principal" is convenient and seems justified by
the realities of the situation.
-----------------------------------------------------------------------------------------------------
-------

53. The only possible conclusion must be that even if, as was contended, the matter
is to be considered not on the basis of who "owns" the shares but of who is the
shareholder, the true shareholder throughout is the principal, the nominee being
shareholder in name only, i.e., as the very term "nominee" implies, his shareholding
is nominal only. He has no real control over the shares, this remaining with the
principal at whose direction the nominee is bound to act. It follows that apart from
disguising the identity of the real owner (which is one of the main purposes of the
nominee device), a nominee is the shareholder only for the purpose of carrying out
his principal's directions,so that what alters upon transfer to a nominee is not the
control over the shares, but the manner of its exercise. It is little more than a
question of mechanics. It equally follows that, if for any purpose the nominee had to
establish the existence of a "genuine link" between himself and the sharesi.e., of
something going beyond the bare fact that the shares are registered in his name, he
would, according to all the cannons accepted in other fields as to what constitutes a
genuine link, be unable to do so.

54. Furthermore, the comparison sometimes made between the position of a

nominee and that of a trustee is quite illusory, but is for that reason illuminating,
for a trustee has real rights over the trust property, which he can assert even against
the beneficiary of the trust. Subject to any specific term of the trust, and of the
general law of trusts, not only is the trustee under no obligation to carry out the
instructions or conform to the directions of the cestui que trust (beneficiary): it is
often his legal duty not to, and to act in a manner quite different from what the latter
wants. The cestui que trust can take legal steps to compel the trustee to conform to
the terms of the trust but, within the scope of those terms, and of the relevant
provisions of trust law, the trustee is completely independent, and free to act at his
own discretion.

(b) "Securitas" Ltd.

55. This brings me to the question of the vesting of the Sidro-(Sofina) shares in
"Securitas" under the various trust deeds described in Judge Jessup's Opinion.
According to the logic of the view just expressed supra in paragraph 54, I ought to
hold (as he does) that the vesting in "Securitas" did indeed transfer the legal
ownership, Sidro-(Sofina) retaining merely the beneficial interest; especially as the
object of the whole transaction was to put "Securitas" in a position of being legally
[p 97] entitled to refuse to comply with Sidro-(Sofina's) own instructions if they
judged that these were given under enemy pressure. Furthermore, as Judge Jessup
points out, no positive evidence (despite several requests for it) was produced to
show that the trust relationship was determined before the crucial date of 12
February 1948 (when the first step that led to the eviction of the Barcelona
Company from its Spanish interests was taken),although it appears that the
relationship was duly determined only two or three months later when (acting on a
request from Sidro) "Securitas" sent the share certificates that had been deposited
with them to the New Jersey firm of nominees henceforth holding for Sidro-
(Sofina). On this basis therefore the shares would, in the absence of the necessary
evidence to the contrary, have to be presumed still to have been American, not
Belgian owned, at the crucial date of 12 February 1948.

56. It seems to me however that, even if one accepts the view (which, for reasons to
be stated later, I do not) that the effect of the "Securitas" transaction was to deprive
Sidro-(Sofina) pro tem of the status of being a Barcelona shareholder, a radical
change came over the situation about, or shortly after the middle of 1946, when the
war in Europe had been over for somewhat more than a year. Although the trust
deeds entered into with "Securitas" were, as Judge Jessup describes, never produced
during the case, they were preceded in time, or at least in operative effect, by
something that was produced, namely a "custodian" agreement between Sidro and
"Securitas" dated 6 September 1939 (the war having then broken out, but Belgium
not yet being involved), which figures as Appendix 2 to Annex 3 of the Belgian
Memorial in the case. It is absolutely clear from the terms of this agreement that its
object was merely to get the securities it covered physically out of harm's way, and
that it had no effect whatever on Sidro's status as shareholder. This came later with
the two Trust Deeds,one also dated 6 September 1939, but evidently with
suspensive effect pending Belgium's actual involvement in the war; and the other
dated February 1940. Because of its inherent probability, I see no reason to doubt
the Belgian affirmation that these Trust Deeds were not to become operative unless
and until the Brussels area should pass into enemy occupation, for only then would
the danger of enemy pressure to surrender or procure the surrender of the shares
arise. It is also I think unimportant that the modifications effected in the first Trust
Deed by the second have never been revealed. I see no reason to doubt the Belgian
assurance that they were technical in character, intended to take account of certain
contemporary Belgian war legislation, which again seems to me inherently
probable. But it does not really matter, because for present purposes one is in any
case "assuming the worst", viz. that between them these two Deeds did transfer the
legal ownership of the shares to "Securitas", for the duration of the war so to
speak.[p 98]

57. This brings me to the third of the inherent probabilities affecting this matter,
namely that the Trust Deeds would (as Belgium asserts they did) have contained a
clause providing for the termination of the situation they created, so soon as an
agreed period after the end of the war had elapsed,for it is hardly credible that
Sidro-(Sofina) would, even to avoid enemy seizure, have signed away all future
control over their shares without some such guarantee of eventual retrocession. That
there was such a clause, and that it duly operated in the second half of 1946, seems
to me indeed, even apart from inherent probabilities, to be an inference that can
reasonably be drawn from the facts given in Judge Jessup's paragraph 92. The result
was the change in the situation to which I referred at the beginning of paragraph 56
supra,namely that "Securitas"who in a letter of 14 April 1947 to Sidro
described themselves as having from 31 December 1946 held the shares "in custody
for your account" (not the language of a Trustee)now reverted to their original
status of being merely custodians, and Sidro-(Sofina) reverted to being the legal
owners and actual shareholders(that the shares were still in the name of nominees
is immaterial for the reasons given in paragraphs 52-54 supra). Accordingly, if this
view is correct, the shares were again Belgian owned on the crucial date of 12
February 1948. There would have been a break in the continuity of their status as
such, from 1939-1946,. but as this occurred before the earliest possible crucial date,
it would not signify.

58. It has to be admitted that in the absence of the relevant instruments, the
foregoing conclusion can only be conjectural. But it is I believe a reasonable
conjecture, warranted by those facts that are known, and by the probabilities
involved. Of course the Trust Deeds would, if produced, constitute what is known in
Common Law parlance as the "best" evidence, and unless they could be shown to
have been lost or destroyed, it is unlikely that a municipal court would admit
secondary evidence of their contents. International tribunals are not tied by such
firm rules, however, many of which are not appropriate to litigation between
governments. It is by no means in the nature of an inescapable inference that the
reason why the Deeds were not produced was because they contained material that
would have been prejudicial to the Belgian case. Documents drawn up in
contemplation of war, and in the situation which confronted countries such as
Belgium at that time, may well have contained provisons, or phraseology, which
after the lapse of nearly 30 yearsor for other reasonsa government would be
reluctant to make public. In my opinion, weighing the whole matter up, and having
regard to what seems to be a very reasonable presumption as to what [p 99]
occurred, Belgium should be given the benefit of the doubt.

59. And this brings me to a point which I consider more important than any yet
mentioned on this particular matter. It is not in my opinion possible to regard
instruments drawn up in emergency circumstances, for the protection of property in
contemplation of war, and of a singularly predatory enemy (I am of course speaking
of the nazified Reich, not of Germany or Germans under any normal circumstances)
in the same light as instruments entered into at other times and in the ordinary way
of business. Certainly an international tribunal should not do so. In my opinion such
transactions in shares as those now in question, whatever the effect that would be
given to them in municipal courts for internal or private law purposes, must, on the
international plane, be regarded as creating between the parties a relationship of a
special character, neither divesting the shares of their pre-existing national
character, nor debarring the transferor's government from sustaining a claim in
respect of them in subsequent international proceedings. Outside of a mediaeval
disputation, if ever there was a case for having regard to the reality rather than the
form, this is surely it.
***

(B) The "Continuity" of Claim Requirement

60. I do not propose to consider here whether it was in fact established that there
were Barcelona shares which were continuously in Belgian hands FN44 up to at
least the date when the present proceedings were commenced. As Judge Jessup,
who goes into the matter in some detail, says, the case rests largely on a series of
presumptions, even though it may be difficult to believe that no shares at all were
continuously Belgian held; and according to the view propounded earlier (supra
paragraph 41) even one such share would, as far as the theory of the matter goes,
suffice to constitute a basis of claim. I want rather to comment on the continuity
doctrine itself.

-----------------------------------------------------------------------------------------------------
----------------
FN44 It is generally accepted that this requirement does not involve continuity in
the same individual person or entity, but only in successive persons or entities of the
same nationality.
-----------------------------------------------------------------------------------------------------
----------------

61. Clearly the "bond of nationality" between the claimant State and the private
party for whom the claim is brought (see supra, paragraph 38) must be in existence
at the time when the acts complained of occurred, or it would not be possible for the
claimant State to maintain that it had suf-[p 100] fered a violation of international
law "in the person of its national", and although this doctrine has been called the
"Vatellian fiction", it nevertheless seems to constitute an indispensable foundation
for the right of international claim on behalf of private parties (unless there is some
alternative, e.g., functional, foundationas when an international organization
claims in respect of a member of its staff). It is however less clear why, as a matter
of principle, if the private claimant is duly a national of the claimant State at the
date of the injury, he must remain so, or the property concerned must do so, or the
claim must not pass into the hands of a national of another State, even after that
date,for the wrong done to the State in the person of its national arises, and the
consequent right "to ensure . . . respect for the rules of international law" accrues, at
the moment of injury, so that, as was pleaded in the Stevenson case FN45 (though
unsuccessfully FN46), the claim then becomes indelibly impressed ab initio with the
national character concerned: in short, the injury to the claimant State is not, so to
speak, "de-inflicted" by the fact that the individual claimant or company ceases to
have its nationality, or that the property involved passes into the hands of a national
of another State FN47;and the position becomes even slightly absurd when the
continuity rule is interpreted as even excluding such claims though they
subsequently return to their nationality of origin after a comparatively short interval,
as might well be the case with, precisely, shares.
-----------------------------------------------------------------------------------------------------
----------------
FN45 U.N. Reports of International Arbitral Awards, Vol. IX, p. 494.
FN46 But in this case the beneficiaries resulting from the change in the nationality
of the claim, not only had ex hypothesi a different nationality from that of the
original claimant, but had the nationality of the defendant Statewhich, created a
special situation. In other ways also the Umpire's finding did not constitute an
outright rejection of the "ab initio" thesis.
FN47 If value was received in respect of the transfer concerned, the question might
arise whether the "damage" had not been made goodbut this is another matter.
-----------------------------------------------------------------------------------------------------
----------------

62. In his dissenting opinion in the Panevezys case FN48, Judge van Eysinga clearly
thought that the continuity rule, though a reasonable stipulation to be inserted by
agreement in treaties about claims(or to be read into them in consequence of
provisions limiting their application to persons having the nationality of the
claimant State at the treaty date) was not a rule of customary international law, in
which sphere it could lead to unreasonable results. Thus a rigid application of it,
though justified where necessary to prevent abuses FN49, should be eschewed
where it would work injustice, and this view has received support in recent writings
contending for a more eclectic application of the rule, so as not to "leave a [p 101]
substantial body of. . . rights without a practical remedy . . .FN50". A clear case of
this would be where the change in nationality was involuntary, e.g., because of a re-
alignment of State boundaries, or because the successor in title to the affected
property, e.g., under a will, happened to have a different nationality from that of the
original claimant or owner. Or again, why should the fact that a former dependent
territory attains independence and becomes a separate State deprive whole
categories of claimants in that State of all possibility of redress? Such would
however be the effect of the continuity rule, for there would technically have been a
change in the claimant's nationality, and the former sovereign or protecting State
could no longer sustain the claim, while the new one also could not or, according to
the doctrines involved, should not be able to do so, because the private claimant was
not, at the time of the injury, its national,or alternatively because, since the latter
State did not then exist as a separate State, it could not itself, qua what it now is,
have suffered any wrong in the person of its national FN51 . (This was in fact more
or less the situation that arose in the Panevezys case. The matter ought of course to
be provided for by a rule of the law of State Succession, but it is somewhat doubtful
whether this is yet the casesee the detailed discussion in O'Connell, State
Succession in Municipal Law and International Law (Cambridge, 1967), Vol. I, pp.
537-541).

-----------------------------------------------------------------------------------------------------
----------------
FN48 P.C.I.J., Series A/B, No. 76 (1939) at pp. 33-35.
FN49 For instance, if, as suggested by Judge van Eysinga, the object were to found
compulsory jurisdiction, where none would otherwise have existed, by seeking out a
State able to invoke a treaty clause to that effect.
FN50 O'Connell, International Law (Stevens-Oceana, 1965), Vol. II, p. 1120;and
Professor R. Y. Jennings in Hague Recueil (General Course of 1967), Vol. II, pp.
476477, citing Sinclair, British Year Book for 1950, at p. 127 says, that Judge van
Eysinga's view "is in accord with what Mr. Sinclair has shown to be the history of
the development of the rule of nationality of claims: that it was evolved in the 19th
century in the context of the interpretation of treaties setting up claims commissions
and was a product of the ordinary rule that such treaties must be interpreted
strictly"i.e., it was not really a rule of customary international law.
FN51 This last point is essentially the same as the one which arose in the
Cameroons case (I.C.J. Reports 1963) under the head of the "objection ratione
temporis" which I felt obliged to uphold de lege lata in my separate Opinion, for the
reasons given in Part V of it (I.C.J. Reports 1963, pp. 127-130). The particular point
material in the present context is dealt with in the first paragraph on p. 129 of the
Volume. But I failed then to take account of the possibility that the matter might be
regarded as covered by the law of State Succession, though this is still uncertain
see end of paragraph 62 supra.
-----------------------------------------------------------------------------------------------------
----------------

63. In short, too rigid and sweeping an application of the continuity rule can lead to
situations in which important interests go unprotected, claimants unsupported and
injuries unredressed, not on account of [p 102] anything relating to their merits, but
because purely technical considerations bring it about that no State is entitled to act
FN52. This situation is the less defensible at the present date in that what was
always regarded as the other main justification for the continuity rule (and even
sometimes thought to be its real fons et origo), namely the need to prevent the
abuses that would result if claims could be assigned for value to nationals of
powerful States whose governments would compel acceptance of them by the
defendant State, has largely lost its validity. Even powerful States are not now in a
position to act in this way: indeed, for reasons that need not be gone into here, they
are in these days at a positive disadvantage in such matters.

-----------------------------------------------------------------------------------------------------
----------------
FN52 This would be a situation even worse than the present one regarding the
Barcelona Company, for that Company has a government which did formerly act,
could have continued to act, and still could in theory act : whereas according to the
continuity rule, it may result that no government can act.
-----------------------------------------------------------------------------------------------------
----------------

64. Nor can it plausibly be contended that, if the continuity rule were not strictly
applied, legal objections would arise because, if the claim were successful, the
damages or compensation would be payable to the claimant State, although the
private party concerned was no longer its national, or the affected property no
longer belonged to one of its nationals;for on the basis that the State is asserting
its own right in making the claim, it is always the position, and it is well recognized
internationally, that any compensation due is paid to the claimant State, and belongs
to it, for use at its discretion. This was implicit in the view expressed by the
Permanent Court in the Chorzw Factory case, when it said that the damage
suffered by the individual could "only afford a convenient scale for the calculation
of the reparation due to the State"(my italics)FN53. If there are any fetters on the
State's discretion as to what it does with the com-pensation awarded, they are
imposed by the domestic law concerned. So far as international law goes, the
claimant State can use this compensation as it pleases: it can keep it for itself
(though this naturally is not normally done) or it can pay it to the private party who
was injured, whether (as it will usually be the case) he is still its national, or has
since become the national of another State, or to the national owner of the affected
property, or to a foreign owner who may have bought it, or the claim, off the
former, etc. There is, internationally, neither legal nor practical difficulty here.

-----------------------------------------------------------------------------------------------------
----------------
FN53 P.C.I.J., Series A, No. 17 (1928), p. 28.
-----------------------------------------------------------------------------------------------------
----------------

65. If these considerations are applied here, the conclusion would be that, provided
Belgian shareholding existed on 12 February 1948, the[p 103]claim then became
once and for all indelibly impressed with Belgian national character, and that any
subsequent dealings in the shares were immaterial, affecting only the quantum of
the damages eventually payable if Belgium were successful, or affecting only the
identity of the actual persons or entities whom the Belgian Government would
eventually select to become the recipients of a due share of any damages recovered.

Issues Connected with the Fourth Preliminary objection

66. The Judgment of the Court does not deal with the fourth preliminary objection
that had been advanced on the Spanish side and which, together with the third, was
joined to the merits by the Judgment which the Court gave in the preliminary (1964)
phase of the casenamely the question of the exhaustion of local remedies. On the
other hand, this question has had its importance for certain Members of the Court,
and it was always possible that individual rejections of the Belgian claim might be
based not on Belgium's lack of ius standi but on the view that the Barcelona
Company did not adequately avail itself of the means of recourse open to it in the
Spanish courts. In these circumstances, without attempting to discuss the fourth
preliminary objection generally, I consider it legitimate to make certain limited
comments on one or two aspects of the matter to which I attach special importance
(and which are also of importance for the clarification of the lawsee paragraph 2
supra, recalling however, as being equally, if not even more applicable here, what
I said in paragraph 37 above.

***

(1) The issue of jurisdiction

67. While the question of Spanish jurisdiction to conduct bankruptcy proceedings in

respect of Barcelona Traction, a Canadian company, is not technically part of the
fourth preliminary objection, which concerns the exhaustion of local remedies, it is
related to it in an important way, as will be seen; and since it too has a certain
preliminary character, it may properly receive some consideration here.

68. It appears to me probable that, considered at the international level FN54, the
declaration of bankruptcy made in respect of the Barcelona [p 104] Company did
involve an excess of legitimate, or at least normal, Spanish jurisdiction
internationally. This view is not of course based on the non-Spanish nationality of
the Company,still less because of doubts (though these certainly subsist) as to
whether the Company did, in the proper sense of these notions, carry on business in
Spain, or own property or have a domicile or seat there FN55. It is based on the
nature of the alleged default on which the petition in bankruptcy was based, and
acceded to by the court. The point may be illustrated by reference to Barcelona's
subsidiary, Ebro FN56, which, although equally a Canadian company, did
undoubtedly carry on business in Spain, owning property, occupying offices, etc.,
there. Consequently, had it been Ebro that was bankrupted, and for non-payment of
commercial debts arising out of its local activities, no question of any excess of
jurisdiction could have arisen despite Ebro's Canadian nationalityfor such matters
would have been legitimately of Spanish concern. (It was indeed noticeable that it
was expressly admitted on the Belgian side that the bankrupting of Ebro (had that
occurred) would have been quite proper, jurisdictionally) But Barcelona was not
bankrupted for anything of that kind, as is clear from the bankruptcy judgment
itself. It was bankrupted exclusively for the non-payment of the interest on its
sterling bonds, issued outside Spain, and also held outside Spain except in so far as
certain private Spanish parties had recently acquired a few of them, apparently for
the express purpose of bringing the bankruptcy proceedings. Yet in respect of these
same bonds, issued under Canadian law, all the necessary machinery for the
guaranteeing and enforcement of the obligation, through a well-known Canadian
institution, the National Trust, had been set up, and existed for utilization in Canada,
where also, in the last resort, the Company could have been made the subject of
proceedings for the appointment of a receiver.

-----------------------------------------------------------------------------------------------------
----------------
FN54 The question whether there was jurisdiction under Spanish law, in the
circumstances appertaining to the Barcelona Company, is irrelevant or inconclusive
for international purposes, since the very question at issue in international
proceedings is whether the jurisdiction which a State confers upon its own courts, or
otherwise assumes, is internationally valid.
FN55 Barcelona was a holding company, and a holding company is by definition
not an operating company. This has been brought out in several decided cases, but is
too often lost sight of.
FN56 Standing for "Ebro Irrigation and Power Co. Ltd."
-----------------------------------------------------------------------------------------------------
----------------

69. Clearly, if the real object had been to obtain payment of the arrears of interest on
the bonds, action would have been taken in Canada, and not merely would but
should, for the step taken by the Spanish bankruptcy petitioners was in clear breach
of the important "no action" provisions of both the trust deeds(clauses 44 of the
Prior Lien deed and 35 of the First Mortgage deedAnnex 28 to the Memorial,
Vol. I). These provisions were of course conditions of the bond obligation, by [p
105] which the petitioners automatically became bound on acquiring the bonds.
They provided that no proceedings to obtain payment should be taken by any
bondholder until after the (Canadian) Trustee had, upon a request to act, refused or
neglected to do so.

70. In these circumstances the primary jurisdiction was clearly Canadian, and the
Spanish courts should have declined jurisdiction,at least in the first instance and
until the remedies available through the Canadian National Trust had been invoked.
It is true that, under present conditions, international law does not impose hard and
fast rules on States delimiting spheres of national jurisdiction in such matters (and
there are of course othersfor instance in the fields of shipping, "anti-trust"
legislation, etc.), but leaves to States a wide discretion in the matter. It does
however (a) postulate the existence of limitsthough in any given case it may be
for the tribunal to indicate what these are for the purposes of that case; and (b)
involve for every State an obligation to exercise moderation and restraint as to the
extent of the jurisdiction assumed by its courts in cases having a foreign element,
and to avoid undue encroachment on a jurisdiction more properly appertaining to, or
more appropriately exercisable by, another State.

71. These considerations apply equally, not only to the initial Spanish assumption of
jurisdiction in bankruptcy, but to various later stages of the bankruptcy proceedings
themselves, and in particular (as part of the process of finally disposing of the
Barcelona Company's Spanish under-taking) to the purported cancellation of its
shares in Ebro (a Canadian company)these being at the time under the control of
the Canadian National Trust or of a receiver appointed by the Canadian courtsand
the "replacement" of these by scrip issued in Spain, and subsequently sold to the
new and specially formed Spanish company, Fecsa FN57, without any reference to
the competent Canadian authorities or any action to procure the enforcement of
these measures in Canada, so that there (and everywhere outside Spain) the original
scrip remained and remains perfectly valid. The same observations apply to the
purported transfer of Ebro's Canadian share register, its Canadian registered offices,
and its very seat itself (also Canadian), to the city of Barcelona,in disregard of the
fact that these things, which could not physically be transferred without Ebro's
consent or enforcement action in Canada, remained where they were, and are still
there today, not only in actuality but in law, [p 106] seeing that Ebro is a Canadian
company whose status, seat and location of share register and registered offices are
all governed by Canadian law. In short what really took place appears to have had
the character of a disguised expropriation of the undertaking.

-----------------------------------------------------------------------------------------------------
----------------
FN57 Standing for "Fuerzas Elctricas de Catalua, S.A."
-----------------------------------------------------------------------------------------------------
----------------

72. If therefore it were necessary to reach a conclusion on this matter, it could in my

view only be in the sense that the whole bankruptcy proceedings were, for excess of
jurisdiction, internationally null and void ab initio, and without effect on the
international plane.

**

(2) Exhaustion of local remedies: the question of notification

73. The conclusion just indicated would also be of importance as regards the
question of exhausting local remedies, in so far as it might tend to suggest that,
strictly, this question did not arise at all,for there should be no necessity to
exhaust such remedies in respect of proceedings which, for excess of jurisdiction
were, internationally, a nullity and void ab initio. At least, in respect of the
substance of the proceedings, there could be no such obligation if
internationallythe proceedings were vitiated from the start.

74. Be that as it may, there are other considerations which suggest that the whole
issue of the exhaustion of local remedies may be irrelevant in such circumstances as
those of the present case;for if it is the fact (as to which, vide infra) that the
Barcelona Company was never, according to the applicable international standards,
properly notified of the original bankruptcy declaration, so that, on the international
plane, the bankruptcy procedure never began to run against it, the correct conclusion
might well be that no obligation to exhaust local remedies could ever have been
generated;in much the same way that (even if the case is not entirely on the same
plane) a person entitled to diplomatic immunity does not lose that immunity through
ignoring proceedings brought against him in the local courts,nor is it a condition
of his government's right to complain that he should have exhausted local means of
recourse in the assertion or defence of his immunity. Again, the possibility, and
even probability, that the management of the Company did de facto become aware
of the proceedings, in sufficient time to put in an opposition within the prescribed
period, is clearly irrelevant;for if a certain kind of notification is required by law,
and this is not given, then any time-limits dependent on it simply do not, as a matter
of law, begin to run,and once again the whole procedure is vitiated and rendered
void. [p 107]

75. In this connection a clear distinction must be drawn between proceedings which,
if invalid, are so ab initio, and proceedings the complaint as to which concerns their
outcome, e.g., that they resulted in a denial of justice. As regards the latter kind of
proceedings, it is evident that, in principle at least, local remedies must be
exhausted. The case is different, at any rate as regards the substance of the issues
involved, where the alleged vice relates not to the outcome but to the very inception
of the proceedings.

76. In considering what kind and, so to speak, degree of notification is legally

requisite, it is clearly not sufficient, in cases involving a foreign element, merely to
apply domestic law standards, or to rely on, or rest content with, the fact that the
requirements of the local law concerned were duly complied with,if such was
indeed the case. Internationally, it is necessary to consider whetherobjectively
in the case of a foreign company having its seat and management abroada
"notice" which takes the form of nothing more than a simple press publication of the
adjudication in bankruptcy, suffices,particularly if this publication is local only,
and not effected in the country of the company's management and seat. There is
here a direct connection with the question of excess of jurisdiction already discussed
above; and it is important to remember (see paragraph 68) that it was not anything
to do with the conduct of the Barcelona Company's Spanish undertaking that was in
question in the bankruptcy proceedings, or which formed the basis of the
bankruptcy adjudication, but a primarily extra-Spanish matter, the servicing of the
sterling bondswhich was directly the concern of the Company in Canada, and of
the bondholders' trustee, the Canadian National Trust. The very fact that, as was
expressly recognized in relation to the Company's domicile, by the bankruptcy
petition itself, namely that "it [the Company] does not have [a domicile] in Spain,
any more than it has any specific commercial establishment there", must logically
lead to the conclusion that, on the international plane, a notification effected in
Canada, or by Canadian means of some kind, was called for. It is difficult to see
how the apparently admitted non-Spanish domicile of the Company could possibly
lead to the conclusion suggested in the bankruptcy petition, and accepted by the
judge, that in these circumstances it would be "necessary to limit publication to the
Official Bulletin of Tarragona"which the judge extended to the Official Bulletin
of the province of Barcelona, but no further.

77. I fully appreciate that Spanish law, like certain other historic and highly
developed legal systems, approaches the subject of bankruptcy mainly from the
standpoint of the creditors, and with the object above all or at any rate in the first
instance, of safeguarding their rights, and hence of avoiding so far as possible any
premature disposal, dispersal or concealment of the debtor's assets, in such a way as
to prejudice those rights. I [p 108] therefore discount the natural reactions of a jurist
trained in the common-law school when confronted with a situation in which a
debtor can be declared bankrupt, or a company liquidated or wound-up, on the basis
of proceedings, of which no previous notice has been or will be given, and at which
the debtor is not represented or afforded an opportunity to appearand this
although the declaration takes immediate effect, and that effect involves for the
bankrupt a complete loss of commercial status and of legal capacity to act. I also
accept the fact that according to the philosophy of this point of view, only a very
short interval is allowed in which the bankruptcy can be challenged with a view to
its cancellation and the reversal of its effects.

78. But for these very reasons, it appears to me to be an essential counterpart of the
considerable stringency of such a system that, at the very least, the debtor, having
been declared bankrupt, should receive actual noticejudicial noticeof the
declaration of bankruptcy, and should do so in a form which must ensure that it is
brought directly to the attention of the person or entity concerned FN58. Unless this
is done, the process, viewed as a whole, comes very near to constituting, if not a
species of concealment, at least a serious obstacle to the possibility of a timely
challenge to the bankruptcy;so that a procedure already highly favourable to the
creditor interest, becomes loaded against that of the debtor to an extent difficult to
reconcile with the standards of the administration of justice required by international
law. More especially is this the case when the only period within which the
bankruptcy can be challenged is a period of eight days running not from the date of
notice but from that of the press publication of the bankruptcy declaration itself, and
failure to observe it apparently has, thenceforth, a permanently preclusive effect.

-----------------------------------------------------------------------------------------------------
----------------
FN58 Under English lawto cite the system I am most familiar within the case
of the winding-up of a company on the basis of a petition, not only must the
existence of the petition be advertised (and not merely in the official London
Gazette but in one of the ordinary daily newspapers also) at least seven clear days
before the petition is due to be heard,but, in addition, notice of it must be served
on the company at its registered head office, equally before the hearing of the
petition, at which of course the company is entitled to be represented (Halsbury's
Laws of England, loc. cit., in notes 12 and 13 supra, pp. 544-549). In the case of
foreign companies, notice must no less be served, and, if this cannot be effected at
an address for service or place of business in England leave will be given to effect
service abroad (ibid., pp. 842-843).
-----------------------------------------------------------------------------------------------------
----------------

79. The pertinence and force of these considerations is of course greatly increased
where, as in the present case, a foreign element is involved,where the bankrupt is
a foreign entity, with its seat and management abroad, and where the occasion of the
bankruptcy is not the local commercial activities of that entity, but one affecting its
(chiefly non-local) bondholders. In such circumstances, mere publication in the
local press, and then not in the ordinary newspapers but in journals of a highly
specialized kind, normally little read except by persons having a [p 109] particular
reason to do so, can not be regarded as sufficient. It is in fact doubtful whether press
publication suffices at all, if it is the only measure taken. But it should at least be
effected not only in the local press but also in that of the country or city where the
bankrupt resides or (if a company) has its seat;and, although the point was never
finally resolved, there is some reason to think that this was in fact what Spanish law
itself really required.

80. However, in my opinion, in the circumstances of cases such as the present one,
even publication of the latter kind is hardly adequate. Something in the nature of
judicial notice is necessary and, as mentioned in the statement of facts given in the
early part of the Court's Judgment (paragraph 15), no such notice was given at the
time: indeed it was not until 15 years later, in June 1963, that the Barcelona
Company's longstanding request for an official copy of the bankruptcy judgment
was acceded to. The reason given in that judgment for publication in the official
bulletins of Tarragona and Barcelona only, namely that the domicile of the
Company was "unknown", is difficult to reconcile with the fact that the seat of the
company was shown as "Head Office, 25 King Street West, Toronto, Canada" on
one of the most important documents which, together with a translation into
Spanish, was furnished to the bankruptcy judge by the petitioners, as Nos. 3 and
3bis in the dossier of the case, namely the report of the council of administration
(Board of Directors) of the Company, covering its balance sheet for 1946, the
figures of which were cited in support of the bankruptcy petition (Annexes to the
Memorial, Vol. II, p. 258).

81. Even if Spanish law did not require action to be taken in Toronto in such a case
(see end of paragraph 79 above), it certainly in no way prohibited this. Indeed, such
action would have been entirely consistent with the relevant provisions of that law,
and it had been taken by the Spanish courts in other cases, particularly the Moncayo
and Niel-on-Rupel cases, and was to be taken again in an analogous context in the
Namel case a year later by the actual judge who was then in charge of the Barcelona
bankruptcy. There existed at least three or four ways of doing this: by publication in
the Toronto newspapers; through the registered letter post, with postal certificate of
delivery; by personal service through a Spanish consulate in Canada, if Canadian
law so allowed; or in the last resort by service effected through the Canadian
authorities themselves.

82. It was contended that service or publication in Canada would have constituted
an internationally impermissible act of imperium carried out in foreign territory. But
in fact such acts take place every day, and constitute indeed the usual ways in which
persons resident or domiciled in one country are formally apprised of proceedings
affecting them, instituted in another country. Local publication, or service by post,
at least, [p 110] can involve no act of imperium; and the other forms of service
mentioned above have the actual concurrence, general or specific, of the local
authorities. The Spanish cases cited in the preceding paragraph show that the
Spanish courts themselves, in other cases, made use of the method of publication in
foreign papers. The truth is that in the present case no attempt to notify the
Barcelona Company in Canada was made.

83. In my opinion this omissionand even if it could have been the result only of
inadvertence or oversightwas of such a character as to vitiate the whole
proceedings on the international plane, and to render them void or inoperative ab
initio. Relative to the Company, the proceedings were never properly initiated at all.
Consequently (recalling the observations made in paragraph 75 above)in the
presence of a nullity, the question of exhausting legal remedies did not arise.

VI

The philosophy of Joinder to the Merits

84. When, in the earlier (1964) phase of the present case, the Court joined the third
and fourth preliminary objections to the merits, it made a number of observations
both on the general philosophy of joinder as a judicial act, and also as regards the
particular reasons for effecting it on that occasion (I.C.J. Reports 1964, pp. 41-46).
On the present occasion the Court has not thought it necessary to supplement these
observations. But I believe there are certain additional points that can usefully be
madeexcept however as regards the fourth preliminary objection, for it was
always clear that this objection, relating to the exhaustion of local remedies, was
intimately connected with the ultimate issues of substance involved by the claim,
and could not even be considered except in relation to these,and so could not be
pronounced upon without in large measure prejudging the meritsa situation that
has generally been viewed as eminently calling for a joinder.

85. As regards the third preliminary objection, on which the Court's present
Judgment is mainly founded, the situationthough fully explained on pages 44-46
of the Report of the Court's earlier Judgment-was perhaps not so obviously clear
although, as was pointed out in that Judgment, matters relating to the merits had
been discussed in the written and oral proceedings in that phase of the case, in
connection with this objection. It may therefore be desirable to point out that, apart
from the doubt (see loc. cit., pp. 44-45) whether the objection had an exclusively
[P111] preliminary character, and did not at least in part appertain to the merits, the
Court could not, without hearing the merits, regard itself as adequately informed on
what was evidently one of the key questions in the case, namely whether, in
addition to the alleged infringements of the Barcelona, Traction Company's rights,
there had not also been infringements of the specific rights, stricto sensu, of the
shareholders, caused either by the same acts as had affected the Company, or by
separate acts affecting only shareholding rights as such. It was indeed this very
point which, inter alia, the Court had in mind in the two following passages from its
earlier Judgment, more than once cited or referred to in the course of the oral
pleadings in the present phase of the case, but which appear to have been
misunderstood to a certain extent, namely (I.C.J. Reports 1964, p. 44):

"It can be asked whether international law recognizes for the shareholders in a
company a separate and independent right or interest in respect of damage done to
the company by a foreign government; and if so to what extent and in what
circumstances and, in particular, whether those circumstances (if they exist) would
include those of the present case"

and (ibid., p. 45):

"In short, the question of the jus standi of a government to protect the interests of
shareholders as such, is itself merely a reflection, or consequence, of the antecedent
question of what is the juridical situation in respect of shareholding interests, as
recognized by international law."

86. These observations no doubt indicated that there could be shareholding interests
recognized and protected by law, which therefore amounted to rights, and that there
might be circumstances in which an infringement of the company's rights would
also infringe the separate rights of the shareholders. But what the Court said in no
sense warranted the view that prejudice caused to the shareholders through illicit
damage done to the company, necessarily and of itself gave the former a basis of
claim which their government could legitimately put forward on the international
planethis being, broadly speaking, the proposition advanced on behalf of
Belgium.

87. This matter was not the only one in respect of which a hearing of the merits was
necessary in order to enable the Court to deal with the third preliminary
objection,for in addition to the question of the legal status of shareholders and the
nature of their rights and interests, this objection also involved that of the nationality
of those concerned. It was contended by Spain, not only that in principle no claim at
all could be made on behalf of shareholding interests in respect of damage caused,
not [p 112] to those interests as such, but to the company,but also that, even if
such a claim could be made, these particular shareholding interests were not really
Belgian, or were not in Belgian hands at the material times. The Court felt it
necessary to hear the merits in order to ensure that it was sufficiently informed as to
the character and relative weight of the interests involved in the Barcelona Traction
Company and its affiliates: indeed it was not until the merits were reached (even if
then) that all the facts were fully brought out regarding this matter; and it was in this
context, rather than that of the status of shareholders, that, according to one current
of opinion in the Court, the Belgian claim should be regarded as inadmissible.
*
88. There are other ways in which the implications of a joinder are liable to be
misunderstoodparticularly if, as in the present case, the objection is eventually
upheld and the merits, though heard, are not pronounced upon. There may be a
tendency to assume that an international tribunal which effects a joinder is already
half-way to dismissing the objection and will eventually do so and give a decision
on the merits. Even if the present case, and others before it, did not demonstrate the
unwarranted nature of such an assumption, this would result as a matter of principle
from the fact that if the assumption were correct, the whole process of joining
preliminary objections to the merits would be rendered meaninglessa mere futile
(and unjustified) postponement, not a genuine suspension, of judgment on the
objection.

89. Equally unjustified, as other cases show, is the opposite assumption,that a

joinder indicates a favourable attitude to the objection on the part of the tribunal
concerneda theory that only needs to be stated for its implausibility to be
manifest. There may indeed be cases in which, on various grounds that seem good
to it, a tribunal will hesitate to take, at the preliminary stage of a case, a decision the
effect of which would be permanently to shut out, then and there, all possibility of a
hearing and decision on the merits. But, although the task of evaluating the factors
involved must be left to the tribunal concerned, adequate grounds for the joinder
must always exist,for the process is one that can never be other than a simple
suspension of judgment on the objection, effected because the tribunal, for one
reason or another, considers that it cannot pronounce upon it at that stage,
consistently with giving their due weight to all the various aspects of the case, and
to holding the scales of justice even between the parties. A joinder can never be
interpreted as foreshadowing a conclusion already half arrived at.

*[p113]

90. No less unwarranted would be any attempt to draw from the upholding of a
preliminary objection inferences as to what the attitude of the tribunal was, or would
have been, in regard to the substantive merits of the claim. No such inferencesin
whatever sensecould possibly be justified by reason of the fact that, on the basis
simply of a preliminary objection as such, the tribunal holds the claim to be
inadmissible.

*****

Postscriptum

I entirely approve of the initiative taken by the Court in paragraph 27 of the

Judgment (and for the first time in a judgmentFN *) of drawing attention to the
length of the proceedings in the present case,so as to indicate where the
responsibility for this lies. If the parties in a litigation before the Court think it
necessary to take several years to prepare and deliver their written and oral
arguments, that is their affair,and, having myself formerly, on a number of
occasions, been in the same position, I can understand the reasons for it.

-----------------------------------------------------------------------------------------------------
----------------
FN* A previous Order of the Court as to time-limits in the present proceedings drew
attention to the matter.
-----------------------------------------------------------------------------------------------------
----------------

Strong objection exists however when the blame for such delays is publicly ascribed
to the supposed dilatoriness or procrastination of the Court itself,in evident
ignorance, or else heedlessness, of the true facts FN**.

-----------------------------------------------------------------------------------------------------
----------------
FN** Some indication of the real facts will be found, for instance, in footnote 14 on
p. 447 of a review article contributed by me to the Kansas Law Review, Vol. 13,
No. 3, March, 1965. Since this was written, periods requested by the parties have
grown to 4-5 years for the written proceedings, and 3-6 months for the oral hearing.
See also for a much more complete statement, Professor Leo Gross, "The Time
Element in Contentious Proceedings in the International Court of Justice",
American Journal of International Law, 1969, Vol. 63, p. 74.

-----------------------------------------------------------------------------------------------------
----------------

Nor is this by any means the only way in which the Court has been misrepresented
in a manner detrimental to the dignity and good order of its functioning as an
independent judicial institution.

(Signed) G.G.Fitzmaurice

[p114]

SEPARATE OPINION OF JUDGE TANAKA

Although I subscribe to the Court's conclusion in dismissing the Belgian claim that
Spain violated an international obligation and incurred responsibility vis-a-vis
Belgium, I regret to have to say that my view differs from that of the Court in its
reasoning. The majority opinion reached its conclusion by deciding the question of
the jus standi of Belgium in the negative, i.e., by upholding the third preliminary
objection of the Spanish Government, whereas my position would be to proceed to
examine the question of the merits after the third and fourth (non-exhaustion of
local remedies) preliminary objections. An examination of the merits, however,
leads to the same result as that reached by the majority opinion, namely the
dismissal of the Belgian claim.

Such preliminary remarks are made necessary in order to determine the scope and
limit of individual, separate or dissenting opinions. By reason of the complexity of
the instant case, we are confronted with a need to make judges' rights, as provided
by Article 57 of the Statute, clearer.

A question may arise as to whether judges' opinions should be limited to those

matters which have been dealt with in the majority opinion or whether they are not
subject to some limitation.

Here, I do not go deeper into the study of this question. I simply wish to say that my
view favours a liberal attitude which would not allow any limitation to be imposed
on judges' statements, other than considerations of decency.

That this issue was taken up in some of the opinions of judges in the Judgment of
the South West Africa case (South West Africa, Second Phase, Judgment, I.C.J.
Reports 1966) is still vivid in our memory. So far as the detail is concerned I should
like to refer to a declaration of President Sir Percy Spender (ibid., pp. 51 ff.)
representing a restrictive theory and my contrary view on this issue as stated in my
opinion (ibid., pp. 262-263), appended to that Judgment.

For the above-mentioned reason my following statement is not obliged to remain

within the framework of the majority opinion. I feel that I must follow a logical
process of my own which, according to my conscience, I believe to be just. If the
question of Belgium's jus standi is resolved in the affirmative, the question of the
exhaustion of local remedies will remain to be examined. If given an affirmative
answer, then the question on the [p 115] merits, namely the denial of justice
allegedly committed by the Spanish authorities vis-a-vis the Barcelona Traction
Company and its subsidiaries should be taken up. This logical process cannot be
interrupted in the middle.

***

The Judgment of 24 July 1964 rejected the first and second preliminary objections
and joined the third and fourth preliminary objections to the merits.

Considering that the joinder of these two preliminary objections would not cause
them to lose their preliminary character, we must first deal with these objections
before examining questions relating to the merits, though bearing the latter in mind.
We shall begin with the third preliminary objection.

The object of the Belgian Government's Application of 14 June 1962 is reparation

for the damage allegedly caused to a certain number of its nationals, including
juridical persons, in their capacity as shareholders of the Barcelona Traction
Company, by the conduct, allegedly contrary to international law, of various organs
of the Spanish State toward that company and various other companies in its group.

The Spanish Government, on the other hand, denies by the third preliminary
objection that the Belgian Government possesses jus standi either for the protection
of the Barcelona Traction Company of Canadian nationality (Application filed on
23 September 1958) or for the protection of alleged Belgian "shareholders" of that
company (present case).

The third preliminary objection involves questions of both law and fact. The
question of law, which is a most important one in deciding this case, is concerned
with whether a State has a right to protect its nationals who are shareholders in a
company of a nationality other than that of the protecting State. More concretely,
the question may be formulated as follows: has the Belgian Government jus standi
to protect its nationals, namely Sidro and others, who are shareholders in the
Canadian Barcelona Traction Company?

Within the framework of diplomatic protection, the third preliminary objection

involves other issues concerning proteges, in particular the question of the
nationality of shareholders, their identification and the question concerning the
separation of legal and beneficial ownerwhich of them is to be treated as the true
shareholder from the viewpoint of diplomatic protection?in shareholding, which
also involves a legal question.

First, let us deal with the question concerning the diplomatic protection of
shareholders in a company of a nationality other than that of the protecting State.
Assuredly it constitutes a most fundamental question underlying the third
preliminary objection and is logically prior to other ques-[p 116]tions, so that a
decision on the former in the negative would make a decision on the latter
unnecessary. Therefore the question of diplomatic protection of shareholders may
be recognized as constituting the core of the third preliminary objection.

Here, it is not necessary to emphasize the spirit of a universally recognized rule of

customary international law concerning every State's right of diplomatic protection
over its nationals abroad, that is, a right to require that another State observe a
certain standard of decent treatment to aliens in its territory. The spirit of the
institution of diplomatic protection is clearly declared by a Judgment of the
Permanent Court of International Justice:
". . . in taking up the case of one of its nationals, by resorting to diplomatic action or
international judicial proceedings on his behalf, a State is in reality asserting its own
right, the right to ensure in the person of its nationals respect for the rules of
international law. This right is necessarily limited to intervention on behalf of its
own nationals because, ... it is the bond of nationality between the State and the
individual which alone confers upon the State the right of diplomatic protection, and
it is as a part of the function of diplomatic protection that the right to take up a claim
and to ensure respect for the rules of international law must be envisaged."
(Panevezys-Saldutiskis Railway case, P.C.I.J., Series A/B, No. 76, p. 16.)

Briefly, the idea of diplomatic protection does not seem to be a blind extension of
the sovereign power of a State to the territory of other countries; the spirit of this
institution signifies the collaboration of the protecting State for the cause of the rule
of law and justice.

Now, in the present case, we are confronted with concrete questions of whether a
national who is a shareholder in a company other than that of the protecting State, is
covered by diplomatic protection and whether the interest involved in the shares is
susceptible of being protected by the national State of the shareholders. In other
words, can the rule of diplomatic protection be extended to a shareholder in a
company of a nationality which is not that of the protecting State, and to an interest
which is characterized by many corporative particularities? This is a question of
interpretation of customary international law regarding the diplomatic protection of
the nationals of a State.

To solve these questions, we shall start from the examination of the nature and
characteristics of a shareholder in a corporation (joint-stock company). For that
purpose we shall consider the concept of a corporation, legal relations between a
corporation and its shareholders, and more particularly the legal significance of the
juridical personality of a corporation. We can easily understand the importance of
the consideration of [p 117] this last issue, if we see that many questions discussed
in the course of the proceedings on the preliminary objections and on the merits
appear to be centred round the question of the juridical personality of a corporation,
especially the question of whether in particular matters an interpretation of the
"piercing of the veil of the corporate personality" is to be admitted or not.

***

We shall first make some observations on the characteristics of corporations.

The corporation, which is a product par excellence of the capitalistic economic

system, possesses in many points remarkable characteristics compared with other
forms of commercial entities such as partnership and limited partnership which are
called in continental countries "socit de personnes" or "Personalgesellschaft", as
distinguished from the corporation, designated as "socit de capitaux" or
"Kapitalgesellschaft". As these nomenclatures indicate, the partnership is an
association which presents itself as a combination of individuals who have personal
con-fidence in one another in moral as well as in economic aspects and who, in
many cases, as the name "socit en nom collectif" indicates, are united usually on
the basis of a family tie, whereas the corporation is nothing other than an
aggregation of strangers, passers-by, who become united only from an economic
motive, namely the desire for possible increased dividends.

In a partnership the members of a partnership retain their own legal and economic
individuality. In internal relations, they are bound by a contractual nexus (between
the members qua individuals and between the members and the partnership) and in
external relations they have an unlimited liability toward the creditors of the
partnership. On the contrary, in the case of a corporation, its members, the
shareholders, stand in no legal relationship either to one another or to outsiders, i.e.,
the creditors of the corporation. The shareholders, different in that from partners
whose entire personality and individuality is absorbed into the business of the
partnership, do not and cannot participate in the activities of the corporation save by
way of exercising their voting rights in the general meeting. Even this kind of
participation of the shareholders in the corporate business is reduced to a minimum
by the natural tendency to indifference and "absenteeism" on the part of
shareholders. Their only obligation consists in the payment of a sum of money for
the shares subscribed by them and their only risk is the impossibility of
reimbursement of their invested sum in case of liquidation or bankruptcy of the
corporation.

Thus the legal position of shareholders lacks the individuality which is [p 118]found
in the case of partners. It is characterized by its abstractness and makes the existence
of shareholders something passive.

The typical corporation, considered from the point of view of those characteristics
in which it differs from the partnership, is designated as a "socit anonyme". This
term is used in contrast with the "socit en nom collectif". The anonymity relates
of course to the corporation itself, but we may assert that this character is derived
from the anonymity of each shareholder in the corporation. The anonymity can be
said to be a characteristic not only of a bearer share but of a registered share as well.

The anonymity of corporations as well as of shareholders makes possible and

facilitates the establishment among several corporations of dependent relationships
and concentrations of diverse kinds and degrees such as the cartel, the
"Interessengemeinschaft", "concerns", mergers (fusion), etc. Particularly, it tends to
produce at the national and international levels the phenomenon of the mammoth
pyramidal structure in which innumerable enterprises, crowned by a controlling
holding company at the top, are affiliated with one another in links of parent-and-
child relationships, by means of holding, subsidiary and sub-subsidiary companies.

The concentration due to the aforesaid anonymity disregards national frontiers and
may cover many countries. In this way international investments are facilitated. The
case of the Barcelona Traction Company offers an excellent example of the
concentration of enterprises and international investment.
The relationship existing among innumerable companies possessing separate
juridical personality is commonly called a "group".

The anonymity of shareholders manifests itself in the recent tendency to separate

power or management from the ownership by mechanisms such as life insurance
companies, pension trusts, and mutual funds, as pointed out by Professor Adolf A.
Berle Jr. (Power Without Property, 1959, pp. 160 ff.). The separation of nominee
and beneficial owner of shares, one of the issues with which the third preliminary
objection in the present case is concerned, may be considered an example of the
manifestation of this tendency.

Anonymity of shareholders and separation of control from ownership in corporative

life necessarily exercise a profound influence upon the character of a corporation as
a juridical entity. In contrast with the partnership, where autonomy among members
or contractual freedom largely prevails and consequently the corporative regulation
by the articles of incorporation is limited to a minimum, matters concerning
corporations are, even in regard to their internal relations, minutely prescribed by
jus cogens in company law and a very narrow sphere is left to the autonomy of the
general meeting as the highest organ of the corporation. The degree of the rule of
law in commercial societies is in [p 119] inverse proportion to the importance which
law attaches to the individual member. In the partnership it is minimal; in the
corporation maximal.

From what has been stated above, we may conclude that the tie of the juridical
personality is, in the case of a corporation, far stronger than in the case of a
partnership. In a corporation juridical personality plays the role of holding together
incoherent individuals by a compact legal frame, while in the case of a partnership,
even under some legal systems recognizing its juridical personality, the partners are
directly liable to creditors of the partnership in the event of its insolvency and
accordingly the function played by its juridical personality is extremely limited.

The above-mentioned characteristics of a corporation are very succinctly indicated

by the following description :

"Dans les socits de capitaux ... le lien de la socit avec la personne de ses
membres est moins marqu; le concept de personnalit morale est donc pour elles
plus ncessaire. Les associs ne sont pas normalement responsables des dettes de la
socit; l'actif social seul en rpond. La dure de la socit ne dpend pas de la vie
des associs, qui ne se connaissent souvent pas, et ont runi leurs capitaux, non leurs
personnes; les actions, qui reprsentent les parts sociales, sont, en principe,
librement ngociables et ainsi appeles changer continuellement de mains."
(Professeurs Henri et Lon Mazeaud et Conseiller Jean Mazeaud, Leons de droit
civil, tome I, 3e d., 1963, pp. 602, 603.)

If we recognize these observations as right, the natural conclusion therefrom would

be that the object of diplomatic protection in the case of a corporation should be the
corporation itself and not its shareholders.

From the viewpoint of emphasizing the significance of the juridical personality of

the corporation, it appears that it must be the company as juridical person which is
capable of enjoying the protection and not the shareholders, since they are excluded
from the protection by the screen of juridical personality of the company.

The traditional doctrine on this matter has been based on the theory of the juridical
personality of a corporation, which holds that "a corporation is a juridical person
distinct from its members". J. Mervyn Jones stated :
"Assuming, therefore, that corporations may be nationals, it follows that only the
state of which they are nationals may intervene on their behalf, and this
notwithstanding the fact that most of the members may be nationals of another
state." ("Claims on behalf of nationals who are shareholders in foreign companies",
British Year Book of International Law, 1949, p. 227.)[p 120]

The argument of the Spanish Government which denies the right of diplomatic
protection of shareholders in favour of the national State of the Barcelona Traction
Company, namely Canada, is precisely based on the above-mentioned theory of a
juridical personality recognized as being distinct from its members.

The Belgian Government on the contrary, wishes to advocate its position by arguing
from a fundamental theory concerning the juridical person. It intends to defend its
viewpoint on the strength of the doctrine of fiction, which denies the real existence
of the juridical person by reducing it to a simple conglomeration of its constituent
members and minimizing the juridical person as being a mere legal technique that
makes it possible for plural individuals to own property or conclude a transaction.

In order to assert its view, the Belgian Government has repeatedly referred to a
figurative concept of "piercing the veil" of corporate personality. So far as this
slogan is concerned, however, it simply means that the shareholders must be
protected by their national State regardless of the juridical personality of the
corporation. It is a petitio principii and nothing more.

The Belgian Government, basing itself on the fiction theory, insists that the real
existence of a corporation is its shareholders and that accordingly the subject to be
protected is not limited to the Barcelona Traction Company, but includes its
shareholders who are Belgian nationals.

The argument developed by the Spanish Government to deny the protection of

shareholders is, as indicated above, based on the role attributed to the juridical
personality of corporation.

The viewpoint of the Spanish Government is not in itself wrong. As we have seen,
in a corporation the role of the juridical personality is at a maximum and that of
shareholders is reduced to a minimum. Never can the shareholders come in contact
with a third person through the wall of the corporate personality. This wall seems
too solid to be penetrated. It appears that diplomatic protection cannot reach to
shareholders, consequently the Spanish view on this point seems to be well founded.

In short, both Governments, the Belgian and the Spanish as well, appear to base
their respective positions on a theory of juridical personality: either on the theory of
fiction or on the realistic theory, either disregarding or emphasizing the functional
importance of juridical personality.

***

However, we must approach the issue in question from a different angle. The
question should be considered on quite another plane. What we have seen above and
what the Spanish Government has put forward are arguments concerned with the
juridical concept of corporation in the [p 121]
meaning of municipal law, private law and particularly commercial law, and they
deal with this concept only.

Law relating to corporations is concerned with matters of private law, namely

private interests, relationships between corporation, shareholders and third parties.
Company law in respect of incorporation, formation, ultra vires, capital, its increase
and reduction, organs, the rights and duties of shareholders (particularly limited
liability), the transfer of shares, accounts, the issuing of bonds, dissolution,
liquidation, etc., is above all related to internal matters of corporations, or business
transactions with outsiders and belongs to the plane of municipal law. The
principles prevailing in these matters are directed, on the one hand, to the protection
of third parties, namely the creditors of a company, and on the other hand, to the
protection of the shareholders in the company itself. These principles are not in
themselves connected in any way with international law. The protection of
shareholders is intended to be guaranteed in corporation law mainly by provisions
concerning the limited liability of shareholders, the maintenance of enterprises, the
principle of publicity, liability of corporate organs, etc. ; it belongs to an entirely
different plane of law the prevailing principle of which is quite extraneous to that of
diplomatic protection.

The Spanish concept of the impenetrability of a company's wall of juridical

personality is based on a principle of private law, and therefore it cannot be applied
to the question of diplomatic protection of shareholders.

Since the matter of diplomatic protection of shareholders belongs to an entirely

different plane, namely to the field of international law, the juridical personality
created from the necessity of the viewpoint of private law or commercial law cannot
be recognized as an obstacle for the protection of shareholders on the plane of
international law.

For this reason the fact that a corporation has juridical personality under the law of a
State does not necessarily justify diplomatic protection by that State only.

This conclusion is based on recognition of the relativity of the validity of each legal
principle and concept.

Every branch of law, for example, private law, procedural law, administrative law,
fiscal law, private international law, law concerning enemy character in wartime,
etc., has its own purpose and accordingly, the sphere which it governs is necessarily
limited. Certain legal principles and concepts may have a relative validity in the
specific sphere to which they belong. Each legal system or institution has its own
objective; to attain this objective, a system of norms, i.e., principles, rules and
provisions, is developed. The system is teleologically constructed. The meaning of
the norms and concepts included in it will be relative to the objective of the system
itself and limited by it, although the existence of [p 122] common principles and
concepts underlying diverse systems cannot be denied. To give an example: we
cannot help recognizing the difference between the legal position of seller and
purchaser and that of parties each playing a specific role with regard to a bill of
exchange, although both cases belong to the law of obligations. We may cite
another example, namely the difference between the legal relationship governing a
company and its shareholders and that involved in an ordinary commercial trans-
action.

What we want to emphasize is that each branch of law, each system and institution,
each provision belonging to it, possesses a specific character from the viewpoint of
its objective and is susceptible of or requires a different interpretation. This
phenomenon is what a distinguished commercialist, Rudolf Mller-Erzbach more
than 55 years ago ingeniously pointed out in an article ("Relativitt der
Rechtsbegriffe und ihre Begrenzung durch den Zweck des Gesetzes", Jherings
Jahrbcher fr die Dogmatik des heutigen Rmischen und Deutschen Privatrechts,
Bd. 61, 1912, ss. 343-384).

On the matters we are interested in, a concept such as nationality, which is

concerned with both municipal and international law, may have a different content
according to the objective of each branch of law and its interpretation and
application may be relative. Even if the nationality of an individual is established by
municipal law, it may not necessarily have validity in international law. It is
possible that one may not be entitled to diplomatic protection from one's national
State by reason of lack of effectiveness, as the Nottebohm case indicates (I.C.J.
Reports 1955, p. 23). The fact that the effectiveness is questioned, implies that the
concept of nationality may vary in meaning according to whether it is interpreted by
municipal law or by international law.

The viewpoint mentioned above may be stressed further with regard to the question
of the nationality of a corporation in relation to its juridical personality. To begin
with, the concept of nationality as applied to a physical person differs from that
applied to a juridical person. In regard to the latter, the relationship of allegiance
originating from the natural tie between physical persons and their national State
may be lacking. Furthermore, the meaning implied in the nationality of corporations
may not be identical according to different branches of law, for example, law
concerning the treatment of foreign corporations, conflict of laws, diplomatic
protection of nationals, law on enemy character, etc. (Prof. Paul Reuter, Droit
international public, 1958, pp. 164, 165.)

Hypothetically, a corporation obtains juridical personality by being incorporated in

a State under the law of that State and acquires the nationality of that State, but the
corporation may possess a foreign [p 123] character in other respects:
preponderance of foreign participation in the capital stock, nationality of members
of boards of directors, place of control, place of business activities, etc. In such
cases it may become controversial whether the national State of the corporation can
claim diplomatic protection on its behalf solely because the corporation has its
nationality; in any event, the national State of the corporation, even if it is entitled to
diplomatic protection, may hesitate to exercise its right.

It is not without reason that Rabel renounced his attempt to seek a uniform content
for the concept of nationality of corporations and declared that each rule should be
interpreted separately (Ernst Rabel, The Conflict of Laws, 1947, Vol. II, p. 21).

***
We may quote an example for the purpose of demonstrating the non-application of a
rule of municipal law to a matter of international law.

The so-called principle of equal treatment of shareholders, we believe, is considered

one of the most fundamental principles governing the law of corporations.
According to this principle, all shares in a corporation or, if several categories of
shares exist, all shares in the same category are, from the viewpoint of the rights
and duties incorporated in them, equal (with the exception of quantative differences
proportionate to the degree of participation), and therefore shareholders are to be
treated equally. This principle is perhaps derived from the fact of anonymity or lack
of individuality where the position of shareholders is concerned, in contrast with
that of partners ; the idea may go back to canon law and, further, to the Aristotelian
notion of justifia distributiva.

The principle of equal treatment of shareholders, however important it may be,

nevertheless has its limitation. The limitation may come from municipal law, but in
any case it comes from outside commercial law. It may take the form of a restriction
of the rights of foreign shareholders in public law. Or it may be based on
international law where the latter recognizes the protection of shareholders in a
foreign company who are nationals of the protecting State. Unequal treatment
arising as the result of a discretionary exercise of diplomatic protection cannot be
avoided when there are shareholders of different nationalities. A situation wherein
some of the shareholders enjoy effective protection and the rest do not is inevitable.
Whether such situation is desirable or not is a different matter.
What we meant above is that a principle such as equal treatment of shareholders,
being of municipal law character, is not ipso jure applicable to matters belonging to
the plane of international law, including matters concerning diplomatic protection of
shareholders. The shareholders who have been excluded from diplomatic protection
cannot protest against [p 124]
diplomatic protection of other shareholders by their respective national States by
referring to the principle of equal treatment of shareholders, which is valid only in
municipal law and not in the matter of international law to which the rule of
diplomatic protection belongs.

What has been said concerning the principle of the equality of shareholders can be
applied mutatis mutandis to the question of the juridical personality of a
corporation. Juridical personality is, as stated above, conferred on a corporation
primarily for the purposes of maintaining the enterprise, owning property,
concluding transactions with outsiders and limiting or denying the liability of
shareholders in regard to creditors of the company. Accordingly, juridical
personality possesses meaning only as a legal technique to serve and guarantee the
corporate existence in respect of private and commercial law. Its validity is relative
and therefore limited.

The Spanish Government conceives the juridical personality of a corporation as an

impenetrable wall lying between corporation and shareholders as far as diplomatic
protection is concerned, so that it can prevent protection of the shareholders and
monopolize it in favour of the corporation itself. In other words, the framework of
juridical personality should involve in itself the susceptibility of diplomatic
protection of the company and at the same time the exclusion of shareholders from
the protection. The question of diplomatic protection could not be distin-guished
from the conclusion of ordinary transactions, where the corporation itself was
represented and the shareholders excluded.

Such a construction, however, would fall into the error of conceiving the juridical
personality of a corporation as an aim in itself, whereas it is nothing but a means in
the interest of its constituent members.

Professor (at that time Judge) Charles De Visscher said:

"L'intrt de l'individu, l'intrt de l'homme est toujours le but du droit et sa fin

suprme. Il en est ainsi alors mme que la poursuite de cet intrt s'effectue sous le
couvert du rgime de la personnalit civile." ("De la protection diplomatique des
actionnaires d'une socit contre l'Etat sous la lgislation duquel cette socit s'est
constitue": Revue de droit international et de lgislation compare, Vol. 61, 1934,
p. 639.)

***
By what is set forth above, we have tried negatively to remove an important
obstacle to the recognition of diplomatic protection in favour of shareholders. Next,
we shall demonstrate positively the necessity and raison d'tre of protection of
shareholders and establish the reason why the shareholders should be protected
independently of the company to which they belong.

We shall solve the question of whether the shareholders' rights and interests are
included in the subject-matter of diplomatic protection [p 125] according to the
universally recognized customary rule of international law, the existence of which
does not admit of any doubt; we are confronted with the interpretation of this
customary rule of international law, i.e., whether diplomatic protection covers the
position, namely rights and interests, of shareholders in a corporation or not.

Roughly speaking, international law places no qualification on "property", "rights"

and "interests", and consequently it seems that the position of shareholders can be
recognized as involving property, rights or interests, and is able to be covered by
diplomatic protection. Before we reach a definite conclusion, however, we must
examine the nature of the shareholders' legal position and their rights and interests,
because some aspects of the legal position of shareholders have appeared to be an
obstacle to the recognition of its diplomatic protection and, therefore, much
discussion has taken place between both Parties concerning this issue.

Let us examine what are usually indicated as shareholders' rights in books on

corporation law of many countries: the right to dividends, the right to surplus assets
in case of liquidation, the right to vote in general meetings, the right of minority
shareholders to sue for the liability of directors, the right to transfer shares, the right
to request certificates, etc.

Examining these so-called shareholders' rights we can distinguish two categories of

rights: the one includes those rights which are enjoyed by shareholders themselves,
namely the right to dividends, the right to surplus assets and the right to transfer
shares; and the other includes the right of voting and all those rights the aim of
which constitutes the common interest of the corporation itself and not the
individual interest of the shareholders. Some German scholars of corporation law
call the rights in the first category eigenntzige Rechte (rights for self-interest) and
the rights in the second category gemeinntzige Rechte (rights for common
purpose). The latter category constitutes rights of shareholders sensu lato; however
they are not exercised by them as shareholders but as an organ composing the
general meeting, and therefore this kind of right cannot be classified in a category of
rights of shareholders in sensu stricto. Of course a preponderant shareholding in the
general meeting would confer on the shareholder right of control, but this so-called
right cannot be said to be a "right" in the proper sense, but mere "interest".

As to the rights of shareholders to request dividends or surplus assets, we cannot

deny them the nature of a right sensu stricto; nor do we hesitate to classify shares in
the categories of "property", "rights" or "interests" which may be covered by
diplomatic protection.

This conclusion, we consider, cannot be denied on the ground that the realization of
the right to dividends or surplus assets presupposes the [p 126] existence of profits
or surplus assets on the balance sheet, and is therefore conditioned by the future
financial circumstances of the company. It is true that the position of shareholders
is, in this respect, more uncertain than the position of creditors and bondholders, but
a conditional right cannot be excluded from diplomatic protection simply because it
involves uncertainty; nor can the fact that shareholders do not possess any right as
regards corporate propertyits formal owner being the company itself be used to
deny diplomatic protection.

In short, whatever construction may be put on the rights of shareholders each

constituent element of a share can be characterized as a "right" or "interest".
Furthermore, we can conceive rights and interests as a whole, as a conglomeration
of diverse rights, duties and interests. Perhaps we can consider them as
Mitgliedschaft or Mitgliedschaftsrecht, which is nothing else but a kind of legal
position possessed by a shareholder. That this legal position can be and will be
considered an object of diplomatic protection, is easily understood by the fact that
the legal position as a whole, being incorporated in the share certificate, becomes
negotiable as a movable and quoted in stock-exchange operations.

In this context, we shall clarify the distinction between protection of shareholders

from the viewpoint of the material content of shares and protection of shareholders
as owners of the share certificates. What we are concerned with is only the former
case in which alleged wrongful acts vis--vis the company are involved and
consequently the intrinsic value of shares is affected, while in the latter case the
question of protection is concerned with an owner or possessor of a particular share
certificate as a titre-valeur as in the case of rei vindicatio, where a share certificate
has been stolen or damaged; the latter case therefore, is not concerned with the
protection of shareholders which is what we are dealing with here.

In sum, the legal position of shareholders can itself be considered to be the object of
diplomatic protection by their national State. From the viewpoint of diplomatic
protection it does not matter whether this position can be conceived as "property",
"a right" or "interests". Even if it cannot be recognized as property or a right, it
constitutes "interest".
The share can be said to be a new type of property which is a product of modern
capitalism; although, unlike copyright, patents and trademarks, it has its origin in
municipal law, it has acquired a highly international character owing to its
anonymity and transferability. There is no other movable property comparable with
the share which is furnished with the highest degree of negotiability through the
mechanism, of international exchange markets.[p 127]

Parallel with the development of international investment, the necessity of its

protection becomes acute. It will be recognized that absence of a uniform law
relative to companies and the highly imperfect state of private international law on
this matter increasingly require diplomatic protec-tion of shareholders in a way that
supplements the measures provided by municipal law.

Briefly, we should approach the customary rule of diplomatic protection from a

teleological angle, namely from the spirit and purpose of diplomatic protection,
without being bound by municipal law and private law concepts, recognizing its
relative validity according to different fields and institutions. The concept of
juridical personality mainly governs private law relationships. It cannot be made an
obstacle to diplomatic protection of shareholders. Concerning diplomatic protection,
international law looks into the substance of matters instead of the legal form or
technique; it pays more consideration to ascertaining where real interest exists,
disregarding legal concepts. International law in this respect is realistic and
therefore flexible.

Judge Wellington Koo in his separate opinion appended to the 1964 Judgment
concerning the third preliminary objection in the present case says:

"International law, being primarily based upon the general principles of law and
justice, is unfettered by technicalities and formalistic considerations which are often
given importance in municipal law ... It is the reality which counts more than the
appearance. It is the equitable interest which matters rather than the legal interest. In
other words it is the substance which carried weight on the international plane rather
than the form." (Barcelona Traction, Light and Power Company, Limited,
Preliminary Objections, Judgment, I.C.J. Reports 1964, pp. 62 and 63.)

***

Even if the existence of an interest (in a broad sense) in diplomatic protection is

recognized, however, the State concerned would have the discretion to exercise the
power of diplomatic protection on certain matters. Here, we must distinguish two
questions: the one is whether diplo-matic protection is, from the viewpoint of the
nature of the object of protection, legally possible or not; the other is whether, in a
specific case, intervention for the purpose of diplomatic protection by a State on
behalf of its national, is appropriate or not. The former question is of a legal nature,
to be distinguished from the latter which constitutes nothing else but the political
evaluation of the fact from various aspects (above all, economic considerations).
The two questions should not be confused.[p 128]

These two questions arise from the existence of the two kinds of interest pertaining
to the diplomatic protection of shareholders: one is the original interest of
shareholders which requires the protection of their national State, the other is the
interest which the national State of the shareholders possesses and which may
become a deciding factor in the exercise of a discretionary power of intervention.
These two interests must not be confused either.
In this respect, we shall consider the meaning of the percentage of participation of
shareholders to be protected in the capital stock of a company. This matter has been
repeatedly discussed between the Parties in the present case relative to the
preponderance of percentage of Sidro's participation in the capital stock of
Barcelona Traction. It has been claimed that this preponderance constitutes an
essential condition for the existence or exercise of the right of diplomatic protection
of shareholders. But we consider that the preponderance of percentage does not
appear to constitute a condition of diplomatic protection. It seems that the
percentage itself possesses no relevance to the legal possibility of diplomatic
protection. Even the holding of one share would jusifytheoretically the right of
diplomatic protection. Whether this right will be exercised or not, is a matter
belonging to the discretion of the national State. What is essential is the existence of
an interest worthy of protection by the shareholders' national State. In this sense the
total value of the shares to be protected should be considered objectively without
regard to the percentage which it occupies in the total capital stock. A holding of 25
per cent. in a big company may be sufficient for the exercise of diplomatic
protection; contrariwise, a 99 per cent. holding in an insignificant company may be
excluded from the consideration of diplomatic protection. Of course other factors
may come into consideration. This is a matter of political expediency, belonging to
the discretion of the protecting State, which presupposes the possibility of
protection, and not a matter of law which is concerned with the legal possibility of
protection.

We presume that the discussion concerning the percentage of the participation of

Sidro in the capital stock of Barcelona Traction is motivated by the idea of
protection of the Barcelona Traction Company itself, on which viewpoint the
Belgian Application of 1958 stood. Con-troversy around the percentage of
participation, so far as the third preliminary objection is concerned, may be
understood as a residuum of the viewpoint of protection of the company represented
by the initial Application; therefore, it seems that it is not relevant to the question
with which we are dealing now.

The question of whether a State is entitled to exercise a right of diplomatic

protection of a foreign corporation is entirely another matter. It seems that it must be
decided in the negative sense, by reason of the fact that the corporation itself does
not possess the nationality of the protecting State. However, some State practice
recognizes the protection of a foreign corporation, if substantial interest in the
corporation [p 129] is owned by its nationals (see Edwin M. Borchard, The
Diplomatic Protection of Citizens Abroad, 1915, p. 622). This is not the case which
we are now considering. Here we are concerned with the issue of the protection of
shareholders and not the company itself. But much progress has been made such
that through protection of a foreign company the protection of shareholders is
attained. It is quite natural that, so long as the standpoint of protection of a company
itself is defended, the percentage of the participation of the protected shareholders
does come into consideration. However, since we refuse to recognize an obstacle to
diplomatic protection in the juridical personality of a company and attribute to
shareholders an independent status which may be an object of diplomatic protection,
the fact of Sidro's holding a certain fairly large percentage of the Barcelona Traction
Company must be deemed to be one of the factors to be taken into consideration in
exercising diplomatic protection but not one legally required as a condition for the
right of protection.

***

It is true that the internationally wrongful acts allegedly committed by the Spanish
administrative or judicial State organs, such as refusal of the transfer of foreign
currency, the bankruptcy judgment of 12 February 1948, etc., are directed to the
Barcelona Traction Company, which possesses Canadian nationality. Accordingly,
the Spanish Government argues that only Canada, the national State of the
company, is entitled to exercise its diplomatic protection. This argument is based on
the municipal law concept of the corporation on which we made observations above
and according to which only the corporate personality prevails regarding external
matters. According to this concept, since only the company could be the victim of a
wrongful act, the damage suffered by the shareholders should be indemnified
through the company indirectly. In short, only the national State of the company
would be entitled to exercise diplomatic protection and not the national State of the
shareholders.

It is also true that the national State of a company is entitled to take measures of
diplomatic protection on behalf of the company, assuming that the bond of
nationality is effective, and that the national State is materially interested in the
protection of the company. But there are many cases where the nationality of the
company is not effective, where the bond between the national State of the company
and the shareholders is lacking and, accordingly, the national State is not inclined to
exercise the right of protection. There may exist another circumstance for the
national State of the company, such as the fact that between this State and the State
responsible for the wrongful acts a nexus of compulsory jurisdiction is lacking; or
the former State, for some political or other reasons may not wish to pursue
diplomatic protection against the latter[p 130]
State; or diplomatic protection by the former State might not bring a satisfactory
result, etc. Under these circumstances there remains no other remedy than that the
national State of the shareholders should take the initiative for the purpose of the
protection of its nationals. A vacuum with respect to protection should not be
tolerated: otherwise shareholders would be left in an entirely helpless condition and
the result would be injustice and inequity which would be harmful for the healthy
development of international investment.

As one of the objections raised to the above-mentioned argument in favour of

diplomatic protection of a national State of shareholders, we may point out the
difficulty which would be produced by the cumulative existence or competitive
concurrence of rights of several States concerning the same object of diplomatic
protection. It follows that in the case of multinational composition of capital, more
than one national State of shareholders might intervene on the condition that the
jurisdictional basis exists, either by the way of intervention as provided for in
Articles 62 and 63 of the Statute or by special agreement or application (Article 40
of the Statute). Each of those entitled to diplomatic protection would be able to
exercise its right of protection according to its discretion without prejudicing the
rights of protection of other States concerned.

Such competitive existence of rights of diplomatic protection of diverse States

appears an extraordinary phenomenon, but we consider that the same kind of legal
phenomenon can be found in contractual or delictual matters where the same
contract or wrongful act gives rise to a claim for compensation by diverse persons
concerned. In such a case, concurrent plural claims may serve a common purpose; if
one of them were exercised and satisfied, the remaining rights would be
extinguished, having attained their purpose.

Accordingly, in the present case, there does not exist any contradiction between, on
the one hand, the right of diplomatic protection of the Barcelona Traction Company
by its national State, namely Canada and, on the other hand, the right of diplomatic
protection of its shareholders by their national State, namely Belgium. The existence
of the former right does not exclude either the existence of the latter right or its
exercise.

Since the two rights of diplomatic protectionthat of Canda and that of Belgium
co-exist in parallel but independently, it is not a necessity for Belgium's right of
diplomatic protection that Canada should finally waive its right of protection in
regard to the Barcelona Traction Company. Such a fact is not relevant to the
existence of the right of diplomatic protection of Belgium in favour of its
shareholders.

We cannot deny the possibility of a cumulative existence of rights of diplomatic

protection in the case of a company just as a natural person may have dual
nationality. If a claim of one State is realized, [p 131] the claim of the other State
will be extinguished to this extent by losing its object. Accordingly, the defendant
State cannot be compelled to pay the damage twice over.

Of course, we recognize that the fear of complication which would be caused by

plural or multiple interventions of several governments has some justification. But if
we deny them, the legitimate interests of shareholders might be left without
protection by their national States. These phenomena would represent some of the
defects inherent in the present institution of diplomatic protection, which might be
related to the non-acceptability of individuals to international tribunals. Practically
complication and confusion might be avoided to a considerable degree by
negotiations and "solutions inspired by goodwill and common sense ..." (Reparation
for Injuries Suffered in the Service of the United Nations, Advisory Opinion, I.C.J.
Reports 1949, p. 186) between the States concerned. Or it would be a task of
international legislative policy to provide means to guarantee the protection of
private investments and to find appropriate solutions in order to overcome the
difficulties arising from the multiple intervention of several governments. We
should not refuse the necessary remedies to protect legitimate shareholders by
conjecturing extreme cases.

It is true that there is no rule of international law which allows two kinds of
diplomatic protection to a company and its shareholders respectively, but there is no
rule of international law either which prohibits double protection. It seems that a
lacuna of law exists here; it must be filled by an interpretation which emanates from
the spirit of the institution of diplomatic protection itself.

***

From what is stated above, we can conclude that whether Canada is entitled to
diplomatic protection of the Barcelona Traction Company as its national State or
whether the Canadian Government once wanted to intervene in the dispute but
finally gave up the original intention, is not legally relevant to solve the question of
the right of diplomatic protection of shareholders by their national State. This right
exists independently of the right of the national State of the company. The history of
the comparatively short-lived Canadian intervention (1948-1952 or 1955), however,
would prove the raison d'tre of the right of diplomatic protection of shareholders
by their national State.

The above-mentioned protection of the shareholders themselves is based on the

concept which characterizes relationships between the company and its members,
namely the shareholders. Although an inde- [p 132]pendent juridical personality is
conferred on a company, this personality does not present itself as an end, but
simply as a means to achieve an economic purpose, namely a maximum degree of
pecuniary interest by a limited sum of investment.

A company in the sociological sense belongs to the category of the "Gesellschaft",

and presents itself as a pure means to achieve the economic purpose of its members,
namely the shareholders; the shareholders constitute the substance of its existence;
they are the sovereign of the company like the citizens in a democratic State. Who
require, in the material sense, diplomatic protection in the case of a company? No-
one other than the shareholders in the company, although in some cases the
company itself, may appear as a formal protege on the scene, having its cause
espoused by its national State. Therefore in a company, the shareholders, as being
its real substance, and the subject of interests, must be considered as the object of
diplomatic protection; not the company itself which has nothing but a Active
existence and can only play the role of a technique for the purpose of protection of
the shareholders who are the real owners of the corporate property and enterprise.

From what has been said above, we can conclude that there exists between a
company and its shareholders a relationship of community of destiny which has
been repeatedly emphasized, particularly in the oral arguments by the Belgian
Government, in order to justify its right of diplomatic protection on behalf of its
shareholders in the present case. The alleged internationally wrongful acts, it is true,
are directed against the company itself and not against the shareholders, but only in
a formal sense; in reality both are inseparably connected to each other in such a way
that prejudicial acts committed against a company necessarily produce an effect
detrimental to its shareholders by reduction of the sum of dividends or surplus
assets. In a company, we can recognize the existence of unity between company and
shareholders in the sense that profit and loss are in the final instance attributed to the
shareholders of course under the condition that the liability of each shareholder is
limited to the sum of shares which he has subscribed.

Therefore, the alleged internationally wrongful acts directed against a company can
be conceived as directed against its shareholders themselves, because both can be
considered, in substance, i.e., economically, identical.

Accordingly, one cannot deny to the national State of shareholders the right of
diplomatic protection of its nationals on the ground that another State may possess
or exercise the same right on behalf of the company itself. Consequently, in the
present case, the recognition of the right of diplomatic protection of Canada, which
is the national State of the Barcelona Traction Company, does not exclude the same
right of Belgium, the national State of the shareholders of that company on their
behalf; hence Belgium may be entitled to exercise its original [p 133] right of
protection of her shareholders independently of the protection of the company itself
by Canada. Therefore, the Belgian Government cannot be regarded as substituting
the Canadian claim to the protection of the company.

It might be said in passing that by this assertion we do not go so far as to maintain

that the interest of the company coincides perfectly with the totality of the
shareholders' interests. We must recognize that originally a company is no more
than a means for its shareholders to achieve their lucrative purpose; but so long as
the company continues as a going concern it would enjoy in some measure an
independent existence free from the arbitrary decision of the shareholders. So long
as a company exists for a considerable space of time and fulfils its corporate
purpose it acquires an objective existence (the idea of so-called "Unternehmen an
sich" of Walther Rathenau) which, owing to its important social role the
shareholders would not dare dissolve arbitrarily, even if it were legally possible, by
the prescribed majority vote. We know that many contemporary big and influential
corporations are extending their activities to fields of an educational, scientific and
philanthropic nature and are contributing to the solution of social and cultural
problems for the welfare of humanity (A. A. Berle, The 20th Century Capitalist
Revolution, 1954, pp. 164, 188). Accordingly, even in the case of a corporation
created for the egoistic purposes of shareholders, there may exist a common interest
of the company distinct from the individual interest of the shareholders, and
therefore we cannot deny the possibility of conflict between these two interests.
However, the possibility of common interest does not preclude the fact that between
the company and the shareholders a relationship of community normally exists and
wrongful acts done to and damage inflicted on the former can be considered also as
being directed against the latter.

We recognize that an adequate connection of cause and effect may exist between the
wrongful acts done to the company and the damage inflicted on the shareholders,
but we can explain this fact, as is mentioned above, by the existence of a community
of destiny or a substantial economic identity between them.

***

From what has been stated above, we consider that we can demonstrate the raison
d'tre of the right of diplomatic protection by a State of its nationals who are
shareholders in a company of a nationality other than that of the protecting State.

The Parties have argued by quoting international arbitral precedents, the practice of
States and the writings of authoritative publicists to defend their standpoints.
Although cases concerning the protection of shareholders exactly analogous to the
present case cannot be found, [p 134] international practice and doctrine do not
seem to deny the protection of shareholders by their national State to which the
company itself does not belong.

The Spanish Government admits the protection of shareholders by their national

State (1) where, following the general tendency of international practice and
doctrine, the company possesses the nationality of the State responsible for the
damage, and (2) where the foreign company has been dissolved or is practically
defunct. In these cases there exists the circumstance that the protection of the
shareholders by the national State of the company cannot be expected, either
factually or legally. This is why in these cases the protection of shareholders
directly by their national State is justified. The question is whether these two
instances are to be considered as a manifestation of a more general principle in
favour of the protection of shareholders or as an exception to the main principle
which does not admit their protection.

The principle of customary international law concerning diplomatic protection by

the State of its nationals, however general and vague it may be, does not prohibit the
rights or the legal position of shareholders being included in "property, rights and
interests" as an object of protection. This conclusion can be justified as a correct
interpretation of customary international law concerning diplomatic protection,
particularly taking into account the above-mentioned necessity of international
investment in the past as well as in the future. The nature of the interest of
shareholders is to be interpreted as a legitimate one worthy of protection by their
national State.

Next, customary international law does not prohibit protection of shareholders by

their national State even when the national State of the company possesses the right
of protection in respect of the latter.

The Spanish Government denies the right of protection of shareholders by their

national State. It admits diplomatic protection of shareholders only in the two
above-mentioned exceptional cases. Protection of shareholders from this viewpoint
is considered only as a substitute for the protection of the company itself which has
become impracticable through the circumstances indicated above. From our
viewpoint, the protection of the shareholders possesses a meaning independently of
the protection of the company itself. Accordingly, it can exist regardless of
circumstances which might make the exercise of the right of protection of a
company and the intervention of its national government impossible or difficult.
There does not appear to exist in international law any restriction to the effect that
the protection of shareholders in a foreign company by their national State must be
limited to the above-mentioned two cases. The national State of shareholders, in the
present case Belgium, is entitled to protect them just as in the cases where a
company possesses the nationality of the responsible State, or a company has been
dissolved or is practically defunct.

In short, the contention of the Spanish Government is based on the [p 135]

municipal law concept of corporate personality and that of shareholders which is its
corollary. The two protections, we considerprotection of the company and that of
the shareholdersmay co-exist and on equal terms; the latter is not supplementary
to the former.

For the foregoing reasons, we conclude that Belgium has an independent right to
protect the Belgian shareholders in Barcelona Traction in conformity with the
interpretation of customary international law concerning the diplomatic protection
of nationals.

II
So far we have been concerned with the question of the legal, that is to say, the
theoretical basis for the jus standi of the Belgian Government: the question whether
a State has a right to protect its nationals who are shareholders in a company of a
nationality other than that of the protecting State. This question having been
answered in the affirmative, we must now consider some questions from the
viewpoint of the identification of individual shareholders with reference to the
present case.

These questions are concerned of course with the existence of shareholders who are
entitled to receive diplomatic protection by their home State. Not all so-called
"shareholders", but only those who are qualified from the functional and temporal
viewpoint to receive protection. (It goes without saying that proof of their status as
shareholders must be furnished as a matter of principle either by the register in the
case of registered shares or by possession in the case of bearer shares.)
From the viewpoint of functional differentiation a question arises when shares are
owned by two persons: the one, a nominee, whose name is entered in the share
register and who exercises rights as alter ego of the real owner; the other, the
beneficial owner, who enjoys rights as the real or economic owner of the shares. By
what criterion shall it be decided which of those two is entitled as shareholder to be
the object of protection : the nominee or the beneficial owner?

In the present case, the register of the shareholders of the Barcelona Traction
Company kept by the National Trust Company of Toronto gives successively as
from 7 November 1939 the names of the Charles Gordon Company, a partnership of
New Jersey and Newman & Company, a partnership of New Yorkthe two are of
American nationality and does not give the name of Sidro which is of Belgian
nationality. It is contended by the Belgian Government that a contractual nominee-
beneficial-owner relationship exists between the two American partnerships and
Sidro. The purpose of the establishment of such a relationship [p 136] seems to have
been a wartime necessity of German-occupied Belgium to protect Sidro's
participation in the capital and management of Barcelona Traction against an enemy
power. Under such relationships a question arises: which of the nationalities
American or Belgianprevails, in deciding the national character of Sidro's shares?

The Spanish Government denies the effect of the Belgian nationality of Sidro by
regarding the nominees, who are of American nationality, as the true shareholders.
We consider that the beneficial ownership, and, accordingly, in the present case,
Sidro's position as beneficial owner, must be the criterion for deciding this question.
The reason therefor is as follows: diplomatic protection depends upon where the
real interest resides; it is not concerned with a legal mechanism of private law such
as corporate personality, nominee relationship, etc. As we have seen in another
context, just as the rule of diplomatic protection should disregard the legal veil of
the corporate personality of the company in favour of its real substance, namely the
shareholders, so it should disregard the legal veil of the nominee in favour of the
beneficial owner. The existence of a nominee relationship does not exercise any
influence upon the diplomatic protection of shareholders. Sidro loses neither its
shareholding in the Barcelona Traction Company nor its Belgian nationality. It is
quite unthinkable that the conclusion of the nominee contract which was motivated
by a wartime necessity could exercise any influence upon the status of Sidro as a
shareholder of the Barcelona Traction Company.
In short, the fact that the two above-mentioned partnerships are of American
nationality has no relevance for the purpose of establishing the jus standi of the
Belgian Government. What is relevant for the jus standi of Belgium is the fact that
Sidro is the beneficial, that is to say, the real owner of Barcelona Traction's shares
in respect of which the American partnerships are nominees.

***

Next, we shall consider the question of the existence of a bond of nationality

between the shareholders and the protecting State as a condition of protection in the
present case.

The object of the Belgian Government's Application of 14 June 1962 is reparation

for the damage allegedly caused to a certain number of its nationals in their capacity
as shareholders of the Barcelona Traction, Light and Power Company. In the
shareholders are included both natural and juridical persons.

The contention of the Belgian Government concerning its jus standi is based on the
preponderance of the Belgian interest in the Barcelona Traction Company. The
preponderance of the Belgian interest is evident, the Belgian Government argues,
from the fact that the majority of the shareholders in that company are of Belgian,
nationality and that it [p 137] amounted to 88 per cent. of Barcelona Traction's
capital stock. The most important shareholder in the Barcelona Traction Company,
according to the Belgian Government, is admitted to be Sidro, S.A. (Socit
Internationale d'Energie Hydro-Electrique), whose holding is said to amount to 75
per cent. of the shares of the Belgian holding.

The preponderance of the Belgian participation in Barcelona Traction at the time of

its adjudication in bankruptcy is indicated by the Belgian Government (Memorial,
paragraphs 1-10) by the following figures:

Registered shares issued............ 1,080,446

Bearer shares issued ............. 718,408
Total shares issued.............. 1,798,854

Shares owned by Belgian nationals (minimum) . . 1,607,845

Shares not owned by Belgian nationals (maximum) 191,009

Belgian participation in the capital of Barcelona Traction at the date of the

adjudication in bankruptcy of that company therefore amounted to not less than 89.3
per cent. of the capital issued.

Of this figure of 89.3 per cent., 75.75 per cent. belonged to Sidro, so that 13.55 per
cent. at least of the capital of Barcelona Traction belonged to other Belgian
nationals.

The figures given above come from three main sources of information, namely :

1. Information derived from the register of Barcelona Traction registered shares.

A statement drawn up by the National Trust Company of Toronto, which keeps the
register of the shares of Barcelona Traction,
gives the following figures:

Total issued shares.............. 1,798,854

Registered shares............... 1,080,446
Registered shares owned by Sidro........ 1,012,688
Registered shares owned by shareholders other than
Sidro................... 67,758
1,080,446

The total number of registered shares in Belgian hands was 1,013,108 in which 420
shares belonging to Belgian shareholders other than Sidro are included.

The shares mentioned above as belonging to the Sidro Company had been entered in
the list of registered shares since 7 November 1939 in the name of Charles Gordon
& Company as nominee.[p 138]

2. Information derived from the accounts of Sidro.

The above information is confirmed and supplemented by the accounts of Sidro, for
the certificate drawn up by the firm of chartered accountants, Deloitte, Plender,
Giffiths & Co., dated 6 May 1959 shows that, as at 12 February 1948, Sidro owned
1,012,688 Barcelona Traction registered shares and 349,905 bearer shares, i.e., in all
1,362,593 shares out of a total of 1,798,854 shares issued, which represented 75.75
per cent. of the capital of the company.

3. Facts derived from the information gathered by the Institut belgo-luxembourgeois

du change (Belgo-Luxembourg Exchange Institute).

At the time of adjudication in bankruptcy of Barcelona Traction, this company had

issued 1,798,854 shares, of which at least 1,607,845 were owned by Belgian
nationals; that is to say, 1,362,593 shares owned by Sidro (1,012,688 registered and
349,905 bearer shares), and at least 245,252 shares (420 registered and 244,832
bearer shares) owned by other Belgian nationals.

Belgian participation amounted therefore to at least 89.3 per cent. of the capital of
the company.
Next, we shall see Belgian interests in Barcelona Traction at the time of the
institution of international proceedings (14 June 1962) (Memorial, paras. 11-19).
This is shown by the following figures:

Registered shares issued.......... 1,472,310

Bearer shares issued.............. 326,544
Total shares issued.............. 1,798,854
Shares owned by Belgian nationals....... 1,588,130
Shares not owned by Belgian nationals..... 210,724
Proof of the preponderance of Belgian participation at that date will be given with
the help of information furnished by:

1. The register of registered shares of Barcelona Traction. The statement drawn up

by the National Trust Company of Toronto gives the following facts :
2.
Total issued shares.............. 1,798,854
Registered shares............... 1,472,310
Registered shares owned by Sidro ....... 1,354,514
Registered shares owned by shareholders other than
Sidro................... 117,796
Total .... 1,472,310 [p 139]

The total number of registered shares in Belgian hands was therefore 1,356,902 in
which 2,388 shares belonging to Belgian shareholders other than Sidro are included.

As to the registered shares owned by Sidro, the nominee this time was the firm of
Newman & Co., New York, which had succeeded Charles Gordon & Co.

2. Information derived from the accounts of Sidro.

A certificate drawn up by the firm of Deloitte, Plender, Griffiths & Co., dated 23
August 1962, shows that on 14 June 1962 Sidro owned 1,354,514 Barcelona
Traction registered shares, and 31,228 bearer shares, that is to say, a total of
1,385,742 shares out of 1,798,854 shares issued, which represented 77 per cent. of
the total capital of Barcelona Traction.

3. Information concerning bearer shares owned by Belgian nationals.

As at 1 April 1962 there were in circulation 326,554 Barcelona Traction bearer

shares of which 31,228 shares were owned by Sidro.

When the proceedings were instituted the number of Barcelona Traction shares in
circulation was 1,798,854 of which at least 1,588,130 were owned by Belgian
nationals. Of these 1,385,742 shares were owned by Sidro (1,354,514 registered and
31,228 bearer shares) and at least 202,388 (2,388 registered and 200,000 bearer
shares) were owned by other Belgian nationals.

From the facts given above, it can be concluded that more than 88 per cent. of the
Barcelona Traction shares were in Belgian hands both at the time of the adjudication
in bankruptcy of that company and at the time the present proceedings were
instituted.

This Belgian participation is made up as follows: 10 to 15 percent. of the capital of

Barcelona Traction is owned by the general public in Belgium, whilst 75 to 77 per
cent. of the capital is owned by Sidro, a company under Belgian law.

The foregoing is the demonstration on the part of the Belgian Government

concerning the preponderance of the Belgian participation in the capital of
Barcelona Traction.
Are the figures of 88 per cent. of the Belgian participation and 75 per cent. of
Sidro's participation at a critical date in Barcelona Traction correct? It depends on
the reliability of information furnished by the National Trust Company of Toronto,
the firm of chartered accountants, Deloitte, Plender, Griffiths & Company, and the
Institut belgo-luxem-bourgeois du change.

It is argued that these three main sources being on the Belgian side, one cannot
therefore expect unprejudiced information from them. But it is also not just to deny
absolutely their evidential value in such circumstances. Each case should be valued
according to its own merits. [p 140]

Particularly, the matter in question is that of degree. The figure for Belgian
participation may not be correct to the last digit. It may be 90 or 80 per cent. instead
of 88 per cent. But one cannot deny the evidential value of a statement simply
because it may involve some minor incorrectness or mistake. Whether the
percentage is 80 or 10 per cent. the question of the jus standi of the Belgian
Government is entirely the same.

***

Next, we are confronted with the question as to whether Sidro can be said to have
Belgian character. It is quite a different question from that of whether the 75 per
cent. participation of Sidro in the Barcelona Traction's capital stock really existed. It
is concerned with the constitution of Sidro as a corporate body which may include
natural and juridical persons as its constituent elements. In the case where a
shareholder of Sidro is a company, the Belgian character of Sidro might depend on
the nationality of individual shareholders of that company. If a shareholder of this
latter company is a company the same process should be repeated, and would go on
ad infinitum. Under such circumstances the national character of Sidro could only
be decided by the nationality of ultimate individual shareholders who were natural
persons.

The Spanish Government denies the Belgian character of Sidro by contending that
Sofina, the principal shareholder of Sidro, is very limited in its Belgian holding.
However, to establish the Belgian character of Sidro, which is required for its
protection, we need not go to such excessive lengths of logical formalism.

The fact that Sidro is of Belgian nationality can be recognized without the slightest
doubt. This company was formed under Belgian law and it has its seat (siege social)
in Belgian territory, namely in Brussels. Its Belgian nationality has never been
denied by the Spanish Government. Sidro, accordingly, is entitled to receive
diplomatic protection from the Belgian Government, being qualified therefor by the
facts of its formation and seat. These facts are sufficient to justify the connecting
link between Sidro and Belgium. Just as the Barcelona Traction Company can enjoy
the diplomatic protection of the Canadian Government by reason of similar factors,
so Sidro is entitled to receive diplomatic protection from the Belgian Government
by reason of its Belgian nationality.

It is possible that Sidro may be susceptible of two protections which are compatible
with each other: on the one hand, it might be protected indirectly by the Canadian
Government as a shareholder of a Canadian company, Barcelona Traction, on the
other hand, it might be protected directly by the Belgian Government owing to its
Belgian nationality. In this latter respect Sidro is subject to Belgian protection as a
shareholder of Barcelona Traction, by virtue of having Belgian nationality and as a
company as such.[p 141]

In this context we must add a few words concerning a Judgment of the International
Court of Justice in the Nottebohm case (Second Phase, I.C.J. Reports 1955, pp. 16,
17, 25, 26). This Judgment denied the extension of the right of diplomatic protection
of Liechtenstein to Mr. Nottebohm vis--vis Guatemala on the ground that his
nationality of Liechtenstein lacked effectiveness. That Judgment was concerned
with the effectiveness of nationality of a natural person and not that of a company.
That Judgment is not germane to the present case, however, because here the
nationality of Sidro is undoubtedly established.

In short, the jus standi of the Belgian Government can be founded on the Belgian
nationality of Sidro, even if the Belgian nationality of the majority of the
shareholders ultimately cannot be proved.

The percentage of Sidro and other Belgian holdings in the whole capital stock of the
Barcelona Traction Company has no particular relevance for the question of the jus
standi of the Belgian Government, but it would become an important factor for the
assessment of damage allegedly incurred by Belgian shareholders.

The question of continuity of nationality, that is, identification of shareholders from

the temporal viewpoint, can be decided in the affirmative. Sidro's continued
existence since 1923, covering the two critical dates, is sufficient to prove this
continuity.

As to the question of bearer shares, this does not seem relevant to a decision
concerning jus standi and continuity.

For the above-mentioned reasons the third preliminary objection raised by the
Spanish Government should be rejected.

We shall proceed to examine the fourth preliminary objection raised by the Spanish
Government against the Belgian Application.

III

In the fourth preliminary objection the Spanish Government holds that the Belgian
Application of 14 June 1962 is inadmissible by reason of the non-exhaustion of
local remedies by the Barcelona Traction Company and those concerned, as
required by international law.

The Spanish Government invokes not only the rule of customary international law
on local remedies, but Article 3 to the Treaty of Conciliation, Judicial Settlement
and Arbitration of 19 July 1927, which provides as follows:

"In the case of a dispute the occasion of which, according to the municipal law of
one of the Parties, falls within the competence of the national courts, such Party
may require that the dispute shall not be submitted to the procedure laid down in the
present Treaty until a judgment with final effect has been pronounced within a [p
142] reasonable time by the competent judicial authority." [English text from
League of Nations Treaty Series, Vol. LXXX, pp. 28 ff. Note by the Registry.]

That the local remedies rule constitutes "a well-established rule of customary
international law" and that "the rule has been generally observed in cases in which a
State has adopted the cause of its national whose rights are claimed to have been
disregarded in another State in violation of international law", is clearly declared by
the International Court of Justice (Interhandel, Judgment, I.C.J. Reports 1959, p.
27).

The International Court of Justice continues:

"Before resort may be had to an international court in such a situation, it has been
considered necessary that the State where the violation occurred should have an
opportunity to redress it by its own means, within the framework of its own
domestic legal system." (Ibid., p. 27.)

The provision of Article 3 of the said Treaty is nothing else but the recapitulation of
this already existing rule, the spirit and principle of which are found amplified in the
Court's decision and implemented in conventions providing for the compulsory
jurisdiction of international tribunals.

Before examining the well-foundedness or otherwise of the fourth preliminary

objection, we must consider the relationship between two concepts, namely
exhaustion of local remedies in detail and denial of justice, which is regarded as the
main or central issue arising from the alleged internationally wrongful acts imputed
by the Belgian Government to the Spanish authorities.

We cannot understand the position of the Court, which ordered the joinder of the
fourth preliminary objection to the merits, without considering the relationship of
the exhaustion of local remedies to denial of Justice.

The Court decided as follows:

"As regards the fourth Preliminary Objection, the foregoing considerations apply a
fortiori for the purpose of requiring it to be joined to the merits; for this is not a case
where the allegation of failure to exhaust local remedies stands out as a clear-cut
issue of a preliminary character that can be determined on its own. It is inextricably
interwoven with the issues of denial of justice which constitute the major part of the
merits. The objection of the Respondent that local remedies were not exhausted is
met all along the line by the Applicant's contention that it was, inter alia, precisely
in the attempt to exhaust local remedies that the alleged denials of justice were
suffered." (Barcelona Traction, Light and Power Company Limited, Preliminary
Objections, Judgment, I.C.J. Reports 1964, p. 46.)[p 143]
Therefore, before deciding whether the fourth preliminary objection is to be upheld
or not, we shall make some observations on the complicated relationship existing
between the exhaustion of local remedies and the denial of justice.

There can be no doubt that the local remedies rule possesses a procedural character
in that it requires the person who is to be protected by his government to exhaust
local remedies which are available to him in the State concerned, before his
government espouses the claim before an international tribunal.

What is the raison d'tre of this rule?

In the first place, the consecutive existence of two proceduresmunicipal and

internationalwould guarantee and promote the justness of a decision. (It goes
without saying that the procedure of an international tribunal is not comparable to
that of, for instance, the Cour de Cassation.)

Secondly, so long as local remedies are not exhausted, and some other remedies
remain, the condition is not fulfilled. The exhaustion means the existence of a
"judgment with final effect" or analogous circumstances. In such situation recourse
to international remedies will be justified.

Thirdly, this procedural rule appears to express a higher conception of equilibrium

or harmony between national and international requirements in the world
community. The intention of this rule is explained as follows by Professor Charles
De Visscher: "Il s'agit donc ici avant tout d'une rgle de procdure propre a raliser
un certain quilibre entre la souverainet de l'Etat recherch et, d'autre part, les
exigences suprieures du droit international ..." ("Le dni de justice en droit
international", 52 Acadmie de droit international, Recueil des cours, 1935, II, p.
423), or, as Judge Crdova said:

"The main reason for its existence lies in the indispensable necessity to harmonize
the international and the national jurisdictions assuring in this way the respect due
to the sovereign jurisdiction of Statesby which nationals and foreigners have to
abide and to the diplomatic protection of the Governments to which only foreigners
are entitled" (separate opinion, Interhandel, Judgment, I.C.J. Reports 1959, p. 45).

The procedural requirement of the exhaustion of local remedies presupposes the

existence of a high degree of confidence by the claimant in the judicial system and
in its application, and this constitutes one of the fundamental conditions to be
fulfilled in the matter of the exhaustion of remedies in the State concerned.

***[p 144]

Next, we shall consider the concept of denial of justice.

Although the exhaustion of local remedies belongs to the plane of procedural law,
denial of justice belongs to the plane of substantive law. In the present case, the
latter constitutes the fundamental concept applied to all the allegedly internationally
wrongful acts imputed by the Belgian Government to the Spanish authorities. The
former, on the contrary, is nothing other than a condition for the obtaining of
reparation for the damage suffered by the Barcelona Traction Company's
shareholders through denial of justice.

We shall examine, in the first place, the concept of denial of justice, and next the
logical relationship between this latter and the local remedies rule.

The term "denial of justice" in its loose sense means any international delinquency
towards an alien for which a State is liable to make reparation. It denotes in its
ordinary meaning an injury involving the responsibility of the State committed by a
court of justice. As far as acts of a court which would involve the State in
responsibility are concerned, a very narrow interpretation practically does not admit
the existence of a denial where decisions of any kind given by a court are involved,
but seeks to limit the application of this institution to the case of the denial to
foreigners of access to the courts. This view would virtually mean by denial the
exclusion of foreigners from all actions instituted in courts of law; therefore this
concept cannot be accepted. Another more moderate and generally approved view
which can be considered as acceptable is that denial of justice occurs in the case of
such acts as

"corruption, threats, unwarrantable delay, flagrant abuse of judicial procedure, a

judgment dictated by the executive, or so manifestly unjust that no court which was
both competent and honest could have given it, ... But no merely erroneous or even
unjust judgment of a court will constitute a denial of justice, ...". (Brierly-Waldock,
The Law of Nations, 6th ed., 1963, p. 287; see also Sir Gerald Fitzmaurice, "The
meaning of the term 'denial of justice' ", British Year Book of International Law,
1932, p. 93.)

***

Now we shall consider the logical relationship between the two concepts:
exhaustion of local remedies and denial of justice, and proceed to examine the
admissibility of the fourth preliminary objection.
As we have seen above, the exhaustion of local remedies is a condition of a
procedural nature, which is imposed on an individual whose interests his national
State wants to protect by international proceedings. But to be able to fulfil this
condition there must exist in the State concerned a judicial situation such as to make
the realization of exhaustion possible. Consequently, we must recognize that some
cases constitute exceptions [p 145] in regard to the application of the local remedies
rule. Instances of such cases are given in the following passage:

"La rclamation internationale n'est pas subordonne l'puisement pralable des

recours quand ceux-ci sont absents, inadquats ou a priori inefficaces. Il en est ainsi
quand l'organisation judiciaire de l'Etat ne fournit aucune voie lgalement organise,
quand les voies lgales n'ouvrent aux intresss aucune perspective raisonnable de
succs, ou enfin quand, au cours mme de la procdure, le plaideur tranger est
victime de lenteurs ou d'obstructions quivalant un refus de statuer et qui
l'autorisent abandonner une voie qui se rvle sans issue." (Charles De Visscher,
op. cit., pp. 423-424.)
Under these circumstances respect for and confidence in the sovereign jurisdiction
of States which, as indicated above, constitute the raison d'tre of the local remedies
rule, do not exist. The rule does not seem to require from those concerned a clearly
futile and pointless activity, or a repetition of what has been done in vain.

It is said that "a claimant cannot be required to exhaust justice in a State when there
is no justice to exhaust" (Charles De Visscher, op. cit., p. 424); and again "A
claimant in a foreign State is not required to exhaust justice in such State when there
is no justice to exhaust". (Statement by Mr. Fish, Secretary of State, quoted in
Moore, International Law Digest, Vol. VI, 1906, p. 677.) If a state of denial of
justice prevails in the country concerned, there can be no possibility of exhausting
local remedies. In the above-mentioned extreme cases, it is impossible for the
interested parties to comply with the condition concerning the exhaustion of local
remedies; accordingly this condition must be dispensed with for them.

We must limit the application of the local remedies rule to cases and circumstances
where its fulfilment is possible. Thus it may be said that this rule is not of an
absolute character in its application.

In the light of the above considerations, we shall examine whether the exhaustion of
local remedies can be required from the Belgian Government and whether in the
case of an affirmative answer it has been observed or not.

It is clear that the claim put forward by the Belgian Government is based on the
alleged internationally wrongful acts imputed to the Spanish Government and that
these acts are characterized globally as a denial of justice.

According to the Belgian Application (paragraph 43) they

"relate to a whole series of positive measures, acts or omissions which are often
contradictory, which overlap and are interrelated, and of which the unlawful
character from the point of view of the law of nations is seen particularly in the final
result to which they have led". [p 146]

The Belgian Government classifies these measures, acts and omissions into
administrative measures manifestly arbitrary or discriminatory, and conduct on the
part of the courts revealing a lack of impartiality, contempt for the principle of the
equality of parties before the court, and other defects amounting to a denial of
justice from the point of view of international law. As to the conduct of the courts,
the Belgian Government contends that a large number of decisions of the Spanish
courts are vitiated by gross and manifest error in the application of Spanish law,
arbitrariness or discrimination in international law, denials of justice lato sensu.
Furthermore, the Belgian Government contends that in the course of the bankruptcy
proceedings the rights of the defence were seriously disregarded (denials of justice
stricto sensu). (Final submissions of the Government of Belgium filed on 14 July
1969.)

In sum, the claim of the Belgian Government is based on the alleged denials of
justice, sensu stricto as well as sensu lato, committed by the Spanish authorities in
regard to the Barcelona Traction Company and others concerned. In the
circumstances of the present case, however, we cannot recognize that so serious a
situation of denial of justice has in general prevailed that the interested party should
be exempted from the obligation to exhaust local remedies. But concerning this
particular case it is conceivable that, from the Applicant's viewpoint, the conten-tion
of the alleged denial of justice would imply the uselessness of the exhaustion of
local remedies.

If the facts of collusion and connivance of the Spanish courts or judges with the
March group really existed in dealing with the proceedings of the Barcelona
Traction bankruptcy case, as contended by the Belgian Government in the written
and oral pleadings, we can conclude with reason that, under such circumstances, to
expect a successful outcome of the exhaustion of local remedies by those concerned
would be simple nonsense.

The two conceptsexhaustion of local remedies and a denial of justiceare in

contradiction so far as the latter is meant in sensu stricto. The former is based on a
positive viewpoint, namely the expectation of the realization of a certain result by
the courts; the latter on a negative viewpoint, namely its renouncement.

Hypothetically, if a denial of justice really existed, there would be justification for

believing that the local remedies rule would have become useless to that extent, as
in the case of lack of an appropriate legal and judicial system and organization.

Briefly, in the concept of a denial of justice there seems to be inherent the

contradiction of denying the possibility of the fulfilment of the exhaustion of local
remedies. It seems that, in a case where the "original wrong" consists in a denial of
justice, the fulfilment of the exhaustion [p 147] of local remedies cannot be
expected, unlike the case of other internationally wrongful acts (for instance,
murder, confiscation of property, etc.) where independent fulfilment of the
exhaustion rule can be required.

If there is an element in the denial of justice which makes the fulfilment of the
exhaustion rule impossible, then the Belgian Government would be dispensed to
that extent from the observance of this rule. Despite the contentions by the Belgian
Government concerning alleged facts of a denial of justice in the bankruptcy
proceedings against the Barcelona Traction Company, the Belgian Government
does not insist that "there is no justice to exhaust" in Spain and that Belgium should
exceptionally be exempt from the obligation to exhaust local remedies. The Belgian
Government does not contend that the Spanish judiciary as a whole is paralyzed and
corrupt or that the fulfilment of the exhaustion rule is impossible; its complaints are
concerned only with some of the judges and courts.

***

Now let us see whether the obligation of exhaustion of local remedies was fulfilled
by the Barcelona Traction Company and those concerned.

First, we must consider what kind of remedies should be exercised and to what
degree these remedies have been pursued. Owing to the highly complicated
structure and proceedings of this dispute, it is extremely difficult to answer these
questions. Everything depends on the circumstances of the case and the issues and,
in particular, on the effectiveness of the available remedies (such as revision by the
supreme court). Sometimes, complication arises from a difference of interpretation
of law between the Parties. For instance, the Spanish Government insists that, as a
result of the Barcelona Traction Company's failure to observe the time-limit of eight
days for a plea of opposition to the Reus judgment of 12 February 1948, the case
became res judicata and, consequently, all actions of the Barcelona Traction
Company and its subsidiaries should be null and void. The Belgian Government, on
the contrary, basing itself on the nullity of the publication in Spain of the judgment,
argues that the time-limit of eight days did not begin to run and therefore it did not
expire. If the former argument is right, the Barcelona Traction Company and its
subsidiaries would lose the means of redress by becoming unable to exhaust local
remedies, the result of which would be highly inequitable.

We are led to the conclusion that in the matter of the exhaustion of local remedies
the same spirit of flexibility should exist which, as indicated in another context,
prevails in matters of diplomatic protection in general. If we interpreted the
provision of Article 3 of the Treaty of Conciliation,[p 148] Judicial Settlement and
Arbitration of 1927 and the customary international rule on the matter of local
remedies too strictly, possible minor errors in the technical sense would cause those
concerned to be deprived of the benefit of diplomatic protection, particularly in such
an affair as the Barcelona Traction case the complexity and extensiveness of which,
from the substantive and procedural viewpoints, appear to be extremely rare in the
annals of judicial history.

The guiding principle for resolving the questions concerning exhaustion of local
remedies should be the spirit of diplomatic protection according to which, in
addition to a juristic, technical construction, practical considerations led by common
sense should prevail. The decision as to whether legal measures offer any
reasonable perspective of success or not, should be flexible in accordance with the
spirit of diplomatic protection. Even if, for instance, institutionally an administrative
or judicial remedy exists whereby an appeal may be made to higher authority, this
remedy may be ignored without being detrimental to the right of diplomatic
protection, if such an appeal would be ineffective from the point of view of common
sense.

From what has been said above, "exhaustion" can be seen to be a matter of degree.
Minor omissions should not be imputed to the negligence of those concerned. It is
sufficient that the main means of redress be taken into consideration. The rule of
exhaustion does not demand from those concerned what is impossible or ineffective
but only what is required by common sense, namely "the diligence of a bonus
paterfamilias".

***

Next, let us enumerate some of the main measures alleged to have been taken by the
Barcelona Traction Company and those concerned (according to the final
submissions filed on 14 July 1969 by the Government of Belgium, Section VII).

(1) Concerning the Reus court's lack of jurisdiction to declare the bankruptcy of
Barcelona Traction:
opposition proceeding of 18 June 1948;
application of 5 July 1948 (for a declaration of nullity); its pleading of 3 September
1948;
a formal motion of National Trust in its application of 27 November 1948;
Barcelona Traction Company entered an appearance (23 April 1949) in the
proceedings concerning the Boter declinatoria; its formal adherence to that
declinatoria (11 April 1953).[p 149]

(2) Concerning the bankruptcy judgment and the related decisions: application of 16
February 1948 on the part of the subsidiary companies, Ebro and Barcelonesa to
have the bankruptcy judgment set aside;
the bankrupt company itself entered opposition to the judgment by a procedural
document of 18 June 1948, confirmed on 3 September 1948;
incidental application for a declaration of nullity submitted by the Barcelona
Traction Company (5 July 1948).

(3) Concerning the blocking of the remedies:

numerous proceedings taken by the Barcelona Traction Company, beginning with
the incidental application for a declaration of nullity (5 July 1948).

(4) Concerning the failure to observe the no-action clause:

clause referred to by National Trust in its application for admission to the
proceedings (27 November 1948).

(5) Concerning the conditions of sale:

the conditions of sale were attacked by Barcelona Traction in an application to set

aside and on appeal, in an application of 27 December 1951 for a declaration of
nullity containing a formal prayer that the order approving the conditions of sale be
declared null and void, and in an application of 28 May 1955;
the same challenge was expressed by Sidro in its action of 7 February 1953 and by
other Belgian shareholders of the Barcelona Traction Company in their application
of 26 May 1955.

These facts which have not been contested by the Spanish Government and whose
existence may be considered as being of judicial notice, prove that the case was
effectively pursued before the Spanish courts or judges and that local remedies were
exhausted as a condition for diplomatic protection by the Belgian Government.

Whether local remedies have been exhausted or not must be decided from a
consideration of whether the most fundamental spirit of this institution has been
observed or not. Now, this spirit, as is indicated above, constitutes a means of
ensuring the respect and confidence due to the sovereign jurisdiction of a State. The
important point is that this spirit has been respected.

The aim of the rule of exhaustion of local remedies is a practical one and its
application should therefore be elastic. Each situation, being different, requires
different treatment. We must beware of the danger to which this rule is exposed
because of its procedural and technical nature, lest it make necessary diplomatic
protection futile by an excessive raising of the objection of non-exhaustion.

Moreover, the fact that in this case, which was pending for more than [p 150] 14
years, from 12 February 1948 (date of the bankruptcy judgment against the
Barcelona Traction Company by the Reus judge) to 14 June 1962 (date of the
Application by the Belgian Government), 2,736 orders and 494 judgments by lower
courts and 37 by higher courts had been delivered, according to the Spanish
Government. Even if these figures are not correct in every detail, we can none the
less recognize from them as a whole the fact that the condition of exhaustion of
local remedies was indeed satisfied by the Barcelona Traction Company or its
subsidiary companies. Accordingly, the argument contrary thereto by the Spanish
Government is unfounded.

Therefore, the fourth preliminary objection raised by the Spanish Government must
be rejected.

IV

The third and fourth preliminary objections having been decided in favour of
Belgium, we must now consider a basic question on the merits, namely whether
Spain is responsible for internationally wrongful acts allegedly committed by Spain
which constitute "a denial of justice".

First it must be made clear that the charge of a denial of justice imputed to Spain by
the Belgian Government does not denote a very narrow interpretation, namely the
denial to foreigners of access to the courts. What the Belgian Government contends
is not only not limited to a denial in such a formal sense, but includes a denial of
justice in a wider material sense, in which, generally speaking, gross injustice,
irregularities, partiality, flagrant abuse of judicial powers, unwarranted delay, etc.,
are included, as we indicated in another context.

The judgment of the Reus judge of 12 February 1948 declaring the bankruptcy of
Barcelona Traction, its consequences and the successive acts of the Spanish courts
constitute the main complaints of the Belgian Government. But the complaints
include acts not only of a judicial nature but also of an administrative nature, since it
is alleged that some acts and omissions of the Spanish administrative authorities,
particularly of the Institute of Foreign Exchange, had caused the adjudication in
bankruptcy of the Barcelona Traction Company.

From the lengthy arguments in the written and oral proceedings, we can guess the
existence of antagonism between the two economic and financial groups: the one,
the Mr. Juan March group and the other, the Barcelona Traction group. While the
Belgian Government emphasizes the financial and political ambition and the
collusion with the Spanish administrative and juridical authorities of the former
group, the Spanish Government contends that there was abuse of the pyramidal
structure of the latter group and stresses the tax evasion and financial irregularities
[p 151] committed by that group, such as the creation of fictitious debts and the
sacrifice of creditors by means of auto-contracts between Barcelona Traction and its
subsidiaries.

The Spanish Government contends that the Barcelona Traction Company had been
constantly in a state of "latent bankruptcy" owing to its financial methods
detrimental to creditors and bondholders; the Belgian Government on the contrary
insists that the financial situation of Barce-lona Traction had been normal or even
prosperous except in the period of the Spanish Civil War and the Second World
War.

The Belgian Government also contends that individual judicial and administrative
measures which constitute separate subjects of complaint, were combined into an
integral whole to bring about the "hispanicization" of a prosperous foreign
enterprise. According to the Belgian Government, the adjudication in bankruptcy of
Barcelona Traction is nothing other than the result of the machinations of Juan
March in collusion with Spanish judicial and administrative authorities. This is the
reason why the Belgian Government, alongside of individual complaints, advanced
an overall complaint which unites and integrates numerous separate complaints.

The main complaints put forward by the Belgian Government focus on the
irregularities allegedly committed by the Spanish courts in the bankruptcy judgment
and the judicial acts following this judgment. These alleged irregularities are
included in the concept of denial of justice lato sensu. The usurpation of jurisdiction
may come within denial of justice in this sense.
The usurpation of jurisdiction by the Spanish courts is alleged on the ground that
Barcelona Traction was a company under Canadian law with its company seat in
Canada, having neither company seat nor commercial establishment in Spain, nor
possessing any property or carrying on any business there.

Also, disregard for the territorial limits of acts of sovereignty is pointed out in the
measures of enforcement taken in respect of property situated outside Spanish
territory, without the concurrence of foreign authorities. Furthermore, irregularities
are said to have been committed by conferring upon the bankruptcy authorities,
through the device of "mediate and constructive civil possession"not physical
possessionthe power of exercising in Spain the rights which attached to the shares
located in Canada of several subsidiary and sub-subsidiary companies and on
which, with the approval of the Spanish judicial authorities, they relied for the
purpose of replacing the directors of those companies, modifying their articles of
association, etc.

It is to be noted that Canada did not protest against the Spanish Government's
usurpation of Canadian jurisdiction which was alleged by the Belgian Government.

As denials of justice lato sensu the Belgian Government complains that a large
number of decisions made by the Spanish courts are vitiated by [p 152] gross and
manifest error in the application of Spanish law, by arbitrariness or discrimination,
in particular:

(1) flagrant breach of the provisions of Spanish law which do not permit that a
foreign debtor should be adjudged bankrupt if that debtor does not have his
domicile, or at least an establishment, in Spanish territory;

(2) adjudication in bankruptcy when the company was not in a state of insolvency,
was not in a state of final, general and complete cessation of payment either, and
had not ceased its payments in Spain;
(3) the judgment of 12 February 1948 failed to order the publication of the
bankruptcy by announcement in the place of domicile of the bankrupt, which
constitutes a flagrant breach of Article 1044 (5) of the 1829 Commercial Code;
(4) the decisions failing to respect the separate estates of Barcelona Traction's
subsidiaries and sub-subsidiaries, in that they extended to their property the
attachment arising out of the bankruptcy of the parent company, and thus
disregarded their distinct juridical per-sonalities;

(5) the judicial decisions which conferred on the bankruptcy authorities the fictitious
possession (termed "mediate and constructive civil possession") of securities of
certain subsidiary and sub-subsidiary companies have no legal basis in Spanish
bankruptcy law and were purely arbitrary.
(Final Submissions filed on 14 July 1969 by the Agent of the Belgian Government,
Section III.)

There are other items which are concerned with the alleged violation of the
provisions on bankruptcy and which include among others: the bestowal on the
commissioner of power to proceed to the dismissal, removal or appointment of
members of the staff, employees and management, of the companies all of whose
shares belonged to Barcelona Traction or one of its subsidiaries; ignoring the
separate legal personalities of the subsidiary and sub-subsidiary companies in the
matter of the attachment of their property in Spain; irregularities concerning the
convening of the general meeting of creditors of 19 September 1949; violation of
the provisions concerning the sale of the property of the bankrupt company;
authorization of the sale based on the allegedly perishable nature of the property to
be sold; in violation of the legal provisions the commissioner fixed an exaggeratedly
low upset price on the basis of an expert's opinion submitted by one side only;
numerous irregularities in the General Conditions of Sale.

Next, the Belgian Government alleges that various denials of justice stricto sensu
(Final Submissions, Section IV) were committed by the Reus court in the course of
the bankruptcy proceedings, the Spanish [p 153] courts disregarding the rights of the
defence; in particular: insertion by the Reus court in its judgment on an ex parte
petition of provisions which went far beyond finding the purported insolvency of or
a general cessation of payments by the bankrupt company (particularly in respect of
the attachment of the property of the subsidiary companies without their having
been summonsed and without their having been adjudicated bankrupt); the
applications for relief presented by subsidiary companies directly affected by the
judgment of 12 February 1948 were rejected as inadmissible on the grounds of lack
of jus standi; it was impossible to develop or argue the complaints against the
General Conditions of Sale because the order which had approved the General
Conditions of Sale was regarded as a matter of mere routine.

The Belgian Government considers that "many years elapsed after the bankruptcy
judgment and even after the ruinous sale of the property of the Barcelona Traction
group without either the bankrupt company or those co-interested with it having had
an opportunity to be heard on the numerous complaints put forward against the
bankruptcy judgment and related decisions in the opposition of 18 June 1948 and in
various other applications for relief". It continues that "those delays were caused by
the motion to decline jurisdiction fraudulently lodged by a confederate of the
petitioners in bankruptcy and by incidental proceedings instituted by other men of
straw of the March group . . .". Furthermore, it concludes: "that both general
international law and the Spanish-Belgian Treaty of 1927 regard such delays as
equivalent to the denial of a hearing".

***

From what we have seen above, we can recognize that the alleged ground for
complaint on the merits consists essentially of a denial of justice for which the
Belgian Government blamed the Spanish State. It is one of the cases in which a
State may incur responsibility through the act or omission of any of its organs
(legislative, administrative, or judicial). But whether a State incurs responsibility or
not depends on the concrete circumstances of each case; in particular, the
characteristics of the three kinds of State activitieslegislative, administrative and
judicialmust be taken into consideration. Mechanical, uniform treatment must be
avoided.

The case before the Court is concerned mainly with the acts and omissions of some
judicial organs, particularly of the Spanish judges and courts, which, the Belgian
Government alleges, constitute denials of justice.

Whether the above-mentioned acts and omissions allegedly constituting denials of

justice would entail international responsibilities as constituting infringements of
international law, must of course be decided from the nature of each act and
omission in question; but we must consider also [p 154] the characteristics of the
judicial function of a State as a whole and the judiciary in relation to the executive
in particular.

One of the most important political and legal characteristics of a modern State is the
principle of judicial independence. The independence of the judiciary in a formal
sense means the guarantee of the position of judges, and in a material sense it means
that judges are not bound except by their conscience.

Although judges possess the status of civil servants, they do not belong to the
ordinary hierarchy of government officials with superior-subordinate relationships.
They are not submitted to ordinary disciplinary rules, but to rules sui generis.

As to the institutional independence of courts as a whole, differences exist among

various countries. In the first category of countries a system is adopted whereby the
highest court or the lower courts, or both, have conferred upon them the power of
judicial review, namely the power to pass judgment on the constitutionality of laws,
ordinances and official acts. In these countries, as a corollary of this system, the
independence of courts and judges vis--vis the government is outstanding. But in
other countries where the whole body of courts and judges is under the authority of
the Minister of Justice who is a member of the Cabinet, this does not seem to create
much difference, so far as judicial independence is concerned, from the former
group of countries. What is required from judges by judicial ethics does not differ in
the two systems.

The judicial independence of courts and judges must be safeguarded not only from
other branches of the government, that is to say, the political and administrative
power, but also from any other external power, for instance, political parties, trade
unions, mass media and public opinion. Furthermore, independence must be
defended as against various courts and as between judges. Courts of higher instance
and judges of these courts do not function as superiors exercising the power of
supervision and control in the ordinary sense of the term vis--vis courts of lower
instance and their judges.

This is a particularity which distinguishes the judiciary from other branches of

government. This distinction, we consider, seems to be derived, on the one hand,
from consideration of the social significance of the judiciary for the settlement of
conflicts of vital interest as an impartial third party and, on the other hand, from the
extremely scientific and technical nature of judicial questions, the solution of which
requires the most highly conscientious activities of specially educated and trained
experts. The independence of the judiciary, therefore, despite the existence of
differences in degree between various legal systems, may be considered as a
universally recognized principle in most of the municipal and international legal
systems of the world. It may be admitted to be a [p 155] "general principle of law
recognized by civilized nations" (Article 38, paragraph 1 (c), of the Statute).

The above-mentioned principle of judicial independence has important

repercussions in dealing with the question of the responsibility of States for acts of
their organs internally as well as internationally.

In the field of municipal law, we have, in the matter of responsibility of States for
acts of their judiciary, the following information furnished by the Max-Planck
Institute in Haftung des Staates fr rechtswidriges Verhalten seiner Organe, 1967.
So far as the judiciary is concerned, it concludes:

"In the overwhelming majority of the legal systems investigated, the State is not
liable for the conduct of its judicial organs." (Op. cit., p. 773.)

In addition, it must be pointed out that those countries exceptionally recognizing

State responsibility limit its application to criminal matters under specific
circumstances (in particular, the compensation of innocent persons who have been
held in custody).

As to the international sphere, an analogous principle exists. Unlike internationally

injurious acts committed by administrative officials, a State is, in principle, not
responsible for those acts committed by judicial functionaries (mainly judges) in
their official capacity. The reason for this is found in the fact that in modern
civilized countries they are almost entirely independent of their government.

We shall take into account the above-mentioned characteristics of the judiciary to

resolve the question of whether the Spanish State incurs responsibility by reason of
alleged internationally wrongful acts and omissions of the Spanish courts and
judges, because their activities constitute the main grounds for the complaints which
are presented as charges of denials of justice.

The question may be whether the acts and omissions mentioned here (in the final
submissions) really constitute an international wrong for which the Spanish State is
responsible for reparation in respect of the damage.

If judicial organs function quite independently of the government, it may be

impossible for a State to incur responsibility by reason of any judicial act or
omission on the municipal as well as on the international plane. But, in the case of
some serious mistakes injudicial actions, a State is made responsible, by special
legislative measures, for the reparation of damage; grave irregularities committed by
the municipal judiciary may involve a State's responsibility on the plane of
international law.

In short, on the one hand, a State by reason of the independence of the [p 156]
judiciary, in principle, is immune from responsibility concerning the activities of
judicial organs; this immunity, on the other hand, is not of an absolute nature. In
certain cases the State is responsible for the acts and omissions of judicial organs,
namely in cases where grave circumstances exist. That is the reason why denial of
justice is discussed by writers as a matter involving a State's responsibility.

The concept of a denial of justice, understood in the proper sense, is that of an

injury committed by a court of justice involving the responsibility of the State. A
difference of viewsnarrower and broader interpretationsexists concerning acts
of this kind, as we have seen in other contexts. The view which we consider as
acceptable is the broader one, which covers cases of denial of justice, such as
"corruption, threats, unwarrantable delay, flagrant abuse of judicial procedure, a
judgment dictated by the executive, or so manifestly unjust that no court which was
both competent and honest could have given it". But from the latter viewpoint, as a
principle, no erroneous or even unjust judgment of a court will constitute a denial of
justice.

Justification for this interpretation can be found in the independence of the judiciary
(Oppenheim-Lauterpacht, International Law, Vol. I, 8th ed., 1955, p. 360). Brierly-
Waldock says:

"It will be observed that even on the wider interpretation of the term 'denial of
justice' which is here adopted, the misconduct must be extremely gross. The
justification of this strictness is that the independence of courts is an accepted canon
of decent government, and the law therefore does not lightly hold a state responsible
for their faults. It follows that an allegation of a denial of justice is a serious step
which states. . . are reluctant to take-when a claim can be based on other grounds."
(Op. cit., p. 287.)

***

Next, we shall consider the content and character of a denial of justice allegedly
committed by the Spanish judicial authorities.

It is to be noted that the various complaints raised by the Belgian Government are
mainly concerned with the interpretation of municipal law, namely provisions of the
Spanish commercial code and civil procedure code in the matter of bankruptcy, and
provisions of Spanish private international law on the jurisdiction of Spanish Courts
concerning bankruptcy. Questions relating to these matters are of an extremely
complicated and technical nature: they are highly controversial and it is not easy to
decide which solution is right and which wrong. Even if one correct solution could
be reached, and if other contrary solutions could be decided to be wrong, we cannot
assert that incorrect decisions constitute in themselves a denial of justice and
involve international responsibility.

For instance, the attachment of the property of the subsidiary com-[p 157]panies by
the Reus judge in disregard of their juridical personalities and relying on the
doctrine of "piercing the veil", even if it might be deemed illegal, could not be
recognized as a denial of justice. As a legal question, this issue involves an element
similar to the question of whether the Belgian Government can base its jus standi
for the purpose of the diplomatic protection of Belgian shareholders on the doctrine
of "piercing the veil". The controversies concerning the alleged failure to order the
publication of the bankruptcy in the place of domicile of the bankrupt and the
validity of decisions failing to respect the separate estates of Barcelona Traction's
subsidiary and sub-subsidiary companies or conferring on the bankruptcy authorities
the fictitious possession (termed "mediate and constructive civil possession") of
securities of certain subsidiary and sub-subsidiary companies, should be considered
in themselves irrelevant to the question of the existence of a denial of justice also.

These questions which are concerned with the interpretation of the positive law of a
State and which are of a technical nature, cannot in themselves involve an important
element which constitutes a denial of justice. Questions of the kind mentioned
above may constitute at least "erroneous or unjust judgment" but cannot come
within the scope of a charge of denial of justice.
The same can be said concerning the validity of the bankruptcy judgment from the
viewpoint of the existence or non-existence of a cessation of payments or a state of
insolvency. Even if any error in fact-finding or in the interpretation and application
of provisions concerning bankruptcy exists, it would not constitute in itself a denial
of justice.

The question of valuation of the property of the Barcelona Traction Company as a

going concern is a very complicated matter; various methods are conceivable,
diverse proposals have been made and experts' opinions are divided. It is difficult to
conclude that one method is absolutely right and the other wrong and, therefore, that
a judge by adopting one alternative instead of the other would commit a denial of
justice.

Arguments developed on the question as to whether the rights incorporated in

negotiable securities may be exercised without possession of the securities, in other
words on the question of the temporal separability or non-separability of right and
instrument as regards the share may be considered to have no relevance to the
question of a denial of justice.

The innumerable controversies concerning the details of the bankruptcy proceedings

may also be considered as possessing no relevance from this point of view.

In short, since these issues are of a technical nature, the possible error committed by
judges in their decisions cannot involve the responsibility of a State. That the above-
mentioned doctrine precludes such an error from being a constituent element in a
denial of justice as an internationally wrongful act is not difficult to understand from
the other viewpoints also. The reason for this is that these issues are of a municipal
law nature and [p 158] therefore their interpretation does not belong to the realm of
international law. If an international tribunal were to take up these issues and
examine the regularity of the decisions of municipal courts, the international
tribunal would turn out to be a "cour de cassation", the highest court in the
municipal law system. An international tribunal, on the contrary, belongs to quite a
different order; it is called upon to deal with international affairs, not municipal
affairs. Now, as we have seen above, the actions and omissions complained of by
the Belgian Government, so far as they are concerned with incorrectness of
interpretation and application of municipal law, cannot constitute a denial of justice.
This means that in itself the incorrectness of a judgment of a municipal court does
not have an international character.

A judgment of a municipal court which gives rise to the responsibility of a State by

a denial of justice does have an international character when, for instance, a court,
having occasion to apply some rule of international law, gives an incorrect
interpretation of that law or applies a rule of domestic law which is itself contrary to
international law (Brierly-Waldock, op. cit., p. 287). Apart from such exceptionally
serious cases, erroneous and unjust decisions of a court, in general, must be
excluded from the concept of a denial of justice.

***

Now, excluding allegedly erroneous or unjust decisions of the Spanish judiciary as

constituent elements of a denial of justice, it remains to examine whether behind the
alleged errors and irregularities of the Spanish judiciary some grave circumstances
do not exist which may justify the charge of a denial of justice. Conspicuous
examples thereof would be "corruption, threats, unwarrantable delay, flagrant abuse
of judicial procedure, a judgment dictated by the executive, or so manifestly unjust
that no court which was both competent and honest could have given it", which
were quoted above. We may sum up these circumstances under the single head of
"bad faith".

Two questions arise. Does the Belgian Government contend that there existed such
circumstances as bad faith in order to justify its complaints based on a denial of
justice? If this question is answered in the affirmative, has the existence of
aggravating facts been sufficiently proved?

Here we must be aware that we are confronted with questions belonging to a

dimension entirely different to the one which we have dealt with above: it is not a
municipal or legal-technical, but an international and moral dimension. An ethical
valuation of the conduct of national judicial organs has been introduced. It is not the
correctness or incorrectness of the interpretation or application of the positive law of
a country which is in question, but the conduct of judicial organs as a whole which
must be evaluated from supra-positive, transnational viewpoints (Philip C. Jessup,
Transnational Law, 1956). We would say that we should consider the [p 159] matter
from the viewpoint of natural law which is supra-national and universal. An ethical
valuation such as a condemnation for bad faith, abuse of powers or rights, etc.,
would become a connecting link between municipal and international law and the
two jurisdictionsmunicipal and internationalin respect of a denial of justice,
and would cause the alleged acts to involve responsibility on the plane of
international law.

It is true that the Belgian Government maintains the existence of bad faith in actions
and omissions of the Spanish judiciary. However, most of its arguments concentrate
on pointing out the simple irregularities in each measure. As stated above, this does
not differ very much from controversies concerning the interpretation and
application of Spanish bankruptcy lawmatters which in themselves cannot justify
the existence of bad faith on the part of the Spanish judiciary.
Although the Belgian Government insists on the existence of bad faith on the part of
the Spanish judiciary and puts forward some evidence concerning the personal
relationship of Mr. Juan March and his group with some governmental personalities,
the use of henchmen in instituting and promoting bankruptcy proceedings, etc., we
remain unconvinced of the existence of bad faith on the part of Spanish
administrative and judicial authorities. What the Belgian Government alleges for the
purpose of evidencing the bad faith of the Spanish judges concerned does not go
very much beyond surrounding circumstances; it does not rely on objective facts
constituting collusion, corruption, flagrant abuse of judicial procedure by the
Spanish judiciary, etc. If corruption of a judge were considered to have been
committed, the Barcelona Traction Company and its group should have had
recourse to the measure of revision and, if it was upheld, the fact of proving a denial
of justice in the present case could have been established.
Despite this, the Belgian Government did not choose this measure. Instead of
producing concrete objective facts to evidence the bad faith of the Spanish
authorities, the Belgian Government put forward an "overall complaint" consisting
of art agglomeration of circumstances which do not appear to be relevant to the
issue. The relying upon such an "overall complaint" would mean in itself a
weakness in the standpoint of the Belgian side, and it would have no reinforcing or
supplementing effect on the cause of the latter.

We consider that aggravating facts, namely those of bad faith, have not been
sufficiently proved.
It is not an easy matter to prove the existence of bad faith, because it is concerned
with a matter belonging to the inner psychological process, particularly in a case
concerning a decision by a State organ.

Bad faith cannot be presumed.[p 160]

It is an extremely serious matter to make a charge of a denial of justice vis-a-vis a

State. It involves not only the imputation of a lower international standard to the
judiciary of the State concerned but a moral condemnation of that judiciary. As a
result, the allegation of a denial of justice is considered to be a grave charge which
States are not inclined to make if some other formulation is possible.

In short, for the reasons indicated above, the Belgian allegation that Spain violated
an international obligation and incurred responsibility vis--vis Belgium is without
foundation. Therefore, the Belgian Government's claims must be dismissed.

(Signed) Kotaro Tanaka.

[p 161]

SEPARATE OPINION OF JUDGE JESSUP

1. I agree with the majority of the Court that the Belgian claim must be dismissed,
but since I reach that conclusion by different lines of reasoning, I feel it is
incumbent on me to explain what my reasons are.

2. I regret that the Court has not considered it appropriate to include in its Judgment
a wider range of legal considerations. For my part, I share the view of the late Judge
Sir Hersch Lauterpacht, "that there are compelling considerations of international
justice and of development of international law which favour a full measure of
exhaustiveness of judicial pronouncements of international tribunals" (Lauterpacht,
The Development of International Law by the International Court, Revised Edition,
1958, Chapter 3, p. 37). Sir Hersch went on to say (at p. 39):

"The administration of justice within the State can afford to rely on purely formal
and procedural grounds. It can also afford to disregard the susceptibilities of either
of the parties by ignoring such of its arguments as are not indispensable to the
decision. This cannot properly be done in international relations, where the parties
are sovereign States, upon whose will the jurisdiction of the Court depends in the
long run, and where it is of importance that justice should not only be done but that
it should also appear to have been done."

3. Six months after he wrote the Preface to that important book, Judge Lauterpacht
put his preachment into practice in his separate opinion in the Certain Norwegian
Loans case, wherein he wrote (I.C.J. Reports 1957, p. 9 at p. 36):

"In my opinion, a Party to proceedings before the Court is entitled to expect that its
Judgment shall give as accurate a picture as possible of the basic aspects of the legal
position adopted by that Party. Moreover, I believe that it is in accordance with the
true function of the Court to give an answer to the two principal jurisdictional
questions which have divided the Parties over a long period of years and which are
of considerable interest for international law. There may be force and attraction in
the view that among a number of possible solutions a court of law ought to select
that which is most simple, most concise and most expeditious. However, in my
opinion such considerations are not, for this Court, the only legitimate factor in the
situation." [p 162]

4. In Interhandel (I.C.J. Reports 1959, p. 6), the Court had before it four preliminary
objections advanced by the United States. (One notes in passing that Interhandel,
like Barcelona Traction, was a case involving a holding company and complicated
corporate stock interests.) In its Judgment, the Court found it appropriate to record
its view on all four preliminary objections. By nine votes to six, the Court upheld
the third preliminary objection to the effect that Switzerland had not exhausted the
local remedies available to it in the United States. Since the case was disposed of on
this ground, it could be argued that the Court should not have ruled in its Judgment
on the other three preliminary objections. However, the Court held: by ten votes to
five, that it rejected the first preliminary objection; unanimously, that it rejected the
second pre-liminary objection; by ten votes to five, that it was not necessary to
adjudicate on part (a) of the fourth preliminary objection; by fourteen votes to one,
that it rejected part (b) of the fourth preliminary objection.

Judge Sir Percy Spender, in his separate opinion, and President Klaestad and Judge
Sir Hersch Lauterpacht in their dissenting opinions, felt it necessary also to deal
with part (a) of the fourth preliminary objection on which the Court declined to rule,
because that objection dealt with the important issue of the self-serving or automatic
reservation of the United States to its declaration accepting the jurisdiction of the
Court.

5. In the Arbitral Award Made by the King of Spain on 23 December 1906 (I.C.J.
Reports 1960, p. 192), Judge Moreno Quintana in his declaration (p. 217) stated that
while he was in agreement with the decision, he believed that a number of "legal
questions which are of particular concern . .. should have been dealt with in the first
place". He listed the questions which he had in mind and on which the judgment
failed to pronounce.

6. In the Temple of Preah Vihear case (I.C.J. Reports 1961, p. 17), the Court in its
Judgment said that the reasons it gave for upholding its jurisdiction made it
unnecessary to consider Cambodia's other basis for asserting jurisdiction or
Thailand's objection to that basis. In the joint declaration of Judges Sir Gerald
Fitzmaurice and Tanaka (pp. 36, 38), one reads:

"As regards the second preliminary objection of Thailand whilst we are fully in
agreement with the view expressed by Sir Hersch Lauterpacht in the South West
AfricaVoting Procedure case (I.C.J. Reports 1955, at pp. 90-93) to the effect that
the Court ought not to refrain from pronouncing on issues that a party has argued as
central to its case, merely on the ground that these are not essential to the
substantive decision of the Courtyet we feel that this view is scarcely applicable
to issues of jurisdiction (nor did Sir Hersch imply otherwise). In the present case,
Thailand's second [p 163]preliminary objection was of course fully argued by the
Parties. But once the Court, by rejecting the first preliminary objection, has found
that it has jurisdiction to go into the merits of the dispute . .. the matter is, strictly,
concluded, and a finding, whether for or against Thailand, on her second
preliminary objection, could add nothing material to the conclusion, already arrived
at, that the Court is competent."

7. In Barcelona Traction, Light and Power Company, Limited, Preliminary

Objections, I.C.J. Reports 1964, p. 4, Judge Tanaka in his separate opinion said (at
p. 65):

"The more important function of the Court as the principal judicial organ of the
United Nations is to be found not only in the settlement of concrete disputes, but
also in its reasoning, through which it may contribute to the development of
international law."

8. One of the great jurists of the Permanent Court of International Justice, Judge
Anzilotti, also shared the Lauterpacht philosophy of the nature of the international
judicial process, as is shown in his dissenting opinion in Diversion of Water from
the Meuse (P.C.I.J., Series A/B, No. 70, p. 4 at 45):
"The operative clause of the judgment merely rejects the submissions of the
principal claim and of the Counter-claim. In my opinion, in a suit the main object of
which was to obtain the interpretation of a treaty with reference to certain concrete
facts, and in which both the Applicant and the Respondent presented submissions
indicating, in regard to each point, the interpretation which they respectively wished
to see adopted by the Court, the latter should not have confined itself to a mere
rejection of the submissions of the Applicant: it should also have expressed its
opinion on the submissions of the Respondent; and, in any case, it should have
declared what it considered to be the correct interpretation of the Treaty.

It is from the standpoint of this conception of the functions of the Court in the
present suit that the following observations have been drawn up."

9. The specific situations in each of the cases cited can be distinguished from the
situation in the instant case, but all of the quoted extracts are pervaded by a certain
"conception of the functions of the Court" which I share but which the Court does
not accept. Article 59 of the Statute indeed provides: "The decision of the Court has
no binding force except between the parties and in respect of that particular case."
But the influence of the Court's decisions is wider than their binding force.

The instant case, however, presents its own particularity. In its decision in 1964 the
Court joined to the merits two of Spain's preliminary objec-[p164]tions. Whatever
the legal interpretation of the character of those preliminary objections at this stage
of the proceedings, it remains true that the Belgian claim must be dismissed if either
of the objections is well founded. Since one of them is sustained by the Court (and
on different grounds in this opinion), it can be said that the Court would reach out
too far if it made a judicial finding on the basic question of the existence of a denial
of justicean issue which it has decided Belgium has no right to bring before the
Court. Under these circumstances, I agree that it would be excessive for a separate
opinion to analyse and pass upon the voluminous proceedings before the Spanish
administrative and judicial authorities. There are situations in which the logical
must yield to the practical; this is such a situation.

I associate myself with Judge Gros' allusion, in paragraph 28 of his separate

opinion, to the problem of the exhaustion of local remedies.

I would also observe that the procedural processes of the Court happily facilitate an
informal but nonetheless fruitful division of labour when some judges feel obliged
to file separate opinions. Having had the benefit of a preview of the separate
opinions of Judges Sir Gerald Fitzmaurice and Gros, I feel content to leave to their
opinions, and to other separate opinions as well, the amplification of certain
juridical considerations which I do not treat, even as they have been willing to rely
on some of my factual summaries. In neither case does it necessarily follow that I or
they reach the same conclusions on each point of law or fact.

***

10. In adjudicating upon the Barcelona Traction case the Court must apply rules
from one of the most controversial branches of international law. The subject of the
responsibility of States for injuries to aliens (otherwise referred to as the diplomatic
protection of nationals), evokes in many current writings recollections of political
abuses in past eras.FN1. The Court is not involved here in any conflict between
great capital-exporting States and States in course of development. Belgium and
Spain are States which, in those terms, belong in the same grouping. I do not agree
with the Spanish contention on 20 May 1969 that Belgium was merely trying to get
the Court to internationalize a private litigation, but it is true that basically the
conflict was between a powerful Spanish financial group and a comparable non-
Spanish group. This case cannot be said to evoke problems of "neo-colonialism".

-----------------------------------------------------------------------------------------------------
----------------
FN1 The writer may be excused for mentioning that he described and deplored such
abuses, more than two decades ago: A Modern Law of Nations, 1947, Chapter V.
Happily, the days of "gun-boat diplomacy" are now lost in limbo.
-----------------------------------------------------------------------------------------------------
----------------
[p 165]

Moreover, the Court is not here in the least concerned with such provocative
problems as State sovereignty over natural resources or the rules applicable to
compensation in case of nationalizations or expropriations. Professor F. V. Garca
Amador, in his sixth report as Special Rapporteur of the International Law
Commission on State responsibility (Yearbook of the International Law
Commission, 1961, Vol. II, p. 2 at p. 46), set forth an admirable attitude:

". . . his purpose was to take into account the profound changes which are occurring
in international law, in so far as they are capable of affecting the traditional ideas
and principles relating to responsibility. The only reason why, in this endeavour, he
rejected notions or opinions for which acceptance is being sought in our time, is that
he firmly believes that any notion or opinion which postulates extreme positions
whatever may be the underlying purpose or motive is incompatible and
irreconcilable with the idea of securing the recognition and adequate legal
protection of all the legitimate interests involved. That has been the policy followed
by the Commission hitherto and no doubt will continue to be its policy in the
future."

11. The institution "of the right to give diplomatic protection to nationals abroad
was recognized in . . . the Vienna Convention on Diplomatic Relations, 1961", as
Mr. Gros (as he then was) reminded the sub-committee of the International Law
Commission (Yearbook of the International Law Commission, 1963, Vol. II, p.
230). The institution of the right to give diplomatic protection is surely not obsolete
although new procedures are emerging.

With reference to diplomatic protection of corporate interests, the customary

international law began to change in the latter half of the nineteenth century FN1.
As Jennings writes, in somewhat picturesque and Kiplingesque language :

"It is small wonder that difficulties arise when 19th century precedents about
outrageous behaviour towards aliens residing in outlandish parts are sought to be
pressed into service to yield principles apposite to sophisticated programmes of
international investment." (121 Hague Recueil 1967, II, p. 473.)

-----------------------------------------------------------------------------------------------------
----------------
FN1 Paul De Visscher sees the change developing after the decision in the Ruden
case in 1870; 102 Hague Recueil 1961, II, at pp. 467-468.
-----------------------------------------------------------------------------------------------------
----------------

Since the critical date in this case is 1948, developments in the law [p 166] and
procedures during the ensuing last two decades are not controlling.

12. Any court's application of a rule of law to a particular case, involves an

interpretation of the rule. Historical and logical and tele-ological tools may be used
by the judge, consciously or unconsciously. If the Court in the instant case had
decided to include more factors in its Judgment, it could have clarified the
traditional system in the light of clearer understandings of business practices and
forms of corporate organization, as these were already well developed two decades
ago when the events called into question in this case transpired. Legal norms
applicable to those events should not be swept aside on the assumption that they
have already become mere cobwebs in the attics of legal history. Corporations today
and tomorrow may well utilize other methods of financing and controlling foreign
enterprises, and governments will have adapted or will adapt their own laws and
practices to meet the realities of the economic factors which affect the general
interests of the State. The "law of international economic development" will mature.
Thus joint business ventures, State guarantees of foreign investment, the use of
international organizations such as the IBRD and UNDP, may in the course of time
relegate the case of Barcelona Traction to the status now occupied by Delagoa
Baya precedent to be cited by advocates if helpful to the pleading of a cause, but
not a guiding element in the life of the international business community.

Nevertheless, the Court has the duty to settle a specific dispute between Belgium
and Spain which arose out of Spain's exercising jurisdiction over a complex of
foreign corporate enterprises.

13. There is a trend in the direction of extending the jurisdictional power of the
State to deal with foreign enterprises which have contact with the State's territorial
domain; ". . . all that can be required of a State is that it should not overstep the
limits which international law places upon its jurisdiction; within these limits, its
title to exercise jurisdiction rests in its sovereignty[FN1]. But what are the limits
placed by international law? Do the courts of the United States, for example, go too
far in applying its anti-trust laws to foreign enterprises, following the statement of
principle by Judge Hand in Alcoa [FN2]? But that principle is accepted in at least
six other countries [FN3]. Are the jurisdictional limits on national jurisdiction
exceeded in the cases dealing with product liability of a [p 167]"giant octopus
corporation" with multiple subsidiaries abroad? Rules valid enough for inter-state
conflicts within the constitutional system of the United States, may be improper
when placing a burden on international commerce FN1. The Committee on
International Law of the Association of the Bar of the City of New York concluded
that ". . . the extension of the regulatory and penal provisions of the Securities Ex-
change Act of 1934 ... to foreign corporations which have neither listed securities in
the United States nor publicly offered securities within the United States is a
violation of international law FN2".

-----------------------------------------------------------------------------------------------------
-----------------
[FN1] Lotus, Judgment No. 9, 1927, P.C.I. J., Series A, No. 10, p. 19.
[FN2] 148 Fed. 2d 416 (1946). Cf. Jessup, Transnational Law, 1956, pp. 73 ff.
[FN3] Drachsler, "American Parent and Alien Subsidiary: International Anti-trust
Problems of the Multinational Corporation", Bulletin of the Section of International
FN1 Mecsas, "Personal Jurisdiction over Foreign Corporations in Product Liability
Actions: Forum Non Conveniens and Due Process Limitations on In Personam
Jurisdiction over Foreign Corporations", 50 Cornell Law Quarterly, p. 551 at p. 563
(1965). Cf. American Law Institute, Restatement of the Law, Second, Conflict of
Laws, Title C (1967 ed.).
FN2 The Record of the Association, Vol. 21, No. 4, April 1966, p. 240 at p. 252.
-----------------------------------------------------------------------------------------------------
----------------

14. In States having different types of economic and financial problems,

international law has become increasingly permissive of actions involving
nationalizations. In place of what used to be denounced as illegal expropriation, the
issues now turn largely on the measure of compensation, since even the famous
General Assembly Resolution on Permanent Sovereignty Over Natural Resources
FN3, provides that compensation is due.

To whom, in such cases is compensation due? If in the anti-trust, product-liability

and other situations, the corporate veil is freely pierced to assert the State's
jurisdictional power, why should it not also be pierced to determine the State's
responsibility to the interests actually injured by action damaging to a foreign
enterprise? In the instant case, Spain asserted its power to deal with Barcelona
Traction's subsidiaries in Spain, disregarding the Canadian nationality of Ebro and
others. The equitable balance of legal interests permits Belgium to pierce the veil of
the Canadian "charter of convenience" and to assert the real interests of the
shareholdersassuming of course that their continuous Belgian character is
established. In so far as there has been an increase in the permissible limits of the
exercise of State authority over foreign corporate enterprises, there must be an
accompanying realistic liberalisation of rules identifying the State or States which
may, in case of abuse, invoke the right of diplomatic protection.

15. The legal rights which are vindicated through the international [p 168]
procedure of diplomatic protection, are not identical with rights derived from the
applicable municipal law; the rights are on different planes. There are situations in
which no right under municipal law exists because that law does not provide or
permit legal action to enforce the claim, but international law does afford a remedy.
The obvious cases are those where an injury is inflicted by a State instrumentality or
agent which is immune from suit. If, for example, a naval vessel of State A
negligently rams and sinks a merchant vessel of State B, and the law of State A does
not permit any legal action against the State or its instrumentality, State B, on the
international plane, may press a claim for damages on behalf of the vessel which
possesses its nationality FN1. Of course if there are no local remedies, the
international rule for exhaustion of such remedies is not applicable and a State may
incur international liability for the very reason that there is no local remedy FN2.
Although statutes now provide in many countries a cause of action for damages
caused by the death of a person, no such cause of action existed at common law.
The subject was discussed by Umpire Parker in the Lusitania cases ((1923) VII
U.N.R.I.A.A., pp. 32, 34 ff.), in holding that international law and practice support
the presentation of claims of heirs and widows (where the nationality requirements
are met), irrespective of the question whether under the law of the State charged
with responsibility for wrongful death, the heir or widow has a right to damages.

-----------------------------------------------------------------------------------------------------
----------------
FN1 Under the British-United States Claims Convention of 1853, the umpire
awarded damages to the owners of the British collier Confidence, which had been
run down by the United States frigate Constitution;III Moore, International
Arbitrations, 3063. Cf. The Lindisfarne, in the United States-Great Britain Claims
Commission under the 1910 Treaty, VI U.N.R.I.A.A., 21.
FN2 So in Ruden's case and in Johnson's case, in the United States-Peruvian Claims
Commission 1870, awards were made to the claimants when a circular of the
Minister of Justice forbade the judges to receive suits of the type in question.
Moore, International Arbitrations, Vol. III, pp. 1653 and 1656.
-----------------------------------------------------------------------------------------------------
----------------

16. In connection with the instant case, the question arises from the argument that
there can be no international right to damages for shareholders indirectly injured by
damage to the company in which they hold shares, since no such right is generally
established in municipal law. Much reliance is placed upon the proposition that
under most systems of municipal law, shareholders have no rights in or to the assets
of the corporation until after it is dissolved or wound up. Shareholders' suits are
indeed provided by law in the United States and somwhat less extensively in Great
Britain. In the United States "The derivative stockholder-plaintiff is not only a
nominal plaintiff, but at the same time a real [p 169] party in interest. He sues not
solely upon a corporate cause of action but also upon his own cause of action". See
Koessler, "The Stockholder's Suit: A Comparative View", 46 Columbia Law
Review 1946, pages 238 and 242. The provisions for shareholder suits in the
European countries seem to be somewhat less favourable to the shareholder. But the
trend in France is toward more protection of shareholders, as Judge Gros points out
in paragraph 11 of his separate opinion.

17. Although the concept of corporate personality is a creature of municipal law,

none of the theories evolved in that frame of reference can be relied on universally
to explain the legal relations surrounding that "technical legal device".

"Gierke's theory was based upon Germanic village communities, medieval guilds
and similar truly corporate entities. But such a theory hardly fits the modern holding
company. . . The result is that those who administer the law, whether as judges,
revenue authorities, or as administrators, in civilian and common law systems alike
[and I would add in the international law system] have had to discard all known
theories of corporate personality, and to relativise the conception of juristic
personality, respecting it for some purposes FN[1], disregarding it for others, in
accordance with the nature of the problem before them." (Friedmann, Legal Theory,
5th ed. 1967, pp. 522-523. See also p. 571.)

-----------------------------------------------------------------------------------------------------
------
FN1 Thus, for example, where a corporation carries on a purely commercial
activity, international law does not "pierce the veil" to grant it the sovereign
immunity attaching to the State by which it is wholly owned and managed; see
Harvard Research in International Law, Report on Competence of Courts in Regard
to Foreign States, 1932, Art. 12, p. 641.
-----------------------------------------------------------------------------------------------------
-------

I would paraphrase and adapt a dictum from a recent decision of the Supreme Court
of the United States in an anti-trust case: the International Court of Justice in the
instant case is "not bound by formal conceptions of" corporation law. "We must
look at the economic reality of the relevant transactions" and identify "the
overwhelmingly dominant feature" [FN2]. The overwhelmingly dominant feature in
the affairs of Barcelona Traction was not the fact of incorporation in Canada, but the
controlling influence [p 170] of far-flung international financial interests manifested
in the Sofina grouping.

It may well be that the new structures of international enterprise will be increasingly
important FN1, but any glance at the world-wide picture today shows that non-
governmental corporations still have a major role to play FN2. That is why so many
new States, and the United Nations itself, encourage the investment of private
capital FN3.

-----------------------------------------------------------------------------------------------------
----------------
[FN2] Mr. Justice Marshall delivering the opinion of the Court in United States v.
The Concentrated Phosphate Export Assn. Inc. et al., 89 S. Ct. p. 361 at pp. 366-
367, 1968. Cf. the statement of a leading member of the New York Bar: "To give
any degree of reality to the treatment, in legal terms, of the means for the settlement
of international economic disputes, one must examine the international community,
its emerging organizations, its dynamics, and relationships among its greatly
expanded membership." (Spofford, "Third Party Judgment and International
Economic Transactions", 113 Hague Recueil 1964, III, pp. 121-123.)
FN1 See Friedmann et al., International Financial Aid, 1966; Kirdar, The Structure
of United Nations Economic Aid to Underdeveloped Countries, 1966.
FN2 See Friedmann, The Changing Structure of International Law, 1964, Chap. 14;
Hyde, "Economic Development Agreements", 105 Hague Recueil 1962, I, p. 271.
FN3 Blough, "The Furtherance of Economic Development", International
Organization, 1965, Vol. XIX, p. 562, and especially, Dirk Stikker's report to
UNCTAD on "The Role of private enterprise in investment and promotion of
exports in developing countries" (1968), UN Doc. TD/35/Rev.l, and "Panel on
Foreign Investment in Developing Countries", Amsterdam, 16-20 February, 1969,
E/4654, ST/ECA/117.
-----------------------------------------------------------------------------------------------------
----------------

***

The Right to Extend Diplomatic Protection to Corporate Enterprises

18. The decision of the Court, in this case, is based on the legal conclusion that only
Canada had a right to present a diplomatic claim on behalf of Barcelona Traction
which was a company of Canadian nationality. My own conclusion is that, for
reasons which I shall explain, Canada did not have, in this case, a right to claim on
behalf of Barcelona Traction. As a matter of general international law, it is also my
conclusion that a State, under certain circumstances, has a right to present a
diplomatic claim on behalf of shareholders who are its nationals. As a matter of
proof of fact, I find that Belgium did not succeed in proving the Belgian nationality,
between the critical dates, of those natural and juristic persons on whose behalf it
sought to claim. The Belgian claim must therefore be rejected.

The Record of Actual Diplomatic Representations

19. If a State extends its diplomatic protection to a corporation to which it has

granted a "charter of convenience" while at the same time [p 171] similar diplomatic
assistance is being extended by another State whose nationals hold 100 per cent, of
the shares, the situation might be considered analogous to cases of dual nationality
of natural persons FN1. In those cases, international jurisprudence supports the
principle that preference should be given to the "real and effective nationality", as
was held by this Court in the Nottebohm, Second Phase, Judgment (I.C.J. Reports
1955, pp. 4, 22), which will be discussed later in this opinion.
-----------------------------------------------------------------------------------------------------
----------------
FN1 The analogy may be drawn even though the nationality of shareholders is not
the test of the nationality of a corporation for purposes of international law.
-----------------------------------------------------------------------------------------------------
----------------

If Canada could be considered the State of the "real and effective nationality" of
Barcelona Traction and if Canada assumed and maintained the role of Barcelona
Traction's diplomatic protector, such facts would militate against the Belgian
posture that Belgium was the State entitled to press the claim. The arguments of the
Parties followed some such theory; Counsel for Spain called it an "essential point"
and examined at length the record of Canadian diplomatic activity in the case (20
June 1969). The lack or failure of Canadian diplomatic protection is distinctly
relevant to an analysis of the so-called "exceptions" to the alleged general rule that
only the State of which the company has the nationality is entitled to claim on its
behalf. Such "exceptions" will be discussed later. The facts relative to the positions
as claimant Governments of Canada and Belgiumand of Great Britain and the
United States as wellmust accordingly be taken into account. The record throws
light on the nature and extent of the several national interests.

In the instant case, Spain was at one time confronted by diplomatic representations
of Great Britain, Canada, the United States and Belgium. But at that stage of
multiple diplomatic activity, specific claims for damages were not being advanced;
Spain was being asked to take steps to halt what were considered to be destructive
actions against Barcelona Traction. Spain's replies in the early stages rested on the
proposition that the Government could not interfere with the normal functioning of
the Spanish courts.

Great Britain

20. The first British Note was dated 23 February 1948 and asserted an interest due
to the dismissal of high-ranking British officers in the Barcelona Traction company
and to the position of bondholders "resident in the United Kingdom". (A.P.O.
(1960), Vol. III, pp. 193 ff. for this and subsequent demarches, except as otherwise
noted.) In the next British Note, of 27 March, there was support for the Canadian
representations [p 172] "on behalf of the United Kingdom bondholders". On 28
September 1951, the British Note speaks on behalf of the protection of
(unidentified) "shareholders and bondholders". Thereafter, aside from
correspondence about the failure of Spain to reply to the British Notes and about the
committee of experts and its report in 1951, the British position seemed to be
merely one of supporting Canada. Throughout this period, Canada had no embassy
in Madrid and its notes were transmitted through the British Embassy. But the
Receiver and Manager of Barcelona Traction, in a memorandum submitted to the
Supreme Court of Ontario, on 24 December 1951, reported a conference with
British Treasury officials in London on the preceding 25 July, during which Mr.
Eggers, a representative of the Treasury, "stated that Great Britain had taken no
action independent of Canada. He insinuated that the British had merely followed
the Canadian lead which we know to be untrue". (Emphasis supplied.)
(Receivership Docs., Vol. 5, p. 772.) The basis for this last conclusion is not clear.

Canada

21. The aid of the Canadian Government was originally requested by National
Trust, as trustee for certain Barcelona bond issues, which made representations to
the Canadian Government when it learned of the developments in Spain following
the bankruptcy judgment of 12 February 1948. Counsel for National Trust informed
the Supreme Court of Ontario that:

"The Government of Canada as a result of such representations made a demarche to

the Government of Spain through appropriate diplomatic channels with regard to the
matter . . . FN1" (Receivership Docs., Vol. 1, p. 16. A memorandum in ibid., Vol. 4,
p. 585, indicates that Barcelona Traction joined National Trust in its
representations.)

-----------------------------------------------------------------------------------------------------
------
FN1 This statement was made by Counsel on 9 July 1948 in connection with
National Trust's application for the appointment of a receiver and manager, an
application which was granted by the Court on 15 July 1948.
-----------------------------------------------------------------------------------------------------
-------

22. The first Canadian Notelike the first Belgian Note and the second British
Notewas dated 27 March 1948. (The Belgian Note will be cited later to A.M.,
Vol. IV, Annex 250.) Canada made an official protest, alleging a denial of justice to
Barcelona Traction, Ebro and National Trust, because of a lack of proper notice and
an absence of jurisdiction under the principles of private international law. Passing
over some of the Canadian notes, one finds that on 21 July 1949 a long [p 173] note
of protest alleges discrimination against Canadian interests and against "foreign
investments in Spain"; the emphasis is on Ebro, a Canadian corporation.

23. In February of 1950, there was close collaboration between the Canadian and
Belgian Governments; they proposed to urge the Spanish Government to agree to
the appointment of a committee of experts composed of representatives of Spain,
Canada and Belgium to study certain financial aspects of the Barcelona case. The
Governments of Great Britain and of the United States were also consulted by
Canada and it was planned that those governments would support the dmarche.
Canadian drafts of the proposed note to Spain were submitted to the three other
Governments. Throughout, Canada stressed its appreciation of the large financial
interest of Belgian nationals in Barcelona Traction. A text provisionally approved,
stated that the Governments of the United Kingdom and of the United States "are
interested in this matter as it relates to the security of foreign investments
generally". The phrasing of the quoted clause was suggested by the United States.
Before the final text could be co-ordinated with all the four Governments, the
Spanish Government took the initiative by a Note of 16 March 1950 to the British
Embassy in Madrid, proposing a similar commission, but composed of Spanish,
Canadian and British representatives; Belgium was omitted FN1.

-----------------------------------------------------------------------------------------------------
----------------
FN1 The documentation is in A.R., Annexes 37 and 38. Mr. Heineman, the
directing personality of Barcelona Traction, on 24 February 1950, was apparently
confident that the Canadian Note was about to be delivered with the support of the
other three Governments; telegram Heineman to Brosens in Buenos Aires, 24
February 1950, O. & S., New Docs. 1964, App. 8.
-----------------------------------------------------------------------------------------------------
----------------

24. There is some question whether the Canadian and British participation in the
Tripartite Committee of Experts in 1950-1951 should be considered as an aspect of
diplomatic protection. The Receiver and Manager on 16 November 1950 sent a
memorandum to the Ontario Court informing him that the Canadian Department of
External Affairs had asked him to put up $20,000 to cover the fees and expenses of
Mr. Norman, the Canadian member of the Commission. The Receiver and Manager
asked for authority to pay that amount and said:

"It is my opinion that the intervention of the Government of Canada in this matter
has been of the utmost importance and that the continued support of the
Government of Canada is essential if the integrity of the portfolio held by the
plaintiff [National Trust] is to be restored and the properties presently under seizure
in Spain are to be recovered." (Receivership Docs., Vol. 4, p. 585.)[p 174]

In its pleading, Spain took the position, on 20 June 1969, that when the Canadian
and British members of the Committee joined in signing an Agreed Minute which
supported the Spanish contention that foreign exchange had been denied to
Barcelona Traction because the company refused to furnish the information
demanded by the Spanish authorities, this was an indication that the Canadian
Government was satisfied that there was no basis for Barcelona's complaints.
However, Mr. Glassco, the Receiver and Manager, informed the Ontario Court
through his memorandum of 24 December 1951 that he had attended a conference
in the Department of External Affairs in Ottawa together with representatives of
National Trust and Barcelona Traction. He said they

". . . were advised that the Canadian and British Governments had signed the
Agreed Minute in order to prevent the issuance of a much stronger unilateral
statement by the Spanish Government; that the statements in the Agreed Minute
with respect to foreign exchange had been agreed with a view to saving the face of
the Spanish Government as regards the non-provision of foreign exchange to the
subsidiaries of the defendant [Barcelona Traction] in the past; and that the Canadian
and British Governments hoped that the atmosphere created by the Agreed Minute
would be such that the private interests concerned could work out a settlement of
their differences in the expectation that a suitable modus operandi for the future
could be achieved with the Spanish Government". (Ibid., Vol. 5, p. 756.)

25. The next Canadian Note of 26 July 1951 reflects a continuing Canadian interest
since it objects to the issuance of new share certificates of the subsidiaries which
"would be to render valueless the previously issued shares". Ebro, National Trust
and Barcelona Traction bondholders are mentioned. The Canadian Note of 28
September 1951 stresses both Ebro and Barcelona Traction and says Canada "feels
bound to renew its representations .. . for the protection of the interests of these
companies". A long Note of 22 December 1951 invokes Canadian rights under a
treaty between the United Kingdom and Spain concerning respect for corporate
personality and offers to arbitrate that issue. The Note reserves the "right to make
any claim under international law which may be open to it if the sale of the assets
takes place on the 4th January, 1952, since it is advised that this would constitute a
denial of justice". In this Note, Barcelona Traction, Ebro, Catalonian Land,
International Utilities and National Trust as trustee for the bonds, are all mentioned.
(A.C.M., Vol. VI, Annex 1, No. 28 FN1) [p 175]

-----------------------------------------------------------------------------------------------------
----------------
FN1 Consequent upon certain enquiries and observations from the Bench, Belgium
produced additional documentation in 1964 and in 1969: see e.g., Distr. 64/72 and
64/74 and 1969 New Docs. 42-45.
-----------------------------------------------------------------------------------------------------
----------------

26. On 12 February 1952, the Belgian Ambassador in Madrid reported a

conversation with the Spanish Minister for Foreign Affairs, Mr. Artajo, in which the
latter told him that the Spanish Consul in Ottawa had talked about the Barcelona
case with the Canadian Secretary of State for External Affairs who said: (tr.) "The
Canadian interests in this case are so small that it interests us very little." Such a
view does not seem to be quite in line with the Canadian Note of 21 April 1952
which was produced as a new document by Belgium in May 1964. The Note repeats
the Canadian view of the mistreatment of the companies in Spain, especially Ebro;
invokes again the treaty of 1922 and willingness to resort to arbitration ; but
concludes that no further exchange of Notes was apt to help reach a settlement and
that private negotiations might be the best way to a solution. In sending a copy of
this Note to the Belgian Ambassador in Ottawa, the Canadian Government noted
that it was much shorter than a draft which had previously been shown to the
Belgian Government there was no use reiterating legal arguments. (K. J.
Burbridge to Vicomte du Parc, 7 May 1952.) It was not until 10 May 1969 that Mr.
Artajo, in a letter in reply to an enquiry from the Spanish Agent in the Barcelona
Traction case before this Court, flatly denied the accuracy of the Belgian
Ambassador's report. (Spanish New Docs., 16 May 1969, Vol. III, p. 181.) The
lapse of time in securing such a denial was not explained.

27. Canada's further activity in the case was moderate. On 15 February 1955, Mr.
Arthur Dean, American attorney for Sidro, suggested to Wilmers in Brussels that it
would be helpful if Canada would join in a demarche in Madrid, although he
doubted whether Canada could be convinced that they had sufficient interest other
than in the rights of the Canadian trustee for the bonds. (O. & S., New Docs., 1964,
App. 13.) Canada had by this time established its own embassy in Madrid and it
appears that the Canadian Secretary of State for External Affairs had paid a personal
call on the Foreign Office in Madrid in connection with the Barcelona case in 1954
(A.C.M., Vol. VI, p. 109). On 21 March 1955 the Canadian Government had
commended Mr. Dean's visit, saying that Canada "continues, of course, to be deeply
interested in the affair of Barcelona Traction". (A.C.M., Chap. II, Ann. 1, Doc. No.
30.) On 1 July 1955, Mr. Dean wrote at length to Mr. Pearson, Canadian Secretary
of State for External Affairs, reporting on his visit in Madrid. He hoped Canadian
Ambassador Pope would be instructed to join in energetic representations [p 176] to
Foreign Minister Artajo. (New Docs., 1964.) Mr. Pearson replied on 19 July that
Canada believed that the best hope lay in private negotiations.

"The Canadian Government has not been prepared actually to intervene in this
matter or to make representations to the Spanish Government as to the measures
which ought to be taken toward a settlement."

The requested instructions to Ambassador Pope would not be sent. (Ibid.) In 1957,
Belgium informed Canada that they intended to resort to the International Court of
Justice. The Canadian official merely expressed his appreciation for the courtesy of
keeping him informed. Belgium similarly notified Ottawa in 1964 and 1965.
(Belgian New Docs., Nos. 42 et seq.)

Finally, further questions from the Bench were conveyed by the Belgian
Ambassador in Ottawa on 23 June 1969, to the Canadian Secretary of State for
External Affairs, who replied on the following day that the correspondence which
had passed between the Canadian and Spanish Governments was in the dossier
before the Court and was self-explanatory.

"As was suggested in a communication of 21 April 1952, the Government of

Canada was of the opinion that there was little chance of settling this dispute by
means of additional diplomatic representations. The Government of Canada has
acted accordingly." (My trans., New Docs. Nos. 44-45.)

It is a fair conclusion that Canadian diplomatic protection of Barcelona Traction

ceased in April 1952.

United States
28. Apparently the first diplomatic demarche by the United States Government on
behalf of Barcelona Traction was a Note from the Charge in Madrid to Foreign
Minister Artajo on 22 July 1949. The Note stated that:

". . . the Government of the United States lends its support to and is in concurrence
with the Note of 21 July 1949, submitted to your Ministry by the British Embassy
on behalf of the Canadian Government, the Note in question relating to the
treatment which has been and is currently being accorded to the Canadian company,
Barcelona Traction, Light and Power Company Limited, a company in which
American citizens have interests ... The treatment which had been accorded this
company, in which [p 177] foreign capital is so heavily invested, has had an adverse
effect in foreign banking and investment circles . . ." (A.P.O., 1960, Vol. III, p.
247.)

Attention has already been called to the co-operation of the United States with
Canada in February 1950, where American interests were described as arising from
"the security of foreign investments generally".

In June and July 1951, the United States Embassy requested complete copies of the
reports of the Spanish experts on the international tripartite committee and
"reiterates its deep interest in the issues involved in the case of the Barcelona
Traction Company . .." (ibid., pp. 249 and 251). It seems that the United States
Secretary of Commerce, when in Madrid in October 1954, brought up with some
officials of the Spanish Government the possibility of that Government's
intervention in the judicial proceedings; he was told this was hardly possible.
(Spanish New Docs., 1969, Vol. III, p. 174.)

29. In 1955, United States Ambassador John Lodge in Madrid lent his assistance to
Mr. Arthur Dean in connection with his efforts on behalf of Sidro. An office
memorandum of the Spanish Ministry of Foreign Affairs, 30 March 1955, recorded
that Ambassador Lodge had phoned to support Mr. Dean's request for an interview
with Minister for Foreign Affairs Artajo.

"The United States Ambassador stressed the extraordinary interest he insisted that
it be put that waywhich the State Department attributes to a rapid and satisfactory
solution of that matter about which the aforesaid Department continues to be
concerned. He suggests the opportuneness of a solution by direct negotiations
between the parties." (Loc. cit.)

The interview was grantedthe request having been supported by the Canadian
Embassy alsoand Mr. Dean in writing to Mr. Artajo to express his thanks, stated:

"Our inability to arrive at an appropriate settlement of this matter is naturally a

matter of very great concern to the management and shareholders of Sofina, in
which there is now a substantial American interest. . ." (Spanish New Docs., 1969,
Vol. III, p. 178.)

Mr. Dean informed Mr. Lester Pearson, the Canadian Secretary of State for External
Affairs, about his visits as already noted.

30. But despite the warmth of Ambassador Lodge's message to the Spanish Foreign
Office, it is clear that the interest of the United States was of a general nature and
that its support did not amount to diplomatic protection of the Barcelona Traction
company or of any identified [p 178]
shareholders in that company or in Sidro or in Sofina. In a cable of 15 February
1955, before the visits to Madrid which have just been described, Mr. Dean advised
Wilmers, President of Barcelona Traction and then in Brussels, that he had

". . . received request from our Department [sc. Department of State] suggesting
they have never considered operating company in question [sc. Barcelona Traction]
American and have treated this matter not as a protection case but on more general
grounds of principle regarding treatment and encouragement of international
investment and would appreciate extent to which U.S. capital now participating in
company". (O. & S., New Docs. 1964, App. 13.)

It is not known what information was given to the State Department concerning the
extent of the United States capital participation at that time FN1. It seems clear from
the record that the placing of Barcelona Traction shares in the names of American
nominees did not require any investment of United States capital. But Mr. Dean
apparently represented both Sidro and Sofina and on 1 February 1955 he informed
the Spanish Ambassador in Washington that Sofina was "the majority common
shareholder" in Barcelona Traction, and informed the Spanish Foreign Minister that
there was a "substantial American interest" in Sofina. (The letter to the Ambassador
is in the New Documents presented by Spain on 16 March 1964.)

-----------------------------------------------------------------------------------------------------
----------------
FN1 As indicated elsewhere, the evidence offered concerning certifications and
payments of coupons does not seem persuasive despite the argument of counsel for
Belgium on 8 July 1969 citing A.M., Vol. I, Annexes 18 and 20, pp. 133 and 142.
-----------------------------------------------------------------------------------------------------
----------------

31. There were references by Spain to Amitas, a Delaware corporation which

financed the National Trust receivership, as if it represented a United States interest,
but the real interest there seems to have been Belgian. The Canadian Receiver and
Manager of National Trust borrowed at least $980,000 from Amitas by selling to
Amitas Receiver's 5 per cent. certificates. In his request to the Ontario Court for
authorization to borrow the first $100,000 on 25 August 1949, the Receiver and
Manager referred to this
"American Intercontinental Trade & Service Company (Amitas) Inc., a Delaware
corporation which is understood to be associated or affiliated with a Belgian
corporation which holds bonds and the majority of the outstanding shares"

of Barcelona Traction. (Receivership Docs., Vol. 2, p. 273.) On 3 August he had

written to the Canadian Foreign Exchange Control Board about [p 179]the
anticipated dollar transaction, and made a more definite statement. He stated that
Amitas is

"controlled, I believe wholly owned, by the Belgian interests, commonly referred to

as 'Sofina', who are the majority owners of the equity stock of the Barcelona
company and who also hold a substantial quantity of its bonds".

He explains that if his receivership is successful, he will have plenty of United

States dollars to repay the loan but:

"Looking at the darkest side of the picture, should the portfolio prove unsaleable,
the position would simply be that Amitas would be unable to collect anything upon
the Receiver's certificates as there is no personal liability attached thereto." (Ibid., p.
277. The last receiver's request to the Court for authority to borrow, which is
recorded in the Receivership Documents filed with this Court by Spain, was on 19
March 1963; Vol. 8, p. 1356.)

This evidence supports the Belgian assertion that the Receiver was financed by
Sofina, but of course there were American interests in Sofina. The Receiver in his
numerous requests did not refer to nominees or to the trust agreement of Sidro with
Securitas which will be discussed later in this opinion.

32. On 25 May 1967, the Belgian Embassy in Washington enquired of the United
States Department of State whether the first United States Note of 22 July 1949,
concerning American interests in Barcelona Traction, had in mind Americans
interested as owners or beneficial owners of shares or whether it included also
American citizens acting as trustees or nominees for third persons not having
American nationality. The State Department's reply of 5 June 1967 stated that the
1949 Note was inspired by questions of principle relative to the equitable treatment
of foreign investments in order to preserve the confidence of foreign investors in the
security of their investments in Spain. The interests of American citizens which
were mentioned in the 1949 Note, referred only to those who had rights of property
or beneficial ownership in the company. (Belgian New Doc. 5 presented 7 April
1969.)

Belgium

33. The first Belgian Note concerning the Barcelona Traction case is dated 27
March 1948 (A.M., Vol. IV, Annex 250). The Note stresses the importance of
Belgian interests in Barcelona Traction by asserting that Sidro owns more than 70
per cent. of the shares of Barcelona Traction and other Belgian individuals own
enough to bring the total to 80 per [p 180] cent. In addition, the Belgian State had
50,000 shares of Sidro received as a capital tax, and 40 to 45 per cent. of the First
Mortgage bonds of Barcelona Traction were also held by Belgians. Like the British
Government, the Belgian Government notes that some of the higher ranks of the
personnel of the companies have been discharged, especially Mr. William
Menschaert, a Belgian national, President and sole legal representative of Ebro in
Spain. The proceedings in Spain are summarized and declared improper or illegal.
The note concludes with the statement that there has been a series of denials of
justice which cannot help but gravely injure legitimate Belgian interests in the
companies involved. The Spanish reply as usual indicated that the Government
could not interfere with the courts.

The next Belgian Note on 22 July 1949 touched on the refusal of foreign exchange,
reviewed the further steps in the Spanish proceedings and repeated that the denial of
justice continued to injure very important Belgian interests (ibid., Annex 252).
Spain sent a reasoned rebuttal on 26 September 1949 but did not challenge
Belgium's right to speak for the Belgian interests (ibid., Annex 253).

34. As already noted, in February 1950 Belgium was actively cooperating with
Canada on the project for establishing a tripartite committee of experts. When this
demarche was frustrated by the Spanish proposal, Belgium vigorously objected to
being left off the Committee of Experts. Belgium's next diplomatic protest was on
13 July 1951 (ibid., Annex 254). Stress was laid on the effect of the measures in
Spain on the Belgian investors. It was said that in equity, note should be taken of the
interest of Barcelona Traction in Ebro and of the interest of Sidro in Barcelona; the
interest of the Belgian investors in Sidro was given at 40 to 45 per cent., without
counting the participation of Sofina which was 35 per cent. After there had been
some conversations on the subject, the Belgian Note of 7 November 1951 again
stressed their concern in the protection of very important Belgian interests and
enclosed a memorandum on Spanish law (ibid., Annex 256).

35. The Spanish reply of 14 November 1951 now insisted that diplomatic
intervention in the Barcelona Traction case was the exclusive function of the
Canadian and British Governments, whose representatives had been asked to join in
the expert committee to examine the question of the refusal of foreign exchange
(ibid., Annex 257). Belgium replied on 6 December, discussing the merits of the
matter and asserting that the importance of the Belgian interests in the capital of
Barcelona Traction justified Belgium being represented on the Committee of
Experts. On the same date, Belgium proposed arbitration under the treaty of 19 July
1927; [p 181] the issue would be the damage to Belgian interests caused by the
bankruptcy of Barcelona (ibid., Annex 258). The Spanish reply of 22 December
1951 argued that Belgium had not complied with the 1927 treaty since it had not
presented a formal claim, had not proved the Belgian nationality of the shareholders
in a Canadian company, and had not shown that Belgian interests had been injured
by an illegal act on the part of Spain (ibid., Annex 259). Belgium replied in rebuttal
on 31 December 1951, and Spain countered on 3 January 1952 (ibid., Annexes 260
and 261). At this stage the issue concerning the right of Belgium to interpose in
connection with a Canadian company, comes sharply into focus.

36. A Belgian Note of 21 March 1955, indicating the possibility of private

negotiations which were then in train, and mentioning the visits of Mr. Dean, is not
printed in the Annexes to the Belgian Memorial but as Annex 66, Document No. 2,
of the 1963 Preliminary Objections. Then, on 31 December 1956, Belgium sent a
long Note summarizing the whole affair (A.M., Vol. IV, Annex 262). On 16 May
1957, a further Belgian Note refers to certain personal conversations of their
Ambassador in Madrid and broaches the possibility of a judicial settlement (ibid.,
Annex 263). The Spanish Note of 10 June 1957 and the Belgian Note of 8 July deal
extensively with the question of the right of Belgium to act in this case (ibid.,
Annexes 264 and 265). The last Note puts more stress on the 50,000 shares held by
the Belgian State and summarizes again the extent of the interests of Sidro. It seems
unnecessary to follow the ensuing correspondence which involves the actual
Application to this Court, the discontinuance and the new Application of 1962.

37. It is hard to explain the apparent reluctance of the applicant Government to

place this entire record before the Court in a composite and coherent form especially
in view of their recent initiative in eliciting the information from the Government of
the United States as noted above. But the conclusion emerges that although in 1948
the Canadian Government, like the other three Governments involved, was
disturbed by the judicial proceedings which overtook Barcelona Traction in Spain,
the chief Canadian interest was in the securities of which National Trust was trustee
and that when the bonds were paid off after the assets were sold in Spain, Canadian
interest declined. This was the conclusion reached by counsel for Belgium in his
pleading in 1964. (Oral Proceedings, 13 May 1964.) It must be borne in mind that
the securities pledged under the Barcelona Traction Prior Lien and First Mortgage
bonds held by National Trust Co., Ltd., as trustee, included bonds and shares of
Ebro and of Catalonian Land Co., Ltd., and other subsidiaries. Of Ebro, for
example, there were some 11 million face value, of bonds and some 300,000
shares of stock. (In another connection, it is interesting that many of the shares had
blank powers of attorney attached to the certificates. [p 182]

See Receivership Documents, Vol. 1, p. 54.) But Canada apparently had no deep
abiding interest either in Canadian shareholdings in Barcelona Traction, for they
were not large, or in the company itself which (at least after the payment of the
bonds) was linked to Canada only by the "charter of convenience" and the
receivership proceedings FN1. The latter were not of a nature to stimulate Canadian
diplomatic action, although, under the supervision of the Ontario court, the Receiver
and Manager took an active part in trying to promote a settlement through
negotiations of the private interests involved. (See Receivership Documents, Vol. 5,
p. 774.) I do not find it credible that Canada can be considered to be competing with
Belgium in diplomatic protection of the interests clustered around Barcelona
Traction.
-----------------------------------------------------------------------------------------------------
----------------
FN1 Belgian counsel's argument on 30 June 1969 about the "violation of Canadian
sovereignty" and interference with the functions of the receiver as a Canadian
"public authority" does not seem to reflect the actual thinking of the Canadian
Government.
-----------------------------------------------------------------------------------------------------
----------------

The interests of the United States and Great Britain were those of governments of
States which contain great financial capitalsNew York and London. Neither of
them pressed claims on behalf of specific persons whether natural or juristic. Both
Governments have a general interest in the welfare of international "banking and
investment circles" which are closely linked with their national economies.

Belgium remains the only identifiable claimant against Spain in connection with the
bankruptcy of the Barcelona Traction Company.

If, under international law, a State is not entitled to extend its diplomatic protection
to large shareholder interests of its nationals in circumstances such as those in the
instant case, none of the equity interests in the Barcelona Traction enterprise would
be entitled to diplomatic pro-tection. I do not believe international law requires that
such a conclusion be reached.

***

38. There is no question that, under international law, a State has in general a right
to extend its diplomatic protection to a corporation which has its nationality, or
national character as it is more properly called. The proposition raises two questions
:

(1) What are the tests to determine the national character of a corporation?

(2) Assuming the appropriate tests are met, must that national char [p 183]acter be
"real and effective" as shown by the "link" between the corporation and the State,
just as, in the Nottebohm case, this Court decided that a certain claim to nationality
is not enough in all situations to justify a State in extending its diplomatic protection
to a natural person?

39. There are two standard tests of the "nationality" of a corporation. The place of
incorporation is the test generally favoured in the legal systems of the common law,
while the sige social is more generally accepted in the civil law systems. (See
Kronstein, "The Nationality of International Enterprises", 52 Columbia Law Review
(1952), p. 983.) There is respectable authority for requiring that both tests be met
FN1.
-----------------------------------------------------------------------------------------------------
----------------
FN1 There is ample coverage of the literature in the excellent study by Ginther, op.
cit., infra.
-----------------------------------------------------------------------------------------------------
---------------

It is not possible to speak of a single rule for all purposes. The tests used in private
international law have their own character, as well brought out by Caflisch, "La
nationalit des socits commerciales en droit international priv", Annuaire suisse
de droit international, Vol. XXIV, 1967, page 119.

Commercial treaties and claims conventions often contain their own definitions of
which companies shall be considered to have the nationality of a State for purposes
of the treaty. (Cf. Walker, "Provisions on Companies in United States Commercial
Treaties", 50 American Journal of International Law, 1956, p. 373; Wilson, United
States Commercial Treaties and International Law, 1960; and, for a more
comprehensive survey, Ginther, "Nationality of Corporations", sterreichische
Zeitschrift fr ffentliches Recht, Vol. XVI, 1966, p. 28 at pp. 31-59.) The tests
used for such purposes may be quite differenteven in the practice of the same
Statefrom the tests used for other purposes. For example, the "control" test was
widely used to determine the enemy character of property during war, but it is not
established in international law as a general test of the nationality of a corporation
FN2. On the other hand, control may constitute the essential link which, when
joined to nationality, gives the State the right to extend diplomatic protection to the
corporation. It is a familiar fact that the laws of certain States provide favourable
conditions for companies incorporating therein, especially in relation to taxation.
Canada is one such State, Liechtenstein is another. In the United States, many
companies find it advantageous, for various reasons, to incorporate in Delaware or
New Jersey FN3. Charters secured for such reasons may be called "charters of
convenience".

-----------------------------------------------------------------------------------------------------
----------------
FN2 See the observations of the Permanent Court of International Justice on the
control test in Certain German Interests in Polish Upper Silesia (Series A, No. 7, at
p. 70).
FN3 Cf. Cahill, "Jurisdiction over Foreign Corporations and Individuals who Carry
on Business within the Territory", 30 Harvard Law Review, 1917, p. 676.
-----------------------------------------------------------------------------------------------------
----------------

40. The Judgment of the Court in Nottebohm, Second Phase, in 1955 [p 184](I.C.J.
Reports 1955, p. 4), has been widely discussed in the subsequent literature of
international law, particularly with reference to the so-called "link theory" by which
the effectiveness of nationality may be tested FN1.

-----------------------------------------------------------------------------------------------------
----------------
FN1 The wide range of unfavourable comments is reflected in the text and citations
in Grossen, "Nationalit et protection diplomatique", Ius et Lex, Festgabe zum 70.
Geburtstag von Max Gutzwiller, 1959, p. 489. Brownlie, Principles of Public
International Law, 1966, has a full treatment at pp. 323 ff. His position is generally
favourable to the Court's judgment.
-----------------------------------------------------------------------------------------------------
----------------

It has been argued that the doctrine is equally applicable in the case of ships flying
"flags of convenience" and in relation to the diplomatic protection of corporations. I
have maintained the view that it should apply in both those situations FN2.

-----------------------------------------------------------------------------------------------------
----------------
FN2 Jessup, "The United Nations Conference on the Law of the Sea", 59 Columbia
Law Review, 1959, pp. 234, 256. Meyers, The Nationality of Ships, 1967, fully
covers the question of flags of convenience, and the applicability of the rule to
corporations is treated in Harris, "The Protection of Companies in International Law
in the Light of the Nottebohm Case", 18 International and Comparative Law
Quarterly, April 1969, p. 275.
-----------------------------------------------------------------------------------------------------
----------------

41. In the instant case the Parties did not debate the applicability of the link
principle to the Barcelona Traction Company, but they were certainly aware of the
question. The Spanish side stated:

". . . the Spanish Government never disputed the effective character of Barcelona
Traction's Canadian nationality, because a number of factors were present which
were sufficient proof of the existence of a real link between the company and the
economic life of Canada". (P.O., 1963, p. 190.)

Counsel for Belgium argued on 4 July 1969 that "if the Canadian Government had
been able to espouse in international judicial proceedings the cause of Barcelona
Traction, its action could have been challenged on the ground of the lack of
sufficient true Canadian interest". Counsel for Spain responded directly to this
remark on 21 July.

42. I am in full agreement with the proposition that the decisions of the International
Court of Justice should not be based upon a legal rule or principle which has not
been considered by the parties [FN3]indeed, I believe that the failure to heed that
proposition is the only criticism which can properly be directed at the Court's
decision in Nottebohm. When, however, both Parties have revealed a full awareness
of the fact that the "link" principle might be applied to test the national quality of
Barcelona Traction, the fact that they did not choose to develop their arguments on
the ground of legal principle, rather than of fact, cannot operate to prevent the Court
from dealing with the principle. Of course [p 185] the question whether the link
principle does apply to juristic persons is a question of international law and jura
novit curia. The implication in the pleading of Belgian counsel just cited, intimated
a conclusion that the link principle does apply to juristic persons.

-----------------------------------------------------------------------------------------------------
----------------
[FN3] The proposition has been admirably expounded in Carsten Smith, The
Relation Between Proceedings and Premises, a Study in International Law, 1962.
-----------------------------------------------------------------------------------------------------
----------------

It is indeed true that since Spain admitted that Canada had a right to extend
diplomatic protection to Barcelona Traction, it may be argued that Spain is estopped
to deny such a right although the elements of true estoppel may be lacking and such
estoppel could be claimed (if at all) by Canada and not by Belgium. Aside from the
fact that I believe the jurisprudence of the Court has tended to rely too heavily on
estoppel or preclusion, the question posed here is in the first place a question of the
Court's finding a rule of law. The Court in its Judgment does not accept the
application of the link theory to juristic persons. Since I have reached the conclusion
that the existence of a link between a corporation holding a "charter of convenience"
and the State granting the charter, is the key to the diplomatic protection of
multinational corporate interests, I cannot avoid the problems of law and fact on any
such basis as the application of the doctrine of estoppel in this particular case.

43. It has also been argued that the Court should not pass judgment on the question
whether there existed the necessary link between Canada and Barcelona Traction
without hearing argument on behalf of Canada. Canada might have sought to
intervene in the instant case under Article 62 of the Statute, but it did not do so. It is
said that after judgment is pronounced in this case of Belgium v. Spain, Canada
might find some jurisdictional ground to found an application to institute a case of
Canada v. Spain. It is known that no such jurisdictional ground now exists. It seems
quite unreal to suppose that Spain would now agree with Canada upon a compromis
submitting to the Court a Canadian claim on behalf of Barcelona Traction, thus
exposing Spain to the new hazard of being required to pay some two hundred
millions of dollars of damages. But if the Court were properly seised of an
application by Canada, it would have to take cognizance of the fact that following
Article 59 of the Statute, "The decision of the Court has no binding force except
between the parties and in respect of that particular case". Had the Court endorsed
the application of the link principle to juristic persons, in its present decision in
Belgium v. Spain, Canada could have argued against that conclusion in the
hypothetical case of Canada v. Spain, or might have relied on Spanish admissions
that Canada was entitled to protect the company. [p 186]

The "Link" Concept

44. It seems to be widely thought that the "link" concept in connection with the
nationality of claims, originated in the International Court of Justice's Judgment in
Nottebohm. I do not agree that in that instance the Court created a new rule of law.
Indeed the underlying principle was already well established in connection with
diplomatic claims on behalf of corporations. To look for the link between a
corporation and a State is merely another example of what is now the familiar
practice of "lifting the veil". See, for example Cohn and Simitis "'Lifting the Veil' in
the Company Laws of the European Continent", 12 International and Comparative
Law Quarterly (1963), page 189; Drachsler in Report of the Section of International
and Comparative Law of the American Bar Association, July 1964, page 29. The
practice of such States as the United States and Switzerland had already given
weight to the proposition that a corporation would not be protected solely because it
was incorporated in the State, i.e., had the State's nationality; some other link was
required and that link usually was related to the ownership of shares. Such
abstention, being as it were "against interest", has special probative value FN1.

-----------------------------------------------------------------------------------------------------
----------------
FN1 State practice is noted infra, paras. 60 et seq.
-----------------------------------------------------------------------------------------------------
----------------

Three years after the decision in Nottebohm, the Italian-United States Conciliation
Commission, under the presidence of the late Professor Sauser Hall, in the
Flegenheimer case stated:

"The right of challenge of the international court, authorizing it to determine

whether, behind the nationality certificate or the acts of naturalisation produced, the
right to citizenship was regularly acquired, is in conformity with the very broad rule
of effectivity which dominates the law of nationals entirely and allows the court to
fulfill its legal function and remove the inconveniences specified." (Emphasis
supplied.) (53 American Journal of International Law, 1959, p. 944.)

That the link concept represents a general principle of law and not merely an ad hoc
rule for the decision of a particular case, is indicated also by its applicability to the
test of the nationality of ships which fly "flags of convenience". These maritime
situations are comparable to the corporate situations just discussed since they
involve corporate decisions to register their ships under the flags of States which
offer special advantages in connection with tax, labour and other laws.

45. The Judgment in Nottebohm, Second Phase, was pronounced on 6 April 1955.
At that time, the International Law Commission, which was preparing its projects
on the law of the sea, had not yet developed [p 187] the concept of a "genuine link"
as a requisite for the recognition of the nationality of a ship. But the link theory was
thereafter actively argued in the Commission and at length in the Geneva
Conference of 1958 on the Law of the Sea. Article 5 of the Convention on the High
Seas was adopted in the following terms:

"Each State shall fix the conditions for the grant of its nationality to ships, for the
registration of ships in its territory, and for the right to fly its flag. Ships have the
nationality of the State whose flag they are entitled to fly. There must exist a
genuine link between the State and the ship; in particular, the State must effectively
exercise its jurisdiction and control in administrative, technical and social matters
over ships flying its flag." (Emphasis supplied.)

46. In 1959, governments were submitting to the International Court of Justice

views on the Constitution of the Maritime Safety Committee of the Inter-
Governmental Maritime Consultative Organization case. The influence of the link
concept was apparent. (Meyers, The Nationality of Ships, 1967, pp. 227 ff.) When
the Court gave its Advisory Opinion on the above case in 1960, it clearly confined
itself to a particular question of treaty interpretation and declined to examine
general customary law on "a genuine link". (I.C.J. Reports 1960, p. 171.) It made a
passing reference to Article 5 of the "unratified Geneva Convention on the High
Seas". In his dissenting opinion, Judge Moreno Quintana said that the provision in
Article 5

".. . by which international law establishes an obligation binding in national law,

constitutes at the present time the opinio juris gentium on the matter". (Ibid., p.
178.)

The Nottebohm case itself was not discussed at length in connection with the law of
the sea in the International Law Commission but Dr. Garcia Amador, Special
Reporter for the International Law Commission on State Responsibility, in his Sixth
Report, noted that he had added a paragraph to his earlier draft "in order to
incorporate the rule laid down by the International Court of Justice in the
Nottebohm case". (Yearbook of the International Law Commission, 1961, Vol. II, p.
53; see Article 23 of his revised draft at p. 49.) Although the "link" concept was
much discussed at the Geneva Conference, only a few governments or delegates
referred to the Nottebohm case (Meyers, op. cit., pp. 269 ff.). Four States
Netherlands, Norway, Liberia and the United Kingdomin their pleadings in the
Constitution of the Maritime Safety Committee of the Inter-Governmental Maritime
Consultative Organization case made some reference to the Court's statements in
Nottebohm, Second Phase, about "unilateral acts" of States. (I.C.J. Pleadings, pp.
357-359; 365-366; 374; [p 188] 404-405.) The important point is that there was
growing recognition of the rule that if a State wishes to have its "unilateral acts"
recognized and given effect by other States, those acts must conform to the
principles and rules of international law. If a State confers its nationality on a person
who has no genuine link with it, another State may not need to recognize the person
as such national. Such nationality has been styled "a citizenship of convenience"
FN1. If a State purports to confer its nationality on ships by allowing them to fly its
flag, without assuring that they meet such tests as management, ownership,
jurisdiction and control, other States are not bound to recognize the asserted
nationality of the ship FN2. As a matter of principle and logicsupported by State
practicea comparable rule is applicable to corporations. A State may, by
extending diplomatic protection to a corporation, hold out that corporation as having
its "nationality", because the State had granted it its charter of incorporation. But if
in fact there is no "genuine link" between the corporation and the State in question,
the State to which diplomatic representations are made may, on that ground reject
them. Perhaps one makes here an analogy to stateless persons but the stateless
individual has nothing behind him and cannot be protected until the present
imperfect law of human rights is fully developed FN3. On the other hand, the
corporation which has a nominal connection with a State of incorporation but whose
shares are all owned by nationals of another State in which latter State the actual
management and control of the company are carried on, has behind it the
shareholders who represent the real interest. No rule of law, no principle, forbids
that latter State to extend its diplomatic protection to those interests.

-----------------------------------------------------------------------------------------------------
----------------
FN1 Uebersee Finanz-Korporation A.G., Liestal, Switzerland, Plaintiff, Fritz von
Opel, Intervener-Plaintiff v. Herbert Brownell, Jr., Attorney General, et al., 133 F.
Supp. 615, 619 (1955), affd. 244 F. 2d 789 (1957). This case, decided by the United
States District Court, District of Columbia, in the same year as the decision of the
International Court of Justice in Nottebohm, also involved a consideration of the
validity of the naturalization of a German in Liechtenstein during the Second World
War. The question was in part whether the intervener was an innocent stockholder
in a company vested by the Alien Property Custodian as enemy alien property. The
United States Court did not cite the Nottebohm case.
FN2 There are, however, situations in which national courts still find it appropriate
to recognize "the law of the flag"; see McCulloch v. Sociedad Nacional de
Marineros de Honduras, 83 S. Ct. (U.S.) 671 (1963).
EN3 And query whether the term "man" in "The Rights of Man" includes a
corporation!
The Court's decision in Nottebohm, Second Phase, has been criticized as creating a
new group of apatrides; see Bindschedler-Robert, "La protection diplomatique des
socits et des actionnaires", Revue de la Socit des juristes bernois, Vol. 100,
1964, p. 141.
-----------------------------------------------------------------------------------------------------
----------------

47. It is true that the Court in the Constitution of the Maritime Safety[p 189]
Committee of the Inter-Governmental Maritime Consultative Organization case, as
a matter of treaty interpretation, and taking into account the travaux prparatoires,
stated that:
".. .it is unlikely that it was contemplated [in drafting the Convention which
established IMCO] that the test should be the nationality of stock-holders and of
others having beneficial interests in every merchant ship; facts which would be
difficult to catalogue, to ascertain and to measure. To take into account the names
and nationalities of the owners or shareholders of shipping companies would . . .
'introduce an unnecessarily complicated criterion'... On the other hand, the criterion
of registered tonnage is practical, certain and capable of easy application." (I.C.J.
Reports I960, p. 169.)

It would be unsound to transpose some of these words from their context, where
persuasive reasons are set out for the particular issue before the Court, to support an
argument that it is not practical to ascertain the existence of preponderant, majority
or substantial stock interests in corporations. In particular it will be shown that in at
least certain cases, international law does not exclude the protection of shareholders
on the ground that it is difficult to identify them, e.g., in the case where international
law permits the protection of foreign shareholders in a corporation which is the
victim of unlawful destructive acts performed by the State of incorporation. Nor can
the rule which permits the protection of shareholders in certain circumstances be
discarded because company management may sometimes find it inconvenient to
reveal the exact position in regard to the ultimate ownership of the shares.

48. One of the reasons for the rule on continuity of nationality of claims is the
avoidance of assignments of claims by nationals of a small State to nationals of a
powerful State. If a powerful State should seek to attract corporations to incorporate
under its laws so that it could claim them as its nationals even though the
corporations had no further connection with that State, this Court should not "regard
itself as bound by the unilateral act" of that State. The same conclusion must be
reached when less powerful States attract the incorporation of companies or the
registration of ships by providing "charters of convenience" or "flags of
convenience".

It has been noted that Canada is one of the States which attracts the incorporation of
companies through favourable tax laws, etc. Counsel for Spain called attention to
the fact that a corporation called the San Antonio Land Company was incorporated
in Toronto in the same year 1911as Barcelona Traction by Mr. Pearson, "the
promoter and first president of Barcelona Traction". The identity of some of the
personalities in the two companies, as well as their London agents, was stressed.
The [p 190] business of the Land Company was carried on in Texas. Counsel quoted
from the report of the Special Master of the Federal District Court in New York
FN1:

"It is perfectly clear that the Toronto office, the Board of Directors, etc., was
maintained only in pursuance of the requirements of the statutory existence of the
corporation under the laws of the Dominion of Canada. The effective control of the
affairs of the corporation plainly was lodged elsewhere than in Toronto and
followed the peregrinations of Dr. Pearson, the master mind FN2." (Hearing of 27
May 1969.)

-----------------------------------------------------------------------------------------------------
-------
FN1 The nature of the litigation in question is not relevant to the point being
discussed here.
FN2 The rebuttal of counsel for Belgium, on 27 June 1969, while correctly pointing
to some errors in the Spanish analysis of the San Antonio Land Co. case, did not
affect the point here under consideration.
-----------------------------------------------------------------------------------------------------
------

49. The evidence shows that counsel for Spain was correct in asserting that the
situation in Barcelona Traction was parallel. Throughout, one finds that the
important decisions, the vital planning, was done by such persons as Heineman,
Wilmers, Speciael, Hubbard and Lawton, whose instructions issued from Great
Britain, the United States and Belgium and Spain itself, but rarely if ever from
Canada. The general meetings of shareholders held in Toronto seem to have been
pro forma affairs. It is true that in 1948 a "Receiver and Manager" of Barcelona
Traction was appointed in Canada and operated out of Toronto, but since the
operating companies in Spain had passed into the control of the bankruptcy officials
there, the Receiver and Manager could merely try to encourage a settlement; he did
not have the power to make a settlement.

Counsel for Belgium, in the same pleading in which he rebutted some of the
Spanish contentions about the San Antonio Land Co. case, quoted from a judgment
of Mr. Justice Roxburgh in the English High Court of Justice, the following passage
which strongly confirms the fact that Barcelona Traction's management was not
centred in Toronto:

"Barcelona was a holding and not an operating Company. Sterling was its life
blood. It also borrowed pesetas but it had little interest in Canadian dollars. London
was its financial seat.... There were in Canada, so far as I know, or rather so far as I
have been told, nothing but a registered office of undisclosed size with a staff of
undisclosed dimensions, and share registers." [p 191]

Counsel noted that on the final point the judge had not had discovery, but counsel
did not deny the truth of the judge's comment.

It is true that Roxburgh J. was dealing with a period of time anterior to the
bankruptcy proceedings in Spain, but I find nothing in the record to suggest that
there was later a material change whereby the principal power centre of Barcelona
Traction was located in Toronto FN1.
-----------------------------------------------------------------------------------------------------
----------------
FN1 In the same court proceeding, the testimony of Mr. Hubbard, Chairman or
President of Barcelona Traction during several years, is not wholly clear. He
testified that all meetings of the Directors of the Company were held in Canada; that
he attended some but not all such meetings; that neither he nor his predecessor or
successor as President or Chairman was resident in Canada; that Mr. Speciael, as
President may have gone to Canada from New York to attend some directors'
meetings; it was not necessary for the President or Chairman of the Board to preside
over directors' meetings. (According to the company law of Canada, it seems that
the directors present may elect a chairman of the meeting if neither the President nor
vice-president is present; Fraser and Stewart, Handbook on Canadian Company
Law, Fifth Ed. 1960, p. 134.) Mr. Hubbard indicated that some decisions were made
in London, with notice to the office in Toronto and that in other cases "instructions
came from Canada". Mr. Hubbard testified that "There was a very strong Board in
Canada" but of the directors listed as residing in Canada (according to a list
submitted to the Court in the same proceeding) the only one appearing in the list of
registered shareholders in 1948 (A.M., Ann. 2) held one share. (The records of the
Court proceedings are in A.C.M., Vol. I, Annex 13, especially Document No. 6.)
This was a Mr. Merry who is listed as Secretary of the Company (but not a director)
in 1918. (A.P.O., Ann. 22, Doc. No. 2. This is the only extract from minutes of
directors' meetings which lists those present, so far as I have been able to ascertain;
three directors were present.)
-----------------------------------------------------------------------------------------------------
---------------

***

50. There are three situations in which there is wide agreement that a State may
extend its diplomatic protection to shareholders who are its nationals, although the
company whose shares they hold has the nationality of another State. These three
situations are sometimes considered "exceptions" to a general rule allowing
protection of the corporation itself.

51. The first of these situations is where the corporation has been incorporated in the
State which inflicts the injury on it without legal justification, and where the
shareholders are of another nationality.

It is in such situations that one finds the widest agreement that a State may extend
diplomatic protection to shareholders who are its nationals [FN2]. The rationale
seems to be based largely on equitable considerations and the result is so reasonable
it has been accepted in State practice. Judge Charles De Visscher says this result is
required by "des considrations imprieuses de justice". ("De la protection
diplomatique des actionnaires d'une socit contre l'Etat sous la lgislation duquel
cette socit s'est constitue", 61 Revue de droit international et de lgislation
compare, 1934, p. 624.) By hypothesis, the respondent State has committed an
unlawful act from which injury results. The corporation itself cannot seek redress
and therefore the State whose nationals own the shares may protect them ut singuli.
The equities are particularly striking when the respondent State admits foreign
investment only on condition that the investors form a corporation under its law.
These points are clearly made by Petrn, 109 Hague Recueil, 1963, II, pages 506
and 510.Petrn refers with approval to the earlier lectures by Paul De Visscher, 102
Hague Recueil, 1961, I, page 399; see especially pages 478-479.

-----------------------------------------------------------------------------------------------------
----------------
[FN2] The Respondent here shares in this agreement. Bindschedler-Robert (op. cit.,
p. 174), writing in 1964, considered that this view was being accepted in
international law. She cites the well-reasoned and well-documented study by Kiss,
"La protection diplomatique des actionnaires dans la jurisprudence et la pratique
internationale", in La personalit morale et ses limites (1960), p. 179. Kiss indeed
cites abundant authority for even broader rights to protect shareholders; he refers to
Borchard, Ch. De Visscher, Sibert, Ralston, Fitzmaurice, Pinto, Paul De Visscher,
Perry, Sfriades, Jones, Guggenheim, Battagliani, Bindschedler, but query whether
all these carry their conclusion as far as does Kiss. See also in support of the broader
rule allowing protection of shareholders, Agrawala, "State Protection of
Shareholders' Interests in Foreign Corporations", The Solicitor's Quarterly, 1962, p.
13; Nial, "Problems of Private International Law", 101 Hague Recueil, 1960, III, p.
259.
-----------------------------------------------------------------------------------------------------
----------------

Judge Wellington Koo, in his separate opinion in this Barcelona case in 1964
asserted emphatically:

". . . the original simple rule of protection of a company by its national State has
been found inadequate and State practice, treaty regulation and international arbitral
decisions have come to recognize the right of a State to intervene on behalf of its
nationals, shareholders of a company which has been injured by the State of its own
nationality, that is to say, a State where it has been incorporated according to its
laws and therefore is regarded as having assumed its nationality" (I.C.J. Reports
1964, p. 58).

Judge Wellington Koo considered it immaterial whether this rule should or should
not be considered as an "exception".

52. It is curious that this "exception" should have been so widely accepted since it
ignores the traditional rule that a State is not guilty of a breach of international law
for injuring one of its own nationals. It rebuts also the notion that an injury to a
corporation is not a direct [p 193] injury to the shareholders. Moreover, if the
foreign shareholders may be protected in such a situation, it is also necessary to
choose one horn of a dilemma: either one admits that the right of the shareholders
existed at the moment when the injury was done to the corporation, which means
that the rights of shareholders may be damaged by an injury to the corporation, or, if
that right came into existence subsequently, then one ignores the rule of
international law that a claim must be national in origin. Moreover, the admission of
this "exception" negates the argument, sometimes advanced against the diplomatic
protection of shareholders, to the effect that such claims expose an accused State to
a vast variety of claims on behalf of persons of whose existence it was ignorant.
Since customary practice has, however, accepted this "exception", other arguments
against protection of shareholders are correspondingly weakened, especially since
the doctrine in question generally does not insist that the life of the corporation must
have been extinguished so that it could be said the shareholders had acquired a
direct right to the assets.

53. The second situation in which it is widely agreed that a State may claim on
behalf of its shareholders in a foreign corporation, is where the State of
incorporation has liquidated or wound up the corporation after the injury was
inflicted by some third State.

This situation differs from that just considered in that the respondent State has
committed its unlawful act (let us say total confiscation) against a foreign
corporation. Here some doctrine would say that ordinarily State A, the State of
incorporation, should be the one to extend diplomatic protection. But by hypothesis
the corporate life has been extinguished by State A, so thatjust as in the first
situationa claim can not be pressed for the corporation. Brownlie states the
situation as follows:

"Where the State under the law of which the company is incorporated terminates the
existence of the company in law, or other circumstances make the company
practically defunct, the shareholders remain as the interests affected by government
act: intervention on their behalf would seem to be justified in such a case."
(Brownlie, Principles of Public International Law, 1966, p. 401.)

Here it may be said that after liquidation and payment of creditors, the
shareholdersunder an applicable system of municipal lawhave a property
interest in the assets and for that reason may be protected. But at the time of the
unlawful act ("confiscation") they did not have such a property interest and
therefore under the rule of continuity the claim did not have in origin the
appropriate nationality on that basis. [p 194]

54. But Brownlie equates the case of the termination of the existence of the
company with the case where it is "practically defunct". This is a term which was
used by the British Government in the Delagoa Bay case and used a good deal by
the Parties in their pleading in the instant case. Its exact meaning is not clear but
Barcelona Traction did have some life in Canada even after the practical
annihilation in Spain. From 1948 on it was under a receivership, but the
"appointment of a receiver and manager over the assets and business of a company
does not dissolve or annihilate the company . . ." (Kerr, On the Law and Practice as
to Receivers, 13th ed. by Walton, 1963, p. 232). As already noted, the Receiver and
Manager of Barcelona Traction concerned himself only with promoting negotiations
for a settlement between the private parties; none of the public utility enterprises in
Spain were under his direction or within his control; and he had to borrow the
money for his operations from an affiliate or subsidiary of the Belgian company,
Sidro.

It is true that after 1948 there was some trading in Barcelona Traction shares on the
Brussels Bourse (Verbatim Record for 7 July 1969), and according to Moody's
Manual of Investments, for years ranging from 1952 to 1967, there were sales in
New York, Canada and London. No infor-mation is available to make it possible to
say whether the transactions were merely speculative, but it may be noted that in
1961, when the first Belgian application was withdrawn from this Court in
expectation of a private negotiated settlement, the quoted price was somewhat
higher.

55. It is true that so far as Canadian law is concerned, the shareholders had not yet
acquired a direct right to the assets but since I do not base my conclusion on this
factor, I do not pursue it further.
56. I also find it unnecessary to consider in detail what is considered the third
"exception" where shareholders may admittedly be protected, namely where the
injury is inflicted directly on the shareholders and not indirectly through damage to
the company.

***

57. It is now possible to turn to the question which is crucial for the instant case,
namely whether the three situations just mentioned are the only ones in which
international law permits a State to extend diplomatic protection to shareholders
who are its nationals.

I find no evidence or reasoning which precludes such protection in other situations,

but the question can be answered only by analysing the fundamental principles
underlying the right of diplomatic protection. [p 195]

The Basic Principle of State "Interest"

58. In this opinion traditional language has been used, for example in speaking of
injuries to a corporation as such, but this is really a bit of anthropomorphism since,
as Sir Edward Coke remarked, corporations "have no souls" (case of Sutton's
Hospital, 10 Rep. 32) and as stated by more recent jurists, the corporation "is not a
thing. It is a method." (Douglas and Shanks, "Insulation from Liability through
Subsidiary Corporations", 39 Yale Law Journal, 1929, pp. 193, 194.) That
corporations have a nationality, is a legal fiction FN1. In legal principle and
practice, the situation is that in relations with other States, a State is entitled to treat
a corporation as if it were one of its nationals, provided the corporation is connected
with it by certain links.
-----------------------------------------------------------------------------------------------------
----------------
FN1"Legal fiction", according to Morris Cohen, "is the mask that progress must
wear to pass the faithful but blear-eyed watchers of our ancient legal treasures. But
though legal fictions are useful in thus mitigating or absorbing the shock of
innovation, they work havoc in the form of intellectual confusion." Quoted in
Transnational Law, p. 70.
-----------------------------------------------------------------------------------------------------
----------------

"Indeed, it is at least arguable that all cases of apparent protection of corporations

are in reality cases of protection of the shareholding interest of nationals of the
protecting State." (Clive Parry, "Some Considerations upon the Protection of
Individuals in International Law", 90 Hague Recueil, 1956, II, p. 657 at p. 704.)

It is customary also to speak about "claims of individuals" or "of natural persons"

and about "corporate claims" or "claims of corporations". Such language is
convenient, but it conceals the fact that in international relations, the claims in
question are always the claims of a State, not of a natural or juristic person. A
citizen has no right to diplomatic protection; it is wholly within the discretion of the
government whether it will or will not extend its diplomatic protection.

59. A State takes up a claim against another State when it considers that its own
interests have been affected. As the Court said in Nottebohm, Second Phase (p. 24)
"Diplomatic protection and protection by means of international judicial
proceedings constitute measures for the defence of the rights of the State". In
Mavrommatis Palestine Concessions (P.C.I.J., Series A, No. 2, p. 12) the Court
identified the State's "own rights" as "its right to ensure in the person of its subject
respect for the rules of international law". Almost the identical words were repeated
by the Court in Panevezys-Saldutiskis Railway (P.C.I.J., Series A/B, No. 76, p. 16),
although in this latter case the Court went on to elaborate the importance of "the
bond of nationality". [p 196]

In explaining the basis for a State's right to give diplomatic protection, the rather
simplistic notion that a State was injured when an injury was inflicted abroad upon
the least of its nationals, has come to be superseded by the realization of the national
economic importance of foreign invest-ments as State interests.

This is one reason why it is not now pertinent to stress the difference in municipal
law between private "rights" and "interests", as Judge Gros shows so clearly in his
separate opinion.

". .. States protect their corporations chiefly on the basis of the real national interest
and not, in fact, on the basis of nationality. In such a situation, it seems necessary to
allow the State of the nationality of these shareholders to present their claims to the
limit of their interest in the corporation. ...
Since the protection of national interest in foreign corporations is based on
protecting an economic or pecuniary interest, it matters little whether the party in
whose behalf the protection is exercised is a shareholder or a bondholder, or even if
the national interest is held indirectly; e.g., if a national corporation controls another
corporation which holds bonds or shares in a third corporation sustaining an injury."
(Khalid A. Al-Shawi, The Role of the Corporate Entity in International Law, 1957,
pp. 55 and 59.)

"In three countriesItaly, Britain and Franceall proposals for foreign investment
must clear government agencies before they can be carried out, whether or not
government sources of credit are used . . . The Government of Japan, through the
Ministry of Finance (and when required, through such additional agencies as the
Ministry of International Trade and Investment and the Ministry of Agriculture),
must approve all foreign investments . . ." (Friedmann and Kalmanoff, Joint
International Business Ventures, 1961, pp. 188 and 190.)

60. No survey of State practice can, strictly speaking, be comprehensive and the
practice of a single State may vary from time to time perhaps depending on
whether it is in the position of plaintiff or defendant. However, I am not seeking to
marshal all the evidence necessary to establish a rule of customary international law.
Having indicated the underlying principles and the bases of the international law
regarding diplomatic protection of nationals and national interests, I need only cite
some examples to show that these conclusions are not unsupported by State practice
and doctrine.

61. The primacy of the general economic interests of the State in protecting private
investments abroad, and the minimizing of any one es-[p 197] sential test justifying
diplomatic protection, are strikingly brought out in the message of the Swiss Conseil
federal of 29 October 1948 to the As-semble f!!!edrale, concerning the
negotiation of agreements with Yugoslavia on trade, payments, and a global
settlement of Swiss claims for nationalized property:

"Article 5 indicates what must be considered as Swiss assets, holdings or claims.

This question presents no difficulty when the assets belong to natural persons; in
that case the nationality of the owner or creditor serves as the criterion. So far as
corporate persons and companies are concerned, the seat, which must be in
Switzerland, has not been made the only test, but the question is also raised as to
whether there is a substantial Swiss interest in the corporate person or company. In
most cases the substantial Swiss interest will be shown to exist when the effective
majority of the capital is in Swiss hands. If there is no such majority, it is the
minority exerting a decisive influence on the company which is to be taken into
account; this is particularly easy to discern when there is a compact minority on one
side and a scattered majority on the other. The composition of the board of directors
and senior management may also be a determining factor when it belongs to them to
shape the will of the corporate person and decide on its behalf. Lastly, in certain
cases the creditors ought not to be overlooked either, for they too may exert a
certain influence on the undertaking. But it is always necessary to consider the real
circumstances and not trust in purely legal constructions, whose sole aim may be to
dissimulate the true facts." (Feuille fdrale de la Confdration suisse, 100 anne
1948, Vol. III, p. 672 at 686. [Translation from French by the Registry.])

62. In its note of 20 April 1938 to the Mexican Government, in regard to the case of
Mexican Eagle Oil Company, a Mexican corporation, the British Government said:

"But the fact remains that the majority of shareholders who are the ultimate
sufferers from the action of the Mexican Government are British, and the
undertaking in question is essentially a British interest.
For this reason alone His Majesty's Government have the right ... to protest against
an action which they regard as unjustified." (8 Whiteman Digest of International
Law, p. 1273.)

In a section of the British Digest of International Law, entitled "Protection of British

Interests in Foreign-Incorporated Companies", one finds a number of passages in
which the stress is on the British "interests" rather than on the nationality of the
company. (See Vol. 5, Part VI, pp. 535 ff.)
[p 198]

63. In regard to the practice of the United States, it has already been noted that that
Government maintains that it is entitled under international law to protect
substantial American shareholder-interests in foreign corporations and that it
declines to protect American companies in which the substantial interest is alien-
owned. Thus, in 1912, the Department of State declined to make representations on
behalf of an American company in which Americans owned only $100 worth of
shares out of a total of $450,000. (V. Hackworth, Digest of International Law, p.
845.) In 1965, the same Department informed an American embassy: ". . . the
Government of the United States has the right under principles of international law
to intervene or espouse a claim on behalf of nationals of the United States who own
a substantial interest in a corporation organized under the laws of... [a foreign
country]". (8 Whiteman Digest, p. 1272.)

The Restatement of Foreign Relations Law of the American Law Institute (1965) in
Section 173 provides that a State is liable for damage to alien stockholder interests
in a corporation of a third State if "a significant portion of the stock" is alien-owned,
the corporation fails to obtain reparation, for reasons which the shareholders can not
control, and the corporation has not waived or settled its claim.

"In international law, as in the domestic law of the United States, there has been a
gradually increasing tendency to disregard the separate corporate entity when
necessary to avoid injustice. Originally the United States, like Great Britain, refused
to intervene on behalf of its national shareholders in a foreign corporation . .. Since
late in the 19th century, a number of such claims have been presented to and
allowed by international tribunals. In most of these, the international responsibility
of the State with respect to the injury to the alien shareholder as such was not
squarely presented as a question of international law, since this point was settled by
the terms of the international agreement establishing the tribunal or by the
compromis under which the case was submitted to it. . . [citing Delagoa Bay].
However, the practice of providing for such cases in international arbitration
agreements has apparently come to be regarded as a reflection of customary
international law, and it now seems to be recognized that, at least under some
circumstances, the State is responsible for the injury to alien shareholders owning a
significant interest in the injured corporation." (Reporter's Notes to S. 172; cf. II,
Hyde, p. 904.)

64. In the Hannevig case, Norway espoused against the United States, the claim of
Hannevig, a Norwegian national, on the ground that he had a [p 199] substantial
interest in certain American corporations alleged to have been damaged by action of
the United States Government. (The case is described in 32 American Journal of
International Law, 1938, p. 142.) The United States did not assert the American
character of the corporations as a basis for resisting the claim.

65. This section of the opinion may close with the words of Judge Huber in the
familiar Ziat, Ben Kiran claim:

"International law, which in this field, is in the main based on principles of equity,
has laid down no formal criterion for granting or refusing diplomatic protection to
national interests bound up with interests belonging to persons of different
nationalities." (8 Whiteman Digest, p. 1283.)

***

The Question of Double or Multiple Protection

66. Counsel for the Respondent made numerous statements to the effect that
diplomatic protection could never be extended by more than one State in any one
case. Such an argument is advanced against the possibility that more than one large
shareholding interest might be protected, it being alleged that if the State of which
the company has the nationality is the only State entitled to extend diplomatic
protection, impermissible double protection would be avoided. That position is not
correct since there are various situations in which international law recognizes the
right of more than one State to interpose in connection with the same allegedly
wrongful act.

67. In an ordinary case of dual nationality, both of those States of which claimant is
a national may extend protection although in case of conflict an international
tribunal may apply the doctrine of effective nationality. This Court said in the
Reparation for Injuries Suffered in the Service of the United Nations case:
"International Tribunals are already familiar with the problem of a claim in which
two or more national States are interested, and they know how to protect the
defendant State in such a case." (I.C.J. Reports 1949, pp. 174, 186.) In that case, the
Court was asked by the General Assembly to consider, and it did consider, whether
a claim might be brought both by the State of which the injured person was a
national and by the United Nations. The Court said that "there is no rule of law . . .
which compels either the State or the Or-ganization to refrain from bringing an
international claim". The General Assembly thereafter recognized that two claims
might be presented, and authorized the Secretary-General to negotiate agreements to
reconcile action by the United Nations with the rights of the State of which the
victim was a national. (UN General Assembly Res. 365 (IV), 1 Dec. 1949, para. 2.)
[p 200]

68. The situation is not so simple when one considers the condition of artificial or
juristic persons. International law has not developed a clear rule of dual nationality
for such entities although different criteria are employed for determining nationality.
Respondent indicated that a company may have dual nationality because both
criteria are acceptable (Preliminary Objections, 1963, p. 191), but it insisted only
one of the two States may make a claim. Yet in cases which are now very common
in the commercial life of the world, the corporation may have various links with
more than one Statelinks just as real as those which may connect a natural person
with two different States whose nationality he possesses. International law cannot
be oblivious to these corporate links. As already indicated above, they include the
place of incorporation, the place of management, the place of operation (probably
including employment of labour and payment of taxes), the nationality of the
persons (natural or artificial) who exercise control, whether through the board of
directors and management, or through stock interests, which not infrequently may
exercise control even when a relatively small minority.

69. I shall not go over all the cases but merely note the double or joint diplomatic
interposition in Delagoa, Mexican Eagle and Tlahualilo. (Cf. Paul De Visscher, 102
Hague Recueil, 1961,1, pp. 477-478.) In the case of Barcelona Traction, diplomatic
representations, some perhaps only in the nature of good offices, were made by
Canada, the United Kingdom, United States of America and Belgium.

In the case of two different but simultaneous justifiable diplomatic interpositions

regarding the same alleged wrongful act, the Respondent can eliminate one claimant
by showing that a full settlement had been reached with the other. If, in this case,
Spain made a settlement with Canada for Barcelona Traction, the Belgian claim for
the shareholders might be considered moot.

70. With all respect to the Court, I must point out the irrational results of applying a
rule which would provide that only the State in which a company is incorporated
may extend diplomatic protection in case of damage inflicted under circumstances
in which the State inflicting the damage incurs liability under international law, as
illustrated by the organization of the Iranian Oil Consortium. In September 1954 an
agreement was concluded between eight oil companies on the one side and, on the
other side, the Government of Iran and the Government-owned National Iranian Oil
Company; it was ratified by the Iranian Parliament. [p 201]

The agreement gives to the Consortium the exclusive rights in a defined area for the
production, refining and processing of crude oil and natural gas, together with other
facilities. The eight participating oil companies include the former Anglo-Iranian
Oil Company, now British Petroleum Company, which participates to the extent of
40 per cent.; five American oil companies also having 40 per cent.; the one Dutch
company having 14 per cent. and the French company having 6 per cent. To carry
out the operations, the Consortium caused to be incorporated in the Netherlands,
two Dutch companies, one a Producing company and the other a Refining company.
All the shares of the Dutch Producing company and of the Refining company are
owned by an English holding company, Iranian Oil Participants Limited, with
offices in London. The shares of the "Holding Company" are owned by the
members of the Consortium in the percentages indicated aboveFN1. The two
operating companies were incorporated in the Netherlands because of the liberal
provisions of its commercial code which permit the companies to have their head
offices and board of directors and management overseas, in this case, in Iran. The
code also permits "one-man" companies, which makes it possible for all their shares
to be held by the "Holding Company" in London. Fortunately, the Iranian Oil
Consortium agreement was so skilfully drawn in a co-operative spirit, that one does
not anticipate the likelihood of any diplomatic claims, quite aside from the fact that
the agreement includes notable arrangements for arbitration of any disputes FN2.
But should there be any question in the future of representations by any
government, it would be absurd to maintain that the Netherlands Government would
be the sole government entitled to make such representations. Nor would it seem
rational to assign an exclusive role to the British Government on the ground that the
Holding Company was incorporated in Great Britain and has its office in London.
Perhaps a stronger link between the enterprise and Great Britain would be the extent
of British Government participation in holding shares in British Petroleum.

-----------------------------------------------------------------------------------------------------
----------------
FN1 Actually, in 1955 nine independent American companies were admitted to
participate and each of the original American participating companies surrendered 1
per cent. of their shareholdings to the new group. For the purposes of this
illustrative example, it is not necessary to explain further the position of another
British company, Iranian Oil Services Ltd. This account of the organization of the
companies is based upon "History and Constitution of Iranian Oil Participants and
Iranian Oil Services", a talk by Mr. J. Addison, General Manager of Iranian Oil
Participants Ltd. to Staff Information Meeting, Tehran, 21 August 1961.

FN2 See "The Oil Agreement Between Iran and the International Oil Consortium:
The Law Controlling", by Abolbashar Farmanfarma, of the Tehran Bar, in 34 Texas
Law Review, 1955, p. 259.
-----------------------------------------------------------------------------------------------------
----------------

***[p 202]

71. The Court could logically have begun its analysis of the case by examining the
proof of the nationality of the physical or juristic persons whom Belgium asserts the
right to protect. If it found that such nationality was not proved, the Belgian claim
must be dismissed without regard to the rule concerning the diplomatic protection of
shareholders in a corporation chartered in a third State.

72. The burden of proof was clearly on the Applicant to prove the Belgian
nationality of the shareholders on whose behalf Belgium claims. The Belgian
argument (7 May 1969) that Spain was estopped or precluded from contesting the
Belgian character of Sidro and Sofina, is not per-suasive.

The Continuity Rule

73. The two dates on which the nationality had to be proved, are determined by the
rule of continuity. As the term implies, the rule requires that the nationality remain
unchanged between those two dates. Sir Gerald Fitzmaurice makes a forceful
argument against any "too rigid and sweeping" application of the continuity rule,
but I believe his illustrative situation in paragraph 62 of his separate opinion may be
covered by another rule deriving from the law of State succession, and on that basis
would escape the application of the continuity rule for international claims which I
consider to be generally bindingspecialia generalibus derogant.

74. Although the phraseology varies, there is general agreement on the principle that
the claim must be national in origin, that is to say that the person or persons alleged
to have been injured must have had the nationality of the claimant State on the date
when the wrongful injury was inflicted. One might well admit that there is a certain
artificiality in the whole notion since it rests basically on the Vatelian fiction, but I
do not think the Court can change a long established practice on this matter. (But cf.
1932 Annuaire de l'Institut de droit international, Vol. 37, pp. 479 ff., and Jessup, A
Modern Law of Nations, 1947, p. 116.)

75. There was a fleeting attempt by Belgium to identify the origin of the claim as
the refusal of foreign exchange, which indeed started the toboggan down the slide in
terms of the Belgian contentions. (See especially the statement by counsel for
Belgium on 18 April 1969: "Belgium rests its case on the illegality in international
law of Mr. Suanzes's rulings in October and December 1946 and the circumstances
surrounding them.")

This position was abandoned (it would have weakened the Belgian case in terms of
the continuity rule), and throughout much of the written pleadings and oral
argument it seems to have been taken for granted [p 203] that the critical date, when
the injury complained of was inflicted, was that of the Reus decree declaring
Barcelona Traction bankrupt, namely 12 February 1948 FN1. I think the Court is
entitled to accept that date, at least to the extent of saying that if the claim was not
Belgian on that date, the claim must be dismissed.

-----------------------------------------------------------------------------------------------------
----------------
FN1 In its final submissions on 15 July 1969 under heading VI, Belgium asserted:
"that the Belgian Government has established that 88 per cent. of Barcelona
Traction's capital was in Belgian hands on the critical dates of 12 February 1948 and
14 June 1962 and so remained continuously between those dates. . ." (Emphasis
supplied.) The same assertion was amplified under heading V.
-----------------------------------------------------------------------------------------------------
----------------

76. The terminal date under the continuity rule is more controversial. Historically,
many international claims have been settled through the diplomatic channel and
never were presented to an international tribunal. In many mixed claims
commissions, claims were heard long after the events complained of because the
commissions were established ad hoc after a certain number of claims had
accumulated. For a moderate example, the British-American Mixed Claims
Commissions established under a treaty concluded in 1910, decided in 1920 a claim
based on events which took place in 1898. (VI, U.N.R.I.A.A., p. 42.) This
diplomatic practice supported the view that the nationality of the claim had to be
proved up to the time when it was espoused by the State. Thereafter, it was argued,
the claim could be regarded as statal and, for the purposes of the continuity rule, the
status of the individual on whose behalf the claim was made, became immaterial.

Now the first Belgian representation in regard to the bankruptcy proceedings

involving Barcelona Traction, was dated 27 March 1948 (A.M., Vol. IV, Annex
250). But in its Note of 22 December 1951 (ibid., Annex 259), Spain maintained
that Belgium had not then as yet made a formal claim. This was denied by Belgium
(Annex 260), which insisted that its diplomatic protest of March 1948 should be
considered a formal claim. In any event, at that period Belgium seems to have
claimed on behalf of the Barcelona Traction company and not the Belgian
shareholders.

77. However, when a case is brought before a permanent tribunal such as the
International Court of Justice, the date of the application takes the place of the first
diplomatic representation [FN2]. Counsel for Belgium on 4 July 1969 made a
persuasive argument in favour of choosing that as the date required by the
continuity rule although I do not agree that the Court is driven to making new law
no matter what terminal date it selects. Counsel for Spain on the other hand, insisted
on 21 July 1969 that the critical moment for the terminal date should be when the
terms of the dispute were clearly defined which could only be after the respondent
State had indicated its position. I find slight precedent for this view and see no logic
in it FN1. I therefore conclude that the terminal date for compliance with the
continuity rule is 19 June 1962, the date of the "new" Application.

-----------------------------------------------------------------------------------------------------
-----------------
[FN2] See Institut de droit international, Annuaire, 1965, Vol. II, p. 270
[FN1] Nevertheless, there is some support for the view that nationality must be
continuous to the date of the Court's judgment; see the convenient summary in
Ro!!!ed, "Bankruptcy and the Espousal of Private Claims under International Law"
in Legal EssaysA Tribute to Frede Castberg, 1963, pp. 307-309.
-----------------------------------------------------------------------------------------------------
----------------
Piercing the Veil of Sidro and Sofina

78. Belgium conceded that to prove the nationality of Sidro and Sofina it should go,
and had gone, beyond the simple facts of State of corporation and sige social. It
stated that in strict law it was not necessary to go beyond that but

"it has always admittedbasing itself on the constant practice of Statesthat a

government is only justified in taking up the claim of a company [FN2] if the latter's
nationality be real and effective. For this reason, the Belgian Government has made
a point, from its very first pleadings, of showing that three-quarters of Sidro's shares
belonged to Belgian shareholders on the two crucial dates (1948 and 1962). On
account of the size of the participation in Sidro's capital of another Belgian
company, Sofina, the Belgian Government has taken a further step; it has shown
that on the same dates Belgian shareholders had an even larger holding in Sofina
than in Sidro." (Reply, Part III, Sec. 1013, p. 738.)

-----------------------------------------------------------------------------------------------------
-------
[FN2] The "company" in question is Sidro as shareholder in Barcelona Traction.
Mr. Arthur Dean, in his letter of 1 February 1955 to the Spanish Ambassador in
Washington, stated that he represented "Sofina, the majority common shareholder"
in Barcelona Traction. [Footnote added.]
-----------------------------------------------------------------------------------------------------
-------

In the next section Belgium states that it is not obliged to show that Sidro's shares
are, for the major part, Belgian owned but has nevertheless done so particularly in
Annex 133 to the Reply.

79. In the light of this statement in its written pleading, the Court is justified in
deciding whether Belgium succeeded in its attempt to prove the nationality of the
alleged Belgian shareholders in Sidro and Sofina, in other words, to pierce the
corporate veils of these two Belgian companies. I repeat that share-ownership is not
a test of corporate nationality [p 205] in the broad sense, but, as Belgium states, a
test of whether the nationality is "real and effective". Belgium in effect thus accepts
the application to corporations of the Nottebohm link principle. But there are other
Belgian statements in the oral argument which seem to modify that position and
which object to the Spanish demand for proof of Belgian shareholding in the two
Belgian companies.

80. If, as I maintain, Canada was not legally competent to protect Barcelona
Traction because of the absence of a link (such absence being in part proved by the
extent of foreign shareholding) [FN1], then Belgium by the same token would not
be legally competent to protect Sidro unless the presence of a link is established.
This is the challenge which Belgium seems to have accepted. Apparently Belgium
was willing to have the link tested entirely by the extent of shareholdings and not by
other factors. This may be due to inability to prove that the international controlling
group was associated with or operated out of Belgium. Here again there is an
illustration of the fact that the rule which permits claims to be submitted on behalf
of shareholders places a heavy burden of proof on the claimant State, especially in
the case of great international holding companies whose focus of power can not
easily be proved especially over a period of years. There is added difficulty in time
of war when many steps, some of them devious, but quite justifiable, need to be
taken to avoid enemy appropriation or exploitation and also characterization as
enemy by allied or friendly States. As Berle has abundantly demonstrated, the
centre or focus of power is not necessarily to be identified by the location of the
largest number of shares [FN2]. Counsel for Belgium recognized this fact in stating,
on 13 May 1969, that Sofina was, at one period, controlled by about 8 per cent. of
the shareholdings. The place of in-corporation, whence the promoters of an
enterprise secure a "charter of convenience", has lost its significance as evidence of
the real identification [p 206] of a holding company. Moreover, the siege social in
terms of an office, etc., can be merely a facade.

-----------------------------------------------------------------------------------------------------
-----------------
[FN1] In all the analyses of the nationality of shareholders, very little emphasis is
put on any Canadian holdings. On 1 April 1962, out of 1,798,854 issued shares of
Barcelona Traction 41,294 were held in Canada. The Canadian shareholders
included 57 individuals (of whom 20 held less than 5 shares each) and 43 Canadian
companies of which one, Houston & Co., held 30,225 shares. In the "U.S.A.
Section", 11, not counting Newman & Co., held over 1,000 shares each. 15
shareholders holding a total of 2,387 shares, had addresses in Belgium. Of these, 7
held only 1 share each; in at least some of these cases they seem to have been
simply qualifying shares (A.M., Annex 10).
[FN2] "... it is just possible that in talking the language of 'ownership' in relation to
the flow of national capital, we are talking the language of history rather than the
language of reality" (Berle, Power Without Property (Eng. ed. 1960), p. 45).
This is true because, as Judge Tanaka has pointed out, anonymity brings about the
separation of management from the ownership. (Cf. Morphologie des groupes
financiers, Centre de recherche et d'information socio-politiques, 1962, pp. 9 and
60, and Meyssan, Les droits des actionnaires et des autres porteurs de titres dans les
socits anonymes, 1962, pp. 9-10.)
-----------------------------------------------------------------------------------------------------
----------------

81. There is, to be sure, a certain logic in taking the position that if international law
permits a State to protect a shareholder interest, the State should be able to protect a
single shareholder and would not have to prove that a substantial percentage of the
shares were held by its nationals. This seems to be the Swiss practice but not that of
the United States and there is very little support in the doctrine for pushing logic to
such extremes. Nor does the claimant State in the instant case rely on any such
principlequite the contrary. Law is constantly balancing conflicting interests. The
British-American Claims Commission, under the Presidency of Henri Fromageot, in
1923 in the Eastern Extension case, declared that "the function of jurisprudence is to
resolve the conflict of opposing rights and interests by applying ... the corollaries of
general principles". (VI, U.N.R.I.A.A., pp. 112, 114.) It is such reasoning which
supports Dunn's allocation of risk theory in the law of State responsibility. I have
elsewhere pointed out as a transnational illustration, the power of a single
shareholder to induce a great corporation to change its policies. But the international
protection of broad State interests of an economic and financial character does not
require permitting a State to protect, let us say, a holder of just one of the hundreds
of millions of shares of a company like A.T. & T.

82. It must be realized how different in character are various corporations. Holding
companies like Barcelona Traction are very different from, let us say, the Ford
Motor Company or the Du Pont Company. In these two examples, regardless of
foreign holdings or interests of the companies, and regardless of the number of their
shares which may be held by foreign interests, the location of plant, the employment
of labour and the payment of taxes are all factors, in addition to place of
incorporation and of policy making, identifying the companies as "American".
Generalizations clustered around the word "corporation" or "company" are therefore
dangerous.

83. If one looks at the link of management-brains, the citizenship of an individual is

not conclusive. If a "Nottebohm" were the sole managing and controlling
personality in a company, this would not prove that the company was identified
with Liechtenstein, for purposes of the application of rules of international law. Nor
is apparent residence conclusive; compare the arguments of the Parties about the
residence of Juan March at [p 207] certain periods, and the challenges to evidence
produced to prove residence. From the point of view of explaining the reasons for
diplomatic protection, it may be significant that the controlling power group has, for
one reason or another, strong political influence with a certain government. Spain's
invocation of old press reports of scandalous connections between Belgian
Government officials and personalities connected with Sidro or Sofina, suggested
this element.
84. There are, of course, abundant precedents for protection of bondholdersI refer
to the holders of corporate bonds and not the holders of government bonds which
raise entirely different legal (and political) problems, as Drago clearly showed. In
the instant case, there was at certain times, as already noted, stress by Great Britain
and by Canada upon the interests of bondholders. As a characterization of the claim
as Belgian, bondholding does not seem to be significant.

Proof by Presumptions

85. In the attempt by Belgium to prove that Sofina's shares were held by Belgians,
at least in large part, there is a very extended analysis of Belgian wartime
legislation. The subject is covered in greatest detail in Annex 133 of the Reply and
in counsel's pleading on 13 May 1969. In this line of argument it is explained that
under the legislation in question, various rules were laid down concerning
certifications and the declarations of ownership of types of shares, whether held in
Belgium or abroad. The argument is to say the least devious and rests on a pyramid
of presumptions. In Annex 133 to the Reply at page 769, it is said that the proof
adduced "rests on presumptions, but presumptions represent a mode of proof
recognized by all legislative systems . . .". Yet counsel for Belgium on 17 April
wisely admonished the Court: "The Court will, I trust, here as elsewhere, reject any
attempt to substitute allegations for proof or insinuations for fact." It must also be
noted that Belgian counsel admitted on 4 July 1969 that the certificates did not
purport to establish continuity of Belgian ownership. Moreover, there are facile
transitions as from broad categories such as "non-enemy", which included "allied",
to the particularity of "Belgian". I do not find the evidence at all convincing.

In the pleading of Belgian counsel in 1964, it was stated on 15 April that there is a
presumption "that when a company is established in a [p 208] particular State and
enjoys the national character of that State, the company is also owned and
controlled by shareholders of the same nationality". By this token, the controlling
shareholders of Barcelona Traction would have been Canadian. Counsel offered a
further presumption that since the shares of Sidro and Sofina "are traded principally
in the Brussels stock market", Belgian nationals own the shares in those companies.
[Ibid., p. 14.] It was further suggested that if shareholders give an address in
Belgium, they must be presumed to be Belgians. [Ibid., pp. 9-10.]

86. The Belgian Memorial filed in 1959 after the first Application, was more
realistic in its appraisal of a submitted classification of ownership of Barcelona
Traction shares. The Memorial stated (at p. 19):
"It should be noted that the foregoing classification was, in almost all cases,
established on the basis of the place of residence of the person in whose name the
shares were registered at that time. Having regard to the Anglo-Saxon custom of
resorting to nominees who are merely custodians of the securities, such a
classification does not necessarily correspond to the place of residence of the real
owners of the securities. Sidro itself had its Barcelona Traction shares registered in
the name of an American nominee.
Furthermore, the place of residence may not correspond to the nationality of the
person concerned, but this is of no great importance in view of the small number of
shares considered as Belgian apart from those held by the Sidro company."

On 13 May 1969, Belgian counsel presented a long detailed list of presumptions,

largely based on the time and place of declaration and certification under the
Belgian wartime legislation. The information does not seem, as claimed by counsel,
to be "both exact and consistent".

On 7 May counsel for Belgium had argued from certain reports of trading in
Barcelona Traction bearer shares on the bourse in both Paris and Brussels during
1961-1962. (The reports are in A.R., Annexes 131 and 132.) In Paris the shares
were apparently unlisted and there was no record of the number of shares bought
and sold. In Brussels 44,264 shares were traded and counsel remarked: "True it
cannot be said that all the purchasers were necessarily Belgian but the likelihood is
that they were." [Emphasis supplied.]

87. The actual Belgian position seemed to fall back on that taken by counsel on 7
May 1969 in the following statement:

"After all, and this is a point of some importance, it is not necessary for the
Government of Belgium to satisfy the Court regarding [p 209] the identity and
Belgian nationality of every individual shareholder whose rights and interests
underlie the Belgian claim. According to the doctrine recognized by this Court and
generally accepted by States, Belgium is presenting a claim for injury done to the
State of Belgium through wrongs inflicted upon its nationals. The Court therefore,
need do no more than estimate in proximate terms the number of Belgian
shareholders in Barcelona Traction."

Although he argued that the evidence is enough for the Court to find that as of 14
June 1962 "at least 200,000 bearer shares in Barcelona Traction were owned by
Belgians other than Sidro", it was actually left to the Court to make an approximate
estimate. All of these presentations and others not noted here, do not suffice to
discharge the burden of proof which rested on the Applicant.

88. One cannot deny that it is far from easy to trace the ownership of bearer shares.
In the Certain German Interests in Polish Upper Silesia case, the Polish Government
argued that "no importance can be attached to the possession of bearer securities,
since it is impossible to ascertain in whose hands they may be at a given moment".
(P.C.I.J., Series A, No. 7, p. 67.) The Court did not find it necessary to pursue this
point. In the instant case, Belgium said that Spain was seeking to drive them with
their backs to the wall by demanding a probatio diabolica for identification of
holders of bearer shares. But Belgium insisted that in this instance it was able to
accomplish this almost impossible task. (Memorial, 1959, p. 17; Reply, Part III, p.
156, and C.R. for 13 May 1969.) I am not convinced that it succeeded FN1
-----------------------------------------------------------------------------------------------------
----------------
FN1 The Belgian State in 1946 or 1947 possessed 10,000 shares of Sofina and
50,000 shares of Sidro. The shares were acquired in payment of a capital levy in
1946 but were apparently held by the State only briefly and probably not after 31
December 1947. See A.O.S., Ann. 30, App. 3, pp. 368 and 381 and Sub-App. 3, p.
388. It was in another context that Belgian counsel spoke, on 4 July 1969, of "the
overall claim, here put forward by the Belgian Government, in respect of the injury
done to the Belgian State by the unlawful acts for which Spain is responsible".
-----------------------------------------------------------------------------------------------------
----------------

Apparently 341,326 bearer shares were in the trust account with Securitas (to be
discussed later herein), after being deposited 31 December 1939 (O.S., p. 203).
Then 8,525 more bearer shares were deposited by Sidro with Securitas7,925 on
12 December 1939 and 600 on 22 February 1940while 2,075 bearer shares were,
for some reason, left in Brussels. (Ibid., pp. 203-204.)
When on 19 April 1948, Sidro asked Securitas to send to Newman & Co. various
securities, it included in the lot to be sent 6,025 bearer shares and the coupons of
341,326 bearer shares, but not the latter certificates themselves. (App. 2 to Annex
11 of the Anexes to the Memorial.) In January 1952, Sidro converted the 341,326
bearer shares then in its [p 210] possession to registered shares; they were registered
in the name of Newman & Co. (See ibid., Annexes 11 and 4.) I have not been able
to establish that none of these 341,326 bearer shares changed hands be-tween 12
February 1948 and January 1952.

It is alleged that 244,832 additional bearer shares were owned by other Belgians in
February 1948. (M., Sec. 10.) It was claimed that on 14 June 1962, 200,000 bearer
shares were held by Belgians other than Sidro. (O.S., p. 206). I find no proof that
these bearer shares were continuously Belgian-owned (assuming the above
allegations to be correct) between 1948 and 1962.

89. In reply to a question from the Bench concerning the possible effect on
continuity if shares were transferred during the period 1948-1962, counsel for
Belgium said, on 4 July 1969, that if shares were sold to other Belgians and then
repurchased by Sidro, "the continuity requirement would be satisfied". But "if the
shares had been sold to, and then repurchased from, non-Belgian nationals, other
than Spanish nationals, the requirement might possibly not have been satisfied . . .".
The Spanish side challenged this statement, and properly so, because one does not
see why this situation would differ from counsel's third case. The third case he put
was where the shares had been sold to, and then repurchased from, Spanish
nationals; here he agreed the continuity requirement would not have been satisfied.
Counsel sought to justify his answer to his own second case by various quotations to
the effect that the continuity rule is artificial and should be re-examined. But he
merely says that Belgium "feels it right that the existence of this body of critical
opinion should be drawn to the attention of the Court". He did not, however, deny
the existence of the rule. When later he analysed his evidence of Belgian holdings in
1948, he did not try to adduce proof that the shares did not change hands between
1948 and 1962. It was in this context that he rejected the Spanish suggestion that
Belgium should prove in regard to each shareholder that he was a Belgian and that
he was a shareholder during the critical period. Counsel said:

"It is a lengthy and expensive procedure to carry out the investigation proposed by
the Government of Spain. It is justifiable if there is something to be distributed. [Sc.
an award in this case.] It is not justifiable otherwise."

He felt this was the more true because he considered that Belgium had proved that
there was at all material times Belgian ownership of at least 200,000 shares aside
from the Sidro holdings. None the less, the statement is a damaging admission of
Belgium's inability to identify the [p 211] shareholders it sought to protect. The
exhaustive effort to trace the bearer shares would hardly have been necessary if
Belgium had been confident that the Court would be convinced that Sidro was the
real owner of the 1,012,688 registered Barcelona shares throughout the critical
period since so large a holding would presumably satisfy the demand that Sidro be
identified with Belgian interests. This may be another slight indication that Belgian
counsel were aware that they were, for one reason or another, not in a position to
prove when the Securitas trust arrangement terminated. (See paragraph 96 below.)

***

Securitas as Trustee for Sidro

90. On 6 September 1939 Sidro concluded a "custodian" contract with Securitas

Ltd. which was a United States corporation formed under the laws of Delaware. (P.
722 of the Chayes Opinion, A.R., Ann. 125; so stated also in A.O.S., Ann. 11, p.
206. Other statements of fact here are taken from the recital in Annex 3 of the
Memorial unless otherwise stated.) It is said that this contract was concluded
"foreseeing the danger of war".. (The contract is in A.M., Ann. 3, App. 2.) Such a
custodian contract did not transfer the "real ownership" which was vested in Sidro.

91. The recitals in Annex 3 of the Memorial do not mention the fact (revealed later
in A.O.S., Ann. 11, p. 207) that on the same date, 6 September 1939, Sidro made
with Securitas a second contract which was a trust agreement. It was further
revealed that this trust agreement of 6 September 1939 was replaced by another trust
agreement on 27 February 1940, but it is said that the differences between the two
trust agreements are without relevance for this case! It is said that the second
agreement merely took advantage of some new Belgian war legislation. The texts of
the trust agreements have never been revealed throughout the pleadings. But the
existence of the trust agreement of 27 February is recorded in Annex 3, page 36, to
the Memorial, where it is described as completing the measures for protection
during the war. It is said that this trust agreement was to enter into force when the
Brussels area was occupied by the enemy or when any other critical situation
developed threatening the normal operations of Sidro. It is further recited that the
period of the application of the trust agreement was indicated by a "suspense
period" which would cease six months after the end of the critical period. Turning
again to Annex 11 of the Observations and Submissions, at pages 207 and 208, it is
stated that when one of the "Operative Events" occurred, [p 212] Securitas
automatically became a trustee of Sidro's property outside Belgium and especially
of 341,326 bearer shares of Barcelona Traction. The 1,012,688 registered shares
were also already on deposit with Securitas and its possession was transformed into
"legal ownership" when Securitas became trustee FN1. Securitas became the trustee
in May 1940 (ibid., p. 209).

-----------------------------------------------------------------------------------------------------
----------------
FN1 Securitas held for Sidro many securities other than and in addition to those of
Barcelona Traction. For example, of Mexican Light & Power Co. 6 per cent.
cumulative income debenture stock, they held shares to par value of $2,254,250,
registered in the name of the Midland Bank of London as nominees, and to the
value of $I,958,000 registered in the name of the Schroder Bank in London as
nominees, the nominees in both instances holding for the account of Charles Gordon
& Co. (A.O.S., Ann. 14, p. 219).
-----------------------------------------------------------------------------------------------------
----------------

Curiously enough, Mr. Mockridge, Belgium's Canadian expert, refers to the

agreement of 6 September 1939 as the "trust agreement" under which Securitas
"became Trustee rather than Custodian". (A.R., Ann. 126, p. 8). On the other hand,
Professor Chayes, Belgium's American expert, bases the trust on the agreement of
27 February 1940 and does not reveal a familiarity with the earlier trust agreement
of 6 September 1939.

92. Annex 17 to the Observations and Submissions is a certificate without date

signed by members of the committee named in application of clause 9 of the trust
deed of 27 February 1940, certifying, in conformity with clause 4 (III) of the trust
deed, that the state of danger which threatened Sidro (citing clause 3 of the trust
deed) had ceased to exist on 14 February 1946 (p. 230). (I note that the Belgian
Government had returned to Brussels on 8 September 1944 and Germany
surrendered on 7 May 1945.) According to the report of Securitas to Sidro dated 24
September 1946 (op. cit., Ann. 18, p. 231; photocopy in A.R., Ann. 123), the
"suspense period" ended 14 August 1946, which was six months after the certified
date of the end of the danger; this is said to be according to Article 4 (III) of the
trust deed. Securitas reports an inventory of what they held in trust on that date. The
letter says they hold the securities subject to future instructions from Sidro. There is
no flat statement that they ceased at that moment to be trustee although this is
implied. A further letter of 17 April 1947 (A.M., Ann. 3, App. 8) encloses a
statement of securities held for Sidro "in custody for your account" as of 31
December 1946. It was not until 19 April 1948 that Sidro instructed Securitas to
send the securities to Newman & Co. On 3 May 1948 Securitas wrote that they had
delivered the securities and that this operation closed Sidro's deposit account with
them (A.O.S., Anns. 19 and 20). The lists showed 1,012,688 shares registered in the
name of Charles Gordon & Co., and certificates (presumably of bearer shares?)
6,025. On 7 June 1948, Newman & Co. wrote that the shares in the former [P 213]
group had been registered in their name and were in the Chase Safe Deposit Co. in
New York (ibid., Ann. 22).

93. Securitas was dissolved by legal action in Delaware, 16 September 1948 (ibid.,
Annex 25, p. 258). An affidavit by Duncan, Alley and Newman, all directors or
officers of Securitas, 30 October 1958, attesting this fact, says they examined the
books of Securitas and that it had held (in addition to the registered shares) 341,326
bearer shares at Winchester House, London, and 7,925 plus 600 bearer shares in
Chase National Bank, New York. Further, on 20 January 1947 Securitas "delivered"
to Sidro 1,400 of these bearer shares and on 25 February 1947, 1,100 of the same.
On 16 January 1947, the safe deposit box at Winchester House, with contents, was
"assigned" to Sofina. On 3 December 1947, in accordance with request of Sidro, the
341,326 bearer shares were credited by Sofina to Sidro's account (ibid., Annex 26).

94. Now title to bearer shares may be considered to pass by delivery of the
certificates, unless the transferee is a nominee or other depositary, for the trustee. It
is not clear to me from the documents whether Securitas, as trustee, did actually
divest itself of title to these bearer shares through these transactions. It should be
noted that the communications in question were originally in English and the words
quoted above"delivered" and "assigned"are the actual terms used, which might
or might not indicate passage of title from the trustee. (See A.O.S., Ann. 25.)

95. It is a vital matter to know when the trust ceased to exist. Professor Chayes,
Belgium's American expert, clearly points out why this is so; he says that during the
German occupation of Belgium

"... Securitas acted as trustee of the property. As such, Securitas held legal title to
the property and could manage the property in its own discretion, without regard to
any instructions from Sidro. Indeed, the whole point of the arrangement was to free
Securitas from the control of Sidro, since during the German occupation,
instructions might come from Belgium with respect to the shares that were inimical
to Sidro's true interests and to the allied cause. Securitas was of course, bound to use
its discretion for the benefit of Sidro, the beneficiary under the trust instrument. The
trustee would be liable if it abused its discretion or used its position to take
advantage of Sidro. And it had to account to Sidro, ultimately, for dividends and
other profits. But subject to these general limitations, [P 214]as trustee during the
war Securitas had full authority over the property" (A.R., Ann. 125, p. 707)FN1

-----------------------------------------------------------------------------------------------------
------
FN1 Securitas evidently was not a "passive trustee" in the sense described by Judge
Augustus Hand in the San Antonio Land and Irrigation Co. case to which the
Spanish side attached such importance. (New Documents, Vol. III, p. 114.)
-----------------------------------------------------------------------------------------------------
-------

Chayes concludes that the trust had been terminated by 12 February 1948, but in
proof of this statement he merely cites Annex 3 to the Memorial, paragraph (g),
where it is asserted that the trust ended on 14 August 1946. It is apparent that he
either never saw the trust deeds or was not at liberty to disclose their exact terms.

96. Spain, in its Preliminary Objections in March 1963, pages 61-62, remarked on
the failure to produce the trust deeds. It also noted the fragile character of the
"proof" that the trust ended on 14 August 1946. It noted other documentary
omissions by Belgium, some of which at least were later suppliedbut the trust
deeds were not supplied. The Belgian omission is especially remarkable in Annex
11 to the Observations and Submissions, page 208, where it discusses the two trust
agreements of 6 September 1939 and 27 February 1940 and, as already noted,
blandly remarks that the differences between the two contracts are irrelevant for the
purposes of this case! The content of the trust agreements is described but the text is
not produced. In the Rejoinder (p. 951) Spain hammers the point that, with all its
documentation, Belgium has not produced the text of the trust agreements, adding a
footnote that it was again calling attention to this abnormality. The Rejoinder cites
the Chayes opinion along the lines noted above. It makes the sound point that since
the personalities acting for Sidro, Securitas and Sofina are essentially the same, their
assertions supporting each other are equivalent to self-serving declarations which
have little probative value.

In his pleading on 7 May 1969, counsel for Belgium dealt with the question of
nominees but did not discuss the trust. On 4 July, he brushed aside the trust issue
which had again been raised by counsel for Spain on 18 June. Nor do I find
elsewhere in the Belgian oral arguments an attempt to meet the Spanish criticism of
the failure to produce the text of the trust agreements.

In his final pleading of 21 July, counsel for Spain stressed the non-production of the
trust agreements, calling attention to the whole record on this matter, ending with a
reference to the opinion of Professor Chayes. In particular he remarked that the only
transfer of shares which Securitas made was that of 3 May 1948 to Newman &
Co.two-and-a [p 215] half months after the critical date of the declaration of
bankruptcy. (This is in accord with A.M., Ann. 11, App. 2).

97. I fully agree with Sir Gerald Fitzmaurice (in paragraph 58 of his separate
opinion) that this Court does not have any fully developed practice on rules of
evidence, but I believe that in the circumstances which have been described it is
proper to apply the common law rule which is to the effect that if a party fails to
produce on demand a relevant document which is in its possession, there may be an
inference that the document "if brought, would have exposed facts unfavourable to
the party .. ." FN1. Although it is true, as Sir Gerald Fitzmaurice emphasizes, that
one should give due weight to the pressures engendered by the situation in the
Second World War, international law has long taken cognizance of practices
designed to thwart belligerents by concealing the truth; the history of the law of
neutral rights and duties, is full of examples. If disclosure of the text of the trust
deeds would have prejudiced some governmental interest, Belgium could have
pleaded this fact, as the United Kingdom successfully pleaded "naval secrecy" in the
Corfu Channel case, I.C.J. Reports 1949, pages 4, 32.

-----------------------------------------------------------------------------------------------------
----------------
FN1 Wigmore, Evidence, 3rd ed. 1940, Vol. 2, sees. 285 and 291. Wigmore traces
the rule back to the beginning of the seventeenth century.
-----------------------------------------------------------------------------------------------------
----------------

Article 48 of the Rules of Court concerning documents submitted after the close of
the written proceedings, requires consent of the other party or a special decision of
the Court; in this instance, the other party asked for the production of the trust
document. Nor was the Court strict in the instant case about applying the rule
witness the fact that over 4,000 pages of "new" documents were introduced by the
two Parties during the oral proceedings between 21 April and 8 July 1969.

98. The legal aspect of the trust situation which is important is the one which
distinguishes it from the nominee situation. As Chayes points out, during the trust,
Securitas had not only legal title but full control, even though the beneficial title was
in Sidro. Accordingly Belgian character of the claim did not exist during the trust.
But in the nominee situations, the nominee is in the position of an agent and the
legal title coincides with the beneficial title in the principal even though he is not a
registered shareholder.

***[p 216]

The Status of "Nominees"

99. The requirements of linguistic simplicity necessitate the constant use of the term
"shareholder". The danger is that the reality behind the term will be lost to sight
through semantic insistence upon the term itself FN1. To my mind, this defect faults
the Spanish arguments concerning nominees. The Spanish argument identifies in all
situations, the real "shareholders" with the names inscribed on the stock registers.
See the Counter-Memorial, Chapter VI, Sections 47 ff. and Rejoinder, Part III,
Chapter II, especially Subsection 2. The legal situation of nominees reveals the
fallacy of this approach, quite aside from the fact that the names of holders of bearer
shares do not appear on the register although they are certainly "shareholders".
-----------------------------------------------------------------------------------------------------
----------------
FN1 On this point counsel for Belgium, speaking on 4 July 1969, was absolutely
correct: "The question is not who has the right to term himself 'shareholder' but, in
Professor Ago's own words, 'who in the last resort has a proper claim to the
economic content of the ownership of a share'... so as to enjoy the protection of
international law."
-----------------------------------------------------------------------------------------------------
----------------

100. Under principles of private international law, the legal nature of the right, title,
or interest of nominees in whose names Barcelona Traction shares were registered,
must be determined by either New York or Canadian law. Counsel for Belgium
properly noted on 7 May 1969 that the principles governing the choice of law are
not unfamiliar to the Court in view of the Permanent Court's decisions in the
Serbian and Brazilian Loans cases, P.C.I.J., Series A, Nos. 20 and 21. Since
according to the unrebutted expert opinions of Chayes and Mockridge there is no
material difference between the two legal systems in the matters here involved, they
need not be analyzed separately.

Annex 125 of the Reply is the opinion of Professor Chayes, and Annex 126 is the
opinion of Mr. Mockridge on the Canadian law. I think it is clear that under both
New York and Canadian law, the nominee does not have "real title", is not the "real
owner" and that the one for whom the nominee acts has all the real elements of
ownership [FN2]. The limitations on this statement are only those which relate to
the rights of the corporation, as for example, its right to deal with the registered
owner in the payment of dividends, etc. As has been shown, where shares are held
by a trustee under a trust instrument, the same conclusion cannot be drawn. The
distinction is clear in both opinions although Mockridge lays more stress on cases
where there is a "bare trust". There can be situations in which the legal owner of
even 97 per cent. of the shares may own something [p 217] worthless because, for
example, of the beneficial interests of a usufruct under German lawbut this is not
such a case. (Cf. the decision of the United States District Court in the Uebersee
case cited above, at p. 13 of that Court's opinion.)

-----------------------------------------------------------------------------------------------------
-----------------
[FN2] In opposition to the Belgian position on nominees, Spain invokes an opinion
from an eminent New York law firmDavis, Polk, Wardwell, Sunderland &
Kiendl. (See C.M., Chap. VI, p. 675, and the text of the firm's letter of 28 February
1963 in Annex 65, Appendix 2, Preliminary Objections 1963). In my view, this
opinion does not controvert the essentials of the Chayes opinion.
-----------------------------------------------------------------------------------------------------
----------------

101. Chayes in his conclusion on page 722 (loc. cit.) says "I have the honor to
conclude that neither Securitas, Ltd., Charles Gordon & Company, Newman &
Company ever had any property interest in the Barcelona Traction shares, except for
the period of the German oc-cupation of Belgium during World War II, when
Securitas, Ltd., held them as Trustee". Mockridge (A.R., p. 732) agrees with Chayes
except he adds the period during which the shares were vested in the Canadian
Custodian of Enemy Property which period he says terminated before the
commencement of the bankruptcy proceedings. According to the Observations and
Submissions (p. 204), they were deblocked 29 April 1947; this fact is confirmed in
the Reply, paragraph 994. When the shares were first transferred to Charles Gordon
& Co., there was attached (in accordance with cabled instructions by Wilmers) a
notice reading:

"We hereby certify that the within transfer does not involve a change of ownership
of the shares represented by the annexed certificates as it is being made to Charles
Gordon & Co. as nominee of our depositary therefore no transfer tax is exigible."
(A.M., Vol. I, Ann. 3, App. 5, p. 50.)

This was on 11 September 1939 and Chayes stresses that there was nothing
inconsistent with the Securitas arrangement in the fact that Sidro transferred direct
to Gordon & Co. (A.R., Vol. II, Ann. 125, p. 5). Chayes states on the same page that
Sidro listed the shares registered in Gordon's name with the United States
authorities before the United States entered the war but there is no documentary
record of this listing. But he says that Sidro reported the trust agreement with
Securitas and did not report Gordon as holding any interest.

102. I find that it is of no legal consequence that the agents in whose names the
shares were registered were not listed publicly as professional nominees. (So also in
Canada; Mockridge, A.R., p. 729.) The practice of registering shares in the names of
nominees is very common in the United States as Chayes shows (ibid., pp. 708-
709). Although nominees were much used in time of war to cloak the identity of the
real owner, they are generally used in the United Stateswhere bearer shares are
not issued simply to facilitate transactions in shares FN1. Somewhat comparably,
when shares are pledged with a bank as collateral for a loan, a stock power endorsed
in blank will be attached. [p 218]

-----------------------------------------------------------------------------------------------------
----------------
FN1 Under the name of "share warrants" bearer shares may be issued in Canada as
in England, but they are not extensively used; Schlesinger, Comparative Law, 2nd
ed., 1960, p. 442
-----------------------------------------------------------------------------------------------------
----------------
103. Chayes noted (ibid., pp. 714 and 715) that unregistered owners of shares may
bring a shareholder's derivative suit, or under Delaware and New York law, in case
of voting against a merger, may demand an appraisal of their shares and cash
payment of the appraised value. In an appraisal case the New York court said there
was no justification for interpreting the word "stockholder" in the statute as meaning
"registered stockholder" (ibid., p. 720). Mockridge shows that Canadian courts
interpreted the word "shareholder" in agreements, as being broader than and not
limited to "registered shareholders" FN1.

-----------------------------------------------------------------------------------------------------
----------------
FN1 Cf. Henn, Corporations, 1961, sec. 179: "Statutory references to shareholders
are not always clear as to whether they refer only to shareholders of record or also
to the beneficial owners of shares. A substantial amount of stock is held by brokers
in their own names (known as 'street names') in behalf of their customers."
-----------------------------------------------------------------------------------------------------
----------------

Mockridge (ibid., p. 730) indicates that shares registered in Charles Gordon & Co.'s
name were vested in Canada although Charles Gordon & Co. had United States
nationality, because Sidro as beneficial owner was "enemy" during the German
occupation. He does not mention Securitas in this context. In the Observations and
Submissions (p. 199), it is said that while the trust was still in force, Sidro declared
the Barcelona Traction shares under Belgian law, although they were registered in
the name of Charles Gordon & Co.

104. The jurisprudence of the Foreign Claims Settlement Commission of the United
States is of interest, notwithstanding the fact that this is a national body, operating in
accordance with its statutory terms of reference and with the terms of agreements
with various governments FN2. For example, the Commission "denied recovery to a
domestic [i.e., United States] corporation with more than eighty per cent, of its stock
registered in the names of American citizens but beneficially owned by aliens.
(Claim of Westhold Corporation . . .)" (Foreign Claims Settlement Commission of
the United States, Decisions and Annotations, 1968, p. 20). Thus neither place of
incorporation nor majority of shares registered in the names of American nominees,
sufficed to make the claim "American".

-----------------------------------------------------------------------------------------------------
----------------
FN2 For the contrary Spanish view on the interest of this jurisprudence, see C.M.,
Chap. VI, Section 55.
-----------------------------------------------------------------------------------------------------
----------------

In the Annotations one reads (at pp. 39-41):

"Beneficial interest.Occasionally legal title is vested in one person while the true
owner is another. Normally such an arrange-[p 219]ment is unnecessary; but as the
Arndt decision indicates, a 'cloaking' of title was sometimes imperative in view of
the discriminatory measures that were practiced during World War II. Applying
settled rules of international law, the Commission held that beneficial interest, as
opposed to nominal or bare legal title, was controlling in deciding the question of
ownership. [Emphasis supplied.]

A more common example of beneficial ownership is the case of an agent who

acquires title to property on behalf of his principal.. .

The technical, legal form in which title to property is held, and the legal capacity to
sue, constituting the so-called 'indicia of title,' must be considered of secondary
importance to the question whether the interest for which espousal is sought is truly
that of a United States national....

A claim concerned an interest in a family fund or 'syndicate', that owned shares of

stock in a Swiss corporation, which assertedly owned all the outstanding shares of
stock in a Yugoslav corporation. It was stated that 18,949 shares of stock held by
the 'syndicate' in Switzerland had been transferred to claimant in 1942, in
recognition of her undivided fractional interest in the family fund ... It appeared that
the various record entries of the transactions were designed merely to cloak the
shares of stock with ownership by a national of the United States, a device which
was then considered best calculated to safeguard the family interests. The
Commission held that on the date of loss claimant was not the owner of the 18,949
shares of stock, but was the beneficial owner of only a 5.29 % interest in the family
fund. (Claim of Antonia Hatvany, Docket No. Y-1063, Dec. No. Y-910, Final
Decision.)"

***

105. Belgium not having established the Belgian character of any substantial
number of shares throughout the critical period which the continuity rule defines,
might rely, and at times seemed to rely, on the Belgian nationality of the group
which shaped the will of the corporate person and dictated its policies. This also
may be a difficult task in the case of great holding companies with many cross-
holdings of shares, which cross-holdings, Belgium stated, were permissible under
Belgian law. The centre of power may be deliberately concealed, not only in time of
war, but for reasons of avoidance of taxation or of the application of anti-trust laws,
or otherwise. The individuals who give instructionsfor [p 220] example, in this
case, Mr. Heineman and Mr. Wilmersmay be acting for unidentified financial
interests, although I have no reason to suggest that this was actually the case.
Belgium in the Reply (Ann. 127, Vol. II) quotes from the report of the Spanish
members of the International Committee of Experts in 1950, passages attesting that
Sidro controlled Barcelona Traction and that Sofina controlled Sidro; and counsel
stated on 13 May 1969 that at least in a certain period, Sofina "tait contrle par
des filiales". The Spanish arguments and Belgian explanations about the alleged
"Belgianization" and take-over bids in 1964 do not prove what the situation was on
19 June 1962. But whatever is the alleged basis for the State interests which justify
protection, that basis must be proved just as much as if the justification were to be
found solely in the continued nationality of shareholders.
***

106. The influence of the Court's judgments is great, even though Article 59 of the
Statute declares that the decision "has no binding force except between the parties
and in respect of that particular case". It may be said that the new methods and
institutions for foreign investments which have been referred to earlier in this
opinion, will overtake the possible consequences of the rule which the Court now
holds to be the law. But not all of the older business practices have been abandoned
and the managerial community of the commercial world might have to meet the
announced rule by new devices. If, for example, it is agreed that when the company
has been wound up and has ceased to exist, the shareholders, now having a direct
right to the assets, may benefit from the diplomatic protection of the State of which
they are nationals, it would be quite feasible to secure the cancellation of the
"charter of convenience" which the corporation had obtained. But surely no
economic, social or political advantage would be gained if in a situation like that in
the instant case, the life of the Barcelona Traction Company had to be officially
ended in Canada so that the principal shareholders, who are the real parties in
interest, could be protected diplomatically. And could it be reasonably argued in
such circumstances, that the United States would be the State entitled to extend
diplomatic protection because a majority of the shares were found to be registered in
the name of American nominees? One is entitled to test the soundness of a principle
by the consequences which would flow from its application; the consequences here
would clearly be undesirable. With deference to the opinion of the Court, I cannot
agree that international law imposes such a solution of [p 221] the problem which
the Barcelona Traction case has laid before the International Court of Justice FN*.

-----------------------------------------------------------------------------------------------------
----------------
FN* Since I have personally had occasion to correct misconceptions about the
"law's delays" as a feature of the procedure in the International Court of Justice, I,
like Sir Gerald Fitzmaurice, welcome the inclusion in this Judgment of the Court of
an indication of the fact that the fault lies with governments of States and not with
the Court or its Registry. The Court has never been asked to treat a contested case or
a request for an advisory opinion by summary procedure, quite apart from the
possible use of the standing Chamber of Summary Procedure, but if the
governments concerned desired a prompt decision, the Court could meet their
request.
-----------------------------------------------------------------------------------------------------
----------------

(Signed) Philip C. Jessup.

[p 222]
SEPARATE OPINION OF JUDGE MORELLI

[Translation ]

Subject of the dispute and object of the claim

1. It will be advisable to begin by defining, on the one hand, the subject of the
dispute between the Belgian State and the Spanish State and, on the other, the object
of the claim submitted to the Court by Belgium in its Application of 19 June 1962.
This Application has been compared, particularly from the Spanish side, with the
other Application submitted by Belgium on 23 September 1958, and the question
has been raised as to whether what is involved is the same claim or two different
claims.

Having regard to the circumstances of the case, comparison of the two Applications
is useful only for the purpose of a precise determination of the object of the claim
submitted by the 1962 Application, the only one on which the Court had to give a
decision in the present Judgment. The proceedings instituted by the 1958
Application having been closed pursuant to the discontinuance, there was no
litispendance obstacle to prevent Belgium from again submitting the same claim to
the Court. On the other hand there can be no doubt that Belgium was completely
free to refer a different claim to the Court.

2. As regards the subject of the dispute between Belgium and Spain, that dispute has
from the outset been characterized, in the first place, by the complaint put forward
by Belgium on account of the measures taken by the Spanish authorities in respect
of Barcelona Traction and, in the second place, by Belgium's claim to reparation of
some kind for the damage sustained as a result of those measures, regarded as
contrary to international law. Now these elements (and the resulting dispute)
remained unchanged even after the discontinuance, which did not affect the dispute
in any way. It may also be said that the subject of the dispute remained unchanged,
for that subject can only be the product of the component elements of the dispute.

3. Is it possible, despite the continuance of the same dispute, to consider that in its
1962 Application Belgium referred to the Court a claim having a different object
from that submitted to the Court in 1958? I am of the opinion that this question must
be answered in the negative.
When a State is said to be exercising, as against another State, diplomatic protection
of a particular person, to be protecting that person, to be [p 223] taking up his case,
what is meant by these expressions is that a State is exercising as against another
State a right of its own conferred on it by the international legal order, concerning a
particular treatment due to the person concerned. The national State of the person is
entitled to demand that that person be accorded the treatment required by the
relevant rules of international law and, should such treatment not be accorded, may
claim reparation in the form of either restitutio in integrum or compensation.
International reparation is always owed to the State and not to the private person,
even in the case of compensation and despite the fact that the amount of
compensation must be determined on the basis of the damage suffered by the private
person.

These very elementary notions explain quite simply why in the present case the two
claims successively referred to the Court by Belgium, that of 1958 and that of 1962,
must be regarded as completely identical.

4. In the first as in the second Application Belgium asked the Court to adjudge and
declare that the Spanish State was under an obligation towards Belgium to make a
certain form of reparation for an alleged international wrong. Naturally the
international wrong, as such, could have been done by the Spanish State only to the
Belgian State and not to the injured persons.

The wrong complained of by Belgium is described in the same way in both

Applications: according to both it consists of the same conduct on the part of the
Spanish authorities. The principal claim for reparation as expressed in both
Applications has restitutio in integrum as its object and seeks the annulment by the
Spanish State of the measures complained of against it in the same way in both
Applications. As regards the alternative claim for compensation, it is perfectly true
that in the 1962 Application the amount of compensation was reduced to 88 per
cent. of Barcelona Traction's net assets and that, in conformity with the new
presentation of the case, the justification for this alternative claim was changed, so
that reference is no longer made to the damage suffered by Barcelona Traction, but
to the damage suffered by the company's Belgian shareholders. However, neither
the reduction of the amount claimed nor the alteration of the argument in support of
the claim for compensation in any way changes the object of that claim as to its
substance.

5. Between the two claims there is identity not only of petitum but also of causa
petendi.

In this case the causa petendi is the allegedly unlawful character where Belgium is
concerned of a particular course of conduct on the part of the Spanish authorities
composed, according to both Applications, of the same acts and omissions. Thus the
identical nature of the causa petendi is not affected by the fact that there is, as
between the two Applications, a difference in the way in which they set out to prove
that a right of [p 224] Belgium's was indeed infringed by the measures complained
of. The fact that in the first Application Belgium complained of the damage
suffered, as a result of those measures, by a company in which there was asserted to
be a preponderance of Belgian interests, whereas in the second Application Belgium
complained of the damage indirectly suffered as a result of the same measures by
Belgian nationals in their capacity as shareholders in the company, is merely a
change of argument which has nothing to do with the object of the claim.

Whenever, as in the present case, there is a claim for reparation on account of the
breach, through a particular course of conduct, of the rules of international law
concerning the treatment of foreigners, the specifying of such and such a person as
the one in respect of whom diplomatic protection is exercised is not a matter which
is at all relevant to the object of the claim, for the claim has no other object than the
reparation sought by the State for itself. This is so of course only if the description
of the allegedly unlawful conduct of the other State remains unchanged throughout,
otherwise there would be a change of claim because of a change in the causa
petendi.

Matters are otherwise when diplomatic protection is exercised not in the form of a
claim for reparation on account of a wrong asserted to have been done but, on the
contrary, in the form of a claim to a particular sort of treatment due by the other
State to a private person. In this case the specifying of the private person in respect
of whom diplomatic protection is exercised is an integral part of the specification of
the conduct which the State exercising diplomatic protection calls for on the part of
the other State. Consequently, in the case of such a claim submitted in judicial
proceedings, the substitution of one protected person for another entails a change in
the object of the claim. In such a case there is indeed a change of petitum.

6. The reasons why I am of the opinion that both claims submitted by Belgium to
the Court must be regarded as objectively identical are not the same as those
advanced by the Spanish Government in reaching the same conclusion.

The Spanish Government appears to start from the idea that in order to determine
the object of the claim (or of the case, as it sometimes puts it) regard must be had to
the identity of the protected person. In the argument and submissions of the
Counter-Memorial it reaches, by the use of a perhaps elliptic form of words, the
point of envisaging either the Barcelona Traction Company or the Belgian
shareholders as themselves constituting the possible "objet" of the Belgian "claim".
Thus in that pleading a case involving company protection is contrasted with a case
involving shareholder protection.

Now if the idea is accepted that the protected person himself constitutes the objet of
the claim, or at least the decisive element for determining the object of the claim, it
would have to be inferred as a logical conclusion that the claim submitted by
Belgium in 1962 is different from [p225] that submitted to the Court in 1958,
because Belgium now states that it is protecting not Barcelona Traction but its
Belgian shareholders.

However, according to the Spanish Government, this conclusion must be rejected,

because, it alleges, Belgium sought in its 1962 Application to disguise, under the
appearance of a case concerning Belgian shareholders in Barcelona Traction, a case
which really concerns the company as such. This is purported to be proved by, on
the one hand, the complaints advanced (relating to the measures taken by the
Spanish authorities in respect of the company) and, on the other, the form of
reparation claimed (in the first place restitutio in integrum of the undertaking).

7. I am of the opinion that, in submitting its new claim in the way it considered most
suitable, Belgium was only exercising a freedom which as the Court has observed
in the Judgmentit undoubtedly possessed. The claim had therefore to be examined
and judged in accordance with the content which Belgium had imparted to it. It
would have been quite arbitrary, on the pretext of bringing to light what was alleged
to be hidden behind a disguise, to substitute for the actual claim as formulated by
Belgium a different, purely hypothetical claim.

If, then, the 1962 claim is to be compared with that submitted to the Court in 1958
(the only useful purpose to be served thereby, as already said, being the better to
define the content of the new claim), both claims must be regarded as objectively
identical. But the reason for this is not, as alleged by the Spanish Government, that
the new claim also concerns, despite its outward appearance, diplomatic protection
of the Barcelona Traction Company as such, but rather that in both claims there is
identity of petitum (the reparation sought) and of causa petendi (the allegedly
unlawful conduct of the Spanish authorities).

This having been established, it must however be observed that as between the two
claims there is a difference in respect of the way in which Belgium seeks to prove
that the measures complained of constitute a wrong done by Spain to Belgium. In its
endeavour to prove this (and hence its right to reparation) Belgium ceased relying
on the contention of damage suffered by a company in which there were allegedly
preponderant Belgian interests and, on the contrary, based its claim on the purported
fact that the measures complained of, although taken in respect of the company,
indirectly injured the Belgian shareholders in it. But this new argument could not be
rejected out of hand on the ground that it was only a means of disguising a different
claim. It was the actual argument put forward by Belgium in its 1962 Application
which had to be considered on its own merits in order to judge whether or not it was
well-founded. [p 226]

II

The Order of the Questions

1. Belgium claims reparation from Spain for the measures taken by the Spanish
authorities in respect of Barcelona Traction, which are considered by Belgium as
internationally unlawful. The unlawfulness here concerned must naturally be
unlawfulness vis--vis Belgium resulting from the infringement of a right pertaining
to Belgium, or in other words from the breach by Spain of an obligation it owed to
Belgium. For the international rules concerning the treatment of foreigners,
although they are rules of general international law and, as such, are binding on
every State with regard to every other State, take concrete form in the shape of
bilateral legal relationships, so that a State's obligation to accord the required
treatment to a particular person exists solely towards the national State of that
person and not towards other States.

In order to prove that it was indeed a right pertaining to Belgium which was
infringed by the measures complained of, the Belgian Government contends that
those measures, although taken in respect of a Canadian Company, indirectly
injured Belgian nationals as shareholders in the company. The Spanish Government
challenges this argument from several standpoints, thus posing, inter alia, a problem
as to Belgium's capacity.

2. It is necessary to be clear as to the sense in which it is possible in this connection

properly to speak of capacity; in particular because the Parties have used terms
which are open to misunderstanding: "qualit pour agir" or "jus standi". These terms
would appear to indicate a form of procedural capacity relating to the right to apply
to court. But that right is not now in issue, since the 1964 Judgment upheld the
Court's jurisdiction in the present case and thereby Belgium's corresponding power
to seise the Court, that is to say, Belgium's power to institute proceedings.

At the present stage it is possible to speak of capacity only in the sense of

substantive and not procedural capacity, that is to say in the sense of the vesting in
one State rather than in another of the substantive right invoked in the case. The
hypothesis of the existence of a certain obligation on the part of a given State (the
respondent State) is assumed, and the question is which State possesses the
corresponding hypothetical right; in particular whether or not that right pertains to
the applicant State.

As I said in my dissenting opinion attached to the Judgment on the Preliminary

Objections (I.C.J. Reports 1964, pp. 1ll f), the question of capacity, understood in
this way, is one concerning a substantive right with regard to the actual merits of the
case. A judgment declaring that the applicant State is devoid of capacity in respect
of the right of diplo-[p 227] matic protection which it invokes is not a judgment
declaring the claim inadmissible, but one dismissing the claim on the merits. A
judgment of this kind has the effect of res judicata in the material sense.

3. In my dissenting opinion (pp. 112 ff.; see also pp. 98 ff.) I also explained that the
question of capacity, as a question concerning the possession by the applicant State
of the substantive right invoked by it as the basis for its claim, does not have any
preliminary character, in the sense that there is no logical necessity to resolve the
question of capacity before going on to examine the other questions that likewise
concern the merits.

It follows that it rests with the judge to determine the most suitable order, taking
convenience and economy as his criteria. It is open to him to begin with an
examination of the question of capacity, assuming as a hypothesis the existence of
the obligation relied on as the basis for the claim. But he may also find it simpler,
without going into the question of capacity at all, to find that the claim should be
dismissed on the ground that the obligation asserted by the Applicant is not one
which exists on the part of the Respondent vis--vis any State at all. For this it might
be sufficient to resolve a question of pure law, either by showing the nonexistence
of the legal rule invoked as the basis for the claim, or by ascertaining its true content
FN1.

-----------------------------------------------------------------------------------------------------
----------------
FN1 See, in my separate opinion on the cases concerning South West Africa,
Second Phase, J.C.J. Reports 1966, pp. 65 f., the observations as to the relationship
between the question of capacity (standing) and that of the existence of obligation,
and as to the hypothetical nature of the former question when raised before the
obligation has been shown to exist.
-----------------------------------------------------------------------------------------------------
----------------

4. Now the Spanish Government opposes the Belgian claim by raising, among
others, questions which are undoubtedly questions of capacity. For it denies the
existence of major Belgian shareholdings in Barcelona Traction by disputing the
possibility of regarding certain persons, in respect of whom Belgium claims to
exercise diplomatic protection, as Belgian shareholders in the company; and it does
this from two different standpoints. In the first place the Spanish Government denies
that certain persons described by Belgium as Belgian nationals can really be
regarded and treated as Belgian. In the second place the Spanish Government denies
that certain persons protected by Belgium can be regarded as shareholders in
Barcelona Traction.

There is thus raised from two different standpoints a problem which is undoubtedly
one of capacity, relating as such to the direction of the obligation assumed to exist
on the part of Spain. In the first instance the question is whether the right
corresponding to the hypothetical obligation pertains to Belgium or to some other
State which must be considered to be the national State of the person concerned.
Similarly, in the second [p 228] instance, the question is whether the right of
diplomatic protection pertains to Belgium or to some other State as the putative
national State of the real shareholder. In short, it is what is known as the nationality
of the claim which is the issue in both instances.

5. As will have been noted, all this assumes the existence with regard to the
treatment of Barcelona Traction of an obligation on the part of Spain toward the
national State or States of the shareholders. But the existence of any such obligation
is denied in another argument put forward by the Spanish Government. That
argument does not raise a problem of capacity at all; it raises no problem concerning
the nationality of the claim. It raises on the contrary a problem concerning the very
existence of the rule of law invoked by Belgium as the basis for its claim; and it is
possible to pose this problem even if it is assumed that the protected persons really
are Barcelona Traction shareholders and also Belgian nationals.

It is not possible to maintain that this issue is none the less one concerning the
direction of the obligation (hence one of capacity in relation to the corresponding
right) on the ground that regard must also be had to the right of diplomatic
protection pertaining to Canada as the national State of the company, and therefore
seek to resolve the question of whether it is not Canada rather than Belgium which
has the capacity to claim reparation. This is so because Canada's right is derived
from a rule different from that invoked by Belgium, the latter concerning not
diplomatic protection of the company as such, but diplomatic protection of the
shareholders in connection with measures taken in respect of the company. If it is
decided that no such rule exists, no problem of capacity arises at all.

6. The point is that any question of capacity can only be raised in relation to a rule
of law which is either undisputed or assumed to exist. The question is then as
follows: which is the entity, as between the various entities to which that rule is
directed, on which, in the actual case, that rule confers the right invoked? More
particularly, is it in fact on the Applicant that such a right is conferred? If the very
existence of the rule is negated, any possibility of raising a problem of capacity is
excluded.

Consequently, to say that there is no rule which authorizes diplomatic protection of

shareholders on account of measures taken in respect of the company is to exclude
the existence of any obligation of Spain in this connection, vis-a-vis any other
States. Belgium's right is thereby denied, not because such a right might
hypothetically belong to a State other than Belgium (in other words, not for lack of
capacity on the part of Belgium), but rather because no such right can be invoked by
any State, since no rule exists from which it could derive. [p 229]

On the other hand, the other question, that of the nationality of the claim, does
concern capacity. The possible existence is postulated of a rule authorizing each
State to exercise diplomatic protection of its nationals holding shares in a company,
in respect of the treatment given to the company by another State; and the question
is whether, on the basis of this hypothetical rule, it is to Belgium that the right to
protect certain private persons would belong, on the ground of their being,
according to Belgium's assertion, both Belgian nationals and shareholders in
Barcelona Traction. Thus, as will be seen, a true problem of capacity is raised, the
problem, in other words, of the attribution of the right deriving from a certain rule
which is assumed to exist. A negative answer to this question would also have
brought about the dismissal of the Belgian claim on the merits.

7. Nevertheless, the fact that this problem is one of capacity does not mean that it
ought to have been examined and settled in the affirmative before the Court had any
possibility of going on to examine the other problem, that of the existence of an
obligation owed by Spain to the national States of the shareholders in Barcelona
Traction with regard to the treatment of that company. I said above that the problem
of capacity also concerned the merits and that there was, on that account, no logical
necessity to solve it before the others likewise concerning the merits. The order to
be followed could only be dictated by considerations of economy.

As it happens, the Court gave priority to examining the problem of pure

international law relative to the diplomatic protection of shareholders in a company
by their national State, in respect of measures taken vis-a-vis the company. This
choice appeared in itself the most apt; that it was so was subsequently borne out by
the result to which it led.

For, having settled that problem in the negativehaving, in other words, denied the
existence, as regards the treatment accorded by a State to a given company, of any
obligation owed by that State to the national States of the shareholders, the Court
was thereby enabled to leave aside any problem of capacity, that is to say, the
problem as to whether the persons that Belgium claims to protect are or are not
shareholders in the company and at the same time Belgian nationals. In that way
many very delicate problems of fact and of municipal law, the solution of which
was not necessary for the disposal of the case, have been avoided.

8. And so the Court has been able to bestow a very simple logical structure on its
decision, which in substance consists in negating the major premise of the syllogism
or, in other words, in denying the existence of the rule relied upon by Belgium. In
this way the Court has given a final, concrete solution to the fundamental problem at
issue between the Parties, which lay in the very question whether the rule of
international law invoked by Belgium existed or not. The negative answer to this
question implies that none of the national States of the shareholders, [p 230]
irrespective of the quantity of shares possessed by its nationals, could exercise
diplomatic protection. In consequence, the Belgian claim had to be dismissed on
that basis, even if it had been proved that the whole or nearly the whole of the
shares in Barcelona Traction were in the hands of Belgian nationals.

If, on the other hand, the Court had begun by examining the problem of capacity, its
reasoning and the logical structure of its decision would have been, at all events,
much more complex. As I have already said, any question of capacity can only be
raised in relation to a given rule, which, if it is disputed, as in the present case, must
be supposed to exist for the purposes of the argument. Thus the Court would have
set out from the hypothesis that a certain rule, constituting the major premise of the
syllogism, existed; assuming that premise to be true, the Court would have
examined and settled the various questions of fact which went to make up the minor
premise (it being borne in mind that, in the eyes of an international tribunal,
questions of municipal law also are questions of fact).

Now the problem of capacity raised in this hypothetical way would have had to be
settled either in the affirmative or in the negative.

In the first event, once the Court had decided that Belgium would have capacity on
the basis of a rule of law supposed for the sake of argument to exist, it would have
been obliged to examine and solve the problem as to whether that rule really existed
or not: that is to say, the very problem to which the Court did in fact give priority
and the negative solution of which has been sufficient in itself to dispose of the case
without there being any need to tackle the highly complex question of capacity.

It was only in the event of replying in the negative to the question of capacity that
the Court could, on that basis, have dismissed the Belgian claim without troubling to
see whether the hypothesis on which it had been based corresponded or not to the
real state of affairs in international law. But the hypothetical character of the
reasoning would have appeared somewhat strange. Faced with a very important
problem of international law, one basic to the respective arguments of the Parties,
the Court would have evaded the task of solving it because, instead of setting about
that problem, it had started from a mere hypothesis, that of the solution of the same
problem in the affirmative.

9. It must further be observed that the solution either way of a problem of capacity
is dependent on the particular rule in relation to which the problem is raised. If for
example the postulate consisted of a hypothetical rule whereby each State had the
right to protect its nationals holding shares in a company, irrespective of the
quantity of shares possessed by those nationals, there would be no difficulty in the
present case in finding that Belgium had capacity, considering that Spain does not
dispute the existence in the hands of Belgian nationals of a certain number of shares
in Barcelona Traction, whether that number be large or small. The [p 231] question
of capacity would, on the other hand, appear very delicate if, in accordance with the
Belgian position, one were to posit the existence of a different and, in a sense, more
restricted rule, one bestowing a monopoly of the diplomatic protection of the
shareholders in a company affected by a certain measure on the State whose
nationals possessed the largest proportion of the shares, or of a rule confining
diplomatic protection to the various States whose nationals possessed a substantial
quantity of shares.

Furthermore, the very usefulness of any preliminary, hypothetical solution of the

capacity problem depends on the choice of the assumed rule in relation to which the
problem is raised. It need only in this connection be pointed out, for example, that
an affirmative solution of the capacity problem would be absolutely useless unless
the rule whose existence was assumed for the sake of argument coincided with a
rule subsequently shown to exist.

Ill

The problem of the diplomatic protection of shareholders

1. I shall now turn to the problem of whether a State has the right to exercise
diplomatic protection over those of its nationals who, as shareholders in a company
of a different nationality, have suffered damage on account of measures taken with
regard to the company by a foreign State. To solve this problem correctly it is in my
opinion necessary to begin with a few very general observations on the rules of
international law governing the treatment of foreigners.

These rules are invariably concerned to ensure the protection of certain interests
proper to individuals or collective entities. These interests, although contemplated
by rules of international law, remain simple interests for the purposes of the
international legal order. For it would be contrary to the present structure of the
international community and of the international legal order to consider that the
latter might either bestow or simply predicate rights upon individuals or upon any
collective entities other than those, such as States, which qualify as subjects of inter-
national law. It is only within the State legal order that the interests of foreign
nationals may acquire protection by means of the attribution to the latter either of
rights or of other personal legal situations in their favour (faculties, legal powers or
expectations).

However, the fact that this possibility is open to the legal order of the State may in
one way or another be taken into account in such rules of international law as are
framed with a view to imposing certain obligations upon States in the treatment of
foreigners.[p 232]

The rules of international law in this matter, although they all seek to protect
interests, as such, of individuals or collective entities, may employ different means
to attain their ends and refer in different ways to the systems of municipal law.

2. In the first place there are rules of international law concerning the treatment of
foreigners which directly specify the interests they seek to protect, regardless of the
prevailing attitude of the municipal legal order in that respect. The interests
contemplated by the rules in this category are always interests personal to
individuals and never interests of collective entities. Moreover, the rules in question
always concern those interests of individual foreign nationals which are of
fundamental importance, such as their interest in life or liberty, and never interests
of a purely economic nature.

In such cases the international rule refers to the legal order of the State solely in the
sense that it is addressed to the State with a view to laying upon it an obligation to
observe a given line of conduct in its own internal legal order; which conduct may
consist in conferring, within that legal order, certain rights or other personal legal
situations on foreign nationals.

The international rules in this category are somewhat analogous to the rules of
international law concerning the protection of human rights. For the latter rules also
are concerned not with the protection of such rights as may already have been
conferred by the internal legal system but with the actual predication, binding upon
States, of rights within the municipal order. While it is true that, in this context, it is
to human "rights" that reference is made as being the subject of the protection
sought by the rule of international law, the term is here employed in the sense of
natural rights. In this case also international law envisages the protection of certain
individual interests and not of rights already resulting from any positive legal order.
3. Those international rules regarding the treatment of foreigners which belong to
the category I have just described may be contrasted, having regard to their
structure, with the rules in a second category. These have a much wider area of
applicability, because, on the one hand they concern not only foreign individuals but
also foreign collective, entities, while they are, on the other hand, for that very
reason, designed not to protect a small number of interests of fundamental
importance to the human person but rather to protect other, more numerous interests
which more often than not possess a purely economic character.

Like the rules in the first category, those in the second are also intended for the
protection of interests, to which end they enjoin upon the States to which they are
directed a certain line of conduct which they place those States under an obligation
to observe in their municipal legal orders. But [p 233] before referring in this way to
the internal legal order, the international rules of which I now speak refer to that
same legal order for the purpose of performing a preliminary task, that of
determining what interests are to be the subject of the protection envisaged. This is
so in that the international rule postulates a certain attitude on the part of the State
legal order, inasmuch as it has regard solely to interests which, within that legal
order, have already received some degree of protection through the attribution of
rights or other advantageous personal legal situations (faculties, legal powers or
expectations): an attitude on the part of the State legal order which in itself is not
obligatory in international law.

It is on the hypothesis that this state of affairs has arisen in the municipal legal order
that the international rule lays upon the State the obligation to observe a certain line
of conduct with regard to the interests in question : with regard, one might
thenceforward say, to the rights whereby the interests in question stand protected in
the municipal legal order. I should explain that it is only for the sake of brevity that
in this connection I speak of rights, because instead of a right some other
advantageous legal situation may be involved: a faculty, legal power or expectation.

The conduct which international law renders incumbent upon a State with regard to
the rights which the same State confers on foreign nationals within its own
municipal order consists, in the first place, in the judicial protection of those rights.
Any State which, having attributed certain rights to foreign nationals, prevents them
from gaining access to the courts for the purpose of asserting those rights is guilty,
in international law, of a denial of justice. In addition, international law lays upon a
State, within certain limits and on certain conditions, the obligation to respect, in the
conduct of its administrative or even legislative organs, the rights which the
municipal legal order of the same State confers on foreign nationals. This is what is
known as respecting the acquired rights of foreigners.

As will be observed, the fact that the rules of international law in question envisage
solely such interests of foreigners as already constitute rights in the municipal order
is but the necessary consequence of the very content of the obligations imposed by
those rules; obligations which, precisely, presuppose rights conferred on foreigners
by the legal order of the State in question.
Both the obligation to afford rights judicial protection and the obligation to respect
them apply, then, to rights as conferred by the municipal legal order. This provides
an indirect way of determining what interests the international rule is intended to
protect, given that this rule only protects the interests of foreign individuals or
foreign collective entities if those interests already enjoy a certain degree of
protection within the municipal legal system. This means that the international rule
refers to the municipal legal order in that, to impose upon a State a particular [p
234] obligation, it presupposes a certain freely adopted attitude on the part of the
legal order of that State.

4. There is nothing abnormal in this reference of an international rule to the law of a

given State. It is wholly untenable to object, as the Belgian Government has done,
that in this way the international responsibility of the State is made to depend upon
categories of municipal law, thus enabling a State to set up the provisions of its own
legal order as a means of evading the international consequences of its acts. In
reality, no subordination of international responsibility, as such, to the provisions of
municipal law is involved; the point is rather that the very existence of the
international obligation depends on a state of affairs created in municipal law,
though this is so not by virtue of municipal law but, on the contrary, by virtue of the
international rule itself, which to that end refers to the law of the State.

Nor is it possible to invoke against this, as has also been done, the alleged basic
principle of the supremacy of international law. Despite what the Belgian
Government has asserted to the contrary, this principle has never been affirmed, as
such, by the International Court and, so far as the Permanent Court is concerned, it
stands in clear contradiction to the idea, by which that Court was always guided, of
the separateness of international and municipal law.

Quite another principle underlay the Permanent Court's statement to the effect that
municipal laws were simply facts from the standpoint of international law (P.C.I.J.,
Series A, No. 7, p. 19). This was a reference not to any supposed principle of the
supremacy of international law but rather to the exclusive character of the
international legal order, as of any non-derivative legal system. But this principle
does not by any means rule out the possibility that a rule of international law may
refer to municipal law in some way or another: for example, for the very purpose of
rendering an obligation laid upon a State subject to a certain point of fact within the
province of that State's municipal law. Very clear illustrations of that possibility are
to be found in treaties dealing with extradition or with the recognition of foreign
judgments.

5. In the present instance, the interests concerned are either interests of collective
entities, or more precisely companies, such as Barcelona Traction and the
companies holding shares in it, or interests of individuals, such as the individual
shareholders in Barcelona Traction. But, either way, we are dealing with interests of
a purely economic nature.

It follows that the international rules which may be invoked for the sake of
protecting those interests are exclusively rules entering into the second of the two
categories I have described. But, as has been seen, these rules postulate that, if those
same interests are to be protected, certain rights must already have been bestowed
by the municipal legal order. It is on the hypothesis that the municipal order has
adopted this attitude, op-[p 235] tional in international law, that the international
rule imposes certain obligations on the State.

From the considerations I have set forth it needs must follow that, in terms of
general international law at least, a State is free even to deny companiesor certain
companieslegal personality. For it is only in respect of individuals that the State is
under an obligation in international law to recognize personality, or in other words
to confer a set of rights. The rights in question are precisely those which the State,
by virtue of the rules of international law entering into the first category, has an
obligation to confer upon individuals so as to protect certain of their interests which
are fundamental in nature. It is only in the event that certain rights and,
consequently, legal personality are conferred on a company within the municipal
order that the State is bound by certain international obligations with regard to the
judicial protection of those rights and respect for the same.

Where the municipal legal order denies a company legal personality, this signifies
that the municipal order in question considers the corporate property as the subject-
matter of rights pertaining to the members. In that event it is in relation to these
rights, freely conferred on the members by the municipal order, that there is
incumbent upon the State an international obligation of protection and respect.

If, on the other hand, the municipal legal order allows the company legal
personality, it can but treat the members' rights accordingly. Consistently with the
attribution of the corporate property to the company, considered as a juristic person,
the members will in this case enjoy no more than limited rights, the subject-matter
of which will not be the corporate property. Needless to say, in this case too, the
rights accorded to the members, whatever they may be, enjoy the international
protection which is appropriate to them.

In other words, there is on the one hand a set of rights conferred by the municipal
order on the company and, on the other hand, within the same legal order, another,
quite distinct set of rights conferred on the members. Each set of rights is entitled to
its own, distinct international protection.

As has been seen, both these protections afforded by the international legal order
presuppose a certain attitude on the part of municipal law, namely a certain manner
in which it deals with the rights of the company, on the one hand, and those of the
members on the other. In the present case, the State legal order to be considered is
the Spanish legal system, that is to say the legal order of the State whose
international obligations have to be determined.

So far as the members of the company are concerned, to say that the international
legal order affords protection only to their rights, such as recognized by the
municipal order of the State whose international obligation is in question, is not in
any way to deny that the subject of inter-national protection is, in the upshot, in this
case as always, interests.[p 236]

The reference to the legal order of the State and to the rights which it confers
constitutes merely the means whereby international law establishes what interests it
is concerned to protect. International law protects, by laying certain obligations
upon a State, solely such interests of the members as already enjoy protection within
the municipal legal order of that State on account of the attribution to those
members of rights or other personal legal situations.

If that condition is not satisfied or if, in other words, what is at stake is interests
which do not, within the municipal order, constitute rights conferred on the
members, those interests are not subject to any specific protection in international
law. They may however be interests of the members which coincide with interests
of the company. In that event, if the interests of the company are legally protected
within the municipal order, it is to these interests (constituting rights of the
company) that the international obligations apply.

6. The application to the present case of the principles I have just mentioned does
not occasion any difficulty.

There is no disagreement between the Parties with regard to the attitude of the
Spanish municipal order so far as concerns the way in which it deals with the legal
situation of a limited-liability company, on the one hand, and the rights of its
shareholders on the other. No-one denies that Barcelona Traction, like any such
company, enjoyed legal personality in the legal order of Spain and that it had
consequently to be regarded as the owner of the rights over the corporate property.
Accordingly, the shareholders in Barcelona Traction were not recognized to possess
any rights over the corporate property; they enjoyed only those rights proper to
shareholders in a limited-liability company, such as the right to dividend and certain
rights relating to the conduct of the company's business.

However, Belgium does not complain of any damage that might have been suffered
by Barcelona Traction shareholders in respect of their own rights as shareholders on
account of the measures taken by the Spanish authorities. On the contrary, Belgium
complains of the fact that those measures, although (or rather, precisely because)
they were taken vis-a-vis the company, were detrimental to the interests of the
shareholders. But these were simple interests, not interests constituting rights in the
Spanish legal order.
It follows, in accordance with the principles I have stated, that, so far as such
shareholders' interests are concerned, Spain was under no obligation in international
law; which rules out any international responsibility on the part of Spain for such
damage as the measures taken by its authorities may have caused to the interests of
foreign shareholders. If simple interests are (as they must be) disregarded, and only
rights considered, such as they arise out of the Spanish legal order, it is only to the
rights of the company that the measures of which complaint is made could have
caused harm. But damage caused in respect of the rights of Barcelona Traction, a
Canadian company, could, if internationally un-[p 237] lawful, have constituted an
international wrong only vis-a-vis Canada, not vis--vis Belgium or any other State.
In this connection it can properly be said that it is the Canadian State alone which,
on account of the nationality of the injured private party, has capacity to claim
reparation.

7. Mention must now be made of another way in which the Parties put the question
of whether the measures taken by the Spanish authorities were of an unlawful nature
vis-a-vis Belgium. In place of reference to the distinction between rights and simple
interests, a distinction was drawn between direct damage and indirect damage, and
it was asked whether the measures complained of, although taken with respect to
Barcelona Traction and, as such, causing it direct damage, constituted an
internationally unlawful act vis-a-vis Belgium because they also, albeit indirectly,
caused damage to the Belgian shareholders in Barcelona Traction.
On the basis of what I have said with regard to the different attitudes evinced by the
international rules on the treatment of foreigners with respect to simple interests on
the one hand and rights on the other, I find that the distinction between direct
damage and indirect damage serves no useful purpose.

For, to consider that very limited category of international rules on the treatment of
foreigners which is concerned to protect certain interests independently of whether
or not they constitute rights in the municipal legal order, an injury to such an
interest is, of itself, an internationally unlawful act. No importance could be
attached in this connection to the relationship in which such an injury might stand
towards an injury to another interest, more especially in the sense of its having to be
regarded as the latter's indirect consequence.

Similarly, to consider the other category of international rules, concerned to protect

solely rights recognized by the municipal legal order, what matters in a given
instance is of course to establish whether or not there was an injury in infringement
of such a right. If this is not the case or if, that is to say, there was only an injury to a
simple interest, such injury will not constitute an international wrong even if it
stands in some relationship to an injury in respect of a right which might, as such,
constitute an unlawful act vis-a-vis the national State of the injured party.

It would appear, moreover, that the distinction between direct damage and indirect
damage is, in substance, merely a different way of stating the distinction between
injury in respect of a right and injury to a simple interest. For, supposing a measure
to have been taken with respect to a private party who, as a result of that measure,
has directly suffered damage, if it be enquired, in a concrete case, who is the private
party with respect to whom the measure can be regarded as having been taken, the
only way of answering this question is to consider the legal effects of the measure.
A measure can only be regarded as having been taken with respect to a particular
party if it produces legal effects for that party; if, [p 238] in other words, it involves
the rights of that party. All that other parties could suffer from such a measure
would be consequences affecting their simple interests. To term such consequences
indirect is in fact merely an imprecise way of describing the injury of a particular
party's simple interest, an injury standing in a certain relationship to the injury
suffered by another party in respect of his right.

8. From this I conclude that an international obligation on the part of Spain with
respect to the treatment of Barcelona Traction and, in consequence, international
responsibility on the part of Spain for any breach of that obligation, could only be
held to exist vis--vis Canada, the company's national State. Neither an obligation
nor responsibility on the part of Spain could be held to exist vis--vis Belgium, or
vis--vis any other State of which Barcelona Traction shareholders might be
nationals.

The absence of any responsibility on the part of Spain vis--vis Belgium in respect
of the measures taken by the Spanish authorities with regard to Barcelona Traction
is simply a consequence of the absence of any obligation owed in this respect by
Spain to Belgium; this, in its turn, results from the fact that there is no rule of
international law from which such an obligation might be derived.

In sum, therefore, Belgium has no possibility of exercising diplomatic protection

with respect to the Belgian shareholders in Barcelona Traction, since, as has already
been said, a State which exercises diplomatic protection with respect to one of its
nationals is merely demanding for such national the treatment required by the
international rules governing the matter or else claiming reparation for the violation
of those rules.

9. No importance can be attached in this connection to the facts that the Belgian
shareholders in Barcelona Traction might have benefited indirectly, so far as their
own interests were concerned, from the exercise by Canada of diplomatic protection
of the company and that such protection was not pursued.

We have seen that the interests of shareholders, as simple interests not constituting
rights within the municipal legal order, enjoy no protection under the international
rules governing the treatment of foreigners. This obviously does not rule out the
possibility that those interests might benefit indirectly from the protection which
those same rules afford the company's interests in so far as these constitute rights
under the municipal legal order. It is therefore possible that the exercise of
diplomatic protection of the company by its national State may eventually lead,
through the retrieval of the interests of the company, to the indirect retrieval of the
shareholders' interests too.

But this in no way influences the attitude evinced toward the interests of
shareholders by the international rules governing the treatment of foreigners. The
mere possibility of an indirect protection of shareholders' interests, in the sense
indicated above, does not warrant any inference
[p 239] that whenever such indirect protection is lacking it must be replaced by
direct protection. There could be no question of such direct protection unless a State
owed an obligation and happened to have incurred responsibility toward the national
State of the shareholders. And I cannot see where any basis for such an obligation or
such responsibility is to be found.

Actually the very idea of the diplomatic protection of shareholders by their national
State, it being conceived as a second line of protection that may be brought into play
if protection of the company by its own national State should be lacking, is strictly
bound up with a way of thinking that misconceives the very basis of diplomatic
protection in general, regarding it not as a State's mere exercise of a right bestowed
upon it by the rules of international law concerning the treatment of foreigners, but
rather as a procedure entirely independent of the existence of a right.
Only by taking such a standpoint could it be possible, where the treatment afforded
a company is concerned, to envisage diplomatic protection of the shareholders by
their national State as a second line of protection, that is to say as a protection
subordinated to the condition that diplomatic protection is not exercised, or not
pursued, by the national State of the company. This view, on the contrary, would be
utterly inconceivable on the correct premise that an act of diplomatic protection is
simply the exercise of an international right, and is consequently con-ditional on the
existence of such a right.

10. Neither is it possible, with a view to demonstrating the admissibility of a

second-line diplomatic protection of shareholders in the event that diplomatic
protection of the company is lacking, to rely on a supposed analogy or rather
parallel between that alleged second-line diplo-matic protection and such possibility
as may be afforded shareholders in municipal law of taking action against the
organs of the company, or in their stead, should they remain inactive.

It is the very idea behind such reasoning which, in my opinion, is unacceptable: the
idea that international law must necessarily offer some kind of protection to
shareholders' interests. There is nothing necessary about such protection; it exists
only within the limits and on the conditions which are fixed by international law
itself. Furthermore the requirements which municipal law is concerned to satisfy are
not necessarily requirements that ought also to be the concern of international law.

Needless to say, if the municipal legal order does, in the event of the inactivity of
the organs of a company, confer certain rights on the shareholders, those rights, like
any other rights peculiar to shareholders, will as such enjoy the protection which
international law affords in general to rights conferred on individuals by a municipal
legal order.[p 240]

11. The lack, in a given case, of any exercise of diplomatic protection in respect of
the company might result from the actual impossibility, in that case, of exercising
such protection.

As an example of a case where it would be impossible for the national State of the
company to exercise diplomatic protection in its respect, the hypothesis has been
adduced of the company's being dissolved, or being in a state of legal or simply
material incapacity to act.

With regard to the extreme case, that of dissolution, this must naturally be taken to
mean a dissolution which took place after the measure complained of, whether as a
result or independently of that measure. For if the company were already dissolved
at the time when the measure complained of was taken, it would obviously be
impossible to speak of a measure taken with regard to the company; one would on
the contrary have to speak of a measure taken directly with regard to the members
of the company, which would ipso facto authorize the national States of the
members to exercise diplomatic protection of them.

Furthermore the logic of the argument implies that the dissolution in question must
be an extinction which is effective from the standpoint of the legal order of the
company's national State. Such an extinction is not necessarily the automatic
consequence of an extinction occurring in the legal order of the State that had taken
the measure complained of.

Now it is quite obvious that if a company is dissolved from the standpoint of the
legal order of its national State, there is no possibility of its applying to that State for
diplomatic protection. However, the ability of persons to request diplomatic
protection of their national State is one thing, and entirely depends on the internal
legal system of the State in question; but the exercise of diplomatic protection on
the international plane is quite another matter. Diplomatic protection, as the exercise
of a right arising out of the international legal order, belongs exclusively to the
State, which has entire discretion in its respect. A State is free not to exercise
diplomatic protection even if the national concerned requests it. Conversely, a State
may exercise diplomatic protection even if there is no request from its national. It
follows that the dissolution of a company does not prevent its national State from
exercising diplomatic protection in its respect and that, consequently, the hypothesis
envisaged cannot arise at all.

12. On the other hand it must be recognized that diplomatic protection of a company
really may be impossible when there is no foreign State to exercise it. This would be
so in the case of a company which had the nationality of the very State whose
international obligation was in ques-tion.
Nevertheless, to say that in such a case the national States of the shareholders are
entitled to protect the latter's interests because there is no possibility of their
benefiting indirectly from any protection afforded the company would be to make
havoc with the system of international [p 241] rules regarding the treatment of
foreigners. It would, furthermore, be a wholly illogical and arbitrary deduction.

For to envisage the possibility of indirect protection in certain eventualities is

tantamount to recognizing the absence, so far as shareholders are concerned, of any
direct protection on the part of international law to recognizing, in other words,
that international law does not consider the interests of shareholders, as simple
interests, worthy of its protection and that it consequently refrains from imposing
upon a State, in this connection, any obligations toward shareholders' national
States. This negative attitude on the part of international law cannot be reversed on
the ground that the interests of shareholders might, in other circumstances, benefit
from a purely indirect protection. Such artificial and illogical reasoning would lead
to the creation, for the interests of shareholders, of a direct protection such as their
national States might take up: the very protection which is refused by international
law.

13. A fortiori, the diplomatic protection of shareholders by their national States

must be ruled out where, as in the present case, the diplomatic protection of the
company by its national State is possible but, for some reason or other, is not
exercised or not pursued.

To my general remarks on the notion of a second line of diplomatic protection for

shareholders, and to those I have just made regarding the hypothesis of the
impossibility of the company's receiving diplomatic protection, remarks which
remain no less valid for the hypothesis now under consideration, I would add certain
other observations of specific application to the latter.
According to this latter hypothesis, the possibility of a State's exercising diplomatic
protection of those shareholders in a company who are its nationals would not be
absolute, but contingent on a certain attitude which a third State, i.e., the national
State of the company, is free to adopt or not: an attitude consisting either in
refraining from exercising diplomatic protection of the company or in not pursuing
diplomatic protection once exercised. It would not be easy to establish at what
moment the requisite condition might be regarded as fulfilled. In any event, there
would be a point in time before which the diplomatic protection of the shareholders
would not be admitted; as from that moment, on the other hand, the possibility of
exercising such protection would exist.

But any diplomatic protection presupposes that the State approached by the
protector owes an obligation or, it may be, has incurred a debt of responsibility,
because it is precisely such obligation or responsibility that diplomatic protection
relies on and asserts. Consequently, to say that the national State of the shareholders
cannot exercise diplomatic protection for so long as it is not possible to affirm that
the national State of the company is refraining from exercising diplomatic
protection of the [p 242] latter amounts to excluding the existence, until then, of any
obligation or responsibility vis--vis the national State of the shareholders. It is only
later that such an obligation and, it may be, such responsibility (indeed the very
unlawfulness of the measure taken vis--vis the company) would arise, necessarily
with retroactive effect, owing to the conduct of a third State, the national State of
the company, in abstainingfor some motive the appraisal of which would be a
matter for its own discretionfrom the exercise of diplomatic protection in respect
of the company.

Simply to propound such a theory is to expose its absurdity. Generally speaking, it

is hard to see how a State's non-exercise of its right could have any influence on the
possibility of exercising, let alone the very existence of, another State's right. I have
already pointed out that the international rules governing the treatment of foreigners
take concrete shape in bilateral relationships. Now each of these relationships,
between clearly circumscribed subjects, is absolutely independent of any other
relationship which, though deriving from those same rules, might exist between
other, or partly other, subjects. Hence no such relationship could, through its own
existence or merely through its activation, exert any influence on the very existence
of another. Consequently, if the view be taken that a State is not, vis--vis the
national State of shareholders in a limited company, under any obligation whatever
concerning the treatment of that company, it is impossible to see how such an
obligation could arise retroactively out of the fact that the national State of the
company does not, for whatever reason, exercise its own right.

(Signed) Gaetano Morelli

[p 243]

SEPARATE OPINION OF JUDGE PADILLA NERVO

In its Judgment of 24 July 1964 the Court joined to the merits the third preliminary
objection raised by the Spanish Government to the Application of Belgium.

The Court then stated that:

"the third objection involves a number of closely interwoven strands of mixed law,
fact and status, to a degree such that the Court could not pronounce upon it at this
stage in full confidence that it was in possession of all the elements that might have
a bearing on its decision" (I.C.J. Reports 1964, p. 46).

In the present proceedings the Parties have dealt fully with questions of merits, in
the course of their written and oral pleadings.

The Spanish Government contests the Belgian Government's capacity to act, its jus
standi, its right to intervene on behalf of Belgian nationals (natural or artificial
persons) whom the Belgian Government claims to have been injured by a breach of
international law, for which liability is attributed to the Spanish authorities.

The Belgian Government asserts that it is exercising protection exclusively and

directly on behalf of persons of Belgian nationality and contends that the legal
question which arises when examining its jus standi in the present case is that of the
diplomatic judicial protection, "not of foreign trading companies, but of natural and
artificial persons" who, having invested their funds in the said companies, suffered
losses as shareholders in these companies, as a result of illegal actions committed
against the companies.

The respondent Government contends that

"international law does not recognize, in respect of injury caused by a State to a

foreign company, any diplomatic protection of shareholders exercised by a State
other than the national State of the company".

The applicant Government asserts its right to intervene on behalf of Belgian

nationals, shareholders in the company, and contends that such right is conferred on
it in respect of its nationals by the rules of international law concerning the
treatment of foreigners.

The real issue is whether international law recognizes for the shareholders in a
company "a separate and independent right or interest in respect of damage done to
the company by a foreign government".[p 244]

The Belgian Government, in its first submission, asked the Court to adjudge and
declare that the Spanish State is under an obligation towards Belgium to make
reparation for the damage caused to "Belgian nationals, individual or legal persons,
being shareholders of Barcelona Traction".
In the second submission, it asks that the Court will

"adjudge and declare that this reparation should, as far as possible, annul all the
consequences which these acts, contrary to international law, have had for the said
nationals, and that the Spanish State is therefore under an obligation to secure, if
possible, the annulment by administrative means of adjudication in bankruptcy and
of the judicial and other acts resulting therefrom, obtaining for the said injured
Belgian nationals, all the legal effects which should result from this annulment.. .".
(Application filed 19 June 1962, second submission.)

What is then the real meaning and scope of the present Belgian claim? The new
Application presents as the object of Belgium's protection, not the Canadian
commercial company of Barcelona Traction but Belgian nationals who are said to
be shareholders of Barcelona Traction.

The Spanish Government disputes the Belgian Government's capacity to act

"in view of the fact that the Barcelona Traction Company does not possess Belgian
nationality and that, in the case in point, it is not possible to allow diplomatic action
or international judicial proceedings on behalf of the alleged Belgian shareholders
of the company on account of the damage which the company asserts it has
suffered". (P.O., submissions on third objection.)

I do concur in the view that, in the present case, diplomatic action or international
judicial proceedings on behalf of the shareholders in the company on account of
damage which the company alleges it has suffered, could not be allowed.

It has not been proved that there exists a special customary rule which, by
derogation of the basic principles of international law with regard to the status of
aliens, would have helped the Belgian contention.

Nor has it been demonstrated that there exists an alleged general rule establishing,
in all circumstances, the lawfulness of the protection of shareholders following
damage caused to the company.

I believe it is right to say that international law does not recognize the right of
diplomatic protection of shareholders as such if their rights stricto sensu have not
been violated.

Nor does any rule of international law give support to the admissibility of a double
diplomatic protection, one for the corporation and another for the shareholders in
that corporation.[p 245]

To say that the corporation and the shareholders have parallel interests does not
make admissible a concurrent diplomatic intervention.

No State could be safe from the pressure and danger of a plurality of diplomatic
interventions by States protecting their nationals, shareholders in a given
corporation, if the right of diplomatic protection of shareholders were recognized.
For the time being, the principle which recognizes the capacity of a State to
intervene, by way of diplomatic protection of a company of its own nationality, has
proved to be a fair and well-balanced safeguard or insurance, both for the investor
and for the State, where foreign companies operate.

This regime, whose consequences are well known, has no surprises and establishes
a legal order which, so far, has proved to be generally adequate and satisfactory.

There seems to be no fundamental reason or essential need to depart from it. If a

door is open to the intervention, by way of diplomatic protection of shareholders, of
a plurality of Statesas many as could claim to have shareholders of their
nationalitya chaotic situation of the gravest international consequences would, in
time, develop.
Private investments, needed for economic development, will be encouraged if the
States receiving them are convinced that the national State of the investor will not
use the so-called right of diplomatic protection as a pretext for political or economic
pressure, dangerous to the sovereignty and independence of weaker or less
developed States, who cherish more their national dignity than the speed of their
development. In the relation between the investor and the State where the
investment takes place, a just balance should be aimed at, for it is good for the
international community that capital which goes abroad in search of gain should not
be a potential threat to the essential values and dignity of States.

The lessons of history and past experience are, after all, the source of the law and of
judicial precedents and must have place and weight in the conscience of the judge.

Mervyn Jones, in his work Claims on behalf of nationals who are shareholders in
foreign companies, makes the following historic remarks by way of introduction:

"The era of foreign investment on a large scale reached its height during the fifty
years or so preceding the First World War, when British and American capital
poured into all parts of the world, financing railway and harbour construction,
exploitation of mineral deposits and innumerable other projects in undeveloped
countries. At the same time the institution of the joint-stock company with limited
liability (which was of recent growth) made it possible for [p 246]small capitalists
to invest their money in remote countries for a better yield than was obtainable at
home. There is little doubt that, at first, those countries welcomed foreign capital,
which was badly needed, and were not strict as to conditions of investment. It was
but rarely, during these early days, that any necessity arose for diplomatic
intervention by foreign powers on behalf of their nationals. With the turn of the
nineteenth century, however, nationalist movements became directed against
'economic exploitation' by the foreigner. These movements emphasized economic,
as well as political, sovereignty, and, as time went on, began to interfere more and
more with the projects of foreign capital. The decay of liberal capitalism and laisser-
faire, accompanied by the spread of socialist doctrine throughout the world, caused
governments everywhere to assume greater control of the economic assets and
resources of the nation: in certain countries foreign capital came to be regarded as
an emblem of subordination, and not merely as a means of developing the country.
Much, of course, had happened to justify such an attitude; the extent to which
foreign capital held a grip on the economic life of many countries was considerable.
Against this background the revolutions of 1911-20 in Mexico transformed the
political and social outlook of the nation, as did the later revolutions in central
Europe after the First World War, and those in eastern Europe after the Second.
These revolutions were accompanied by measures of expropriation, which
inevitably raised the question of the position under international law of individuals
who had invested in companies carrying on business in the countries concerned."
(British Year Book of International Law, 1949, p. 225.)

The history of the responsibility of States in respect to the treatment of foreign

nationals is the history of abuses, illegal interference in the domestic jurisdiction of
weaker States, unjust claims, threats and even military aggression under the flag of
exercising rights of protection, and the imposing of sanctions in order to oblige a
government to make the reparations demanded.

Special agreements to establish arbitral tribunals were on many occasions concluded

under pressure, by political, economic or military threats.

The protecting States, in many instances, are more concerned with obtaining
financial settlements than with preserving principles. Against the pressure of
diplomatic protection, weaker States could do no more than to preserve and defend
a principle of international law, while giving way under the guise of accepting
friendly settlements, either giving the compensation demanded or by establishing
claims commissions which [p 247] had as a point of departure the acceptance of
responsibility for acts or omissions, where the government was, neither in fact nor
in law, really responsible.

In the written and in the oral pleadings the Applicant has made reference, in support
of his thesis, to arbitral decisions of claims commissionsamong others those
between Mexico and the United States, 1923.

"These decisions do not necessarily give expression to rules of customary

international law, as. . . the Commissions were authorized to decide these claims 'in
accordance with principles of international law, justice and equity' and, therefore,
may have been influenced by other than strictly legal considerations."
(Schwarzenberger, International Law, Vol. I, p. 201.)

In the Special Claims Commission: Mexico-United States, established by the

convention of 10 September 1923, Article II states:

". . . each member of the Commission . . .shall make and subscribe a solemn
declaration stating that he will. .. examine and decide, according to the best of his
judgment and in accordance with the principles of justice and equity, all claims
presented for decision . . .". (Italics are mine.)

The second paragraph of the same Article II reads as follows:

"The Mexican Government desires that the claims shall be so decided because
Mexico wishes that her responsibility shall not be fixed according to the generally
accepted rules and principles of international law, but ex gratia feels morally bound
to make full indemnification and agrees, therefore. . ." {U.N.R.I.A.A., Vol. IV, p.
780.)

Article VI of the same convention makes another exception to the accepted general
rules, when it states:
". . . the Mexican Government agrees that the Commission shall not disallow or
reject any claim by the application of the general principle of international law that
the legal remedies must be exhausted as a condition precedent to the validity or
allowance of any claim". (Ibid., p. 781.)

Some of the decisions of claims commissions invoked during the pleadings are not,
in my view, relevant precedents in respect to this case.

Now the evolution of international law has other horizons and its progressive
development is more promising, as Rosenne wrote:

"There is prevalent in the world today a widespread questioning of the

contemporary international law. This feeling is based on the [p 248] view that for
the greater part international law is the product of European imperialism and
colonialism and does not take sufficient account of the completely changed pattern
of international relations which now exists. . . .

Careful scrutiny of the record of the Court may lead to the conclusion that it has
been remarkably perceptive of the changing currents of internationalist thought. In
this respect it has performed a major service to the international community as a
whole, because the need to bring international law into line with present-day
requirements and conditions is real and urgent." (Rosenne, The Law and Practice of
the International Court, 1965, Vol. I, pp. 17-18.)

The law, in all its aspects, the jurisprudence and the practice of States change, as the
world and the everyday requirements of international life change, but those
responsible for its progressive evolution should take care that their decisions do, in
the long run, contribute to the maintenance of peace and security and to the
betterment of the majority of mankind.

In considering the needs and the good of the international community in our
changing world, one must realize that there are more important aspects than those
concerned with economic interests and profit making; other legitimate interests of a
political and moral nature are at stake and should be considered in judging the
behaviour and operation of the complex international scope of modern commercial
enterprises.

It is not the shareholders in those huge corporations who are in need of diplomatic
protection; it is rather the poorer or weaker States, where the investments take place,
who need to be protected against encroachment by powerful financial groups, or
against unwarranted diplomatic pressure from governments who appear to be
always ready to back at any rate their national shareholders, even when they are
legally obliged to share the risk of their corporation and follow its fate, or even in
case of shareholders who are not or have never been under the limited jurisdiction
of the State of residence accused of having violated in respect of them certain
fundamental rights concerning the treatment of foreigners. It can be said that, by the
mere fact of the existence of certain rules concerning the treatment of foreigners,
these have certain fundamental rights that the State of residence cannot violate
without incurring international responsibility; but this is not the case of foreign
shareholders as such, who may be scattered all over the world and have never been
or need not be residents of the respondent State or under its jurisdiction.

In the case of the Rosa Gelbtrunk claim between Salvador and the United States, the
President of the arbitration commission expressed a [p 249] view which may
summarize the position of foreigners in a country where they are resident. This view
was expressed as follows:

"A citizen or subject of one nation who, in the pursuit of commercial enterprise,
carries on trade within the territory and under the protection of the sovereignty of a
nation other than his own, is to be considered as having cast in his lot with the
subjects or citizens of the State in which he resides and carried on business." (Italics
added.)

"In this case", Schwarzenberger remarks, "the rule was applied to the loss of foreign
property in the course of a civil war. The decision touches, however, one aspect of a
much wider problem: the existence of international minimum standards, by which,
regarding foreigners, territorial jurisdiction is limited."

As the Permanent Court of International Justice said in the Lotus case in 1927
(P.C.I.J., Series A, No. 10, p. 19)

"all that can be required of a State is that it should not overstep the limits which
international law places upon its jurisdiction; within these limits, its title to exercise
jurisdiction rests in its sovereignty".

The rules concerning the treatment of foreigners are a limitation of a State's

jurisdiction ratione personae. Schwarzenberger says in this respect:

"States generally exercise exclusive jurisdiction over their nationals within their
territory, concurrent jurisdiction over their nationals abroad, and limited jurisdiction
over, for example, individuals and groups within their territory who are protected by
international customary or treaty law." (Italics added.)

"While, in principle, territorial sovereignty applies to nationals and foreigners alike,

the home State retains a concurrent jurisdiction over its nationals abroad. .. .
Furthermore, the unrestricted exercise of territorial jurisdiction over foreigners on
the part of the State of residence may be limited by rules of international customary
law or treaties. If such exercise of territorial jurisdiction happens to come into
conflict with international law, the question turns into an issue between the subjects
of international law concerned. The home State is entitled to demand respect for
international limitations of territorial jurisdiction, and the State of residence may
have to answer for its interference 'with the rights which each State may claim for
its national in foreign territory'. As the World Court laid down in the case of the
Mavrommatis Palestine Concessions (1924), 'it is an elementary principle of
international law that a State is entitled to protect its subjects, when injured by acts
contrary to [p 250] international law committed by another State, from whom they
have been unable to obtain satisfaction through the ordinary channels'."
(Schwarzenberger, International Law, Vol. I, pp. 189-190.)

Much has been said about the justification for not leaving the shareholders in those
enterprises without protection.

Perhaps modern international business practice has a tendency to be soft and partial
towards the powerful and the rich, but no rule of law could be built on such flimsy
bases.

Investors who go abroad in search of profits take a risk and go there for better or for
worse, not only for better. They should respect the institutions and abide by the
national laws of the country where they chose to go.

***

The main preliminary question on the merits in the present proceedings is that of the
international diplomatic and legal protection of natural and artificial persons who,
having invested funds in foreign trading companies, have suffered losses in their
capacity as shareholders of those companies, as a result of acts contrary to
international law of which a State has been guilty towards those companies.

This problem is of capital importance in the modern world, and preoccupies the
governments, economists and businessmen of numerous countries which are
anxious to ensure the security of investments made abroad. Jurists, for their part, are
actively concerned with it and are constantly examining it.

A necessary foundation of a valid international claim is that the national of the

plaintiff State would have been directly injured in his rights by an act contrary to
international law done by the State to whom the claim is addressed.

It is indispensable that the protected person be himself the possessor of a right

which would entitle him to formulate a claim for damages in the internal judicial
order.

If a debtor of a foreign creditor is affected in his rights by an act which violates

international law, the national State of the foreign creditor is not authorized, by that
fact, to the diplomatic protection of such creditor. This question has been submitted
and decided in various instances by arbitral tribunals in the sense that "creditors do
not have legal bases to plead for damages inflicted on their debtors".

In U.S.A. (W. C. Greenstreet, Receiver) v. United Mexican States, General Claims

Commission, it was held that the nationality of the creditors of an insolvent
corporation need not be shown, "the nationality [p 251] of the creditors being just as
immaterial as is that of the stockholders of an insolvent company".

The case of Socit civile des porteurs d'obligations du Crdit foncier mexicain,
before the French-Mexican Commission involved a claim on behalf of the
shareholders of a bank. The bank held mortgages on rural property and damages
were claimed because the security had been dam-aged by depredations of
revolutionary forces. The Commission held that only the owners of the property
might claim. (Feller, The Mexican Claims Commission, p. 122.) Arbitral
jurisprudence confirms the thesis that international law does not authorize the
protection of affected economic interests, but only of rights really violated.

The following arguments were made by counsel for the applicant State:

"The problem of the diplomatic protection of the shareholders practically only arises
when the shareholders are of a different nationality from that of the company.
Indeed, an infringement of the interests and rights of the company and of its
shareholders might then in this case affect the rights possessed by two or even
several States, and might consequently give rise to two or more rights to claim, in so
far as the rules relating to the treatment of foreigners have not been respected.. ..
Indeed, if one disregards the fact that the shareholders are foreigners, if one admits
that these foreign shareholders have no rights or interests distinct and independent
from those of the company, that they are totally inseparable from the latter vis-a-vis
the outside world, that they are entirely covered by the veil of the juristic
personality, one must then conclude that, in this event too, the case is entirely
outside the scope of international law."

That line of argument leads up to saying that therefore:

"The national State of the shareholders cannot exercise any right conferred on it in
favour of its nationals by the rules of international law concerning the treatment of
foreigners." (Hearing of 9 May 1969.)

I disagree with the above statements; of course, any State can exercise such rights in
favour of its nationals abroad, but not because they happen to be in possession of
bearer shares, but because and only if they have been injured in their own specific
rights by the State of residence which has a duty to respect the rights of foreigners
under its jurisdiction, according to the relevant rules of international law concerning
the treatment of foreigners. [p 252]

It is claimed by the Belgian side that the Spanish Government admitted "that there
were certain cases in which diplomatic protection of the shareholders in the event of
damage done to the company was allowed under international law", and quotes the
Spanish admission as saying that such protection is allowed "solely in cases where
the company possesses the nationality of the State against which the claim is made,
so that diplomatic protection of the company as such is excluded".

The Spanish Government, in its Rejoinder, contends that in all the cases in which
the protection of the shareholders was admitted, the complaints raised concerned
damage done exclusively to the shareholders' "own rights", that is to say not
affecting the company itself.
In the present case, for Belgium to be able to intervene, it would thus be necessary
that there had been a violation of the rights of the Belgian shareholders.

Such a violation is excluded, if what is complained of is steps which were ostensibly

directed against the company. It was admitted by the Applicant, during the oral
proceedings, that the Belgian claim did not include damage resulting from an
infringement of any of the recognized direct rights of a shareholder as such.

International law goes no further than imposing on States certain obligations

towards other States, including the obligation to afford aliens certain treatment, for
example, to give them access to their courts and to enable them to have their
lawsuits impartially judged within reasonable time limits and without
discrimination.

A careful distinction should be drawn, contends the Spanish Government, between

two hypotheses which are mutually exclusive. Either there is a wrongful injury to
the rights of the shareholders, in which case diplomatic protection of the latter is
permissible and indeed is the only protection permissible, or else there is a wrongful
injury to the rights of the company and only the company may be the subject of
such protection. The contention is that it is utterly impossible to escape from this
option.

To this contention the Belgian answer was:

"The Spanish Government really wishes to demonstrate by this argument that in

cases of multiple claims, no one may bring action by relying on the right of another
party. But is it necessary to take this extraordinary detour to reach a conclusion
which nobody contests? Belgium is not concerned with the injury suffered by
Barcelona Traction itselfthat would be Canada's business; it is concerned with the
damage suffered by its own nationals who held shares in the company."

***

If the owner of the right or rights which have suffered injury is the company and not
the shareholder, it is beyond all doubt that the case is[p 253] one which falls entirely
outside the sphere in which the diplomatic protection of shareholders by their
national State can be admissible, or even conceivable. The Respondent in its
Rejoinder states:

"The international society of today is certainly not asking for a further

reinforcement of the protection of certain capitalist groups already too powerful and
only too capable of securing support for themselves, a reinforcement which would
take the shape of the possibility of increased pressure on the weaker nations."
(Rejoinder, Part III, Chapter II, Section II, para. 43.)

It adds:

"Contemporary international law tends to concern itself more with the need to
protect countries with a weak economy than to favour, as the Belgian Government
would wish, 'the financial needs of great modern undertakings'." (Ibid.)

"Very many States insist, for very good reasons, that foreign capital must be
invested in national companies. This is the case, in particular, in many countries in
the course of development, but a certain number of highly industrialized countries
impose similar con-ditions either de facto or de jure. What is more, foreign investors
themselves frequently and spontaneously chose this legal formula which may in
their view offer certain advantages."

***

There is a case to which the Belgian side ascribe importance. This is the case of the
American national, McPherson, who laid a claim before the U.S.-Mexican
Commission in 1923 against the Mexican Government, which had refused to honour
the postal money-orders which McPherson had bought through an agent from illegal
authorities and which the latter had issued in the name of the agent. The decision in
that case was delivered on the basis of a convention which, in several essential
aspects and by its very spirit, manifestly derogated from general international law.

Which are the applicable principles of international law and what are the
consequences of their application to the present case?

What follows expresses my views on the matter:

International law lays upon every State in whose territory foreign natural or juristic
persons reside, remain, operate or even simply possess property, an obligation
towards the State of which such persons are nationals: the obligation to afford them
certain treatment. That treatment, which is defined most usually and in greater detail
by the rules of treaty law, nevertheless has its minimum requirements laid down by
cus-[p 254] tomary international law. Those minimum requirements consist
essentially in the respect, within given limits and conditions, of certain rights of a
personal or corporate nature, and in the granting, at the same time, of the possibility
of making use, if necessary, of appropriate judicial or administrative remedies.

Correlative with that obligation, the State of which such persons are nationals has, at
the international level, a right to require the State which is bound by the obligation
to act in conformity therewith, and it has a right, if occasion arises, to submit a
claim in proper form and through accepted channels, should that obligation fail to
be discharged. That is precisely what is known as the exercising of diplomatic
protection. It also includes protection by means of recourse to international
jurisdiction.

The rights attributed to a State by international legal rules concerning the treatment
of foreigners, on the one hand, and, on the other hand, the rights granted to
individuals by the rules of municipal law, are situated at different legal levels.

The existence of the individual's right at the municipal level is the condition
whereby a State is authorized, at the international level, to require that that right be
not infringed. All that a State can require of another State for its own nationals is the
respect of those rights which are accorded to them under the national legal system,
as they are defined by that legal system.

When the foreigner in question is a juristic person, the case is no different,

theoretically, from a case in which a natural person is involved. All legal systems
agree in considering joint-stock companies (socits de capitaux) as independent
legal entities. The latter represent autonomous beings to which rights and
obligations may be ascribed; they are, in short, of themselves subjects in law.

International law, both customary and treaty law, recognizes precisely in respect of
the treatment of foreigners, the existence of companies as entities which are separate
from their members.

For juridical persons as for natural persons, "nationality" expresses a link of legally
belonging to a specific State. The requirement for juridical persons as for natural
persons, is that the existence of the link of legally belonging to a specific country
must, if it is to serve as a plea at the inter-national level, be accompanied by that of
a "real" link with the same country. In general international law, a State is not
entitled to require a specific treatment for a person who has not its nationality and it
can thus not complain that such treatment has not been accorded to that person.

A State may present a claim on behalf of its national if it becomes apparent that
there has been a breach of a right belonging to the latter; but no State may present a
claim on behalf of a person of its nationality [p 255] on the ground that there was
failure to respect a right belonging to another person, possessing another nationality.

The national State of the company can present a claim for the breach of a right of
the company as such; the national State of the shareholder can present a claim for
the breach of a right "stricto sensu" of the shareholder as such. The fact that there
are relationships and links between different persons does not imply that they merge
into a single person.
A claim by a State under the head of diplomatic protection of a national who is a
shareholder of a commercial company is only admissible subject to a two-fold
condition: the applicant State must be able to claim violation of a right of the
shareholder as such; and it must be established that the State which was the author
of the alleged violation was under an international obligation to the applicant State
to ensure respect for the right in question. The receivability of a claim under that
head is ruled out if it appears, firstly, that the right which is said to have been
violated is a right of the company and not of the shareholder, and, secondly, that the
international obligation to ensure respect for the said right was incumbent on the
respondent State in respect of the national State of the company and not in respect
of the national State of the shareholder.
It follows from the principles of international law that in order for a State to be able
to submit a claim in behalf of a national, it must be able to claim that its national has
suffered an infringement of his own rights by a foreign State, and that rights have
been infringed for which the latter State was bound to ensure respect by virtue of an
international obligation binding on it in respect of the claimant State.

There is nothing to prevent a State's submitting a claim in behalf of a national which

relates to that national's position in his capacity as a shareholder in a company; but,
in such a case, it must prove that the person in question has been injured in the
rights conferred upon him himself precisely on account of his capacity of being a
shareholder: that he has been injured in rights which are inherent in that capacity.

It is by no means sufficient that the claimant State rely upon an injury to the rights
of the company as such, for no State may submit a claim in behalf of a person on the
ground that there has been a failure to respect a right which belongs to another
person, whether such latter person be a natural or a juristic person.

International law only authorizes a State to intervene by way of diplomatic

protection if such State relies upon a complaint which is its own complaint: that is to
say, if it complains of the infringement of a right of one of its nationals, committed
in violation of an international obligation which binds to it the State which has
committed the infringement.

If there has not been in the case at issue any infringement of any right of a
shareholder, that fact cannot be altered simply by referring to interests as well as
rights.[p 256]

The situation of the shareholder as defined by the various legal systems, covers the
rights which are defined in the decision on the Brincart case. No system of positive
law confers on a shareholder in a limited company other subjective legal situations
and, in particular, no system attributes to him any legal interest in the property of
the company, as has been expressly acknowledged by both sides.

One cannot accept the transformation of a shareholder's hope for the prosperity of
the company into a right or a legal interest, nor any possibility for a shareholder to
claim that an infringement of the rights of the company constitutes an infringement
of his own legal situation.

The rules of international law concerning the responsibility of the State regarding
the treatment of foreigners would not make it possible to impute to a State an
internationally unlawful act even in a case where the said State had only harmed an
interest which was not protected by the municipal legal system of that State.

There has not been established, in respect of the alleged Belgian shareholders of
Barcelona Traction, the existence of any juridical situation whatsoever attaching to
their status as shareholders which suffered any internationally unlawful attack on
the part of the Spanish administrative or judicial authorities.

***
Barcelona Traction is said to have been a "practically defunct" company.

Shareholders are not entitled to take the place of the company in defending the
latter's own rights when it is these rights which have been affected, for so long at
least as the company has not yet been dissolved and liquidated and the shareholders
therefore have ho right to its property and assets.

It is only when a company has been dissolved and consequently ceases to exist as a
separate legal entity that the shareholders take its place and are entitled to receive
the balance of its property, after the corporate debt has been deducted. Thus it is
only the "legal death" of the corporate person that may give rise to new rights
appertaining to the shareholders as successors to the company.

In 1925 the United States claimed the right, as against the Government of the United
Kingdom, to intervene on behalf of American interests in a non-American
corporation (the Romano-Americana).

In the United Kingdom answer to the American contention, it was said: ". . . it is not
until a Company has ceased to have an active existence or has gone into liquidation
that the interest of its shareholders ceases to be merely the right to share in the
Company's profits and becomes
[p 257] a right to share in its actual surplus assets" (Hackworth, Digest of
International Law, Vol. V (1943), p. 843).

In the case of the Mexican Eagle, a company incorporated in Mexico, in which the
shareholdings were 70 per cent. British and Dutch, 25 per cent. French and the
remainder Swiss, Danish and other interests (as the shares were in bearer form it
was impossible to state the exact proportion of each national interest), a dispute
arose between the Mexican Government and the United Kingdom Government
regarding claims by British shareholders arising from the expropriation of the
properties of the Mexican Eagle Company.
The Mexican Government in a Note of 26 April 1938, maintained the view that a
shareholder was not a co-owner of the property of the undertaking but "merely the
possessor of a right in equity to represent a part of the liquid assets at the moment of
the dissolution or liquidation of the company".

It was not until the moment of dissolution that it was possible to establish the
damage and injuries sustained by shareholders as distinct from the company
(Mervyn Jones, British Year Book of International Law, 1949, p. 241).

On that occasion the Mexican Government stated: "Mexico cannot admit that any
State, on the pretext of protecting the interests of the shareholders of a Mexican
company, may deny the existence of the legal entity of companies organised in
Mexico in accordance with our laws."

I do not concur with the view that the national State of the shareholders may
exercise diplomatic protection when the act complained of was done by the national
State of the company, for this would be equivalent to admitting that any State, on
the pretext of protecting the interests of the shareholders in a foreign company, may
deny the existence of the legal entity of companies organized in accordance with the
laws of the national State of such companies.

I have reservations about paragraph 92 of the Judgment. For the reasons stated
above I am of the opinion that the so-called theory to which the paragraph refers
does not have any validity. The fact that the Judgment ends the paragraph with the
sentence: " Whatever the validity of this theory may be, it is certainly not applicable
to the present case, since Spain is not the national State of Barcelona Traction"
should not be interpreted as an admission that such "theory" might be applicable in
other cases where the State whose responsibility is invoked is the national State of
the company.

This is a fundamental point in the field of intervention on behalf of nationals who

are shareholders in foreign companies of limited liability.

Regardless of the numerous cases of protection which took place in the past
outside international law or contrary to itby the use of economic, political or
military pressure, it is worth recalling thatalso in the past[p 258] in other cases
when a stand was taken within a legal point of view and respect for the sovereignty
of other States, there has been a historical recognition of the separate entity of
corporations of limited liability, and the opinions given in such instances did stress
the independent existence of a company as juridical person.

For example, when the Government of the United States was approached in 1875
with a request that it should intervene on behalf of American stockholders in
Chilean corporations, it refused to do so. It adhered to the view that a corporation
formed under local law should have recourse to the local courts and that although
the good offices of the Government might with propriety be exercised on behalf of
American interests, there could be no official intervention FN1 (Moore, Digest of
International Law (1906), Vol. VI, p. 644). The practice of the United Kingdom
followed similar lines. Thus Sir Robert Phillimore advised that the British Minister
to Mexico should be instructed to limit himself to "good offices" on behalf of a
British shareholder in a Mexican railway siezed by the Mexican Government and
that the British subject should be told that he must rely principally on local
remedies. Years later both Governments found reason to depart from this practice.

-----------------------------------------------------------------------------------------------------
----------------
FN1 The Secretary of State of the United States in a dispatch to the (American)
Minister to Colombia, dated 27 April 1866, wrote as follows:

"It may well be that subjects of Great Britain, France and Russia are stockholders in
our national banks. Such persons may own all the shares except a few necessary for
the directors whom they select.

Is it to be thought that each of those Governments shall intervene when their

subjects consider the bank aggrieved by the operations of this Government? If it
were tolerated, suppose England were to agree to one mode of adjustment, or one
measure of damages, while France should insist upon another, what end is
conceivable to the complications that might ensue?

It is argued that there is no policy which requires us to encourage the employment

of American capital abroad by extending to it any protection beyond what is due the
strictest obligation. There is no wise policy in enlarging the capacity of our citizens
domiciled abroad for purposes of mere pleasure, ease or profit to involve this
Government in controversy with foreign powers." (Loc. cit., pp. 645-646.)

-----------------------------------------------------------------------------------------------------
----------------

I therefore cannot accept that this situationwhich is not the one before the
Courtshould be considered as a limitation or exception to the strict application of
the rule of international law, according to which the shareholders cannot be
protected by their national State except in two instances: (a) when the company has
been liquidated, and (b) when a right of the shareholder as such (right stricto sensu)
has been violated by an illicit act entailing international responsibility.
The scope and increasing activities of powerful international corporations have had
as their field of operation the exploitation of the natural [p 259] resources of many
countries in the process of development and have controlled the functioning of
many of their public services over which the territorial States have come to be,
notwithstanding their sovereignty, in a subordinated position, and their right to
demand compliance with the prescription of their municipal law on the matter has in
many cases been challenged and put in jeopardy. Faced with the structure and
practice of capitalist society in regard to foreign investment, many countries have
imposed the requirement on foreign capital of taking the legal form prescribed by
local legislation. The exercise of the sovereignty of States in this matter cannot be
legally construed as a device to deprive the even-tual shareholders in corporations
of limited liability (socits anonymes) of the diplomatic action of their national
State. Nationalization and expropriation, in accordance with the law on the matter,
have been the result of the essential need not to have public utilities and national
resources subordinated to the private interests of foreign corporations.

I am also of the opinion that neither is a limitation to the rule according to which
it is the national State of the company who has the right of protectionthe fact that
the protecting State does not exercise its right or ceases to do it. The right of
protection is a discretionary one and the national State of the company is not under a
duty to protect.

In respect to paragraph 93 I must make the following observations.

The paragraph begins with the consideration that "in the field of diplomatic
protection of shareholders as in all other fields ... it is necessary that the law be
applied reasonably".

The phrase immediately following refers to a suggestion which might be interpreted

as an example of reasonableness on the matter. The suggestion, or hypothesis, is to
the effect that, "if in a given case it is not possible to apply the general rule" . . .
then, "considerations of equity might call for the possibility of protection of the
shareholders in question by their own national State". The last sentence in this
paragraph states: "This hypothesis does not correspond to the circumstances of the
present case."
I am of the opinion that there is no need for the Judgment to include reference to an
irrelevant hypothesis. It is difficult to imagine a case in which it would be
impossible to apply the general rule that the right of diplomatic protection of a
company belongs to its national State.

It might be argued that in case the company is liquidated and therefore ceases
legally to exist its national State loses the subject of its right and the general rule
cannot be applied. In such eventuality the shareholders can undertake the defence of
their interest before the courts of the State whose responsibility is invoked and
exhaust the local legal remedies open to them. If a denial of justice is claimed, then
the national State of the person whose rights are violated may intervene according to
the rules concerning the protection of foreigners, but in such hypothesis the State of
the shareholders exercises a right of its own (whether or not such right [p 260] is
qualified as "secondary") and if so its action is not based on "considerations of
equity".

The whole Judgment is based on the ground that according to international law the
national State of the company, and only and exclusively it, has the right of
diplomatic and judicial protection of such company. Therefore it is a contradiction
of a legal nature to state even as an irrelevant hypothesis that there might be a
circumstance when that State which, by definition, has the legal capacity to act
could be legally or juridically incapacitatedthe State concerned is free to exercise
its right or not but its abstention to pursue an action does not affect its right to take
it. It cannot lose its legal capacity and a hypothesis based on the impossibility to
apply the general rule is a juridical contradiction and has no reasonable explanation
even as a whimsical hypothesis. It is also inconceivable that if Canada does not
exercise its discretionary right of protection then this fact gives birth to the right of
the shareholders' State.

***

Therefore on those hypothetical limitations it is not possible to build a Belgian ius

standi.

In respect of the attitude in this case of the national State of Barcelona Traction, the
Respondent describes as follows the three successive phases of the Canadian
Government's action, resulting from the examination of the diplomatic
correspondence and relevant documents:

"The first, going up to the time of the Tripartite Statement, was the phase in which,
misinformed by the interested parties, it accused Spain of having violated
obligations in general international law with regard to the treatment of foreigners
and, on that ground, requested the Spanish Government to intervene with a view to
the annulment of the acts of the judicial authorities.
The second phase, which followed upon the Tripartite Statement and did not last
long, was characterized by the definite abandonment of that request and of any
allegation of a breach by Spain of obligations under general international law. The
Canadian Government, on the other hand, raised the particular complaint that
certain clauses of the treaties in force between the two countries had been broken. It
proposed the settlement of the differences on that point by arbitration.
In the third phase, after expressing regret that the Spanish Government had not
accepted the proposal to submit the specific point about the treaties to arbitration,
the Canadian Government, which had meanwhile become better acquainted with the
facts, definitely [p 261] opted for endeavouring to get the dispute settled on an
amicable basis through direct negotiations between the private parties concerned.

It is thus once again clearly confirmed that the famous exceptional circumstances of
'the absence of protection by the national government of the company', which the
Belgian Government has relied on so often and in so many forms in order to justify
its claim to have jus standi in the case to act under the head of the protection of the
Belgian 'shareholders' in Barcelona Traction, quite apart from the fact that even
theoretically it cannot constitute any valid justification, is not in fact by any means
present in the case."
***

In my view the right of diplomatic protection of shareholders in a company of a

nationality other than that of the protecting State, is not in accordance with the
principles of international law in force, i.e., the rule of the diplomatic protection of
companies by the State of which they are nationals.

Nor is such protection recognized by any special customary rule in international

practice. The arbitral decisions rendered on the basis of special bilateral conventions
are not norm-creating, nor have constituted the foundation of, or generated a rule of
customary international law which is now accepted as such by the opinio juris.

There are not, in the present case, exceptional circumstances justifying any
departure from the strict application of the general rule of international law on the
matter.

The right of diplomatic protection, like any other right, has to be understood as a
right which a particular State has against another particular State. To which State
does that right pertain in the present case? Does it pertain to the Applicant? Is Spain
under an international obligation towards Belgium?

Has the respondent State committed a breach of an international obligation owed to

the applicant State by the measures taken in respect to Barcelona Traction? Is the
person affected by the measures of which Spain is accused linked to the applicant
State by a bond of nationality?

In my opinion all those questions ought to be answered in the negative and, if so,
the international liability alleged by the Applicant does not exist.

Towards the eventual and sporadic possessor of a bearer share there is not a direct
and immediate obligation from the State accused of having violated the rights of a
private foreign national (natural or juristic person) by an unlawful act damaging the
corporation (socit anonyme) which has issued the bearer shares.

The fact that theoretically there is not (or there need not be) continuity [p 262] of
ownership of a bearer share, the nationality of the eventual possessor does not give
to his State a right towards the Respondent, who is not under an international
obligation owed to every State which might have, or has, at a given date, some
nationals in the possession of bearer shares in the corporation alleged to be injured
by an illicit international act, unless specific rights of the shareholders as such were
violated.

It is not justifiable to create an ad hoc rule in disregard of existing and generally

accepted ones to fit a particular case which could and should be decided by the
application of the rules of general international law governing the matter.
The claim in the present case and its characteristics are in the nature of a request to
go around or avoid the strict application of the relevant rules of international law
which "does not recognize, in respect of injury caused by a State to a foriegn
company, any diplomatic protection of shareholders exercised by a State other than
the national State of the company".

The shareholders in commercial limited liability companies (socits anonymes) do

not have a separate and independent right in respect to damage done to the company
by a foreign government.

The rules of international law concerning the treatment of foreigners are not rightly
invoked in respect of shareholders as such.

This question ought to be considered in relation to the protection of citizens abroad

and taking into account the jurisdiction of the State where the foreigner resides.

The following concepts contained in Borchard's Diplomatic Protection of Citizens

Abroad are relevant in this respect:

"The bond of citizenship implies that the State watches over its citizens abroad, and
reserves the right to interpose actively in their behalf in an appropriate case. Too
severe an assertion of territorial control over them by the State of residence will be
met by the emergence of the protective right of the national State, and the potential
force of this phenomenon has largely shaped the rights assumed by States over
resident aliens."

"The principles of territorial jurisdiction and personal sovereignty are mutually

corrective forces. An excessive application of the territorial principle is limited by
the custom which grants foreign States certain rights over their citizens abroad,
sometimes merely the application of foreign law by the local courts, sometimes, in
acknowledgment of the principle of protection, a certain amount of jurisdiction."[p
263]

"Each State in the international community is presumed to extend complete

protection to the life, liberty and property of all individuals within its jurisdiction."
"Not every injury warrants immediate interposition by the State. In the first place,
reparation is demanded only for such injuries as the State in its discretion deems a
justification for diplomatic protection. Factors which enter into consideration in
determining the State's interposition are the seriousness of the offence, the indignity
to the nation, and the political expediency of regarding the private injury as a public
wrong to be repaired by national actionin short, the interests of the people as a
whole, as against those of the citizen, receive first consideration before State action
is initiated."

"The individual has in fact sustained no injury in international law, until the State of
residence or its authorities have in some way connected themselves with the original
act or have declined to afford him legal means of redress."

***

In the present case, it is not Belgium but Canada who is the one entitled to protect
its national, Barcelona Traction, in accordance with the existing recognized rule of
protection of a company only by its national State.

Regarding the question: ". . . whether international law recognizes the right of a
State to protect its nationals, natural or juristic persons, as shareholders in a foreign
company, for the damage they might have suffered as a consequence of an
internationally illicit act done to the company by a third State", the answer, as a
matter of law, should be in the negative.

As regards the facts and circumstances of the particular case, they do not constitute
a juridically valid ground to justify an exception to the existing rule.

***

The shareholders of bearer shares in a socit anonyme do not have responsibility

and they are unknown. If the alleged right of diplomatic and judicial protection of
shareholders in a socit anonyme were recognized, any State investor of capital
abroad could buy, in the stock market, the capacity to present claims in the name of
its nationals to the territorial State who admitted in its territory a foreign company
whose nationality it knew, and who was also aware that, according to the [p 264]
existing and accepted rules on the matter, the national States of the numerous and
unknown shareholders did not have, in international law, a right of diplomatic
protection independent from that of the national State of the company.

Such recognition would be a derogation of the relevant principles of international

law and would entail unexpected complications and unnecessary conflicts in
modern commercial and financial international relations.

If the different States, whose nationals were shareholders in the same corporation,
were empowered to undertake, each one in his own right, acts of diplomatic
protection on behalf of their respective nationals, the admission and operations of
foreign commercial corporations of limited liability (socits anonymes) would
constitute a great risk to the territorial States in need of investments who admit
them.

Such recognition will create distrust, insecurity and unforeseen potential danger of
pressures from unforeseen quarters. It will, besides, hinder the activities of modern
commercial enterprises eager to invest capital abroad.

Mervyn Jones, in regard to the law on the subject, states:

"If a State of which the corporation is not a national could normally take up a claim
in respect of an injury to the corporation merely because there are shareholders who
are nationals of that State, and who have suffered loss, the results would be just as
chaotic on the international plane as they would be under municipal law if any
group of shareholders were allowed to sue in any case where the company has
sustained damage.

If a State could intervene without restriction on behalf of its individual nationals

who were shareholders in a foreign corporation, the position of Governments whose
national the corporation was and that of the State against whom the claims were
brought, would be rendered intolerable. It might well be, in such circumstances, that
the number of possible State claimants in respect of an injury to one large company
could comprise half the world. Again, shareholders are not infrequently
corporations themselves, and the process of identifying individual shareholders
might be prolonged ad infinitum; such a process is in any case difficult in practice."
("Claims on behalf of Nationals who are Shareholders in Foreign Companies",
British Year Book of International Law, 1949, pp. 234-235.)

***

The Court did not examine the merits regarding the fourth preliminary objection.
Nevertheless the written and oral pleadings did show that [p 265] the local remedies
in respect to the alleged wrongs and damages were not exhausted.
There are no grounds to say that a miscarriage of justice took place or that the
bankruptcy was fictitious. There is no question that the bankruptcy declaration was
made in accordance with Spanish law on the subject.
There are no legal bases to state that Spain is responsible internationally for the
standard of its laws and for the quality of the justice administered by its courts.
By which criterium is the Court to measure the standard of Spanish laws in order to
decide if it is high or low, good or bad? And by which test could the Court make a
finding regarding the quality of the justice administered?
Which principles of international law, recognized by all nations, give the Court
authority to pass judgment on those matters?

***

After careful consideration of the arguments from both sides contained in their
pleadings, I conclude that there is not convincing evidence of a predominant
Belgian interest in natural or juristic Belgian persons, having the character of
shareholders of Barcelona Traction at the critical dates, even if it is admitted that
those critical dates are 1948 and 1962. Namely the date of the bankruptcy
declaration and the date of the filing of the present Application.

It has not been proved that the majority of shareholders in Barcelona Traction had
the Belgian nationality at the critical dates, nor that the capital in the Belgian
corporations alleged to be shareholders of Barcelona Traction, was a capital
invested or belonging to Belgian nationals or necessarily linked to the national
wealth of the Applicant.

The unfavourable impact on the wealth of a nation cannot be the legal foundation of
a claim when a State considers that its nationals have lost money abroad, due to an
act of the territorial State which is alleged to be a breach of an international
responsibility.

If the defence of the national wealth could be the legal foundation of the State's own
right to diplomatic or judicial intervention, the rules concerning the treatment of
foreigners would be, in fact, substituted by vague and undefined concepts regarding
non-existing duties of the territorial State to guarantee against loss, the investment,
by a person, of money which the national State could, arbitrarily, claim was
originally part of its national wealth when the investor sent his money abroad.

The national wealth is affected, maybe, when any resident takes or [p 266] sends his
money abroad, rather than the moment he loses such money, or his interests,
dividends, or hopes of pecuniary gains from his investment.
If the defence of the national wealth would entail the right to intervene, the violation
of a duty towards a foreigner would not be the foundation of the claim, but the so-
called harm to the wealth of a State as an automatic consequence of the pecuniary
losses eventually suffered by its nationals abroad. Such losses could be traced to
events in the territorial State regardless of its international responsibility, or the
existence of any legal duty towards the success of business enterprises, or
speculative ventures of foreign nationals.

***

I agree with the Judgment of the Court that the Belgian claim be dismissed.

(Signed) Luis Padilla Nervo

.

[p 267]

SEPARATE OPINION OF JUDGE GROS

[Translation ]

1. Although the force of res judicata does not extend to the reasoning of a judgment,
it is the practice of the Court, as of arbitral tribunals, to stand by the reasoning set
forth in previous decisions (cf. Judgment No. 10: "The Court sees no reason to
depart from a construction which clearly flows from the previous judgments the
reasoning of which it still regards as sound"; P.C.I.J., Series A, No. 11, p. 18).
Although I accept the operative part of the present Judgment, my reasoning is
entirely different. Considering the importance of the case from the point of view of
its consequences on the law applicable to international economic relations, I feel it
my duty to set forth, as briefly as possible, the reasons which lead me to accept only
the operative part of the Court's decision.

2. The separation of fact and law is for the international judge merely a working-
method in the first stage of considering a case; but to judge is always to apply a rule
of law to particular facts. What has therefore to be done is to ascertain, taking
account solely of the facts of the case, what rules of international law are applicable
to the treatment given in Spain to a limited company, Barcelona Traction, as from
the decision rendered by the Reus judge on 12 February 1948, according to the
terms of the claim set forth in the Application dated 19 June 1962 and in the final
submissions of the Belgian Government on 9 July 1969. "Each case must be
considered on its individual merits" (P.C.I.J., Series A, No. 7, p. 69).

3. If the question of the nationality of the claim is taken first, which is the way the
Court decided to proceed, the facts assume crucial importance in the present case,
and it was precisely the idea that the third and fourth preliminary objections could
not be decided without full knowledge of the merits which served to justify the
joinder effected by the Judgment of 24 July 1964 FN1. This was thrown into
particular relief, as regards the third objection, i.e., the very point on which the
present Judgment is based, by the observation which the President made on the
Court's behalf in opening the hearing of 13 March 1964.

-----------------------------------------------------------------------------------------------------
----------------
FN1 I share the views on this joinder expressed by Judge Sir Gerald Fitzmaurice in
paragraphs 84-90 of his separate opinion.
-----------------------------------------------------------------------------------------------------
----------------

What then are the facts of the case? Since Belgium is claiming to protect Belgian
nationals, it has to be verified that the persons in question [p 268] were Belgian at
the time of the acts with which Spain is reproached and were still Belgian at the
moment when the Application was filed. Yet this question of proof of the
nationality of the claim has been left aside and the Court has dealt in the first place
and exclusively with Belgium's right to institute proceedings in behalf of the
shareholders in Barcelona Traction. Though the Court, in the reasoning it chose to
follow, dealt only with this point of law, I shall also have to refer to the question of
proof of the nationality of the claim.
4. In seeking to ascertain what are the persons whose case Belgium has taken up,
one must first and foremost pay attention to a fundamental aspect of the case from
which it is evident that any general theory on the status of limited companies fails to
take account of the particular facts in the present case and ignores the legal problem
with which the Court is faced. In protecting shareholders in the company, Belgium
claims to be protecting a moderate number of natural persons and certain companies
that hold stock in Barcelona Traction; i.e., an important investment on the part of
the Belgian economy. This is not a simple situation, as if it were a question of a
limited company whose capital was shared among a few hundred natural persons
the list of whose names was readily available (cf. on this point the role of
shareholders' protection associations, either national or ad hoc, in particular in the
Certain Norwegian Loans case, I. C.J. Pleadings, Vol. I, p. 86). Barcelona Traction
is a company heading 14 others in a group of its own (see A.M., Vol. I, Ann. 24; the
table shows the composition of the Barcelona Traction group of companies as at 31
December 1947), while itself forming part of a group which appears to be controlled
by the Sofina company and, judging by the Belgium-Luxembourg index in Who
Owns Whom (Part I, B.E. 13), involves over 80 closely linked companies. One
cannot simply ignore this fact and argue as if the case concerned the diplomatic
protection of an ordinary limited company. The present case is a special one, firstly
because the principal shareholders in Barcelona Traction are companies and
secondly because Barcelona Traction itself is the holding company of a group of 14
others which it controls either 100 per cent, (nine companies), or nearly 100 per
cent, (four) or 90 per cent. (one). These features have several legal consequences for
the question of diplomatic protection and for that of the jurisdiction competent to
pass judgment on the activities of the group. The question that has been raised
concerns the fate of a large investment claimed to have been made by the Belgian
economy in Spain, and it is to this question that an answer must be given. When the
times are such that from 1954 to 1968 private investments of the order of 30,000
million dollars were made, international law cannot ignore the phenomenon of
investment, and it can hardly be claimed that it did not exist in the critical period of
1948-1952.

5. To facilitate this expose and simplify its presentation, one funda-[p 269]mental
observation is called for with respect to the right of protection in international law.
When the Court defined such protection in the Nottebohm case, it was in these
terms:

"Diplomatic protection and protection by means of international judicial

proceedings constitute measures for the defence of the rights of the State. As the
Permanent Court of International Justice has said and has repeated, 'by taking up the
case of one of its subjects and by resorting to diplomatic action or international
judicial proceedings on his behalf, a State is in reality asserting its own rightsits
right to ensure, in the person of its subjects, respect for the rules of international
law' . . ." (I.C.J. Reports 1955, p. 24.)

This classic formula is usually held to be an explanation of the role of the State
when acting on the international plane, in relation to the position of the individual.
This view of matters might well originally have been that called for by the comity of
nations as it appeared in the nineteenth century and, already with evident
attenuations, during the first third of the twentieth century. But since then, and
particularly at the present day, the formula that in defending its nationals a State is
asserting "its own rights" at the international level has acquired a reality which goes
further than the procedural justification of its origin. Leaving aside the position of
the socialist States where the question of private investments cannot arise and the
security of public investments is obtained by other methods FN 1, and confining our
consideration of the legal nature of international judicial action to States with a
liberal economic system, the economic world today exhibits phenomena of State
intervention in and responsibility for the economic activity of the subject within the
national territory or abroad which are so frequent and thoroughgoing that the
separation of the interest of the individual from that of the State no longer
corresponds to reality.

-----------------------------------------------------------------------------------------------------
----------------
FN1 See "Observations sur les mthodes de protection des intrts privs
l'tranger" in Mlanges Rolin, 1964, pp. 125-133.
-----------------------------------------------------------------------------------------------------
----------------

A few brief illustrations will suffice, since this situation is well known. To remain in
the field of limited companies, the scale on which many States have acted to
preserve the national character of such companies or regulate the labour problem,
the direct aid granted by the State to encourage investment, and the system of State
guarantees against the risks incurred in foreign countries by domestic companies,
are examples of the way in which the State asserts its "own right" to control the
growth of the national economy, ranging over the whole of the activities of private
undertakings, the results of which enter into the gross national product. Thus when,
in consequence of a risk covered by an export-credit guarantee, a State undertakes
to make good to a domestic com-[p 270]pany any damage caused it by another State
within the latter's territory, it is a financial effort on the part of the national
community which enables this liability to be assumed, through a solidarity based on
the idea that certain exports are necessary for the prosperity of the nation FN1. (Cf.
likewise the United States legislation providing for the protection of domestic
industries against "actual or potential" threats; the provisions prohibiting the
subsidiaries of American companies, wherever they may be, from trading with
certain countries when 50 per cent, or more of their capital belongs to American
shareholders; the Japanese law of 10 May 1950 authorizing foreign investment
"which contributes to a healthy and independent expansion of the Japanese
economy and to the improvement of the country's balance of payments . . .".) The
Luxembourg Agreement of 29 January 1966 between the six member-States of the
European Economic Community contains a recognition of the national character of
the "very important" economic interests of a State (one of the signatories declared
that no majority could force a member-State to take measures which it regarded as
contrary to its national interests). It is clear from all these examples, which are
merely illustrations of a planned industrial society, that it is nowadays out of touch
with the facts of economics to represent the relations between private investors and
the Statewhether that of the investor or the State where the investment is made
as mere relations of municipal law. Private investment is no longer an isolated
operation but a factor in the national economic growth policy.

-----------------------------------------------------------------------------------------------------
----------------
FN1 See "A Note on Recent Developments and Problems of Export-Credit
Guarantees" in Economic Bulletin of U.N. Economic Commission for Europe, Vol.
12, 1960, No. 2, pp. 51 ff.
-----------------------------------------------------------------------------------------------------
----------------

6. For the examination of the present case, however, there is no need to expound the
classic theory of planned economies: it will be sufficient to recall the situation of the
Parties at the material time, i.e., in 1948-1952. In a period when Belgium and Spain
were endeavouring to restore their economies, devastated by the world war or the
civil war, a true account of the economic facts shows that all their resources, like
those of other European States, were at that time mobilized for reconstruction;
imports, exports and transport were State-controlled. Any harm done to essential
elements of the national economy constituted, indeed, harm to the efforts at
reconstructing that economy. If, as has been maintained, the Belgian investment in
the Barcelona Traction undertaking in Spain was so considerable, it formed an
element on which the Belgian Government was entitled to count in its plans for
reconstruction (in its final submission's the 1948 value is estimated at 116 million
dollars). The effects of two world wars on the foreign investments of nationals of
the belligerent States are well known: each time funds invested abroad have had to
be liquidated and repatriated. [p 271]

7. In respect of a period when the economic life of Belgium was ordered by

planning, it is an academic view of the facts that would construe them in terms of
the classic legal relationships which obtained between individuals and limited
companies in a world of liberal economics that had disappeared by the advent of the
world war.

If the economic situation of the Parties at the time of the dispute be taken into
account, the distinction between rights and interests upon which the Judgment bases
its explanation of the position of the shareholders does not correspond to the facts of
the case.

8. The position adopted by the Court is that an individual cannot, owing to his legal
status as a shareholder in municipal law, obtain, in international law, the protection
of his national State in cases of unlawful acts, attributable to a foreign State, which
result in material loss for the company. I have indicated the reason why the problem
before the Court is a different one: because the relationship between the individual
shareholder and the company is inextricable from the phenomenon of overall
investment. However, even on the Judgment's own ground, the position does not
strike me as convincing.

In terms of the reasoning followed by the Court, the problem may be divided into
two: in the first place, is it the status of shareholder which makes protection
impossible or is it, in the second place, the nature of the damage caused to the
shareholder "through" the assets of the company?

In the present case, the shareholder has been treated in discussion as a uniform
abstract being. But there are in fact at least three categories of shareholder: the small
private investor, largely unfamiliar with the detailed problems of investment and
inclined to leave his investments undisturbed FN1; the speculator, who buys for a
quick resale; the businessman or company that, as shareholders, control the activity
of a company in their own interest, at times with a proportionally small holding
(financial circles speak of 10 per cent.), either by means of their actual presence in
the organs running the company or the banks lending it vital assistance or by the
conclusion of agreements for technical or commercial co-operation.

-----------------------------------------------------------------------------------------------------
----------------
FN1 It is in respect of this category of shareholder that one would tend to concede,
prima facie, a "continuity" in the ownership of Barcelona Traction shares acquired
before 1948, up to 1962. It is also in respect of these individual shareholders that,
despite the particular characteristics of the holding company, the question might
arise of whether direct rights have been infringed, as the Judgment says in
paragraph 47. However, the claim was not concerned with this legal point.
-----------------------------------------------------------------------------------------------------
----------------

There is no essential difference between a shareholder in the first category whose

investment abroad is lost on account of an unlawful act attributable to the foreign
State, and the owner of a deposit of money or some other property abroad which has
disappeared for the same reason.
It therefore remains to be shown that the share is a form of property right which, for
reasons peculiar to the legal regime governing the rela-[p 272]tionships between a
limited company and its shareholders, is not protected. This is the reasoning
followed by the Judgment, and I regret that I am unable to accept it. For it is based
on a conception of the role of the Court, and of the relationship between
international and municipal law, which may be summarized as follows:

(a) an international court must fall back on concepts of municipal law when seeking
to define the legal relationships between the company and the shareholder;

(b) municipal law does not comprise any right of action of the shareholder in behalf
of the company;

(c) since such right of action does not exist, the State of the shareholder cannot
invoke its right of protection for what is no more than an individual financial
interest.

9. The premise of this reasoning seems to me as unacceptable as its conclusions: the

renvoi to municipal law leads eventually, in the present case, to the establishment of
a superiority of municipal over international law which is a veritable negation of the
latter. It may happen, in certain cases, that the only problem to be decided is that of
whether a rule of municipal law is in conformity with a treaty rule, and that it is
necessary for the purpose to interpret municipal law as it stands. But here we have a
different situation, one in which a denial of justice is alleged to have been
committed against foreign nationals, both the company itself and the shareholders.
To consider as a ground for exonerating a State from international responsibility for
an alleged denial of justice the fact that its municipal law, or some systems of
municipal law, do not feature a shareholder's right of action is not admissible; any
more than the absence of municipal rules on the responsibility of the State for
damage caused by the legislature, administration or judiciary is taken into account
by international law.

10. In the present case, the rules of municipal law are nothing more than facts in
evidence, and they deserve the same attention as the other facts, and the same rigour
in their interpretation, but no more. The Court does not have to apply the rules of
municipal law, as a municipal court of last instance would, to the relationships
between the company and the shareholder; it takes account of them as being facts
for the purpose of its appraisal of the legal situation laid before it by Parties and in
order to see whether that situation as a whole is in conformity with the rules of
international law or not. It is the latter rules which for an international tribunal go to
constitute the reasons of its decision. It is therefore not enough to say that since a
given municipal legal system creates a certain legal relationship, an international
tribunal is obliged, on account of renvoi to municipal law, to accept that relationship
as possessing the same legal cogency. The international tribunal takes this legal
relationship as an established fact and tests it against the rules of international law.
This holds good in the present case for the [p 273] relationship between the
shareholder and the limited company, which we will examine further below.

11. First, an observation with regard to the limited scope of the Judgment. If it is
true that between 1948 and 1952, at the time of the acts complained of whereby the
investment in question changed hands from the viewpoint of Hispano-Belgian
relations the legal system of neither country contained any provision generally
enabling a shareholder to act in place or in behalf of a limited company, that is not a
generally accepted rule. Suffice it to refer to the provisions of the French law of 24
July 1966, which institutes for a minority of shareholders a mechanism enabling
them to participate in controlling the way a limited company is run, as well as an
action for the reparation of damage sustained by the company (Articles 226 and
245) FN1. The result finally produced is that the position of the shareholder as
regards the exercise of diplomatic protection would depend in each case on the
existence of provisions of municipal law; if, in a given case of investment abroad,
one of the States in question allowed shareholders an individual right of action, that
would be sufficient to preclude basing on the renvoi theory any finding that the
State had no capacity.

-----------------------------------------------------------------------------------------------------
----------------
FN1 Likewise the Swedish company-law of 1944, revised in 1948, provides a right
of action for a 10 per cent. minority of shareholders (Art. 129); there are similar
provisions in Norwegian law (Art. 122 of the 1957 company-law) and in Articles
122-124 of the corresponding law of the Federal Republic of Germany.
-----------------------------------------------------------------------------------------------------
----------------

12. If the renvoi method is not applicable in the present case and if the provisions of
municipal law are merely factual data, the complaint that the shareholders in a
limited company were despoiled must be judged in terms of the rules of
international law applicable to foreign invest-ments in the territory of a State, and it
would appear that, as between two European States such as Belgium and Spain, on
the critical dates no less than at present, a total loss of assets that results from acts
described as unlawful and is wholly unindemnified, which amounts to confiscation,
constitutes a grievance justifying a claim to establish international responsibility.
The protocol of 20 March 1952 to the European Convention on Human Rights
declares:

"Article I: Every natural or legal person is entitled to the peaceful enjoyment of his
possessions. No one shall be deprived of his possessions except in the public
interest and subject to the conditions provided for by law and by the general
principles of international law. . . ." (My italics.)

Although Spain is not a party to that convention, there can be no doubt but that it
accepts its content. The least that can be said is that here is a general principle of
law which loses none of its binding force through being restated in the 1952
protocol; irrespective of any treaty provisions, it is directly opposable to Spain.
Investment consists of a decision to assign assets to a productive activity; it does
not, merely [p274] because it takes place in a foreign country, thereby turn into a
vulnerable form of property subject to confiscation without redress, when it enjoys
secure protection from unlawful acts if carried out within the national territory. The
opponents in the present case are two States whose economic and legal conceptions
are the same; any reference to different legal systems is the less acceptable that,
generally speaking, they exclude resort to an international court, with the result that
their rules cannot be subjected to the examination of such a tribunal. I would add
that it is paradoxical, to say the least, to invoke the protection of human rights in the
name of universality while at the same time excluding from it the protection of
property from unlawful acts in the name of a particular way of thinking which
contests that right.

One cannot but observe how an industrial undertaking which nobody ever claimed
to be Spanish before 1948 became Spanish, against the will of the corporate organs
of Barcelona Traction, as a result of acts characterized as a denial of justice both
overall and in detail. In fact the undertaking is today incorporated into the economy
of Spain by a sort of "nationalization" which, if it was effected by a misuse of legal
procedure, constitutes a breach of international law as between the Parties. It is clear
that any nationalization of a regular kind would have been accompanied by
compensation. The fact that negotiations between the private groups involved halted
the first proceedings also shows that the Spanish private group accepted in principle
that some compensation should be provided. I find it hard to see how it could be
claimed that, as between the Parties, an irregular confiscation would not be a breach
of international law, on the sole ground that in municipal law the shareholder, as
such, would have no direct remedy. That is really to displace the problem rather
than solve it.

13. If the view that it is impossible to take international proceedings in behalf of the
shareholders in a limited company cannot be justified by a renvoi of the question to
a system of municipal law from which a shareholder's right of action is absent, it
remains to examine the second reason advanced for finding that the State of which
the shareholders are nationals lacks capacity to institute proceedings.

It has been maintained that the shareholder cannot sustain direct damage: the
damage is always to the company; it is true that the shareholder's personal finances
might be adversely affected, but only "on the rebound". Here we once again come
up against the theory based on certain systems of municipal law as they stood in the
early stages of limited-company legislation, explaining the latter by the idea that the
shareholder confides his investment to the company for better and for worse, and
must accept all the risks without having any right to the protection which the holder
of a bond enjoys. As applied to the small private investor, this theory is incorrect in
its economic justification, but it is even more incorrect as regards the majority of
large companies in the modern economic sceneand this was already true in 1948.
The [p 275]
shareholder no longer plays any useful part in controlling the management of the
company via general meetings, for "we observe that the board of directors has
entirely confiscated the power of the general meeting and become to all intents
omnipotent" (A. Tunc, in Travaux et conf!!!erences de l'Universit libre de
Bruxelles, 1959, p. 11)FN1.

-----------------------------------------------------------------------------------------------------
----------------
FN1 With regard to the United States, see J. K. Galbraith, The New Industrial State,
London, 1967, p. 403:
"For many years those who specialize on the problems of the corporation have been
much concerned with the way control in the large firm has been passing without
recourse from stockholders to the hired management. The latter, as sufficiently
noted in this study, selects itself and its successors as an autonomous and self-
perpetuating oligarchy."

Of course one must not forget the efforts made by certain countries to remedy this
situation by legislative means: cf. paragraph 11 above.
-----------------------------------------------------------------------------------------------------
----------------

The theory in question, therefore, bases the refusal of shareholder protection on a

reason which is today incorrect, because the "legal nature" of the relationships
between the company and the shareholder now has scarcely anything in common
with the legislative texts of the early nineteenth century. It is inadmissible for the
legal analysis to ignore the economic facts; the shareholder-bondholder contrast is
now meaningless if the situation of the State in relation to the company be
envisaged. The various guarantees that the State gives the shareholders no less than
the company by its protecting interventions (advancing credit in the event that an
undertaking be threatened with closure) are the very negation of the notion of risk.
Investment is an instrument of general economic policy. But the theory of the
financial risk to be borne by the shareholder must be ruled out for a reason deriving
from the above-mentioned idea that the situation created in international law by a
confiscation characterized as unlawful cannot be ignored on the sole ground that
shareholders must accept all the risks. That is to proceed as if the substantive issue
had been settled, for if there has been unlawful confiscation, there has been a breach
of international law. Foreigners are not, just because they are shareholders, bound
under international law to run the risk of seeing their investments disappear as a
result of unlawful acts. The shareholder's risk is a financial one, not a risk of
subjection to unlawful treatment.

14. The international-law situation which must be taken into account in the present
case is made up of a series of acts on the part of one State which have been
described as unlawful, and of their effects upon investments made by the nationals
of another State. To affirm that the shareholder is always a speculator who must
shoulder every risk, on the strength of an explanation that no longer corresponds to
prevailing corporation law, not only constitutes, on the international plane, an
irrelevant submission vis--vis a State complaining that, via its nationals'
investments, its general economy has been damaged by an act described as
unlawful, but also leaves out of account the rule of international law which prohibits
confiscation without compensation FN2. [p 276]

-----------------------------------------------------------------------------------------------------
----------------
FN2 Modern bankruptcy law has evolved to no less an extent than corporation law,
so that the proceedings in the present case can be seen to have developed on
anachronistic lines. It is nowadays the tendency to rescue the enterprise no matter
what the faults committed by its officers and the penalties to which they are liable.
See M. Houin's account of the matter in Ides nouvelles sur le droit de la faillite,
1969, pp. 122 ff. Suffice it to observe that the judge chooses between the liquidation
of the assets (bankruptcy) and judicial settlement (composition) in accordance with
an economic yardstick: the chance of bringing the enterprise back to normal.
Furthermore, French legislation has set up special machinery for preventing the
failure of important undertakings whose disappearance would be likely to result in
grave perturbations for the national economy (Ordonnance of 23 September 1967).
-----------------------------------------------------------------------------------------------------
----------------

15. In the analysis based on municipal law, it is indeed stated that the damage at all
events is never "personal" and proper to the shareholder, but solely damage
sustained by the company; this makes it possible to maintain that there has been no
damage suffered by the shareholder, and therefore no confiscation. Here again, even
if the standpoint adopted is that of municipal law, abstraction must not be driven too
far: a limited company is always an assemblage of persons who do not vanish with
the attribution of a corporate personality, the raison d'tre of which is to facilitate
the running of the business. The shareholders form the company, and the Judgment
recognizes the possibility of action by the State of the shareholders when the
company has disappeared. In the present case the company has been entirely
deprived of the means for pursuing its corporate objects and, from the point of view
of the shareholders, this produces the same effects as a disappearance of the
company. The shade of differentiation is therefore a matter of form or rather of
formality. As from 1952 the corporate objects of the Barcelona Traction group have
been void of meaning FN1.

-----------------------------------------------------------------------------------------------------
----------------
FN1 The argument using the fact that Barcelona Traction shares have recently been
transacted to prove that the company is still active is unconvincing. A few purchases
or sales are enough to keep certain loan-stock, unpaid for over half a century,
quoted on some exchanges. When it is said that the shareholder has the right to
dispose of his share, this certainly means to dispose of it under normal conditions,
whichapart from a few speculations on the outcome of the present case before the
Courtis no longer true in respect of Barcelona Traction.
-----------------------------------------------------------------------------------------------------
----------------

If a shareholder were to claim compensation for the loss of profits of a company

whose activities had come to an end, he would be demanding a kind of "functional"
protection, a guarantee of the right to trade abroad, which, if it existed by virtue of a
treaty or of general international law, could be invoked only by the State in whose
territory the company is incorporated and to the economy of which it is linked. But
when shareholders ask for compensation for their investment and what it
represented on the date of the damage, on the ground that the company is no longer
in a position to continue its operations, the fact that this damage, by the totalling of
the damages sustained by all the shareholders, is also the damage done to the
company does not seem to be relevant, leaving aside the problems of assessment
and apportionment. The damage to the company is that it is destroyed; the damage
to the shareholders is that they are injured in respect of their property through the
destruction of the [p 277] investment; the damage suffered by the State of the
shareholders is that one component element of the national economy has undergone
spoliation. The cause of the responsibility is in all cases the unlawful act of the
State, and the action for the protection of the shareholders cannot be described as an
intervention in the domestic affairs of that State, as has sometimes been alleged,
unless it is claimed that denial of justice does not come within the purview of
international law. The point that there should not be any double reparation, on the
one hand for the company and on the other for the shareholders, denotes a very
understandable concern for fair play. Nevertheless, intellectually and juridically, the
individualization of the damage remains a possibility.

Finally, the Judgment's view which admits the possibility of action by the State of
the shareholders in the event of the disappearance of the company is lacking in logic
for, in such an eventuality, if the company's State had started an action it could not
be nonsuited through the disappearance of the company. And even if such action
had been instituted after the disappearance of the company, it is difficult to see why
the State of the company should be unable to make a claim in respect of the
unlawful act which was the root cause of the disappearance. If then, in this case,
both States can act, does this not mean that the general rule conferring the right of
action on the State of the company is not an exclusive rule?

16. Let us now return to the argument of the financial risk that must be borne by the
shareholder: the shareholder is not injured in respect of his "rights", but only in
respect of an economic interest which is not legally guaranteed and not entitled to
diplomatic protection or recourse to proceedings. If a partnership were involved,
those very persons who refuse the idea of protection of the shareholder admit that
protection would be possible, but we are told that, as a shareholder does not enjoy
any right over the company, he has merely an interest in its optimum functioning.

In the first place, this is again to erect definitions taken from certain municipal
systems of law into a rule of international law; this is paradoxical in the present-day
world, when two-thirds of the population live outside the capitalist system and the
legal rules to which the Parties adhere. The principle asserted must therefore be
demonstrated to form a veritable rule for States with a liberal economic system, one
accepted by them as a rule of regional international law. Such is patently not the
case, as is shown by diplomatic practice and arbitration. Moreover, we must recall
the numerous agreements, which were concluded precisely in the period when the
dispute arose, by which minority holdings in companies were indemnified at the
request of the State of which the minority shareholders were nationals (the
agreement of 19 March 1948 between France and Poland, for instance). In the
conventions concluded by Switzerland with Hungary on 19 July 1950, with
Romania on 3 August 1951 and with Bulgaria on 26 November 1954, compensation
is granted even to the holders of single shares. It seems to me impossible to dismiss
these agree-[p 278] merits with a stroke of the pen, in particular those of
Switzerland, which are not peace settlements imposed by a victorious State; it is not
the habit of States to make each other free gifts FN1 and the number of agreements
for the compensation of shareholders considered apart from the limited company
does imply the recognition of an obligation.

-----------------------------------------------------------------------------------------------------
----------------
FN1 In the Hammaken case (U.S.A./Mexico, Moore, International Arbitrations,
Vol. IV, p. 3471) the umpire rejected the argument by the agent of Mexico that a
sum of $100,000 allowed by Mexico on account of the cancellation of a concession
was only an ex gratia donation: "if the [Mexican Government] did not think that the
wrong had been done by the Mexican authorities, it would not have agreed to grant
compensation . . ."
In many cases the respondent State prefers to pay an indemnity rather than to be
declared responsible for the damage; hence the conventional reference to payments
"in equity", "without admitting any legal obligation", "without reference to the
question of liability" (cf. Moore, International Law Digest, Vol. VI, in particular
with regard to the lynching of Italians in Colorado (p. 841) and at New Orleans, and
the lynching of Chinese at Rock Springs (p. 830)). But these forms of words do not
remove the problem of the imputation of international responsibility.
-----------------------------------------------------------------------------------------------------
----------------

17. In the current ethos the limited company is simply a means of investment in the
industrial economy. The State, now having scarcely any property of its own FN2 ,
supervises and directs the activities which go to make up the gross national product,
by drawing up the economic policy of the nation. The supervision requisite to make
sure that the components of the national economy are maintained in normal working
conditions, and in particular to prevent their disappearance as a result of decisions
contrary to law, constitutes one of the normal functions of the State, and takes the
form of anticipating, guiding and assisting at the time of the decision to make the
investment, and of protecting in case of need after the investment has been made.
Investments which have made possible the creation or the development of an
enterprise abroad are as essential to the national economy as investments which are
made within the national territory. The action of the State for the purpose of
protecting a component item of the national economy is a natural feature of the
economic society of which Belgium and Spain formed part at the time when the
dispute arose.

-----------------------------------------------------------------------------------------------------
----------------
FN2 When, in liberal economies, public bodies buy stock in companies and become
shareholders, are they to be deprived of the protection of the State? (The Industrial
Reorganisation Corporation in the United Kingdom ; the Institut de dveloppement
industriel in France.)
-----------------------------------------------------------------------------------------------------
----------------

18. It would be a distortion of this argument to claim that it leads to the recognition
that, in all circumstances, every shareholder has the right to secure the protection of
his State in respect of any act which has inflicted damage on the limited company
itself. In the first place, the present opinion has been directed towards showing that,
while accepting for the sake of argument the renvoi to systems of municipal law, the
alleged legal obstacles to the exercise of a right of protection of shareholders, as
such, were not insuperable even within this legal framework. It is not the case that
the legal characteristics of the bond between the shareholder and the company do
not permit the State to act; neither is it the case that the [p 278] damage done to the
company necessarily rules out the possibility of there being a damage proper to the
shareholder in respect of which the State may intervene; neither, lastly, is it the case
that the State of the shareholders possesses no right of its own to seek to preserve
the component items of the national economy. In fact there are no legal obstacles to
such protection; there are only necessary dispositions, precautions to be taken so as
to reach a reasonable solution in each case.

In the second place, the view that investments may be defended by the State whose
national economy is adversely affected is subject to limitation by the terms of that
very definition. The investments in question must be connected with the national
economy (and therefore not an ephemeral transaction in securities) and there must
have been an unlawful act involving the responsibility of a State. The only problem
is that of deciding in each case how to co-ordinate the protections possible, that of
the company and that of the shareholders.

19. To apply this reasoning more specifically to the case, there is a complaint of
denial of justice, the claim that an industrial undertaking was made to change hands
by procedures that are described as unlawful, and therefore a problem of violation
of international law. The substance of the obligation invoked against the Spanish
Government is the obligation to respect the investments of Belgian nationals and to
protect them from unlawful acts: this is a general obligation incumbent upon States
in the conduct of their economic relations. The Belgian Government's capacity to
institute proceedings corresponds to the right possessed by every State to secure the
respect of that obligation, when the investments of its nationals constitute an
important part of the national economy. The foundation of a rule of economic
international law must abide by economic realities. The company's link of bare
nationality may not reflect any substantial economic bond. As between the two
criteria the judge must choose the one on the test of which the law and the facts
coincide: it is the State whose national economy is in fact adversely affected that
possesses the right to take legal action.
***

20. In the present matter one must seek to ascertain what is reasonable both on the
legal plane and on the plane of economic realities. When a limited company has
been set up, it may be granted that the shareholder is, in principle, defended by the
company, subject to the remarks above as to the three categories of shareholder and
the special character of holding companies.
Accordingly, the State which has the right to protect the Barcelona Traction
investment would be Canada, and that, according to the Judgment, is what both
Parties have admitted. But that is a proposition which must be verified, just as any
contention made by a State which brings an international claim before a court must
be verified, to make sure that it [p 280]really corresponds to the facts. The issue
here relates to certain investments which have suffered serious damage; who has
been harmed? If any property suffers damage, reparation should be sought by the
State with which the property is genuinely linked. Now, supposing that Canada had
intervened before the Court in order to be recognized as having an interest of a legal
nature, relying on Article 62 of the Statute, Spain would not have failed to object
that there were not in Barcelona Traction any substantial or genuine Canadian
interests. It is of course inevitable in complicated cases that parties should commit
self-contradictions, but it would be regrettable if the Court were indirectly to
recognize these as possessing significance. There is indeed a major reason why no
account should be taken of the statements made by the Parties concerning the
Canadian character of the company. The example of the right to intervene provided
for in Article 62 is to the point: if Canada had intervened, even an agreement
between the two Parties by which Canada were recognized to have a legal interest
as being the national State of the company would not have dispensed the Court from
examining the question whether Canada really had a legal interest, for Article 62
says that "It shall be for the Court to decide" whether an intervention is justified,
and it seems to me that, in the matter of jurisdiction, the Court cannot content itself
with taking note of an agreement between the Parties concerning the existence of a
legal interest on the part of a third State which is absent from the proceedings. The
legal interest of Canada either exists or does not exist; it is not for third States to
create it, and the most they could have done would be to recognize this legal interest
so far as their positions in the present case were concerned, without such
recognition having for the Court any effect whatever in regard to the obligation laid
upon it by its Statute to verify its own competence.

21. It is therefore an obiter dictum void of judicial significance to assert at the

present time the Canadian nationality of the Barcelona Traction company. That
Canada did in fact act at the diplomatic level for a certain time, that it proposed
arbitration, these are not reasons for recognizing its right to institute proceedings; it
is not enough to claim a right to be recognized as possessing it. All litigants make
claims and one is always the loser, and, his claim having been dismissed, he finds
that he did not have a right. A holding company whose capital is apportioned among
shareholders of several nationalities and of which the object is to operate an industry
abroad cannot be governed by one system of municipal law in respect of all the
problems concerning it (cf. paragraph 29 below). And the question of which
municipal law is applicable to a specific problem is a matter for international law.
That is what underlies the problem of the "nationality" of companies. The assertion
by a State that it has jurisdiction over a company is nothing but a claim so long as it
has not been admitted by all the States directly concerned in that situation or by an
international judicial decision.

22. It has not been established that Canada has capacity to institute [p 281]
proceedings in behalf of Barcelona Traction, since that company was Canadian in
appearance only FN1 and since, in the economic sphere, the protection of
investments must conform to the reality of the connection. The decision regarding
Nottebohm, an individual, which tacitly left the case of companies open, can be
applied with even greater reason to companies, for the connecting factor of
economic interest, as between investments and the State from which they really
come, is essential, as has been stated above FN2. It is even more true of investment
via a limited company than of an individual or a ship that it cannot be given
consideration at the international level unless the State which puts forward the claim
has suffered a damage to its national economy; when there are several States with
which a company has a genuine connection, a complication may arise, but that is
not the case of all limited companies engaged in activities abroad and the Court is
not called upon to deliver a judgment laying down the law for the protection of
limited companies in general.

-----------------------------------------------------------------------------------------------------
----------------
FN1 Notwithstanding the references in the Judgement in paragraph 71 to various
points of connection with Canada, I agree with the observations made by Judge
Jessup in paragraph 49 of his separate opinion (in particular the footnote thereto).
Those really in control of Barcelona Traction do not seem to have featured any
genuine connection with Toronto.
FN2 The distinction between seeking a genuine connection in favour of or against a
company is devoid of legal significance. No party is ever either favoured or
penalized by the law, because of the fundamental principle of equality before the
law. The purpose of seeking the reality behind appearances is to discover the true
legal situation underlying the forms adopted. The bringing of truth to light is not
inspired by any favourable or unfavourable attitude towards one of the elements of
the problem but by the needs of the process of ascertaining the law.
-----------------------------------------------------------------------------------------------------
----------------

23. One final observation must be made concerning the attitude of Canada ever
since the proceedings were brought. If Canada had felt any interest in the case it had
means so to inform the Court, without having to intervene and run the risk of
judicial rejection of its intervention. In the Corfu Channel case various documents
were proposed to the Court by the Yugoslav Government, which was not a party to
nor intervening in the proceedings, and they were finally submitted to the Court by
the Albanian Government following a decision taken by the Court on 10 December
1948 (I.C.J. Pleadings, Vol. III, p. 190; see also the Judgment on that case, with
regard to this point: I.C.J. Reports 1949, p. 17). In the present case, any Canadian
document relating the course of diplomatic protection by Canada and giving the
exact views of the Canadian Government could have been furnished to the Court by
the same procedure. Yet, on the contrary, the elliptical answer returned by the
Canadian Government on 24 June 1969 to the question put by Members of the
Court did not supply any clarification (New Documents Nos. 44 and 45 submitted
by the Belgian Government). On this point I would refer to paragraphs 19 ff. of the
separate opinion of Judge Jessup.

24. Although the Court has rejected the possibility of considering any analogy with
the Nottebohm case, it seems to me that the Nottebohm [p 282] Judgment does
establish a relative standard and does not go further than the rule already recalled:
"each case must be considered on its individual merits." Thus, even without any
need to rely on that Judgment, the particulars of the present case are such as to place
in the forefront of the matters which the Court should have investigated the problem
of the real provenance of the investments in question. The theory of the genuine
connection implies comparison between Canada, Belgium and Spain and perhaps
other States, and inquiry into the concentration of the undertaking in Spain, the
problem as to whether the real control lay with the organs of Barcelona Traction or
elsewhere, and the reality of the Belgian investment. As the Court did not in fact
consider these verifications to be necessary, it is difficult to give any final opinion
concerning the real connection of Barcelona Traction with any national economy,
but the documents in the case do permit of a few conclusions.

25. The connection with the national economy of Canada is certainly not the most
conspicuous, for the undertaking has never appeared to constitute a factor of
production in that economy.
The connection of Barcelona Traction with the Spanish economy cannot be disputed
so far as the factor of the production of goods and services in Spain is concerned.
The company concentrated all its activities in Spain, and its subsidiaries, Spanish
companies all but three, were under its absolute control, so that it may be considered
that the Barcelona Traction group as an integrated enterprise formed a component in
the Spanish national production. But although this aspect of the matter may have
legal consequences, more particularly in respect of certain problems of jurisdiction,
it has none Whatsoever for the purpose of ascertaining with which State the foreign
investments underlying the creation and development of the enterprise are truly
connected. It has not been established that these investments were mainly Spanish.
There is therefore, from the standpoint of the law applicable to the investments, no
genuine connection with the Spanish economy.

26. The connection with the Belgian economy has been made the subject of
exhaustive commentary by Judge Sir Gerald Fitzmaurice and Judge Jessup. For the
sake of brevity, I will merely say that I do not feel proof has been supplied that the
investments in question belong to the Belgian economy in the sense of the view
propounded in this opinion.

In this case, proof has not been supplied in a manner satisfying for a court that
Barcelona Traction, in continuous fashion, predominantlyor even substantially
represented an investment on the part of the Belgian economy. While it was
possible to furnish prima facie evidence that over certain periods, in terms of origin
of capital invested and of actual control of industrial and financial operations, the
Belgian economy was more involved than others, the observations made by Judge
Jessup in paragraphs 72-98 of his opinion show that the same has not been proved
true of the period after 1940, more particularly during part of the critical period.
Neither was it possible to demonstrate a predominant, constant and certain [p 283]
connection with the Belgian economy on the basis of an inspection of the company-
group of which Barcelona Traction forms part.

To claim the right to protect investments, the presumption that Belgian interests
existed is indeed not enough; what is needed is to prove a genuine connection with
the economy during a continuous period, thus enabling it to be said that
appurtenance to the State in which the company was incorporated is not in line with
economic realities. If it is possible to verify the genuineness of the seat, that cannot
be for the purpose of substituting one presumption for another. In all cases of this
kind, it is naturally difficult to pinpoint effective appurtenance to a particular
national economy, but the fault does not lie in any inadequacy of legal rules: it lies
in the very features of a complex undertaking. Within the ramification of companies
in such a group it is perhaps possible at a given moment, and with reference to a
given operation, to determine with what national economy that operation is
connected; it is not certain that this will be possible for the whole of the group's
operations, especially not with regard to long periods during which there will have
been changes in stockholdings, control and management. But each case raises its
own particular problem and it would not, conversely, be difficult to refer to
company-groups which, despite their complexity, are incontestably connected with
a given national economy.

27. There is therefore no reason to treat company-groups as stateless and deprive

them of all protection at the level of international law; it is not unlawful either in
municipal or in international law to set up such groups, and the problems to which
they give rise are in no way different from those arising out of the commercial,
financial or industrial operations carried out by other corporations. The difficulty of
determining the connecting link creates a complication, not an incapacity. What is
necessary is to ascertain in each case whether the investment in question is, in fact,
connected with a particular national economy and whether the national economic
prosperity of the claimant State has been harmed by the unlawful act which directly
affected the company. When several economies are affected, this produces a
situation which is familiar in international law and is resolved by the
acknowledgment of an obligation to negotiate (cf. the agreements nowadays
concluded among several creditor States vis--vis a debtor State).
That the connection should be genuine is a necessary condition for the protection of
a corporate person no less than for that of an individual, and in its absence the link
with the State is fictitious and does not confer capacity to institute proceedings.
Finding that proof of Barcelona Traction's appurtenance to the Belgian economy has
not been produced, whether on account of the internal organization of the group or
for other reasons, I am obliged to conclude that the claim must be dismissed.

***

28. I would add that there is another ground on which I would consider the
dismissal of the claim justified, but as the Court has not dis-[p284] cussed the matter
I can do no more than allude to it. Within the limits of a separate opinion on a point
not settled by the Judgment and not deliberated, I must needs be brief FN1.
Nevertheless the matter is of sufficient interest and priority to justify an outline of
my reasoning.

-----------------------------------------------------------------------------------------------------
----------------
FN1 I consider that this point of principle remains governed by the observation of
President Huber in July 1926 (P.C.I.J., Series D, addendum to No. 2, p. 15) and the
resolution adopted by the Permanent Court of International Justice on 17 February
1928 (StaufFenberg, Statut et Rglement de la Cour permanente de Justice
internationale, p. 414). When a point of law has not been retained, in application of
Article 4 of the Resolution concerning the Internal Judicial Practice, as one which
should be decided by the Court, any observations thereon that a judge may make are
precluded from possessing the character of judicial pronouncements.
-----------------------------------------------------------------------------------------------------
----------------

The fact that a State may invoke the right to protect its nationals who are
shareholders in a company does not exempt the company from the obligation of
exhausting the local remedies available for the rectification of the situation
complained about. Barcelona Traction ought to have entered a plea of opposition to
the judgment declaring bankruptcy within the legal time-limit, and there are no
reasonable grounds for deciding that the company's failure to enter such opposition
within the time-limit does not form a bar to the institution of proceedings on the
international level. As Sir Hersch Lauterpacht wrote in Ms separate opinion on the
Certain Norwegian Loans case: "however contingent and theoretical these remedies
may be, an attempt ought to have been made to exhaust them" (I.C.J. Reports 1957,
p. 39). As it happens, at the time when the Reus judge gave his decision, there was
nothing to justify the contention that the remedy of opposition was merely
theoretical. Generally speaking, in bankruptcy law the bankruptcy judgment divests
the bankrupt as soon as it is delivered and before any publication; the rule is perhaps
too rigorous but there are reasons for it with which specialists in commercial law are
familiar, and that effect was at all events a feature of Spanish law in 1948 FN2.
Even if it had been intended to maintain that this rule was contrary to a general
principle of law, it was necessary to enter opposition to the judgment while
expressing the necessary reservations as to the lack of notification; this complaint
ought indeed to have been laid in the first instance before the local judge so that he
could rule upon it and, if need be, rectify the situation. Whether it be Spanish law or
international law that is considered to have been violated, it is necessary to request
the local courts to look into the matter and allow them the opportunity of correcting
any mistake.

-----------------------------------------------------------------------------------------------------
----------------
FN2 There is nowhere to be found in the different legislations of the same legal
system, at that time, any provisions concerning publication which are such that they
enable the existence to be deduced of a general principle of law the infringement of
which would ipso facto render the entire proceedings null and void. And if it be held
that failure to publish the judgment at the bankrupt's place of domicile constitutes a
breach of Article 1044 (5) of the Spanish Commercial Code, then it is to the Spanish
courts that complaint must first be addressed in this regard.
-----------------------------------------------------------------------------------------------------
----------------

29. The necessity of entering a plea of opposition becomes still more evident when
it is observed how the concentration of the industrial under-[p285] taking in Spain
lends colour, prima facie to, the Spanish assumption of jurisdiction, on considering
the jurisdiction problem in general and quite apart from the petition for bankruptcy
on account of failure to honour bonds.

The corporate purpose of the undertaking is to develop the hydro-electricity industry

in Spain, and the electric railway and tramway system in the city and province of
Barcelona (cf. Moody's Public Utility Manual, 1968, p. 2067). No area other than
Spain is contemplated for hydroelectric development, and in fact Barcelona Traction
never undertook works in any other country; its subsidiaries operated electricity
production and distribution systems in Barcelona, Catalonia "and the industrial
cities of Tarrasa, Tarragona, Reus" (sic) "and Tortosa" (ibid.: it should be noted that
these details are based on information supplied by the company; see the paragraphs
"Property Seized" and "Assets in Spain sold"). In these circumstances, the absence
of publication in Canada can be seen in a particular light; furthermore, the
considerations set forth in a number of separate opinions concerning the
genuineness or otherwise of the company's headquarters in Toronto could have been
adduced by the Spanish judge, who could also have invoked the judicial precedents
of certain States, where foreign companies which have a branch, have carried on
business, issued bonds or entered into contracts within the national territory have
been adjudged bankrupt FN1. It should be noted that the courts of certain States
have declared bankruptcies for non-repayment of loans, when a businessman has
called on credit in their territory, though that is an exceptional circumstance. The
claim to possess a certain jurisdiction over the activities of the Barcelona Traction
group in Spain was consequently not, a priori, illegitimate, though this does not
imply the legitimacy of all the measures for the execution of the bankruptcy, or of
the actual petition made to the Reus judge. But the state of the law concerning the
bankruptcy of foreign companies was not, at the time of the facts, such as to justify
any abandonment by the company of the remedies open to it.

-----------------------------------------------------------------------------------------------------
----------------
FN1 In several European legal systems a debtor can be declared bankrupt by the
courts of a country in which he carries on a secondary occupation or possesses
assets (Article 9 of the Italian, Article 2 of the Netherlands and Article 238 of the
Federal German laws concerned), or if he is in debt there (French case-law). Some
doubt is thrown on the character of Barcelona Traction as a holding company by
direct activities in Spain (cf. hearing of 14 July 1969).

-----------------------------------------------------------------------------------------------------
----------------

After the passage of many years and countless proceedings, it is not easy to recover
the standpoint of the time when the act complained of occurred, but that is what has
to be done in utter objectivity, and in that light it will be seen that a plea of
opposition to the declaration of bankruptcy ought to have appeared to the company
as an immediately available and practicable remedy.

(Signed) Andre Gros.

Barcelona Traction, Light and

Power Company Ltd, (Belgium
v. Spain)

Brief Fact Summary. Belgium (P) claimed Spain (D)

should be held accountable for the injury to a Canadian
corporation operating in Spain.
Synopsis of Rule of Law. A state assumes an
obligation concerning the treatment of foreign
investments based on general international law, once
the state admits foreign investments or foreign nationals
into its territory.

Facts. On behalf of Belgian nationals (P) who had

invested in a Canadian corporation, Belgium (P) sued
Spain (D) on the premise that Spain (D) was responsible
for acts in violation of international law that had caused
injury to the Canadian corporation and its Belgian
shareholders (P).

Issue. Does a state assumes an obligation concerning

the treatment of foreign investments based on general
international law, once the state admits foreign
investments or foreign nationals into its territory?
Held. Yes. A state assumes an obligation concerning
the treatment of foreign investments based on general
international law, once the state admits foreign
investments or foreign nationals into its territory. It is
highly imperative to draw a distinction between those
obligations of a state toward the international community
as a whole and those arising from the field of diplomatic
protection. It is only the party to whom an international
obligation is due can bring a claim if a breach of an
obligation that is the subject of diplomatic protection
occurs.

Discussion. The basic right of all human persons was

mentioned by the Court to be protected against slavery
and racial discrimination as deriving from basic general
international law. Such rights may derive from
international instruments of a universal or quasi-
universal character. Such obligations are obligations
erga omnes, that is, all states have a legal interest in
their protection.
[G.R. No. L-4465. July 12, 1951.]

CHINESE FLOUR IMPORTERS ASSOCIATION, MANILA, PHILIPPINES, Petitioner-Appellee, v.

PRICE STABILIZATION BOARD (PRISCO), Respondents-Appellants. MANUEL RUSTIA, ERNESTO Y.
SIBAL and other members of the Philippine Flour Institute, Inc., Intervenors and appellants.

Government Corporate Counsel Pompeyo Diaz and Second Assistant Corporate Counsel Hilarion
U. Jarencio for respondents and appellants.

Claro M. Recto, Manuel O. Chan, Vicente Formoso, Jr., Tan & Nuguid for Appellee.

SYLLABUS

1. IMPORT CONTROL; REPUBLIC ACT NO. 426. While the Pratra, now Prisco, is given the power and
authority to determine and regulate the allocation of wheat flour, the allocation shall be made in accordance
with the pattern set in section 14 of Republic Act No. 426, and not under Executive Order No. 305. The only
purpose of the appendices to said Republic Act is to itemize the commodities which are deemed controlled,
the import quota of which need to be fixed by the Import Control Board in accordance with section 7 of the
law for the purpose of allocating them to the importers. They do not necessarily indicate that those excluded
therefrom are not subject to the operation of said Act, because they also come under the provisions of
section 9 which have reference to items of import not enumerated in the appendices. It must be noticed
that, aside from wheat flour, there are other commodities that are excepted from Appendix C, among which
may be mentioned oats and infant foods, umbrella fabrics, salmon and sardines, corned beef, hams and
shoulders, master records, yarn and threads, industrial starch and table cutlery. Other articles are similarly
excepted in Appendix D. The importation of those articles is governed by section 9, which has reference to
items of import not enumerated in appendices C and D.

2. IMPORT CONTROL; REPUBLIC ACT NO. 426; PROVISO OF SECTION 15 CONSTRUED. The second part
of section 15, which is preceded by the word "provided" can only refer to the clause immediately preceding
it in section 15 and can have no other meaning than that the function of allocating the wheat flour instead of
being assigned to the Import Control Commissioner was assigned to the Pratra which heretofore has been
charged with said duty by Executive Order No. 305. It simply means that the authority to determine and
grant flour quota allocations was taken from the Import Control Commissioner and given to the Pratra now
Prisco, which must have been done presumably because of the practice and experience heretofore enjoyed
 by said office in so far as the allocation of wheat flour import quota is concerned under the provisions of
Executive Order No. 305, which was issued to implement and carry out the objectives of the International
Wheat Flour Agreement.

3. IMPORT CONTROL; PRISCOS FUNCTIONS IN QUOTA ALLOCATIONS. The fixing of quota is a function
that the law gives to the Import Control Board (sec. 3) in accordance with the schedule and pattern set in
sections 7 and 14 of Republic Act No. 426, so that once the quotas are fixed, the allocation thereof becomes
the concern of the Import Control Commissioner. The Import Control Board is the policy- determining body
that fixes and allocates the import quota, whereas the Import Control Commissioner is the executive officer
charged with the execution of the policy and directives of the Board. Upon the other hand, the proviso gives
to the Pratra exclusive power and authority to determine and regulate the allocation because the intention is
to give to that office the power and authority not only to allocate the quota but also to pass on the financial
capacity and other requisite qualifications of the importers to whom the quota should be allocated. This is a
function which the Pratra has been exercising before the approval of Republic Act No. 426 in the light of the
rules and regulations adopted by the Import Flour Board under the provisions of Executive Order No. 305,
and the Pratra has a machinery for determining and passing upon the fitness and financial qualifications of
the importers, and that machinery is the one contemplated in the proviso of section 15. But in allocating the
import quota to the importers once they have been screened and determined, the Pratra should follow the
pattern set in section 14 of Republic Act No. 426.

4. IMPORT CONTROL; NATIONALIZATION OF FLOUR TRADE. The policy of our government of placing the
importation of wheat flour exclusively in the hands of Filipino importers in line with the policy of our
Government to encourage and foster the spirit of nationalism among our people in business, commerce and
industry in the Philippines, is indeed very plausible and should be encouraged to give a break to our
countrymen so that they may have a greater share in our local trade, business and commerce but plausible
though it may be, such policy should, however, be adopted gradually so as not to cause injustice and
discrimination to alien firms or businessmen of long standing in the Philippines and who have been long
engaged in this particular trade thereby contributing with their money and efforts to the economic
development of our country. In fact, this is the policy that our Congress has set in an unmistakable manner
in Republic Act No. 426. When the Pratra decided to ignore entirely the rights of the old importers, simply
because they are aliens, in complete disregard of this policy of our Government, these importers have the
right to recur to the sanctuary of justice for redress for they too are entitled to certain rights under our
Constitution.

5. MANDAMUS; SECTION 14 OF REPUBLIC ACT IS MANDATORY. The guaranteed purchases of the

Philippine Government of wheat flour must be allocated among old and new importers in accordance with
the mandatory provisions of section 14 of Republic Act No. 426. And being old importers of wheat flour, the
members of the plaintiff association are entitled as a matter of right to quota allocations of this commodity;
hence, their remedy is mandamus.

6. MANDAMUS; NON-EXISTENCE OF APPEAL TO PRESIDENT Executive Order No. 90, creating the Pratra,
now Prisco, contains no provision requiring direct appeal to the President before action could be taken in
court against the Pratra in connection with the performance of its functions. The Pratra (Prisco) being an
agency created by the President, it is presumed that its action bear his official approval. Such appeal,
therefore, is deemed unnecessary. Neither can the acts of the Pratra be considered as acts of the President
even if the import licenses to be issued by the Pratra are to be signed by authority of the President, because
the Pratra is a mere agency or instrumentality of the executive branch of the Government whose functions
can be looked into by the Courts without infringing the principle of the separation of powers.

7. PLEADING AND PRACTICE; PARTIES; REAL PARTY IN INTEREST; ORGANIZATION OR ASSOCIATION AS

PARTY IN REPRESENTATION OF ITS MEMBERS. In Gallego v. Kapisanan Timbulan ng mga Manggagawa,
(83 Phil., 124) it was held that a labor organization has legal personality to file a complaint in representation
of its members. By analogy, the plaintiff has legal personality to represent its members in this case. This
case can also be considered as class suit under section 18, Rule 3, of the Rules of Court.

DECISION

BAUTISTA ANGELO, J.:

This is an appeal interposed by respondents as well as intervenors from a decision of the Court of First
Instance of Manila ordering the Price Stabilization Corporation (PRISCO) to grant flour quota allocations to
the members of the petitioner association and other qualified importers pursuant to the provisions of
sections 12 and 14 of Republic Act No. 426 on the basis of their quota allocations for the years 1948 and
1949, and dismissing the complaint of the intervenors.

On September 5, 1950, the Chinese Flour Importers Association, Manila, Philippines, filed in the Court of
First Instance of Manila a petition for mandamus to compel the Philippine Relief and Trade Rehabilitation
Administration (PRATRA) and the Philippine Wheat Flour Board to issue in favor of petitioners members the
import quota allocations of wheat flour to which they claim to be entitled under sections 12 and 14 of
Republic Act No. 426, known as Import Control Law, with a prayer that a writ of preliminary injunction be
issued to restrain the PRATRA and the Wheat Flour Board from granting flour allocations and import licenses
therefor to new importers in excess of the latters shares in the portion reserved for new importers by the
provisions of Republic Act No. 426. After hearing, the writ was granted. In the meantime, Manuel S. Rustia,
Ernesto Y. Sibal, and other members of the Philippine Flour Institute Inc., were allowed to intervene. The
parties having agreed to submit the case on the pleadings and on their respective memoranda, because it
involves only a question of law, the trial court rendered judgment as stated in the early part of this decision.
From this judgment respondents and intervenors appealed. On November 16, 1950, petitioner filed a motion
for a writ of execution pending appeal from the judgment of the trial court. The motion was granted over the
objection of the respondents, and in order to stay the execution, respondents were allowed to file a
supersedeas bond. The case is now before us purely on questions of law.

The background of this case is as follows: On March 23, 1949, the Republic of the Philippines signed the
International Wheat Agreement together with the governments of forty-one (41) other countries, which was
entered into for the purpose of assuring supplies of wheat to importing countries and markets of wheat to
exporting countries at equitable and stable prices (Part 1, article 1). The agreement fixes the quantities of
wheat representing the guaranteed sales of an exporting country to the importing countries and the
guaranteed purchases of an importing country from the exporting countries, and specifies the prices for such
sales and purchases (arts. III and VI). The guaranteed purchases of the Philippines as an importing country
is 196,000 metric tons of wheat every crop year during the period of the agreement which expires on July
31, 1953, (Annex A to art. III). The Agreement also provides that the exporting and importing countries
shall be free to fulfill their guaranteed quantities through private channels or otherwise (art. III).

By a resolution approved on February 17, 1950, the Senate of the Philippines concurred in the acceptance of
the Agreement by the President "with the understanding that nothing contained in this Agreement shall be
construed as in any way curtailing or abridging the right, authority and discretion of the Philippine
Government to distribute and allocate among the private importers in the Philippines the guaranteed
purchases of the Philippine Government." This Agreement became effective with respect to the Philippines
on February 27, 1950.

On March 17, 1950, the President issued Executive Order No. 305 regulating the importation of wheat flour
into the Philippines by way of implementation of the International Wheat Agreement and authorizing the
PRATRA to control its importation and distribution. The Order provides that from March 17, 1950, no wheat
flour should be imported into the Philippines without any import license duly issued by the PRATRA which
shall be signed by its General Manager by authority of the President. It also provides that the 196,000
metric tons of wheat, which the Philippine Government has guaranteed to purchase yearly under the
International Wheat Agreement, shall be imported in the name of the Republic of the Philippines and that
the said quantity of wheat shall in turn be allocated to local consumers, dealers and/or importers of flour
who may be authorized by the General Manager of the PRATRA pursuant to the rules and regulations to be
promulgated by the Philippine Wheat Flour Board created in said order. On the same date, the Philippine
Flour Board issued circular No. 1, containing the required rules and regulations, and since said date, the
PRATRA began allocating the importation of wheat flour into the Philippines under the Agreement by virtue
of Executive Order No. 305.

On May 19, 1950, Republic Act No. 426 was approved. This Act provides for the allocation of import
commodities to old and new importers and lays down the pattern to be followed with respect to the amount
of quota allocations. It provides that 70 per cent, 60 per cent and 50 per cent of the total import quota for
the fiscal years 1950- 51, 1951-52 and 1952-53 respectively shall be allocated to old importers, and 30 per
cent, 40 per cent and 50 per cent respectively of said quota for the same fiscal years shall be allocated to
new importers (section 14). It designates the Import Control Commissioner as the official authorized to
allocate the import quota among the various importers, with the exception of wheat flour for the allocation
of which the Pratra was given exclusive power and authority.

On October 3, 1950, Executive Order No. 350 was issued by the President creating the Price Stabilization
Corporation, known as PRISCO, and dissolving the PRATRA effective as of that date. In view thereof, the
PRISCO was substituted for PRATRA as party in this case.

Appellee is an association of fifty-nine (59) licensed Chinese importers of flour which was organized under
the laws of the Philippines and was registered in the Securities and Exchange Commission. Its members
individually imported wheat flour in 1946, 1947 and 1948, and as such are old importers within the meaning
of section 1 of Republic Act No. 426. They are duly licensed to do business in the Philippines and have
individually filed with the PRATRA the prescribed applications for wheat flour import quota allocations and for
licenses to import their quota into the Philippines. They made representations and demands upon the
PRATRA and the Philippine Wheat Flour Board in order that they may be given import quota allocations of
wheat flour in the amount which should correspond to them in accordance with section 14 of Republic Act
No. 426, but their demands were disregarded and their representations ignored. They made the same
representations and demands upon the Prisco, but with the same result. Considering this attitude of the
PRATRA to be discriminatory, unfair and oppressive, appellee filed the present action.

Stripped of unnecessary verbiage, the basic issue involved in this case may be boiled down as follows: Shall
the PRATRA, now PRISCO, make the allocation of import quota on wheat flour in accordance with the
provisions of Republic Act No. 426, as claimed by the appellee, or shall it make such allocation in accordance
with sections 1 and 2 of Executive Order No. 305 in conjunction with section 15 of Republic Act No. 426, as
claimed by the appellants?.

Let us discuss both theories.

Appellants theory is "that the importation and allocation of wheat flour must be governed by sections 1 and
2 of Executive Order No. 305, in conjunction with section 16 of Republic Act No. 426." They allege that the
allocation of wheat flour is not subject to the provisions of Republic Act No. 426; that wheat flour being
considered as a class by itself, Republic Act No. 426 does not apply to this particular commodity; and that in
so far as wheat flour is concerned, the PRATRA, now PRISCO, has the exclusive power to use its discretion in
the allocation of wheat flour, which discretion is not subject to judicial control.

On the other hand, it is appellees theory (1) that being old importers of wheat flour, appellees members
are entitled as a matter of right to quota allocations in the amount which should be determined in
accordance with section 14 of Republic Act No. 426; (2) that as the agency designated by section 15 of said
Act and charged with the function of determining and regulating the allocation of wheat flour among
importers, it is the duty of the PRATRA, now PRISCO, to allocate this commodity in accordance with section
14; (3) that in denying, neglecting, and refusing to give import quota allocations to appellees members in
the amount indicated in section 14, the PRATRA, now PRISCO, has unlawfully neglected the performance of
an act which is specifically enjoined upon it by section 14, and has thereby excluded appellees members
from the use and enjoyment of their rightful shares in the wheat flour quota under section 14; and (4) that
appellees remedy is mandamus.

The theory of appellants "that the importation and allocation of wheat flour must be governed by sections 1
and 2 of Executive Order No. 305, in conjunction with section 15 of Republic Act No. 426", is mainly based
upon the provisions of said section 15 and appendix "C" of Republic Act No. 426. It is therefore important to
examine and analyze these provisions.

Section 15 of said Act provides: jgc:chan rob les.com. ph

"Any existing law, executive order or regulation to the contrary notwithstanding, no Government, office,
agency, or instrumentality, except the Import Control Commissioner, shall allocate the import quota among
the various importers: Provided, That the Philippine Rehabilitation and Trade Rehabilitation Administration
shall have exclusive power and authority to determine and regulate the allocation of wheat flour, among
importers.

"Quota allocations of any importer for any particular article, including wheat flour, shall not be transferable.

"It shall be illegal to cede, transfer, sell, rent, lease or donate, his or its import quota allocation or license
either directly or indirectly by the use of any simulation, strategy or scheme, under the provisions of this
Act, and any violation thereof shall be punishable with the forfeiture by the Commissioner of the import
quota or license of the erring party without prejudice to his subjection to the penal provisions of this Act." cralaw virtua1aw lib rary

Appendix "C" likewise provides in part: jgc:chan roble s.com.p h

"(Controlled Non-essential Imports)

"Flour, all kinds, except wheat flour." cralaw virtua 1aw lib rary

It is contended that, under the above quoted provisions, wheat flour has been removed from the scope and
operation of Republic Act No. 426 and placed under Executive Order No. 305 and the rules and regulations
promulgated thereunder by the Wheat Flour Board because, while on one hand, section 15 of said Act
declares that no government office, agency or instrumentality, except the Import Control Commissioner,
shall allocate the import quota among the various importers, on the other hand, the same section declares
in its proviso that Pratra shall have exclusive power and authority to determine and regulate the allocation
of wheat flour among importers, and while Appendix "C" of Republic Act No. 426 contains a list of all
controlled non-essential imports, however, in the group of flour of all kinds listed therein, wheat flour is
excepted, or excluded therefrom. The said proviso and exclusion, appellants claim, confirm their view that
wheat flour has been excluded from the operation of Republic Act No. 426.

This argument is met by appellee in this wise: In arguing that because wheat flour is excluded in Appendix
"C" this commodity is deemed removed from the scope and operation of Republic Act No. 426, appellants
have completely misunderstood the purpose of the appendices. These appendices were made part of the Act
merely to establish a range of percentage reductions on the items listed therein which shall guide the Import
Control Board in fixing the import quota of said items in accordance with section 7 where express reference
is made to the appendices. If wheat flour was excepted from Appendix "C", it is because the amount of
wheat flour which may be imported into the Philippines and its price are already fixed and determined in the
International Wheat Agreement. There is, therefore, no need for fixing the import quota of wheat flour.

We agree with this line of reasoning of counsel for the appellee. The only purpose of the appendices is to
itemize the commodities which are deemed controlled, the import quota of which need to be fixed by the
Import Control Board in accordance with section 7 of the law for the purpose of allocating them to the
importers. They do not necessarily indicate that those excluded therefrom are not subject to the operation
of said Act, because they also come under the provisions of section 9 which have reference to the items of
import not enumerated in the appendices. In this connection, we also notice, as pointed out by counsel for
the appellee, that, aside from wheat flour, there are other commodities that are excepted from Appendix
"C", among which may be mentioned: Oats and infant foods, umbrella fabrics, salmon and sardines, corned
beef, hams and shoulders, master records, yarn and threads, industrial starch and table cutlery. Other
articles are similarly excepted in appendix "D." Certainly, appellants can not seriously contend that these
articles are not within the purview of Republic Act No. 426 by the mere fact that, like wheat flour, they are
excepted in appendices "C" and "D." To our mind, their importation is governed by section 9 we have
already adverted to, which has reference to items of import not enumerated in the appendices. This section
provides that no such items of import shall be allowed an import license and exchange cover in excess of its
import value (C. I. F.) for the year 1948, except agricultural machineries, equipment and other machinery,
and materials and equipment for dollar-producing and dollar-saving industries, which means that as regards
those articles not mentioned in the appendices they can also be imported by those who had imported them
in 1948, subject only to the limitation that the import quota shall not exceed their import value in 1948, and
to the reservation in favor of new importers provided for in section 14 of Republic Act No. 426.

As regards appellants contention that the second part of section 15, which is preceded by the word
"provided" operates as an exception to exclude wheat flour from the provisions of the Act, we likewise find
more tenable the line of reasoning of the appellee on the matter. Said proviso, in our opinion, can only refer
to the clause immediately preceding it in section 15 and can have no other meaning than that the function
of allocating the wheat flour instead of being assigned to the Import Control Commissioner was assigned to
the PRATRA which heretofore has been charged with said duty by Executive Order No. 305. It simply means
that the authority to determine and grant flour quota allocations was taken from the Import Control
Commissioner and given to the PRATRA, now PRISCO, which must have been done presumably because of
the practice and experience heretofore enjoyed by said office in so far as the allocation of wheat flour import
quota is concerned under the provisions of Executive Order No. 305, which was issued to implement and
carry out the objectives of the International Wheat Flour Agreement. If the intention of the law is to exempt
said wheat flour from the provisions of Republic Act No. 426, the proper place of said proviso would be in
section 22, which contains the repealing clause, and not in section 15. Indeed, if the intention of the law is
to except Executive Order No. 305 from the operation of Act No. 426, that exception would have been
clearly stated in said section 22.

"The proviso is to be construed with reference to the immediately preceding parts of the clause, to which it
is attached. Lewis Sutherland, Statutory Construction, sections 352, 420; Friedeman v. Sullivan, 48 Ark.
213, 2 S. W. 785; United States v. Babbit, 1 Black 55, 17 L. Ed. 94; McRae v. Holcomb, 46 Ark. (306), 310;
Towson v. Denson, 74 Ark. 302, 306, 86 S. W. 661. (Hackney v. Southwest Hotels, 195 S. W. 2d. 55, 58.)"

"The term "provided", is frequently regarded as used, not as qualifying the operation of the statute, but as
conjunctive to an independent paragraph. Provisos have therefore frequently been held to bring in new
matter rather than to limit or explain that which has gone before. (50 Am. Jur., sec. 436.)"

"The natural and appropriate office of a proviso is to modify the operation of that part of the statute
immediately preceding the proviso, or to restrain or qualify the generality of the language that it follows.
Indeed, the presumption is that a proviso in a statute refers only to the provision to which it is attached,
and, as a general rule, a proviso is deemed to apply only to the immediately preceding clause or provision.
(50 Am. Jur., sec. 438.)"

"The operation of a proviso is usually and properly confined to the clause or distinct portion of the
enactment which immediately precedes it, and does not extend to or qualify other sections, unless the
legislative intent that it shall so operate is clearly disclosed; and, a fortiori, a proviso contained in an
amendatory statute will not be extended to the original act. (50 Am. Jur., sec. 640.)"

"Since the proviso in sec. 7205 applies only to that section, and not to sec. 7204, it follows that there is no
limitation of liability as to the value of property entrusted by the guest to the hotelkeeper under sec. 7204.
(59 C. J. 1090)."cralaw virtua1aw l ibra ry

To bolster up the contention that the proviso of section 15 of Act No. 426 has the effect of excluding the
importation of wheat flour from the operation of said Act, counsel for appellants lay stress in the
phraseology used by the law in that, while the first part provides that the Import Control Commissioner shall
allocate the import quota, the proviso prescribes that the PRATRA shall have power and authority to
determine and regulate the allocation. In other words, the first part uses the word "allocate" with respect to
Import Control Commissioner, whereas the proviso employs the phrase "to determine and regulate the
allocation" which, it is contended, is broader in scope and confers absolute discretion upon the PRATRA to
make the allocation without following the pattern set in section 14 of the same Act.

The claim is based upon a misconception of the true import of the terms used in the law. The reason why
the first part of section 15 merely employs the word allocate when referring to Import Control Commissioner
is because the fixing of quota is a function that the law gives to the Import Control Board (section 3) in
accordance with the schedule and pattern set in sections 7 and 14 of Republic Act No. 426, so that once the
quotas are fixed, the allocation thereof becomes the concern of the Import Control Commissioner. The
Import Control Board is the policy-determining body that fixes and allocates the import quota, whereas the
Import Control Commissioner is the executive officer charged with the execution of the policy and directives
of the Board. Upon the other hand, the proviso gives to the PRATRA exclusive power and authority to
determine and regulate the allocation because the intention is to give to that office the power and authority
not only to allocate the quota but also to pass on the financial capacity and other requisite qualifications of
the importers to whom the quota should be allocated. This is a function which the Pratra has been exercising
before the approval of Republic Act No. 426 in the light of the rules and regulations adopted by the Import
Flour Board under the provisions of Executive Order No. 305, and the PRATRA has the machinery for
determining and passing upon the fitness and financial qualifications of the importers, and that machinery is
the one contemplated in that proviso. But in allocating the import quota of the importers once they have
been screened and determined, it is our opinion that the PRATRA should follow the pattern set in section 14
of Republic Act No. 426.

We wish to take note of the inference drawn by appellants from the use of the phrase "including wheat flour"
in the second paragraph of section 15 which prohibits the transfer of quota allocations of any importer for
any particular article pointing out that by the use of that phrase, the legislator meant to exclude wheat flour
from the other provisions of the Act, specially the provisions of sections 12 and 14 relative to the quota
allocations. The argument is spacious, for it fails to recognize that the intention of Congress in inserting said
phrase is precisely to dispel the doubt that may be engendered by the proviso of the first paragraph of
section 15. The preceding paragraph excluded wheat flour from among the imported commodities which the
Import Control Commissioner is called upon to allocate, and the insertion becomes necessary to avoid any
inference that wheat flour is also excepted from the second paragraph of the section. The insertion was
made just to leave no doubt that wheat flour comes within the purview of Republic Act No. 426.

Appellants may inquire, what are the provisions of Executive Order No. 305 which are inconsistent with
Republic Act No. 426? The answer is simple. There are several that may be mentioned, the most important
of which are: on the matter of allocation, the Executive Order provides that wheat flour shall be allocated to
local consumers, dealers and/or importers (sec. 2), whereas Act No. 426 provides that the wheat flour shall
be allocated only among importers within the meaning of said Act (sec. 15). While the Executive Order does
not classify who are qualified importers, nor give any pattern for the allocation of quota, the Act divides the
importers into old and new importers, prescribes their qualifications (sections 1 and 14), and establishes the
basis to be followed in determining the amount of quota allocations which may be given to them (sections 9,
12, 13 and 14). The Executive Order creates a Board which is authorized to issue rules and regulations to be
followed by the PRATRA in the allocation of wheat flour (section 3), whereas the Act provides that the
determination and regulation of wheat flour among importers is a function that is exclusively given to the
PRATRA, which as a consequence it may exercise without necessarily being bound by such rules and
regulations (section 13). Needless to say that, as far as the issue involved in this case is concerned, where
the provisions of Executive Order are inconsistent with or repugnant to the provisions of the Act, the
mandate of the Act must prevail and must be followed. In this connection, we note that section 5 of the
Rules and regulations adopted by the Wheat Flour Board to implement the provisions of Executive Order No.
305, provides that 20 per cent of wheat flour to be imported may be reserved for direct importation by the
PRATRA for stabilization purposes, and the 80 per cent shall be distributed first to direct consumers who are
financially able and who by themselves have been regularly importing their flour requirements, then to
qualified Filipino importers, and finally to other importers. Because these provisions are repugnant to the
pattern set for the allocation of quota in section 14 of Republic Act No, 426, they must be deemed to have
been impliedly repealed by section 22 of the same Act. It follows that PRATRA can only make the allocation
of wheat flour now by observing the pattern set in said section 14.

We are urged to interpret the provisions of Act No. 426 in a way that may exclude wheat flour from its
operation in order to allow the PRATRA to carry out its policy of placing the importation of wheat flour
exclusively in the hands of Filipino importers in line with the policy of our Government to encourage and
foster the spirit of nationalism among our people in business, commerce and industry in the Philippines. We
have been informed, and have taken notice of the claim, that the PRATRA recently in line with the above
mentioned policy of nationalism has determined to allocate the import quota of wheat flour exclusively
among the new importers, to the complete exclusion of the old importers, under the claim that it has
absolute discretion to do so subject only to the restrictions that may be imposed by the Chief Executive.

We are not oblivious of this policy of our Government which is indeed very plausible and should be
encouraged to give a break to our countrymen so that they may have greater share in our local trade,
business and commerce in line with the spirit of nationalism underlying our Constitution, but plausible and
patriotic though it may be, such policy should, however, be adopted gradually so as not to cause injustice
and discrimination to alien firms or businessmen of long standing in the Philippines and who have been long
engaged in this particular trade thereby contributing with their money and efforts to the economic
development of our country. In fact, this is the policy that our Congress has set in an unmistakable manner
in Republic Act No. 426. This is also the policy that our President has expressed in the letter he sent to the
PRATRA relative to the determination of import quota allocations of wheat flour. 1 When the Pratra decided
to ignore entirely the rights of the old importers, simply because they are aliens, in complete disregard of
this policy of our Government, these importers have the right to recur to the sanctuary of justice for
redress, for they too are entitled to certain rights under our Constitution.

"Aliens within the state of their residence enjoy certain rights and privileges like those enjoyed by its
citizens, such as free access to the courts and the equal protection of the laws. Nor may aliens be deprived
of life, liberty, or property without due process of law. Citizens may, of course, be preferred to non-citizens
without violating constitutional guaranties. They are excluded from the enjoyment of political rights, such as
the right to vote and to hold public office. Other restrictions may be imposed for reasons of public policy and
in the exercise of police power." (Padillas Civil Code, pp. 95-96).

It is claimed that wheat flour as a commodity is a class by itself because it has been the subject of an
International Wheat Agreement and as such should be excepted from the provisions of Republic Act No. 426.
What is their special in wheat flour which should make it a class by itself? This commodity is an import, as
are other import items, and the International Wheat Agreement is merely a trade agreement the objectives
of which are to assure supplies of wheat to importing countries and markets for wheat to exporting countries
at equitable and stable prices. The Agreement merely regulates the outflow and inflow of flour between and
among the countries signatories thereto. But the agreement does not interfere with the internal laws of the
signatory countries regarding imports and exports, and as a matter of fact it provides in Article II that
"Nothing in this Agreement shall be construed to exempt any private trader from any laws or regulations to
which he is otherwise subject", and in the resolution approved by the Senate on February 17, 1950, the
Senate concurred in its acceptance by the President "with the understanding that nothing contained in this
Agreement shall be construed as in any way curtalling or abridging the right, authority and discretion of the
Philippine Government to distribute and allocate among the private importers in the Philippines the
guaranteed purchases of the Philippine Government." cralaw virtua1aw l ibra ry

Wheat flour is, therefore, like any other commodity whose importation should be regulated, and as such
should be included within the purview of Republic Act No. 426. A perusal of this act will show that it is all
comprehensive and covers the whole field of imports. It is the general and basic law on imports intended to
replace and substitute all prior laws, executive orders, and rules and regulations on the same subject.
Section 22 which provides that "Any Act or executive order, rules or regulations whose provisions are
contrary to, or in contravention with any provision of this Act are hereby repealed", clearly reveals the intent
of Congress to establish a uniform system of rules on imports and to nullify the heretofore existing laws,
executive orders, and rules and regulations which may be inconsistent with the Act. No reason is perceived,
therefore, why wheat flour shall be regarded as a class by itself and should be excluded from its operation
simply because it has been the subject of an international agreement.

To the foregoing considerations we may add that to interpret Republic Act No. 426 as excluding wheat flour
from its operation, as contended by appellants, would be tantamount to an undue delegation of powers to
the PRATRA and would render the Act unconstitutional and void. As a general rule, the functions of
legislation may not be delegated by the legislative to the executive department or to any executive or
administrative officer, board, or commission, except as such delegation may be expressly authorized by a
constitutional provision. And a statute that vests an arbitrary discretion in administrative officers with
respect to an ordinary lawful business, profession or appliance, or fails to prescribe a uniform rule of action
or to lay down a guide or standard whereby the exercise of discretion may be measured, is void and
unconstitutional. We are not prepared to adopt such interpretation.

"As the general rule is stated in Corpus Juris, which statement has been cited and quoted with approval, the
functions of legislation may not be delegated by the legislative to the executive department or to any
executive or administrative officer, board, or commission except as such delegation may be expressly
authorized by a constitutional provision, and the constitution affords the measure of the powers which may
be granted to purely administrative boards or officers. Hence, where executive officers or bodies are charged
with the administration of statutes, the legislature must ordinarily prescribe a policy, standard, or rule for
their guidance and must not vest them with an arbitrary or uncontrolled discretion with regard thereof or as
to the matters or persons to which the statutes shall be applied. So the legislature cannot vest in executive
officers or bodies an uncontrolled power to vary, change, or suspend a statute unless the constitution so
provides." (16 C. J. S. pp. 348-349.)

"The practical question which arises in this problem is the determination of what is a proper and reasonable
discretion and what is an invalid arbitrary discretion. The general accepted rule as to this question is to the
effect that a statute or ordinance vests an arbitrary discretion in administrative officers with respect to an
ordinarily lawful business, profession, or appliance, if it fails to prescribe a uniform rule of action or fails to
lay down a guide or standard whereby the exercise of discretion may be measured. Any law which
authorizes the issuing or withholding of licenses, permits or approvals or sanctions other administrative
functions in such a manner as the designated officials arbitrarily choose, without reference to all of the class
to which the law under consideration was intended to apply and without being controlled or guided by any
definite rule or specified conditions to which all similarly situated may conform, is unconstitutional and void."
(11 Am. Jur., p. 947.)

Our attention has been invited to resolution No. 43, approved by the Senate of the Philippines after this case
has been decided by the lower court, in which it is reiterated that the intent and policy of the Senate in
inserting in the law the proviso under consideration is to afford Filipino business enterprises more substantial
participation in the vital wheat flour import trade. Indeed, in that resolution, it is intimated that the proviso
of section 15 of Act No. 426 came into being as an amendment of the Senate with the considered object of
utilizing the PRATRA as the sole arbiter in fixing wheat flour allocations in consonance with the national
policy to advance the field of Filipino participation in the business enterprises in the Philippines. But it is to
be regretted that the attempted clarification has not been written into the law, and the resolution has not
been concurred in by the House, and as such it does not have any binding effect in the determination of this
case. The resolution does not have the effect of law. The same cannot swerve this Court from its
constitutional duty to interpret the law in accordance with well-known rules of statutory construction.

"While a court may not inquire into the intent of a legislator, it is bound to ascertain the legislative intent
from what was done by the legislature as an entity." (People v. Marxhauson, 171 N. W. p. 537.)

"A legislative construction placed on a prior statute is without binding force in a judicial proceeding and court
is free to place its own construction on the prior statute." In re Cauldwells Estate, 36 N. Y. Swd 43, 178
Misc. 916. (10 Fifth Dec. Digest, p. 1527.)

"A legislative declaration of opinion as to meaning of earlier statute, without a positive legislative act, is not
binding on the court in the construction of the earlier statute, since statutory construction is a judicial not a
legislative function. State ex rel Washington-Oregon I v. Co. Dobson, 130 P2d 939, 169, Or. 546." (40
Fifth Dec. Digest, p. 1528.)

". . . under the general rule that a legislative resolution does not have force or effect as a law, a legislative
resolution as to the proper construction of a statute is not binding on the courts." Boyer Campbell Co. v.
Fry, 271 Mich. 221, 260 N. W. 165, 98 ALP. 827 (50 Am. Jur. p. 331.)

The other point stressed by the appellants is that mandamus does not lie in this case because the power
vested in the PRISCO to determine and regulate the allocation of wheat flour among importers requires
exercise of discretion. They claim that it is elementary that mandamus will not lie to compel the
performance of a discretionary duty, and in issuing the writ, the trial court in effect has ordered the PRISCO
not merely to act, but to act in a particular manner, to wit: to give wheat flour allocations to Chinese
importers. The contention presupposes that the power and authority vested in the PRISCO to determine and
regulate the allocation of wheat flour among importers is to be governed exclusively by the provisions of
Executive Order No. 305. Under this theory, the claim is indeed well taken, for there is no doubt that the
aforesaid order gives to the PRISCO wide range of discretion to allocate the import quota of wheat flour to
the importers. But the assumption runs counter to our theory that, while the PRISCO is given the power and
authority to determine and regulate the allocation of wheat flour, the allocation shall be made in accordance
with the pattern set in section 14 of Republic Act No. 426. Such being the case, the guaranteed purchases of
wheat flour must be allocated among old and new importers in accordance with the mandatory provisions of
section 14. And being old importers of wheat flour, the members of the appellee are entitled as a matter of
right to quota allocations of this commodity, hence their remedy is mandamus.

The claim that appellee has a plain, speedy and adequate remedy in the ordinary course of law, other than
the special civil action for mandamus, by a direct appeal to the President of the Philippines, would be tenable
if Executive Order No. 90, creating the PRATRA, now PRISCO, contain a provision requiring such appeal
before action could be taken in court against the PRATRA in connection with the performance of its
functions. But no such appeal is therein provided, and the PRATRA, now PRISCO, being an agency created
by the President, it is presumed that its actions bear his official approval. Such appeal, therefore, is deemed
unnecessary. Neither can the acts of the PRATRA be considered as acts of the President even if the import
licenses to be issued by the PRATRA are to be signed by authority of the President, because the PRATRA is a
mere agency or instrumentality of the executive branch of the Government whose functions can be looked
into by the Courts without infringing the principle of the separation of powers.

"In addition to the various federal boards and officers considered supra this section, mandamus may lie, in a
proper case, to compel action by other federal boards or officers. Thus it has been held that a collector of
customs may be compelled by mandamus to perform purely ministerial duties;" (55 C. J. S. p. 202).

"Mandamus lies to compel the interstate commerce commission to perform a purely legal duty, in the
performance of which no act of judgment is involved; also to proceed and decide a case according to its
judgment and discretion, where it refuses to proceed at all on the ground that it is without jurisdiction and
where in fact the law requires it to do so." (55 C. J. S. p. 202).

"Mandamus lies to compel the commissioner of patent to perform ministerial duties; and it is a proper
remedy where he acts beyond his authority and without warrant of law." (50 C. J. S. p. 201).

The remaining question to be determined refers to the claim that the Chinese Flour Importers Association is
not the real party in interest in this case and, therefore, the petition should be dismissed. It is true that the
petition has been filed in the name of the association, but it is likewise true that the association has filed the
petition in behalf of its members who are all old importers and are entitled to import quota allocations under
the law. This association dealt with the PRATRA directly, and vice versa, in so far as the subject matter of
litigation is concerned, and it is this association that filed the bond for the issuance of the writ of preliminary
injunction prayed for in the petition. In Gallego Et. Al. v. Kapisanan Timbulan ng mga Manggagawa, * 46
Off. Gaz., 4245, it was held that a labor organization has legal personality to file a complaint in
representation of its members. By analogy, the appellee has legal personality to represent its members in
this case. This case can also be considered as class suit under section 12, Rule 3 of the Rules of Court.

Wherefore, the decision appealed from is affirmed, with costs against the appellants. The writ of preliminary
injunction issued by the lower court is hereby made final.

Paras, C.J., Bengzon, Padilla, Tuason, Montemayor, and Jugo, JJ., concur.

Separate Opinions

PARAS, C.J. :

Mr. Justice Feria voted with the majority.

PABLO, M., concurrente: chanro b1es vi rt ual 1aw li bra ry

Los apelantes contienden que el articulo 15 de la Ley Numero 426 concede al PRISCO facultad y autoridad
exclusivas para determinar la asignacion a los importadores. Dicho articulo dice textualmente: jgc:chan roble s.com.p h

"ART. 15. No obstante las disposiciones en contrario de la ley, orden ejecutiva o reglamento vigente,
ninguna oficina, organismo o dependencia del Gobierno, con excepcion del Comisionado de Control de
Importaciones, asignara la cuota de importacion a los varios importadores: Entendiendose, Que la
Administracion de Ayuda Comercial y Rehabilitacion de Filipinas tendra la facultad y autoridad exclusivas de
determinar y reglamentar la asignacion de la harina de trigo a los importadores.

"No seran transferibles las asignaciones de cuota de un importador para cualquier mercancia determinada,
incluyendo la harina de trigo.

"Sera ilegal ceder, traspasar, vender, arrendar o donar, su asignacion o licencia de cuota de importacion, ya
sea directa o indirectamente, o por medio del uso de alguna simulacion, estrategia o ardid, a las personas o
entidades que no tengan derecho a la cuota de importacion bajo las disposiciones de esta Ley, y la infraccion
de la misma sera castigada con la perdida de la cuota o licencia de importacion del infractor, que sera
decretada por el Comisionado, sin perjuicio de estar sujeto a las disposiciones de esta Ley." cralaw virt ua1aw lib ra ry

Si las disposiciones de este articulo se aplicasen independientemente de las del articulo 14, como
pretenden los apelantes el PRISCO tendria poderes omnimodos: podria conceder a dos o mas
importadores chinos que pueden ser nuevos o antiguos la asignacion de toda la cuota de importacion
de harina de trigo correspondiente a Filipinas, o podria asignarla a dos o mas importadores indios, en
perjuicio del importador filipino y de todos los demas importadores. La discrecion concedida al PRISCO, de
acuerdo con el sentido literal del articulo, es absoluta: puede asignarla solamente a dos o tres importadores
australianos (antiguos o nuevos), privando de ella a todos los demas; puede distribuir la importacion entre
varios importadores de diferentes nacionalidades y en la cantidad que crea conveniente, sin necesidad de
apoyarse en base alguna sobre que fundar esta distribucion; puede concederla solamente a importadores
filipinos, pero tambien puede no concederles ni un solo saco de harina, sino a dos o tres importadores
marroquies. En tal caso, toda la cuota de harina para Filipinas podria colocarse en manos o a disposicion de
los importadores extranjeros solamente. Esto seria desastroso, tanto mas si estallara una tercera guerra
mundial. La vida de los habitantes de Filipinas estaria a merced de esos dos o tres importadores extranjeros.
Se repetiria lo que hemos sufrido durante el regimen japones. Mientras algunos extranjeros, que privaban
en los altos consejos del comandante en jefe de ejercito invasor, amasaban fortuna con el acaparamiento de
articulos de primera necesidad, el pueblo se moria de hambre. No creo que la Legislatura haya dado al
PRISCO una facultad tan ilimitada, que puede ser tan proteccionista como desastrosa. Proteccionista si
asigna toda la importacion a los importadores filipinos y desastrosa si la concede a desalmados extranjeros.
Si la intencion de la Legislatura fuera entregar al comerciante filipino el control inmediato y absoluto del
negocio de importacion de harina de trigo, habria puesto en la ley "importadores filipinos," en vez de
"importadores" solamente.

Teniendo en cuenta la recomendacion del Presidente en la sesion del Gabinete de 4 de agosto de 1950 y la
resolucion Numero 43 del Senado de 12 de diciembre de 1950, se puede concluir que la Legislatura ha
tenido la intencion de conceder al comerciante filipino participacion sustancial en la importacion de harina de
trigo, pero no la de adoptar la politica drastica de eliminar inmediata y completamente a los antiguos
importadores, colocando en su lugar a los nuevos. Por eso, establecio un proceso de aumento gradual de la
participacion del nuevo importador en la distribucion de las cuotas de importacion.

El articulo 14 de la Ley Numero 426 da oportunidad a los antiguos importadores de hacer su composicion de
lugar durante los aos de 1950 a 1953, durante los cuales, de una manera gradual y razonable, se ira
disminuyendo la participacion de los antiguos importadores y aumentando la de los nuevos, en la
importacion de "cualesquier mercancias, efectos o articulos de consumo." La harina de trigo esta incluido
indudablemente en estas mercancias, efectos o articulos de consumo." Fuerza es concluir, por tanto, que el
articulo 14 es la base sobre la cual el PRISCO ha de distribuir la harina de trigo. Durante ese proceso, los
antiguos importadores pueden decidir si han de dejar el negocio de importar harina de trigo o de
continuarlo, dedicandose al mismo tiempo a otras actividades para mantener su negocio. Es una medida
razonable y justa, y evita fricciones innecesarias.

Opino que el articulo 15 debe interpretarse en consonancia con las disposiciones del articulo 14.

Concurro, ademas, con la opinion de la mayoria.

G.R. No. L-16968 October 6, 1921

THE PEOPLE OF THE PHILIPPINE ISLANDS, plaintiff-appelle,

vs. CHAN FOOK,Defendant-Appellant.

Hartford Beaumont for appellant.

No appearance for appellee.

VILLAMOR, J.:

The appellant Chan Fook was prosecuted for the crime of resistance
and disobedience to the public authority, and sentenced by the
Court of First Instance of Manila to two months and one day
of arresto mayor and to pay a fine or 1,301 pesetas and the costs of
the action, with subsidiary imprisonment in case of insolvency. chanroblesvi rt ualawlib ra ry chanrobles vi rt ual law li bra ry

From the record it appears that the accused, a Chinese subject, was
a passenger of the United States Military Transport South Bend,
which arrived in Manila on April 6, 1920. Having been allowed by
the immigration authorities to land, he left the boat on the same
day, April 6. At about 3 or 4 o'clock in the afternoon of the following
day, he went to pier no. 1 to get his baggage. After the search of
the baggage in which postcards of an indecent character were
found, a customs agent, Eugenio M. Cruz, attempted to search the
body of the accused, to which the latter apparently objected. A
dispute took place between the two, which terminated in the secret
agent seizing the Chinaman by the arm with intent to search his
body, after showing him his police badge. The accused resisted and
struck the secret agent on the stomach. The latter in turn struck
him on the neck. Here the customs inspector, Anastacio Jacinto,
intervened, and explained to the accused that Cruz was a customs
secret service agent and had the right to search him in order to find
whether he had on his person any contraband. Then the appellant
made no further resistance and allowed himself to be searched. chanroblesvi rtua lawlib rary cha nrob les vi rtua l law lib rary

Under such circumstances, has the accused committed the crime of

resistance and disobedience to the public authority as alleged in the
information? To decide this question, it is first necessary to
determine whether the agent, Cruz, was authorized to search the
person of the accused. chanroblesvi rtua lawlib rary c hanro bles vi rt ual law li bra ry

The prosecution alleges that under section 1338 of the

Administrative Code all persons coming into the Philippine Islands
from Foreign countries shall be liable to detention and search by the
customs authorities under such regulations as may be prescribed
relative thereto. The defense, however, contends that once the
accused has arrived at the point of his destination by being allowed
to leave the boat and to land he was beyond the jurisdiction of the
customs authorities, and, therefore, not liable to search without
judicial warrant. Section 1338 of the Administrative Code provides:

SEC. 1338. Search of persons arriving from foreign countries. - All

persons coming into the Philippine Islands from foreign countries
shall be liable to detention and search by the customs authorities
under such regulations as may be prescribed relative thereto. chanroblesv irt ualawli bra ry chan roble s virtual law l ibra ry

Female inspectors may be employed for the examination and search

of persons of their own sex.

Having in mind the aim of the law in authorizing the search of

persons coming from foreign countries, which is to avoid the
clandestine introduction into the Philippine Islands of goods subject
to the payment of customs duties, or the importation of the articles
prohibited by law, or the entrance of persons who have no right to
reside in these Islands, we are of the opinion that after the customs
authorities have permitted the accused to land in Manila, the
terminus of his voyage, he ceased to be a passenger within the
meaning of said section 1338 of the Administrative Code. chanroblesvi rt ualawlib ra ry chanrobles vi rt ual law li bra ry

The fact that the accused returned to pier No. 1 to get the baggage
that he had left there the day before does not subject him to the
operation of said section. He could have gone back there several
weeks or months after his arrival, and in such case, if the
contention of the prosecution is sustained, all foreigners arriving in
the Philippines would be in the highly anomalous situation of being
liable to detention of the right to be secured against unreasonable
searches guaranteed by section 3 of the Act of Congress of August
29, 1916, known as Jones Law, which provides:

That the right to be secured against unreasonable searches and

seizures shall not be violated.

It is urged that the object of searching the person of the accused

was to find whether he had with him any contraband. It was too late
to look for any contraband. He had already been searched when he
left the boat. The accused had reached his destination, spending the
night in the house where he had taken lodging. It is not, therefore,
reasonable to believe that when he returned to pier No. 1 the next
day, he had about his body any contraband. Thus the search made
by the agent Cruz appears to be unreasonable. chan roblesv irtualawl ibra ry chan roble s virtual law l ibra ry

Commenting on the meaning and score of resistance and

disobedience, as elements of the crimes against public authority and
its agents, Groizard, among other things, says:

A person in authority, his agent or a public officer who exceeds his

power can not be said to be in the exercise of the functions of his
office. The law that defines and establishes his powers does not
protect him for anything that has not been provided for. chanroble svi rtualawl ib rary chan rob les vi rtual law lib rary

The scope of the respective powers of public officers and their

agents is fixed, If they go beyond, it and they violate any
recognized rights of the citizens, then the latter may resist the
invasion, specially when it is clear and manifest. The resistance
must be coextensive with the excess, and should not be greater
than what is necessary to repel the aggression. chanroblesvi rt ualawlib ra ry chanrobles vi rt ual law li bra ry
The invasion of the prerrogatives or rights of another and the
excess in the functions of an office, are the sources that make for
legitimate resistance, especially, in so far as it is necessary for the
defense of the persons or their rights in the manner provided for in
article 8 of the Penal Code. (3 Groizard, pp. 456, et seq.)

In the case at bar the action of the accused in laying his hands on
the agent Cruz is, in our opinion, an adequate defense to repel the
aggression of the latter, who had seized him by the arm for the
purpose of searching him. In accordance with the repeated
decisions of the supreme court of Spain, the gravity of a
disobedience to an order of a person in public authority is measured
and graded by the circumstances surrounding the act, the motives
prompting it, and the real importance of the transgression rather
than by the source of the order disobeyed. And, taking into
consideration the circumstances of the present case, wherein the
agent Cruz had exceeded his functions, and wherein the accused
acted in defense of the most highly esteemed of individual rights -
the constitutional right to be secured against unreasonable searches
- we are of the opinion that there is no ground for finding the
accused guilty of the crime defined in article 252 of the Penal
Code. chanroblesvi rt ualawlib ra ry chanrobles vi rt ual law li bra ry

The supreme court of Spain, in a decision rendered December 26,

1876, held that the act of obstinately disregarding an order of an
agent of the authority does not constitute the crime of grave
resistance and disobedience to an agent of the public authority
where it appears that upon being directed for the third time, the
accused obeyed, though uttering unpleasant words, for although the
accused did not leave the premises on the first and second
requests, he, however, obeyed on the third, and did not render it
necessary for the public officer to make use of the means
authorized by law to make himself respected. That the accused had
no intention to resist and disobey the agents of the authority, in the
legal sense of the word, is shows by the fact that by the mere
explanation of the customs inspector, Anastasio Jacinto, he finally
allowed himself to be searched. Jacinto's words were sufficient to
make the Chinaman submit himself peacefully to the requirement of
the agent Cruz. chanroblesvi rtua lawlib rary chanrob les vi rtual law lib rary
That foreigners in the Philippines are entitled to the benefits of the
individual rights secured by the Philippine Bill is undeniable. In the
case of Kepner vs. U. S. (195 U. S., 100), the Supreme Court said:

When Congress came to pass the Act of July 1, 1902, it enacted,

almost in the language of the President's instructions, the Bill of
Rights of our Constitution. In view of the expressed declarations of
the President, followed by the action of Congress, both adopting,
with little alternation, the provisions of the Bill of Rights, there
would seem to be no room for argument that in this form it was
intended to carry to the Philippine Islands those principles of our
government which the President declared to be established as rules
of law for the maintenance of individual freedom, at the same time
expressing regret that the inhabitants of the Islands had not
therefore enjoyed their benefit.

And according to the principles underlying the Constitution, as

extended to the Philippine Islands by the President's instructions to
the Commission and by the Philippine Bill, foreigners are entitled to
the protection of their life, liberty, and property. In the case of Yick
Wo vs. Hopkins (118 U. S., 356, 369), Justice Matthews says:

The Fourteenth Amendment to the Constitution is not confined to

the protection of citizens. It says: "Nor shall any State deprive any
person of life, liberty, or properly without due process of law; nor
deny to any person within its jurisdiction the equal protection of the
laws." These provisions are universal in their application to all
persons within the territorial jurisdiction, without regard to any
differences of race, of color, or of nationality; and the equal
protection of the laws is a pledge of the protection of equal laws.

In view of the foregoing, the judgment appealed from is reversed,

and the accused must be, and is hereby, acquitted with the costs de
oficio. So ordered. chanro blesvi rt ualawlib ra ry chanrobles vi rt ual law li b

G.R. No. L-15972 October 11, 1920

KWONG SING, in his own behalf and in behalf of all others having a common or general
interest in the subject-matter of this action, plaintiff-appellant,
vs.
THE CITY OF MANILA, defendant-appellant.
G. E. Campbell for appellant.
City Fiscal Diaz for appellee.

MALCOLM, J.:

The validity of Ordinance No. 532 of the city of Manila requiring receipts in duplicate in English and
Spanish duly signed showing the kind and number of articles delivered by laundries and dyeing and
cleaning establishments, must be decided on this appeal. The ordinance in question reads as
follows:

[ORDINANCE No. 532.]

AN ORDINANCE REGULATING THE DELIVERY AND RETURN OF CLOTHES OR

CLOTHS DELIVERED TO BE WASHED IN LAUNDRIES, DYEING AND CLEANING
ESTABLISHMENTS.

Be it ordained by the Municipal Board of the city of Manila, that:

SECTION. 1. Every person, firm or corporation in the city of Manila engaged in

laundering, dyeing, or cleaning by any process, cloths or clothes for compensation,
shall issue dyed, or cleaned are received a receipt in duplicate, in English and
Spanish, duly signed, showing the kind and number of articles delivered, and the
duplicate copy of the receipt shall be kept by the owner of the establishment or
person issuing same. This receipt shall be substantially of the following form:

No. ______________

MANILA, _______________________________________________,
19________

Received of Mr.__________________________________________
(Name)

_______________________________________ the following articles delivered

(Residence.)

to me to be _______________________________________
(Washed, cleaned or dyed.)

"__________________________________________________

"__________________________________________________

"__________________________________________________
 "__________________________________________________

This articles will have been ___________________________________________

(Cleaned, washed or dyed.)

may be taken at ___________m. on the ________ day of ______________, 19

_____ upon payment of P________ the amount of compensation for the work done.

_________________________________________
(Owner or person in charge.)

Provided, however, That in case the articles to be delivered are so many that it will take much time
to classify them, the owner of the establishment, through the consent of the person delivering them,
may be excused from specifying in the receipt the kinds of such articles, but he shall state therein
only the total number of the articles so received.

SEC. 2. No person shall take away any cloths or clothes delivered to a person, firm, or corporation,
mentioned in the preceding section, to be washed, dyed or cleaned, unless he returns the receipt
issued by such person, firm, or corporation.

SEC. 3. Violation of any of the provisions of this ordinance shall be punished by a fine of not
exceeding twenty pesos.

SEC. 4. This Ordinance shall take effect on its approval.

Approved February 25, 1919.

In the lower court, the prayer of the complaint was for a preliminary injunction, afterwards to be
made permanent, prohibiting the city of Manila from enforcing Ordinance No. 532, and for a
declaration by the court that the said ordinance was null and void. The preliminary injunction was
granted. But the permanent injunction was not granted for, after the trial, judgment was, that the
petitioner take nothing by his action, without special finding as to costs. From this judgment plaintiff
has appealed, assigning two errors as having been committed by the trial court, both intended to
demonstrate that Ordinance No. 532 is invalid.

The government of the city of Manila possesses the power to enact Ordinance No. 532. Section
2444, paragraphs (l) and (ee) of the Administrative Code, as amended by Act No. 2744, section 8,
authorizes the municipal board of the city of Manila, with the approval of the mayor of the city:

(l) To regulate and fix the amount of the license fees for the
following: . . . laundries . . .

(ee) To enact all ordinances it may deem necessary and proper for the sanitation and safety,
the furtherance of the prosperity, and the promotion of the morality, peace, good order,
comfort, convenience, and general welfare of the city and its inhabitants, and such others as
may be necessary to carry into effect and discharge the powers and duties conferred by this
chapter. . . .

The word "regulate," as used in subsection (l), section 2444 of the Administrative Code, means and
includes the power to control, to govern, and to restrain; but "regulate" should not be construed as
synonymous with "supress" or "prohibit." Consequently, under the power to regulate laundries, the
municipal authorities could make proper police regulations as to the mode in which the employment
or business shall be exercised. And, under the general welfare clause (subsection [ee], section 2444
of the Manila Charter), the business of laundries and dyeing and cleaning establishments could be
regulated, as this term is above construed, by an ordinance in the interest of the public health,
safety, morals, peace good order, comfort, convenience, prosperity, and the general welfare.

The purpose of the municipal authorities in adopting the ordinance is fairly evident. Ordinance No.
532 was enacted, it is said, to avoid disputes between laundrymen and their patrons and to protect
customers of laundries who are not able to decipher Chinese characters from being defrauded. The
object of the ordinance was, accordingly, the promotion of peace and good order and the prevention
of fraud, deceit, cheating, and imposition. The convenience of the public would also presumably be
served in a community where there is a Babel of tongues by having receipts made out in the two
official languages. Reasonable restraints of a lawful business for such purposes are permissible
under the police power. The legislative body is the best judge of whether or not the means adopted
are adequate to accomplish the ends in view.

Chinese laundrymen are here the protestants. Their rights, however, are not less because they may
be Chinese aliens. The life, liberty, or property of these persons cannot be taken without due
process of law; they are entitled to the equal protection of the laws without regard to their race; and
treaty rights, as effectuated between the United States and China, must be accorded them. 1awph!l.net

With these premises conceded, appellant's claim is, that Ordinance No. 532 savors of class
legislation; that it unjustly discriminates between persons in similar circumstances; and that it
constitutes an arbitrary infringement of property rights. To an extent, the evidence for the plaintiffs
substantial their claims. There are, in the city of Manila, more than forty Chinese laundries (fifty-two,
according to the Collector of Internal Revenue.) The laundrymen and employees in Chinese
laundries do not, as a rule, speak, read, and write English or Spanish. Some of them are, however,
able to write and read numbers.

Plaintiff's contention is also that the ordinance is invalid, because it is arbitrary, unreasonable, and
not justified under the police power of the city. It is, of course, a familiar legal principle that an
ordinance must be reasonable. Not only must it appear that the interest of the public generally
require an interference with private rights, but the means adopted must be reasonably necessary for
the accomplishment of the purpose and not unduly oppressive upon individuals. If the ordinance
appears to the judicial mind to be partial or oppressive, it must be declared invalid. The presumption
is, however, that the municipal authorities, in enacting the ordinance, did so with a rational and
conscientious regard for the rights of the individual and of the community.

Up to this point, propositions and facts have been stated which are hardly debatable. The trouble
comes in the application of well-known legal rules to individual cases.

Our view, after most thoughtful consideration, is, that the ordinance invades no fundamental right,
and impairs no personal privilege. Under the guise of police regulation, an attempt is not made to
violate personal property rights. The ordinance is neither discriminatory nor unreasonable in its
operation. It applies to all public laundries without distinction, whether they belong to Americans,
Filipinos, Chinese, or any other nationality. All, without exception, and each everyone of them
without distinction, must comply with the ordinance. There is no privilege, no discrimination, no
distinction. Equally and uniformly the ordinance applies to all engaged in the laundry business, and,
as nearly as may be, the same burdens are cast upon them.

The oppressiveness of the ordinance may have been somewhat exaggerated. The printing of the
laundry receipts need not be expensive. The names of the several kinds of clothing may be printed
in English and Spanish with the equivalent in Chinese below. With such knowledge of English and
Spanish as laundrymen and their employees now possess, and, certainly, at least one person in
every Chinese laundry must have a vocabulary of a few words, and with ability to read and write
arabic numbers, no great difficulty should be experienced, especially after some practice, in
preparing the receipts required by Ordinance No. 532. It may be conceded that an additional burden
will be imposed on the business and occupation affected by the ordinance. Yet, even if private rights
of person or property are subjected to restraint, and even if loss will result to individuals from the
enforcement of the ordinance, this is not sufficient ground for failing to uphold the hands of the
legislative body. The very foundation of the police power is the control of private interests for the
public welfare.

Numerous authorities are brought to our attention. Many of these cases concern laundries and find
their origin in the State of California. We have examined them all and find none which impel us to
hold Ordinance No. 532 invalid. Not here, as in the leading decision of the United States Supreme
Court, which had the effect of nullifying an ordinance of the City and Country of San Francisco,
California, can there be any expectation that the ordinance will be administered by public authority
"with an evil eye and an unequal hand." (Yick Wo vs. Hopkins [1886], 118 U. S., 356, which compare
with Barbier vs. Connolly [1884], 113 U. S., 27.)

There is no analogy between the instant case and the former one of Young vs. Rafferty [1916], 33
Phil., 556). The holding there was that the Internal Revenue Law did not empower the Collector of
Internal Revenue to designate the language in which the entries in books shall be made by
merchants, subject to the percentage tax. In the course of the decision, the following remark was
interpolated: "In reaching this conclusion, we have carefully avoided using any language which
would indicate our views upon the plaintiffs' second proposition to the effect that if the regulation
were an Act of the Legislature itself, it would be invalid as being in conflict with the paramount law of
the land and treaties regulating certain relations with foreigners." There, the action was taken by
means of administrative regulation; here, by legislative enactment. There, governmental
convenience was the aim; here, the public welfare. We are convinced that the same justices who
participated in the decision in Young vs. Rafferty [supra] would now agree with the conclusion
toward which we are tending.

Our holding is, that the government of the city of Manila had the power to enact Ordinance No. 532
and that as said ordinance is found not to be oppressive, nor unequal, nor unjust, it is valid. This
statement disposes of both assignments of error, for the improprietry of the question answered by a
witness for the defense over the objection of plaintiff's attorney can be conceded without affecting
the result.

After the case was submitted to this court, counsel for appellants asked that a preliminary injunction
issue, restraining the defendant or any of its officers from enforcing Ordinance No. 532, pending
decisions. It was perfectly proper for the trial and appellate courts to determine the validity of the
municipal ordinance on a complaint for an injunction, since it was very apparent that irreparable
injury was impending, that a municipality of suits was threatened, and that complainants had no
other plain, speedy, and adequate remedy. But finding that the ordinance is valid, the general rule to
the effect that an injunction will not be granted to restrain a criminal prosecution should be followed.

Judgment is affirmed, and the petition for a preliminary injunction is denied, with costs against the
appellants. So ordered.

GERMANY
v.
UNITED STATES
 JUDGMENT

Return Home

BEFORE: President: Guillaume;

Vice-President: Shi;
Judges: Oda, Bedjaoui, , Ranjeva, Herczegh, Fleischhauer, Koroma,
Vereshchetin, Higgins, Parra-Aranguren, Kooijmans, Rezek, Al-
Khasawnek, Buergenthal

PermaLink: http://www.worldcourts.com/icj/eng/decisions/2001.06.27_lagrand.htm

Citation: LaGrand (F.R.G. v. U.S.), 2001 I.C.J. 466 (June 27)

Represented By: Germany: Mr. Gerhard Westdickenberg, Director General for Legal
Affairs and Legal Adviser, Federal Foreign Office of the Federal
Republic of Germany;
H.E. Mr. Eberhard U. B. von Puttkamer, Ambassador of the Federal
Republic of Germany to the Kingdom of the Netherlands, as Agents;
Mr. Bruno Simma, Professor of Public International Law at the
University of Munich, as Co-Agent and Counsel;
Mr. Pierre-Marie Dupuy, Professor of Public International Law at the
University of Paris (Pantheon-Assas) and at the European University
Institute in Florence;
Mr. Donald Francis Donovan, Debevoise & Plimpton, New York;
Mr. Hans-Peter Kaul, Head of the Public International Law Division,
Federal Foreign Office of the Federal Republic of Germany;
Mr. Daniel Khan, University of Munich;
Mr. Andreas Paulus, University of Munich, as Counsel;
Mr. Eberhard Desch, Federal Ministry of Justice of the Federal
Republic of Germany;
Mr. S. Johannes Trommer, Embassy of the Federal Republic of
Germany in the Netherlands;
Mr. Andreas Gotze, Federal Foreign Office of the Federal Republic of
Germany, as Advisers;
Ms Fiona Sneddon, as Assistant;

United States: Mr. James H. Thessin, Acting Legal Adviser, United

States Department of State, as Agent;
Ms Catherine W. Brown, Assistant Legal Adviser for Consular Affairs,
United States Department of State;
Mr. D. Stephen Mathias, Assistant Legal Adviser for United Nations
Affairs, United States Department of State, as Deputy Agents;
 The Honourable Janet Napolitano, Attorney General, State of Arizona;
Mr. Michael J. Matheson, Professor of International Law, School of
Advanced International Studies, Johns Hopkins University; former
Acting Legal Adviser, United States Department of State;
Mr. Theodor Meron, Counsellor on International Law, United States
Department of State; Charles L. Denison Professor of International
Law, New York University; Associate Member of the Institute of
International Law;
Mr. Stefan Trechsel, Professor of Criminal Law and Procedure,
University of Zurich Faculty of Law, as Counsel and Advocates;
Mr. Shabtai Rosenne, Member of the Israel Bar; Honorary Member of
the American Society of International Law; Member of the Institute of
International Law;
Ms Norma B. Martens, Assistant Attorney General, State of Arizona;
Mr. Paul J. McMurdie, Assistant Attorney General, State of Arizona;
Mr. Robert J. Erickson, Principal Deputy Chief, Appellate Section,
Criminal Division, United States Department of Justice;
Mr. Allen S. Weiner, Counsellor for Legal Affairs, Embassy of the
United States of America in the Netherlands;
Ms Jessica R. Holmes, Attache, Office of the Counsellor for Legal
Affairs, Embassy of the United States of America in the Netherlands,
as Counsel.

[p.466]

The Court,

composed as above,

after deliberation,

delivers the following Judgment:

1. On 2 March 1999 the Federal Republic of Germany (hereinafter referred to as

"Germany") filed in the Registry of the Court an Application instituting proceedings
against the United States of America (hereinafter referred to as the "United States") for
"violations of the Vienna Convention on Consular Relations [of 24 April 1963]"
(hereinafter referred to as the "Vienna Convention").

In its Application, Germany based the jurisdiction of the Court on Article 36, paragraph 1,
of the Statute of the Court and on Article I of the Optional Protocol concerning the
Compulsory Settlement of Disputes, which accompanies the Vienna Convention
(hereinafter referred to as the "Optional Protocol").
2. Pursuant to Article 40, paragraph 2, of the Statute, the Application was forthwith
communicated to the Government of the United States; and, in accordance with paragraph
3 of that Article, all States entitled to appear before the Court were notified of the
Application.

3. On 2 March 1999, the day on which the Application was filed, the German Government
also filed in the Registry of the Court a request for the indication of provisional measures
based on Article 41 of the Statute and Articles 73, 74 and 75 of the Rules of Court.

By a letter dated 2 March 1999, the Vice-President of the Court, acting President in the
case, addressed the Government of the United States in the following terms:

"Exercising the functions of the presidency in terms of Articles 13 and 32 of the Rules of
Court, and acting in conformity with Article 74, paragraph 4, of the said Rules, I hereby
draw the attention of [the] Government [of the United States] to the need to act in such a
way as to enable any Order the Court will make on the request for provisional measures to
have its appropriate effects."

By an Order of 3 March 1999, the Court indicated certain provisional measures (see
paragraph 32 below).

4. In accordance with Article 43 of the Rules of Court, the Registrar sent the notification
referred to in Article 63, paragraph 1, of the Statute to all States parties to the Vienna
Convention or to that Convention and the Optional Protocol.

5. By an Order of 5 March 1999, the Court, taking account of the views of the Parties,
fixed 16 September 1999 and 27 March 2000, respectively, as the time-limits for the filing
of a Memorial by Germany and of a Counter-Memorial by the United States.

The Memorial and Counter-Memorial were duly filed within the time-limits so prescribed.

6. By letter of 26 October 2000, the Agent of Germany expressed his Government's desire
to produce five new documents in accordance with Article 56 of the Rules.

By letter of 6 November 2000, the Agent of the United States informed the Court that his
Government consented to the production of the first and second documents, but not to that
of the third, fourth and fifth documents. [p 471]

The Court decided, pursuant to Article 56, paragraph 2, of the Rules, to authorize the
production of the latter group of documents by Germany, it being understood that the
United States would have the opportunity, in accordance with paragraph 3 of that Article,
to comment subsequently thereon and to submit documents in support of those comments.
That decision was duly communicated to the Parties by letters from the Registrar dated 9
November 2000.

7. Pursuant to Article 53, paragraph 2, of the Rules, the Court, after ascertaining the views
of the Parties, decided that copies of the pleadings and documents annexed would be made
available to the public at the opening of the oral proceedings.

8. Public hearings were held from 13 to 17 November 2000, at which the Court heard the
oral arguments and replies of:

For Germany :Mr. Gerhard Westdickenberg,

Mr. Bruno Simma,
Mr. Daniel Khan,
Mr. Hans-Peter Kaul,
Mr. Andreas Paulus,
Mr. Donald Francis Donovan,
Mr. Pierre-Marie Dupuy.

For the United States: Mr. James H. Thessin,

The Honourable Janet Napolitano,
Mr. Theodor Meron,
Ms Catherine W. Brown,
Mr. D. Stephen Mathias,
Mr. Stefan Trechsel,
Mr. Michael J. Matheson.

9. At the hearings, Members of the Court put questions to Germany, to which replies were
given in writing, in accordance with Article 61, paragraph 4, of the Rules of Court.

In addition, the United States, acting within the time-limit accorded it for this purpose,
commented on the new documents filed by Germany on 26 October 2000 (see paragraph 6
above) and produced documents in support of those comments.

10. In its Application, Germany formulated the decision requested in the following terms:

"Accordingly the Federal Republic of Germany asks the Court to adjudge and declare

(1) that the United States, in arresting, detaining, trying, convicting and sentencing Karl
and Walter LaGrand, as described in the preceding statement of facts, violated its
international legal obligations to Germany, in its own right and in its right of diplomatic
protection of its nationals, as provided by Articles 5 and 36 of the Vienna Convention,

(2) that Germany is therefore entitled to reparation,

(3) that the United States is under an international legal obligation not to [p 472] apply the
doctrine of 'procedural default' or any other doctrine of national law, so as to preclude the
exercise of the rights accorded under Article 36 of the Vienna Convention; and

(4) that the United States is under an international obligation to carry out in conformity
with the foregoing international legal obligations any future detention of or criminal
proceedings against any other German national in its territory, whether by a constituent,
legislative, executive, judicial or other power, whether that power holds a superior or
subordinate position in the organization of the United States, and whether that power's
functions are of an international or internal character;

and that, pursuant to the foregoing international legal obligations,

(1) the criminal liability imposed on Karl and Walter LaGrand in violation of international
legal obligations is void, and should be recognized as void by the legal authorities of the
United States;

(2) the United States should provide reparation, in the form of compensation and
satisfaction, for the execution of Karl LaGrand on 24 February 1999;

(3) the United States should restore the status quo ante in the case of Walter LaGrand, that
is re-establish the situation that existed before the detention of, proceedings against, and
conviction and sentencing of that German national in violation of the United States'
international legal obligation took place; and

(4) the United States should provide Germany a guarantee of the non-repetition of the
illegal acts."

11. In the course of the written proceedings, the following submissions were presented by
the Parties:

On behalf of the Government of Germany,

in the Memorial:

"Having regard to the facts and points of law set forth in the present Memorial, and without
prejudice to such elements of fact and law and to such evidence as may be submitted at a
later time, and likewise without prejudice to the right to supplement and amend the present
Submissions, the Federal Republic of Germany respectfully requests the Court to adjudge
and declare

(1) that the United States, by not informing Karl and Walter LaGrand without delay
following their arrest of their rights under Article 36 subparagraph 1 (b) of the Vienna
Convention on Consular Relations, and by depriving Germany of the possibility of
rendering consular assistance, which ultimately resulted in the execution of Karl and
Walter LaGrand, violated its international legal obligations to Germany, in its own right
and in its right of diplomatic protection of its nationals, under Articles 5 and 36 paragraph
1 of the said Convention;

(2) that the United States, by applying rules of its domestic law, in par-[p 473]ticular the
doctrine of procedural default, which barred Karl and Walter LaGrand from raising their
claims under the Vienna Convention on Consular Relations, and by ultimately executing
them, violated its international legal obligation to Germany under Article 36 paragraph 2 of
the Vienna Convention to give full effect to the purposes for which the rights accorded
under Article 36 of the said Convention are intended;

(3) that the United States, by failing to take all measures at its disposal to ensure that
Walter LaGrand was not executed pending the final decision of the International Court of
Justice on the matter, violated its international legal obligation to comply with the Order on
Provisional Measures issued by the Court on 3 March 1999, and to refrain from any action
which might interfere with the subject matter of a dispute while judicial proceedings are
pending;

and, pursuant to the foregoing international legal obligations,

(4) that the United States shall provide Germany a guarantee that it will not repeat its
illegal acts and ensure that, in any future cases of detention of or criminal proceedings
against German nationals, United States domestic law and practice will not constitute a bar
to the effective exercise of the rights under Article 36 of the Vienna Convention on
Consular Relations."

On behalf of the Government of the United States,

in the Counter-Memorial:

"Accordingly, on the basis of the facts and arguments set forth in this Counter-Memorial,
and without prejudice to the right further to amend and supplement these submissions in
the future, the United States asks the Court to adjudge and declare that:

(1) There was a breach of the United States obligation to Germany under Article 36 (1) (b)
of the Vienna Convention on Consular Relations, in that the competent authorities of the
United States did not promptly give to Karl and Walter LaGrand the notification required
by that Article, and that the United States has apologized to Germany for this breach, and is
taking substantial measures aimed at preventing any recurrence; and

(2) That all other claims and submissions of the Federal Republic of Germany are
dismissed."

12. At the oral proceedings, the following submissions were presented by the Parties:

On behalf of the Government of Germany,

"The Federal Republic of Germany respectfully requests the Court to adjudge and declare

(1) that the United States, by not informing Karl and Walter LaGrand without delay
following their arrest of their rights under Article 36, subparagraph 1 (b), of the Vienna
Convention on Consular Relations, and by depriving Germany of the possibility of
rendering con-[p 474]sular assistance, which ultimately resulted in the execution of Karl
and Walter LaGrand, violated its international legal obligations to Germany, in its own
right and in its right of diplomatic protection of its nationals, under Articles 5 and 36,
paragraph 1, of the said Convention;

(2) that the United States, by applying rules of its domestic law, in particular the doctrine
of procedural default, which barred Karl and Walter LaGrand from raising their claims
under the Vienna Convention on Consular Relations, and by ultimately executing them,
violated its international legal obligation to Germany under Article 36, paragraph 2, of the
Vienna Convention to give full effect to the purposes for which the rights accorded under
Article 36 of the said Convention are intended;

(3) that the United States, by failing to take all measures at its disposal to ensure that
Walter LaGrand was not executed pending the final decision of the International Court of
Justice on the matter, violated its international legal obligation to comply with the Order on
Provisional Measures issued by the Court on 3 March 1999, and to refrain from any action
which might interfere with the subject-matter of a dispute while judicial proceedings are
pending;

and, pursuant to the foregoing international legal obligations,

(4) that the United States shall provide Germany an assurance that it will not repeat its
unlawful acts and that, in any future cases of detention of or criminal proceedings against
German nationals, the United States will ensure in law and practice the effective exercise
of the rights under Article 36 of the Vienna Convention on Consular Relations. In
particular in cases involving the death penalty, this requires the United States to provide
effective review of and remedies for criminal convictions impaired by a violation of the
rights under Article 36."

On behalf of the Government of the United States,

"The United States of America respectfully requests the Court to adjudge and declare that:

(1) There was a breach of the United States obligation to Germany under Article 36,
paragraph 1 (b), of the Vienna Convention on Consular Relations, in that the competent
authorities of the United States did not promptly give to Karl and Walter LaGrand the
notification required by that Article, and that the United States has apologized to Germany
for this breach, and is taking substantial measures aimed at preventing any recurrence; and

(2) All other claims and submissions of the Federal Republic of Germany are dismissed."
***

13. Walter LaGrand and Karl LaGrand were born in Germany in [p 475] 1962 and 1963
respectively, and were German nationals. In 1967, when they were still young children,
they moved with their mother to take up permanent residence in the United States. They
returned to Germany only once, for a period of about six months in 1974. Although they
lived in the United States for most of their lives, and became the adoptive children of a
United States national, they remained at all times German nationals, and never acquired the
nationality of the United States. However, the United States has emphasized that both had
the demeanour and speech of Americans rather than Germans, that neither was known to
have spoken German, and that they appeared in all respects to be native citizens of the
United States.

14. On 7 January 1982, Karl LaGrand and Walter LaGrand were arrested in the United
States by law enforcement officers on suspicion of having been involved earlier the same
day in an attempted armed bank robbery in Marana, Arizona, in the course of which the
bank manager was murdered and another bank employee seriously injured. They were
subsequently tried before the Superior Court of Pima County, Arizona, which, on 17
February 1984, convicted them both of murder in the first degree, attempted murder in the
first degree, attempted armed robbery and two counts of kidnapping. On 14 December
1984, each was sentenced to death for first degree murder and to concurrent sentences of
imprisonment for the other charges.

15. At all material times, Germany as well as the United States were parties to both the
Vienna Convention on Consular Relations and the Optional Protocol to that Convention.
Article 36, paragraph 1 (b), of the Vienna Convention provides that:

"if he so requests, the competent authorities of the receiving State shall, without delay,
inform the consular post of the sending State if, within its consular district, a national of
that State is arrested or committed to prison or to custody pending trial or is detained in any
other manner. Any communication addressed to the consular post by the person arrested, in
prison, custody or detention shall be forwarded by the said authorities without delay. The
said authorities shall inform the person concerned without delay of his rights under this
subparagraph."

It is not disputed that at the time the LaGrands were convicted and sentenced, the
competent United States authorities had failed to provide the LaGrands with the
information required by this provision of the Vienna Convention, and had not informed the
relevant German consular post of the LaGrands' arrest. The United States concedes that the
competent authorities failed to do so, even after becoming aware that the LaGrands were
German nationals and not United States nationals, and admits that [p 476] the United States
has therefore violated its obligations under this provision of the Vienna Convention.

16. However, there is some dispute between the Parties as to the time at which the
competent authorities in the United States became aware of the fact that the LaGrands were
German nationals. Germany argues that the authorities of Arizona were aware of this from
the very beginning, and in particular that probation officers knew by April 1982. The
United States argues that at the time of their arrest, neither of the LaGrands identified
himself to the arresting authorities as a German national, and that Walter LaGrand
affirmatively stated that he was a United States citizen. The United States position is that
its "competent authorities" for the purposes of Article 36, paragraph 1 (b), of the Vienna
Convention were the arresting and detaining authorities, and that these became aware of
the German nationality of the LaGrands by late 1984, and possibly by mid-1983 or earlier,
but in any event not at the time of their arrest in 1982. Although other authorities, such as
immigration authorities or probation officers, may have known this even earlier, the United
States argues that these were not "competent authorities" for the purposes of this provision
of the Vienna Convention. The United States has also suggested that at the time of their
arrest, the LaGrands may themselves have been unaware that they were not nationals of the
United States.

17. At their trial, the LaGrands were represented by counsel assigned by the court, as they
were unable to afford legal counsel of their own choice. Their counsel at trial did not raise
the issue of non-compliance with the Vienna Convention, and did not themselves contact
the German consular authorities.

18. The convictions and sentences pronounced by the Superior Court of Pima County,
Arizona, were subsequently challenged by the LaGrands in three principal sets of legal
proceedings.

19. The first set of proceedings consisted of appeals against the convictions and sentences
to the Supreme Court of Arizona, which were rejected by that court on 30 January 1987.
The United States Supreme Court, in the exercise of its discretion, denied applications by
the LaGrands for further review of these judgments on 5 October 1987.

20. The second set of proceedings involved petitions by the LaGrands for post-conviction
relief, which were denied by an Arizona state court in 1989. Review of this decision was
denied by the Supreme Court of Arizona in 1990, and by the United States Supreme Court
in 1991.

21. At the time of these two sets of proceedings, the LaGrands had still not been informed
by the competent United States authorities of their rights under Article 36, paragraph 1 (b),
of the Vienna Convention, and the German consular post had [p 477] still not been
informed of their arrest. The issue of the lack of consular notification, which had not been
raised at trial, was also not raised in these two sets of proceedings.

22. The relevant German consular post was only made aware of the case in June 1992 by
the LaGrands themselves, who had learnt of their rights from other sources, and not from
the Arizona authorities. In December 1992, and on a number of subsequent occasions
between then and February 1999, an official of the Consulate-General of Germany in Los
Angeles visited the LaGrands in prison. Germany claims that it subsequently helped the
LaGrands' attorneys to investigate the LaGrands' childhood in Germany, and to raise the
issue of the omission of consular advice in further proceedings before the federal courts.
23. The LaGrands commenced a third set of legal proceedings by filing applications for
writs of habeas corpus in the United States District Court for the District of Arizona,
seeking to have their convictions - or at least their death sentences -- set aside. In these
proceedings they raised a number of different claims, which were rejected by that court in
orders dated 24 January 1995 and 16 February 1995. One of these claims was that the
United States authorities had failed to notify the German consulate of their arrest, as
required by the Vienna Convention. This claim was rejected on the basis of the "procedural
default" rule. According to the United States, this rule:

"is a federal rule that, before a state criminal defendant can obtain relief in federal court,
the claim must be presented to a state court. If a state defendant attempts to raise a new
issue in a federal habeas corpus proceeding, the defendant can only do so by showing cause
and prejudice. Cause is an external impediment that prevents a defendant from raising a
claim and prejudice must be obvious on its face. One important purpose of this rule is to
ensure that the state courts have an opportunity to address issues going to the validity of
state convictions before the federal courts intervene."

The United States District Court held that the LaGrands had not shown an objective
external factor that prevented them from raising the issue of the lack of consular
notification earlier. On 16 January 1998, this judgment was affirmed on appeal by the
United States Court of Appeals, [p 478] Ninth Circuit, which also held that the LaGrands'
claim relating to the Vienna Convention was "procedurally defaulted", as it had not been
raised in any of the earlier proceedings in state courts. On 2 November 1998, the United
States Supreme Court denied further review of this judgment.

24. On 21 December 1998, the LaGrands were formally notified by the United States
authorities of their right to consular access.

25. On 15 January 1999, the Supreme Court of Arizona decided that Karl LaGrand was to
be executed on 24 February 1999, and that Walter LaGrand was to be executed on 3 March
1999. Germany claims that the German Consulate learned of these dates on 19 January
1999.

26. In January and early February 1999, various interventions were made by Germany
seeking to prevent the execution of the LaGrands. In particular, the German Foreign
Minister and German Minister of Justice wrote to their respective United States
counterparts on 27 January 1999; the German Foreign Minister wrote to the Governor of
Arizona on the same day; the German Chancellor wrote to the President of the United
States and to the Governor of Arizona on 2 February 1999; and the President of the Federal
Republic of Germany wrote to the President of the United States on 5 February 1999.
These letters referred to German opposition to capital punishment generally, but did not
raise the issue of the absence of consular notification in the case of the LaGrands. The
latter issue was, however, raised in a further letter, dated 22 February 1999, two days
before the scheduled date of execution of Karl LaGrand, from the German Foreign
Minister to the United States Secretary of State.
27. On 23 February 1999, the Arizona Board of Executive Clemency rejected an appeal for
clemency by Karl LaGrand. Under the law of Arizona, this meant that the Governor of
Arizona was prevented from granting clemency.

28. On the same day, the Arizona Superior Court in Pima County rejected a further petition
by Walter LaGrand, based inter alia on the absence of consular notification, on the ground
that these claims were "procedurally precluded".

29. On 24 February 1999, certain last-minute federal court proceedings brought by Karl
LaGrand ultimately proved to be unsuccessful. In the course of these proceedings the
United States Court of Appeals, Ninth Circuit, again held the issue of failure of consular
notification to be procedurally defaulted. Karl LaGrand was executed later that same day.

30. On 2 March 1999, the day before the scheduled date of execution of Walter LaGrand,
at 7.30 p.m. (The Hague time), Germany filed in the Registry of this Court the Application
instituting the present proceedings against the United States (see paragraph 1 above),
accompanied by a request for the following provisional measures: [p 479]

"The United States should take all measures at its disposal to ensure that Walter LaGrand is
not executed pending the final decision in these proceedings, and should inform the Court
of all the measures which it has taken in implementation of that Order."

By a letter of the same date, the German Foreign Minister requested the Secretary of State
of the United States "to urge [the] Governor [of Arizona] for a suspension of Walter
LaGrand's execution pending a ruling by the International Court of Justice".

31. On the same day, the Arizona Board of Executive Clemency met to consider the case of
Walter LaGrand. It recommended against a commutation of his death sentence, but
recommended that the Governor of Arizona grant a 60-day reprieve having regard to the
Application filed by Germany in the International Court of Justice. Nevertheless, the
Governor of Arizona decided, "in the interest of justice and with the victims in mind", to
allow the execution of Walter LaGrand to go forward as scheduled.

32. In an Order of 3 March 1999, this Court found that the circumstances required it to
indicate, as a matter of the greatest urgency and without any other proceedings, provisional
measures in accordance with Article 41 of its Statute and with Article 75, paragraph 1, of
its Rules (I.C.J. Reports 1999, p. 9, para. 26); it indicated provisional measures in the
following terms:

"(a) The United States of America should take all measures at its disposal to ensure that
Walter LaGrand is not executed pending the final decision in these proceedings, and should
inform the Court of all the measures which it has taken in implementation of this Order;

(b) The Government of the United States of America should transmit this Order to the
Governor of the State of Arizona."

33. On the same day, proceedings were brought by Germany in the United States Supreme
Court against the United States and the Governor of Arizona, seeking inter alia to enforce
compliance with this Court's Order indicating provisional measures. In the course of these
proceedings, the United States Solicitor-General as counsel of record took the position,
inter alia, that "an order of the International Court of Justice indicating provisional
measures is not binding and does not furnish a basis for judicial relief". On the same date,
the United States Supreme Court dismissed the motion by Germany, on the ground of the
tardiness of Germany's application and of jurisdictional barriers under United States
domestic law.

34. On that same day, proceedings were also instituted in the United [p 480] States
Supreme Court by Walter LaGrand. These proceedings were decided against him. Later
that day, Walter LaGrand was executed.

***

35. The Court must as a preliminary matter deal with certain issues, which were raised by
the Parties in these proceedings, concerning the jurisdiction of the Court in relation to
Germany's Application, and the admissibility of its submissions.

**
36. In relation to the jurisdiction of the Court, the United States, without having raised
preliminary objections under Article 79 of the Rules of Court, nevertheless presented
certain objections thereto.

Germany bases the jurisdiction of the Court on Article I of the Optional Protocol, which
reads as follows:

"Disputes arising out of the interpretation or application of the Convention shall lie within
the compulsory jurisdiction of the International Court of Justice and may accordingly be
brought before the Court by an application made by any party to the dispute being a Party
to the present Protocol."

Germany contends that the

"proceedings instituted by [it] in the present case raise questions of the interpretation and
application of the Vienna Convention on Consular Relations and of the legal consequences
arising from the non-observance on the part of the United States of certain of its provisions
vis--vis Germany and two of its nationals".

Accordingly, Germany states that all four of its submissions

"are covered by one and the same jurisdictional basis, namely Art. I of the Optional
Protocol to the Vienna Convention on Consular Relations concerning the Compulsory
Settlement of Disputes of 24 April 1963".

37. The Court will first examine the question of its jurisdiction with respect to the first
submission of Germany. Germany relies on paragraph 1 of Article 36 of the Vienna
Convention, which provides:

"With a view to facilitating the exercise of consular functions relating to nationals of the
sending State: [p 481]

(a) consular officers shall be free to communicate with nationals of the sending State and to
have access to them. Nationals of the sending State shall have the same freedom with
respect to communication with and access to consular officers of the sending State;

(b) if he so requests, the competent authorities of the receiving State shall, without delay,
inform the consular post of the sending State if, within its consular district, a national of
that State is arrested or committed to prison or to custody pending trial or is detained in any
other manner. Any communication addressed to the consular post by the person arrested, in
prison, custody or detention shall be forwarded by the said authorities without delay. The
said authorities shall inform the person concerned without delay of his rights under this
subparagraph;

(c) consular officers shall have the right to visit a national of the sending State who is in
prison, custody or detention, to converse and correspond with him and to arrange for his
legal representation. They shall also have the right to visit any national of the sending State
who is in prison, custody or detention in their district in pursuance of a judgement.
Nevertheless, consular officers shall refrain from taking action on behalf of a national who
is in prison, custody or detention if he expressly opposes such action."

38. Germany alleges that the failure of the United States to inform the LaGrand brothers of
their right to contact the German authorities "prevented Germany from exercising its rights
under Art. 36 (1) (a) and (c) of the Convention" and violated "the various rights conferred
upon the sending State vis-a-vis its nationals in prison, custody or detention as provided for
in Art. 36 (1) (b) of the Convention". Germany further alleges that by breaching its
obligations to inform, the United States also violated individual rights conferred on the
detainees by Article 36, paragraph 1 (a), second sentence, and by Article 36, paragraph 1
(b). Germany accordingly claims that it "was injured in the person of its two nationals", a
claim which Germany raises "as a matter of diplomatic protection on behalf of Walter and
Karl LaGrand".

39. The United States acknowledges that "there was a breach of the U.S. obligation . . . to
inform the LaGrand brothers that they could ask that a German consular post be notified of
their arrest and detention". It does not deny that this violation of Article 36, paragraph 1
(b), has given rise to a dispute between the two States and recognizes that the Court has [p
482] jurisdiction under the Optional Protocol to hear this dispute in so far as it concerns
Germany's own rights.

40. Concerning Germany's claims of violation of Article 36, paragraph 1 (a) and (c), the
United States however calls these claims "particularly misplaced" on the grounds that the
"underlying conduct complained of is the same" as the claim of the violation of Article 36,
paragraph 1 (b). It contends, moreover, that "to the extent that this claim by Germany is
based on the general law of diplomatic protection, it is not within the Court's jurisdiction"
under the Optional Protocol because it "does not concern the interpretation or application
of the Vienna Convention". The United States points to the distinction between jurisdiction
over treaties and jurisdiction over customary law and observes that "even if a treaty norm
and a customary norm were to have exactly the same content," each would have its
"separate applicability". It contests the German assertion that diplomatic protection "enters
through the intermediary of the Vienna Convention" and submits:

"the Vienna Convention deals with consular assistance . . . it does not deal with diplomatic
protection. Legally, a world of difference exists between the right of the consul to assist an
incarcerated national of his country, and the wholly different question whether the State
can espouse the claims of its national through diplomatic protection. The former is within
the jurisdiction of the Court under the Optional Protocol; the latter is not . . . Germany
based its right of diplomatic protection on customary law . . . This case comes before this
Court not under Article 36, paragraph 2 of its Statute, but under Article 36, paragraph 1. Is
it not obvious . . . that whatever rights Germany has under customary law, they do not fall
within the jurisdiction of this Court under the Optional Protocol?"

41. Germany responds that the breach of paragraph 1 (a) and (c) of Article 36 must be
distinguished from that of paragraph 1 (b), and that as a result, the Court should not only
rule on the latter breach, but also on the violation of paragraph 1 (a) and (c). Germany
further asserts "that 'application of the Convention' in the sense of the Optional Protocol
very well encompasses the consequences of a violation of individual rights under the
Convention, including the espousal of respective claims by the State of nationality".

42. The Court cannot accept the United States objections. The dispute between the Parties
as to whether Article 36, paragraph 1 (a) and (c), of the Vienna Convention have been
violated in this case in consequence of the breach of paragraph 1 (b) does relate to the
interpretation and appli-[p 483] cation of the Convention. This is also true of the dispute as
to whether paragraph 1 (b) creates individual rights and whether Germany has standing to
assert those rights on behalf of its nationals. These are consequently disputes within the
meaning of Article I of the Optional Protocol. Moreover, the Court cannot accept the
contention of the United States that Germany's claim based on the individual rights of the
LaGrand brothers is beyond the Court's jurisdiction because diplomatic protection is a
concept of customary international law. This fact does not prevent a State party to a treaty,
which creates individual rights, from taking up the case of one of its nationals and
instituting international judicial proceedings on behalf of that national, on the basis of a
general jurisdictional clause in such a treaty. Therefore the Court concludes that it has
jurisdiction with respect to the whole of Germany's first submission.

43. The United States does not challenge the Court's jurisdiction in regard to Germany's
second submission. Nor does it as such address the issue of the jurisdiction of the Court
over the third submission concerning the binding nature of the Order of the Court of 3
March 1999 indicating provisional measures. It argues, however, that this submission is
inadmissible (see paragraphs 50 and 53-55 below), and that the Court can fully and
adequately dispose of the merits of this case without having to rule on the submission.

44. Germany asserts that the Court's Order of 3 March 1999 was intended to "enforce" the
rights enjoyed by Germany under the Vienna Convention and "preserve those rights
pending its decision on the merits". Germany claims that a dispute as to "whether the
United States were obliged to comply and did comply with the Order" necessarily arises
out of the interpretation or application of the Convention and thus falls within the
jurisdiction of the Court. Germany argues further that questions "relating to the non-
compliance with a decision of the Court under Article 41 para. 1 of the Statute, e.g.
Provisional Measures, are an integral component of the entire original dispute between the
parties". Moreover, Germany contends that its third submission also implicates "in an
auxiliary and subsidiary manner . . . the inherent jurisdiction of the Court for claims as
closely interrelated with each other as the ones before the Court in the present case".

45. The third submission of Germany concerns issues that arise directly out of the dispute
between the Parties before the Court over which the Court has already held that it has
jurisdiction (see paragraph 42 above), and which are thus covered by Article I of the
Optional Protocol. The Court reaffirms, in this connection, what it said in its Judgment in
the [p 484] Fisheries Jurisdiction case, where it declared that in order to consider the
dispute in all its aspects, it may also deal with a submission that "is one based on facts
subsequent to the filing of the Application, but arising directly out of the question which is
the subject-matter of that Application. As such it falls within the scope of the Court's
jurisdiction . . ." (Fisheries Jurisdiction (Federal Republic of Germany v. Iceland), Merits,
Judgment, I.C.J. Reports 1974, p. 203, para. 72). Where the Court has jurisdiction to decide
a case, it also has jurisdiction to deal with submissions requesting it to determine that an
order indicating measures which seeks to preserve the rights of the Parties to this dispute
has not been complied with.

46. The United States objects to the jurisdiction of the Court over the fourth submission in
so far as it concerns a request for assurances and guarantees of non-repetition. The United
States submits that its "jurisdictional argument [does] not apply to jurisdiction to order
cessation of a breach or to order reparation, but is limited to the question of assurances and
guarantees . . . [which] are conceptually distinct from reparation". It contends that
Germany's fourth submission
"goes beyond any remedy that the Court can or should grant, and should be rejected. The
Court's power to decide cases . . . does not extend to the power to order a State to provide
any 'guarantee' intended to confer additional legal rights on the Applicant State . . . The
United States does not believe that it can be the role of the Court . . . to impose any
obligations that are additional to or that differ in character from those to which the United
States consented when it ratified the Vienna Convention".

47. Germany counters this argument by asserting that

"a dispute whether or not the violation of a provision of the Vienna Convention gives rise
to a certain remedy is a dispute concerning 'the application and interpretation' of the
aforesaid Convention, and thus falls within the scope of Art. I of the Optional Protocol".

Germany notes in this regard that the Court, in its Order of 9 April 1998 in the case
concerning the Vienna Convention on Consular Relations (Paraguay v. United States of
America), held that

"there exists a dispute as to whether the relief sought by Paraguay is a remedy available
under the Vienna Convention, in particular in relation to Articles 5 and 36 thereof; and . . .
this is a dispute arising out of the application of the Convention within the meaning of
Article I of the Optional Protocol concerning the Compulsory Settlement of Disputes of 24
April 1963" (I.C.J. Reports 1998, p. 256, para. 31). [p 485]

Germany asserts also that its fourth submission arises under principles of State
responsibility, according to which Germany is entitled to a "whole range of remedies" as a
consequence of the particular violations alleged in this case and that these questions of
State responsibility "are clearly within the ambit of the Optional Protocol".

48. The Court considers that a dispute regarding the appropriate remedies for the violation
of the Convention alleged by Germany is a dispute that arises out of the interpretation or
application of the Convention and thus is within the Court's jurisdiction. Where jurisdiction
exists over a dispute on a particular matter, no separate basis for jurisdiction is required by
the Court to consider the remedies a party has requested for the breach of the obligation
(Factory at Chorzow, P.C.I.J., Series A, No. 9, p. 22). Consequently, the Court has
jurisdiction in the present case with respect to the fourth submission of Germany.

**

49. The United States has argued that the submissions of Germany are inadmissible on
various grounds. The Court will consider these objections in the order presented by the
United States.

*
50. The United States objects first to Germany's second, third and fourth submissions.
According to the United States, these submissions are inadmissible because Germany seeks
to have this Court "play the role of ultimate court of appeal in national criminal
proceedings", a role which it is not empowered to perform. The United States maintains
that many of Germany's arguments, in particular those regarding the rule of "procedural
default", ask the Court "to address and correct . . . asserted violations of U.S. law and errors
of judgment by U.S. judges" in criminal proceedings in national courts.

51. Germany denies that it requests the Court to act as an appella e criminal court, or that
Germany's requests are in any way aimed at interfering with the administration of justice
within the United States judicial system. It maintains that it is merely asking the Court to
adjudge and declare that the conduct of the United States was inconsistent with its
international legal obligations towards Germany under the Vienna Convention, and to draw
from this failure certain legal consequences provided for in the international law of State
responsibility.

52. The Court does not agree with these arguments of the United [p 486] States concerning
the admissibility of the second, third and fourth German submissions. In the second
submission, Germany asks the Court to interpret the scope of Article 36, paragraph 2, of
the Vienna Convention; the third submission seeks a finding that the United States violated
an Order issued by this Court pursuant to Article 41 of its Statute; and in Germany's fourth
submission, the Court is asked to determine the applicable remedies for the alleged
violations of the Convention. Although Germany deals extensively with the practice of
American courts as it bears on the application of the Convention, all three submissions seek
to require the Court to do no more than apply the relevant rules of international law to the
issues in dispute between the Parties to this case. The exercise of this function, expressly
mandated by Article 38 of its Statute, does not convert this Court into a court of appeal of
national criminal proceedings.

53. The United States also argues that Germany's third submission is inadmissible because
of the manner in which these proceedings were brought before the Court by Germany. It
notes that German consular officials became aware of the LaGrands' cases in 1992, but that
the German Government did not express concern or protest to the United States authorities
for some six and a half years. It maintains that the issue of the absence of consular
notification was not raised by Germany until 22 February 1999, two days before the date
scheduled for Karl LaGrand's execution, in a letter from the German Foreign Minister to
the Secretary of State of the United States (see paragraph 26 above). Germany then filed
the Application instituting these proceedings, together with a request for provisional
measures, after normal business hours in the Registry in the evening of 2 March 1999,
some 27 hours before the execution of Walter LaGrand (see paragraph 30 above).

54. The United States rejects the contention that Germany found out only seven days
before the filing of its Application that the authorities of Arizona knew as early as 1982
that the LaGrands were German nationals; according to the United States, their German
nationality was referred to in pre-sentence reports prepared in 1984, which should have
been familiar to German consular officers much earlier than 1999, given Germany's claims
regarding the vigour and effectiveness of its consular assistance.
55. According to the United States, Germany's late filing compelled the Court to respond to
its request for provisional measures by acting ex parte, without full information. The
United States claims that the procedure followed was inconsistent with the principles of
"equality of the [p 487] Parties" and of giving each Party a sufficient opportunity to be
heard, and that this would justify the Court in not addressing Germany's third submission
which is predicated wholly upon the Order of 3 March 1999.

56. Germany acknowledges that delay on the part of a claimant State may render an
application inadmissible, but maintains that international law does not lay down any
specific time-limit in that regard. It contends that it was only seven days before it filed its
Application that it became aware of all the relevant facts underlying its claim, in particular,
the fact that the authorities of Arizona knew of the German nationality of the LaGrands
since 1982. According to Germany, it cannot be accused of negligence in failing to obtain
the 1984 pre-sentence reports earlier. It also maintains that in the period between 1992,
when it learned of the LaGrands' cases, and the filing of its Application, it engaged in a
variety of activities at the diplomatic and consular level. It adds that it had been confident
for much of this period that the United States would ultimately rectify the violations of
international law involved.

57. The Court recognizes that Germany may be criticized for the manner in which these
proceedings were filed and for their timing. The Court recalls, however, that
notwithstanding its awareness of the consequences of Germany's filing at such a late date,
it nevertheless considered it appropriate to enter the Order of 3 March 1999, given that an
irreparable prejudice appeared to be imminent. In view of these considerations, the Court
considers that Germany is now entitled to challenge the alleged failure of the United States
to comply with the Order. Accordingly, the Court finds that Germany's third submission is
admissible.

58. The United States argues further that Germany's first submission, as far as it concerns
its right to exercise diplomatic protection with respect to its nationals, is inadmissible on
the ground that the LaGrands did not exhaust local remedies. The United States maintains
that the alleged breach concerned the duty to inform the LaGrands of their right to consular
access, and that such a breach could have been remedied at the trial stage, provided it was
raised in a timely fashion. The United States contends that when a person fails, for
example, to sue in a national court before a statute of limitations has expired, the claim is
both procedurally barred in national courts and inadmissible in international tribunals for
failure to exhaust local remedies. It adds that the failure of counsel for the LaGrands to
raise the breach of the Vienna Convention at the appropriate stage and time of the
proceedings does not excuse the non-exhaustion of local remedies. According to the United
States, this [p 488] failure of counsel is imputable to their clients because the law treats
defendants and their lawyers as a single entity in terms of their legal positions. Moreover,
the State is not accountable for the errors or mistaken strategy by lawyers.
59. Germany responds that international law requires the exhaustion of only those remedies
which are legally and practically available. Germany claims that in this case there was no
remedy which the LaGrands failed to invoke that would have been available in the specific
context of their case. This is so because, prior to 1992, the LaGrands could not resort to the
available remedies, since they were unaware of their rights due to failure of the United
States authorities to comply with the requirements of the Vienna Convention; thereafter,
the "procedural default" rule prevented them from seeking any remedy.

60. The Court notes that it is not disputed that the LaGrands sought to plead the Vienna
Convention in United States courts after they learned in 1992 of their rights under the
Convention; it is also not disputed that by that date the procedural default rule barred the
LaGrands from obtaining any remedy in respect of the violation of those rights. Counsel
assigned to the LaGrands failed to raise this point earlier in a timely fashion. However, the
United States may not now rely before this Court on this fact in order to preclude the
admissibility of Germany's first submission, as it was the United States itself which had
failed to carry our its obligation under the Convention to inform the LaGrand brothers.

61. The United States also contends that Germany's submissions are inadmissible on the
ground that Germany seeks to have a standard applied to the United States that is different
from its own practice. According to the United States, Germany has not shown that its
system of criminal justice requires the annulment of criminal convictions where there has
been a breach of the duty of consular notification; and that the practice of Germany in
similar cases has been to do no more than offer an apology. The United States maintains
that it would be contrary to basic principles of administration of justice and equality of the
Parties to apply against the United States alleged rules that Germany appears not to accept
for itself.

62. Germany denies that it is asking the United States to adhere to standards which
Germany itself does not abide by; it maintains that its law and practice is fully in
compliance with the standards which it invokes. In this regard, it explains that the German
Code of Criminal [p 489] Procedure provides a ground of appeal where a legal norm,
including a norm of international law, is not applied or incorrectly applied and where there
is a possibility that the decision was impaired by this fact.

63. The Court need not decide whether this argument of the United States, if true, would
result in the inadmissibility of Germany's submissions. Here the evidence adduced by the
United States does not justify the conclusion that Germany's own practice fails to conform
to the standards it demands from the United States in this litigation. The United States
relies on certain German cases to demonstrate that Germany has itself proffered only an
apology for violating Article 36 of the Vienna Convention, and that State practice shows
that this is the appropriate remedy for such a violation. But the cases concerned entailed
relatively light criminal penalties and are not evidence as to German practice where an
arrested person, who has not been informed without delay of his or her rights, is facing a
severe penalty as in the present case. It is no doubt the case, as the United States points out,
that Article 36 of the Vienna Convention imposes identical obligations on States,
irrespective of the gravity of the offence a person may be charged with and of the penalties
that may be imposed. However, it does not follow therefrom that the remedies for a
violation of this Article must be identical in all situations. While an apology may be an
appropriate remedy in some cases, it may in others be insufficient. The Court accordingly
finds that this claim of inadmissibility must be rejected.

***

64. Having determined that the Court has jurisdiction, and that the submissions of Germany
are admissible, the Court now turns to the merits of each of these four submissions.

**

65. Germany's first submission requests the Court to adjudge and declare:

"that the United States, by not informing Karl and Walter LaGrand without delay following
their arrest of their rights under Article 36 subparagraph 1 (b) of the Vienna Convention on
Consular Relations, and by depriving Germany of the possibility of rendering consular
assistance, which ultimately resulted in the execution of Karl and Walter LaGrand, violated
its international legal obligations to Germany, in its own right and in its right of diplomatic
protection of its nationals, under Articles 5 and 36 paragraph 1 of the said Convention". [p
490]

66. Germany claims that the United States violated its obligation under Article 36,
paragraph 1 (b) to "inform a national of the sending state without delay of his or her right
to inform the consular post of his home State of his arrest or detention". Specifically,
Germany maintains that the United States violated its international legal obligation to
Germany under Article 36, paragraph 1 (b), by failing to inform the German nationals Karl
and Walter LaGrand "without delay" of their rights under that subparagraph.

67. The United States acknowledges, and does not contest Germany's basic claim, that
there was a breach of its obligation under Article 36, paragraph 1 (b), of the Convention
"promptly to inform the LaGrand brothers that they could ask that a German consular post
be notified of their arrest and detention".

68. Germany also claims that the violation by the United States of Article 36, paragraph 1
(b), led to consequential violations of Article 36, paragraph 1 (a) and (c). It points out that,
when the obligation to inform the arrested person without delay of his or her right to
contact the consulate is disregarded, "the other rights contained in Article 36, paragraph 1,
become in practice irrelevant, indeed meaningless." Germany maintains that, "by informing
the LaGrand brothers of their right to inform the consulate more than 16 years after their
arrest, the United States . . . clearly failed to meet the standard of Article 36 [1 (c)]". It
concludes that, by not preventing the execution of Karl and Walter LaGrand, and by
"making irreversible its earlier breaches of Art. 5 and 36 (1) and (2) and causing irreparable
harm, the United States violated its obligations under international law".
69. The United States argues that the underlying conduct complained of by Germany is one
and the same, namely, the failure to inform the LaGrand brothers as required by Article 36,
paragraph 1 (b). Therefore, it disputes any other basis for Germany's claims that other
provisions, such as subparagraphs (a) and (c) of Article 36, paragraph 1, of the Convention,
were also violated. The United States asserts that Germany's claims regarding Article 36,
paragraph 1 (a) and (c), are "particularly misplaced" in that the LaGrands were able to and
did communicate freely with consular officials after 1992. There was, in the view of the
United States, "no deprivation of Germany's right to provide consular assistance, under
Article 5 or Article 36, to Karl or Walter LaGrand" and "Germany's attempt to transform a
breach of one obligation into an additional breach of a wholly separate and distinct
obligation should be rejected by the Court."

70. In response, Germany asserts that it is "commonplace that one [p 491] and the same
conduct may result in several violations of distinct obligations". Hence, when a detainee's
right to notification without delay is violated, he or she cannot establish contact with the
consulate, receive visits from consular officers, nor be supported by adequate counsel.
"Therefore, violation of this right is bound to imply violation of the other rights . . . [and]
later observance of the rights of Article 36, paragraph 1 (a) and (c), could not remedy the
previous violation of those provisions."

71. Germany further contends that there is a causal relationship between the breach of
Article 36 and the ultimate execution of the LaGrand brothers. Germany's inability to
render prompt assistance was, in its view, a "direct result of the United States' breach of its
Vienna Convention obligations". It is claimed that, had Germany been properly afforded its
rights under the Vienna Convention, it would have been able to intervene in time and
present a "persuasive mitigation case" which "likely would have saved" the lives of the
brothers. Germany believes that, "had proper notification been given under the Vienna
Convention, competent trial counsel certainly would have looked to Germany for
assistance in developing this line of mitigating evidence". Moreover, Germany argues that,
due to the doctrine of procedural default and the high post-conviction threshold for proving
ineffective counsel under United States law, Germany's intervention at a stage later than
the trial phase could not "remedy the extreme prejudice created by the counsel appointed to
represent the LaGrands".

72. The United States terms these arguments as "suppositions about what might have
occurred had the LaGrand brothers been properly informed of the possibility of consular
notification". It calls into question Germany's assumption that German consular officials
from Los Angeles would rapidly have given extensive assistance to the LaGrands' defence
counsel before the 1984 sentencing, and contests that such consular assistance would have
affected the outcome of the sentencing proceedings. According to the United States, these
arguments "rest on speculation" and do not withstand analysis. Finally, the United States
finds it extremely doubtful that the early childhood "mitigating evidence" mentioned by
Germany, if introduced at the trial, would have persuaded the sentencing judge to be
lenient, as the brothers' subsequent 17 years of experiences in the United States would have
been given at least equal weight. The United States points out, moreover, that such
evidence was in fact presented at trial.

73. The Court will first examine the submission Germany advances in its own right. The
Court observes, in this connection, that the United States does not deny that it violated
paragraph 1 (b) in relation to Ger-[p492]many. The Court also notes that as a result of this
breach, Germany did not learn until 1992 of the detention, trial and sentencing of the La
Grand brothers. The Court concludes therefrom that on the facts of this case, the breach of
the United States had the consequence of depriving Germany of the exercise of the rights
accorded it under Article 36, paragraph 1 (a) and paragraph 1 (c), and thus violated these
provisions of the Convention. Although the violation of paragraph 1 (b) of Article 36 will
not necessarily always result in the breach of the other provisions of this Article, the Court
finds that the circumstances of this case compel the opposite conclusion, for the reasons
indicated below. In view of this finding, it is not necessary for the Court to deal with
Germany's further claim under Article 5 of the Convention.

74. Article 36, paragraph 1, establishes an interrelated regime designed to facilitate the
implementation of the system of consular protection. It begins with the basic principle
governing consular protection: the right of communication and access (Art. 36, para. 1 (a)).
This clause is followed by the provision which spells out the modalities of consular
notification (Art. 36, para. 1 (b)). Finally Article 36, paragraph 1 (c), sets out the measures
consular officers may take in rendering consular assistance to their nationals in the custody
of the receiving State. It follows that when the sending State is unaware of the detention of
its nationals due to the failure of the receiving State to provide the requisite consular
notification without delay, which was true in the present case during the period between
1982 and 1992, the sending State has been prevented for all practical purposes from
exercising its rights under Article 36, paragraph 1. It is immaterial for the purposes of the
present case whether the LaGrands would have sought consular assistance from Germany,
whether Germany would have rendered such assistance, or whether a different verdict
would have been rendered. It is sufficient that the Convention conferred these rights, and
that Germany and the LaGrands were in effect prevented by the breach of the United States
from exercising them, had they so chosen.

75. Germany further contends that "the breach of Article 36 by the United States did not
only infringe upon the rights of Germany as a State party to the [Vienna] Convention but
also entailed a violation of the individual rights of the LaGrand brothers". Invoking its right
of diplomatic protection, Germany also seeks relief against the United States on this
ground.

Germany maintains that the right to be informed of the rights under Article 36, paragraph 1
(b), of the Vienna Convention, is an individual right of every national of a State party to the
Convention who enters the [p 493] territory of another State party. It submits that this view
is supported by the ordinary meaning of the terms of Article 36, paragraph 1 (b), of the
Vienna Convention, since the last sentence of that provision speaks of the "rights" under
this subparagraph of "the person concerned", i.e., of the foreign national arrested or
detained. Germany adds that the provision in Article 36, paragraph 1 (b), according to
which it is for the arrested person to decide whether consular notification is to be provided,
has the effect of conferring an individual right upon the foreign national concerned. In its
view, the context of Article 36 supports this conclusion since it relates to both the concerns
of the sending and receiving States and to those of individuals. According to Germany, the
travaux preparatoires of the Vienna Convention lend further support to this interpretation.
In addition, Germany submits that the "United Nations Declaration on the human rights of
individuals who are not nationals of the country in which they live," adopted by General
Assembly resolution 40/144 on 13 December 1985, confirms the view that the right of
access to the consulate of the home State, as well as the information on this right, constitute
individual rights of foreign nationals and are to be regarded as human rights of aliens.

76. The United States questions what this additional claim of diplomatic protection
contributes to the case and argues that there are no parallels between the present case and
cases of diplomatic protection involving the espousal by a State of economic claims of its
nationals. The United States maintains that the right of a State to provide consular
assistance to nationals detained in another country, and the right of a State to espouse the
claims of its nationals through diplomatic protection, are legally different concepts.

The United States contends, furthermore, that rights of consular notification and access
under the Vienna Convention are rights of States, and not of individuals, even though these
rights may benefit individuals by permitting States to offer them consular assistance. It
maintains that the treatment due to individuals under the Convention is inextricably linked
to and derived from the right of the State, acting through its consular officer, to
communicate with its nationals, and does not constitute a fundamental right or a human
right. The United States argues that the fact that Article 36 by its terms recognizes the
rights of individuals does not determine the nature of those rights or the remedies required
under the Vienna Convention for breaches of that Article. It points out that Article 36
begins with the words "with a view to facilitating the exercise of consular functions
relating to nationals of the sending State," and that this wording gives no support to the
notion that the rights and obligations enumerated in paragraph 1 of that Article are intended
to ensure that nationals of the sending State have any particular rights or [p 494] treatment
in the context of a criminal prosecution. The travaux preparatoires of the Vienna
Convention according to the United States, do not reflect a consensus that Article 36 was
addressing immutable individual rights, as opposed to individual rights derivative of the
rights of States.

77. The Court notes that Article 36, paragraph 1 (b), spells out the obligations the receiving
State has towards the detained person and the sending State. It provides that, at the request
of the detained person, the receiving State must inform the consular post of the sending
State of the individual's detention "without delay". It provides further that any
communication by the detained person addressed to the consular post of the sending State
must be forwarded to it by authorities of the receiving State "without delay". Significantly,
this subparagraph ends with the following language: "The said authorities shall inform the
person concerned without delay of his rights under this subparagraph" (emphasis added).
Moreover, under Article 36, paragraph 1 (c), the sending State's right to provide consular
assistance to the detained person may not be exercised "if he expressly opposes such
action". The clarity of these provisions, viewed in their context, admits of no doubt. It
follows, as has been held on a number of occasions, that the Court must apply these as they
stand (see Acquisition of Polish Nationality, Advisory Opinion, 1923, P.C.I.J., Series B,
No. 7, p. 20; Competence of the General Assembly for the Admission of a State to the
United Nations, Advisory Opinion, I.C.J. Reports 1950, p. 8; Arbitral Award of 31 July
1989, Judgment, I.C.J. Reports 1991, pp. 69-70, para. 48; Territorial Dispute (Libyan Arab
Jamahiriya/Chad), Judgment, I.C.J. Reports 1994, p. 25, para. 51). Based on the text of
these provisions, the Court concludes that Article 36, paragraph 1, creates individual rights,
which, by virtue of Article I of the Optional Protocol, may be invoked in this Court by the
national State of the detained person. These rights were violated in the present case.

78. At the hearings, Germany further contended that the right of the individual to be
informed without delay under Article 36, paragraph 1, of the Vienna Convention was not
only an individual right, but has today assumed the character of a human right. In
consequence, Germany added, "the character of the right under Article 36 as a human right
renders the effectiveness of this provision even more imperative". The Court having found
that the United States violated the rights accorded by Article 36, paragraph 1, to the
LaGrand brothers, it does not appear necessary to it to consider the additional argument
developed by Germany in this regard.

**[p 495]

79. The Court will now consider Germany's second submission, in which it asks the Court
to adjudge and declare:

"that the United States, by applying rules of its domestic law, in particular the doctrine of
procedural default, which barred Karl and Walter LaGrand from raising their claims under
the Vienna Convention on Consular Relations, and by ultimately executing them, violated
its international legal obligation to Germany under Article 36, paragraph 2, of the Vienna
Convention to give full effect to the purposes for which the rights accorded under Article
36 of the said Convention are intended".

80. Germany argues that, under Article 36, paragraph 2, of the Vienna Convention

"the United States is under an obligation to ensure that its municipal 'laws and regulations .
. . enable full effect to be given to the purposes for which the rights accorded under this
article are intended' [and that it] is in breach of this obligation by upholding rules of
domestic law which make it impossible to successfully raise a violation of the right to
consular notification in proceedings subsequent to a conviction of a defendant by a jury".

81. Germany points out that the "procedural default" rule is among the rules of United
States domestic law whose application make it impossible to invoke a breach of the
notification requirement. According to Germany, this rule "is closely connected with the
division of labour between federal and state jurisdiction in the United States . . . [where]
criminal jurisdiction belongs to the States except in cases provided for in the Constitution".
This rule, Germany explains, requires "exhaustion of remedies at the State level before a
habeas corpus motion can be filed with federal Courts".

Germany emphasizes that it is not the "procedural default" rule as such that is at issue in
the present proceedings, but the manner in which it was applied in that it "deprived the
brothers of the possibility to raise the violations of their right to consular notification in
U.S. criminal proceedings".

82. Furthermore, having examined the relevant United States jurisprudence, Germany
contends that the procedural default rule had "made it impossible for the LaGrand brothers
to effectively raise the issue of the lack of consular notification after they had at last
learned of their rights and established contact with the German consulate in Los Angeles in
1992". [p 496]

83. Finally, Germany states that it seeks

"nothing . . . more than compliance, or, at least, a system in place which does not
automatically reproduce violation after violation of the Vienna Convention, only
interrupted by the apologies of the United States Government."

84. The United States objects to Germany's second submission, since it considers that
"Germany's position goes far beyond the wording of the Convention, the intentions of the
parties when it was negotiated, and the practice of States, including Germany's practice".

85. In the view of the United States:

"the Vienna Convention does not require States Party to create a national law remedy
permitting individuals to assert claims involving the Convention in criminal proceedings. If
there is no such requirement, it cannot violate the Convention to require that efforts to
assert such claims be presented to the first court capable of adjudicating them".

According to the United States,

"if there is no obligation under the Convention to create such individual remedies in
criminal proceedings, the rule of procedural default - requiring that claims seeking such
remedies be asserted at an appropriately early stage - cannot violate the Convention".

86. The United States believes that Article 36, paragraph 2, "has a very clear meaning" and

"means, as it says, that the rights referred to in paragraph 1 shall be exercised in conformity
with the laws and regulations of the receiving State, subject to the proviso that said laws
and regulations must enable full effect to be given to the purposes for which the rights
accorded under the Article are intended".

In the view of the United States,

"in the context of a foreign national in detention, the relevant laws and regulations
contemplated by Article 36 (2) are those that may affect the exercise of specific rights
under Article 36 (1), such as those addressing the timing of communications, visiting
hours, and security in a detention facility. There is no suggestion in the text of Article 36
(2) that the rules of criminal law and procedure under which a defendant would be tried or
have his conviction and sentence reviewed by appellate courts are also within the scope of
this provision." [p 497]

87. The United States concludes that Germany's second submission must be rejected
"because it is premised on a misinterpretation of Article 36, paragraph 2, which reads the
context of the provision -- the exercise of a right under paragraph 1 - out of existence".

88. Article 36, paragraph 2, of the Vienna Convention reads as follows:

"The rights referred to in paragraph 1 of this article shall be exercised in conformity with
the laws and regulations of the receiving State, subject to the proviso, however, that the
said laws and regulations must enable full effect to be given to the purposes for which the
rights accorded under this article are intended."

89. The Court cannot accept the argument of the United States which proceeds, in part, on
the assumption that paragraph 2 of Article 36 applies only to the rights of the sending State
and not also to those of the detained individual. The Court has already determined that
Article 36, paragraph 1, creates individual rights for the detained person in addition to the
rights accorded the sending State, and that consequently the reference to "rights" in
paragraph 2 must be read as applying not only to the rights of the sending State, but also to
the rights of the detained individual (see paragraph 77 above).

90. Turning now to the "procedural default" rule, the application of which in the present
case Germany alleges violated Article 36, paragraph 2, the Court emphasizes that a
distinction must be drawn between that rule as such and its specific application in the
present case. In itself, the rule does not violate Article 36 of the Vienna Convention. The
problem arises when the procedural default rule does not allow the detained individual to
challenge a conviction and sentence by claiming, in reliance on Article 36, paragraph 1, of
the Convention, that the competent national authorities failed to comply with their
obligation to provide the requisite consular information "without delay", thus preventing
the person from seeking and obtaining consular assistance from the sending State.

91. In this case, Germany had the right at the request of the LaGrands "to arrange for [their]
legal representation" and was eventually able to provide some assistance to that effect. By
that time, however, because of the failure of the American authorities to comply with their
obligation under Article 36, paragraph 1 (b), the procedural default rule prevented counsel
for the LaGrands to effectively challenge their convictions and sentences other than on
United States constitutional grounds. As a result, although United States courts could and
did examine the professional competence of counsel assigned to the indigent LaGrands by
reference to United States constitutional standards, the procedural default rule prevented
them from attaching any legal significance to the fact, inter alia, that the violation of the
rights set forth in Article 36, paragraph 1, prevented Germany, in a timely fashion, from
retaining private counsel for [p 498] them and otherwise assisting in their defence as
provided for by the Convention. Under these circumstances, the procedural default rule had
the effect of preventing "full effect [from being] given to the purposes for which the rights
accorded under this article are intended", and thus violated paragraph 2 of Article 36.

**

92. The Court will now consider Germany's third submission, in which it asks the Court to
adjudge and declare:

"that the United States, by failing to take all measures at its disposal to ensure that Walter
LaGrand was not executed pending the final decision of the International Court of Justice
on the matter, violated its international legal obligation to comply with the Order on
Provisional Measures issued by the Court on 3 March 1999, and to refrain from any action
which might interfere with the subject matter of a dispute while judicial proceedings are
pending".

93. In its Memorial, Germany contended that "provisional measures indicated by the
International Court of Justice [were] binding by virtue of the law of the United Nations
Charter and the Statute of the Court". In support of its position, Germany developed a
number of arguments in which it referred to the "principle of effectiveness", to the
"procedural prerequisites" for the adoption of provisional measures, to the binding nature
of provisional measures as a "necessary consequence of the bindingness of the final
decision", to "Article 94 (1), of the United Nations Charter", to "Article 41 (1), of the
Statute of the Court" and to the "practice of the Court".

Referring to the duty of the "parties to a dispute before the Court . . . to preserve its subject-
matter", Germany added that:

"[a]part from having violated its duties under Art. 94 (1) of the United Nations Charter and
Art. 41 (1) of the Statute, the United States has also violated the obligation to refrain from
any action which might interfere with the subject-matter of a dispute while judicial
proceedings are pending".

At the hearings, Germany further stated the following:

"A judgment by the Court on jurisdiction or merits cannot be treated on exactly the same
footing as a provisional measure . . . Article 59 and Article 60 [of the Statute] do not apply
to provisional measures or, to be more exact, apply to them only by implication; that is to
say, to the extent that such measures, being both incidental [p 499] and provisional,
contribute to the exercise of a judicial function whose end-result is, by definition, the
delivery of a judicial decision. There is here an inherent logic in the judicial procedure, and
to disregard it would be tantamount, as far as the Parties are concerned, to deviating from
the principle of good faith and from what the German pleadings call 'the principle of
institutional effectiveness' . . . Provisional measures . . . are indeed legal decisions, but they
are decisions of procedure . . . Since their decisional nature is, however, implied by the
logic of urgency and by the need to safeguard the effectiveness of the proceedings, they
accordingly create genuine legal obligations on the part of those to whom they are
addressed."

94. Germany claims that the United States committed a threefold violation of the Court's
Order of 3 March 1999:

"(1) Immediately after the International Court of Justice had rendered its Order on
Provisional Measures, Germany appealed to the U.S. Supreme Court in order to reach a
stay of the execution of Walter LaGrand, in accordance with the International Court's
Order to the same effect. In the course of these proceedings -- and in full knowledge of the
Order of the International Court -- the Office of the Solicitor General, a section of the U.S.
Department of Justice -- in a letter to the Supreme Court argued once again that: 'an order
of the International Court of Justice indicating provisional measures is not binding and
does not furnish a basis for judicial relief'.

This statement of a high-ranking official of the Federal Government . . . had a direct

influence on the decision of the Supreme Court.

(2) In the following, the U.S. Supreme Court - an agency of the United States - refused by a
majority vote to order that the execution be stayed. In doing so, it rejected the German
arguments based essentially on the Order of the International Court of Justice on
Provisional Measures . . .

(3) Finally, the Governor of Arizona did not order a stay of the execution of Walter
LaGrand although she was vested with the right to do so by the laws of the State of
Arizona. Moreover, in the present case, the Arizona Executive Board of Clemency - for the
first time in the history of this institution - had issued a recommendation for a temporary
stay, not least in light of the international legal issues involved in the case . . ."

95. The United States argues that it "did what was called for by the Court's 3 March Order,
given the extraordinary and unprecedented [p 500] circumstances in which it was forced to
act". It points out in this connection that the United States Government "immediately
transmitted the Order to the Governor of Arizona", that "the United States placed the Order
in the hands of the one official who, at that stage, might have had legal authority to stop the
execution" and that by a letter from the Legal Counsellor of the United States Embassy in
The Hague dated 8 March 1999, it informed the International Court of Justice of all the
measures which had been taken in implementation of the Order.

The United States further states that:

"two central factors constrained the United States ability to act. The first was the
extraordinarily short time between issuance of the Court's Order and the time set for the
execution of Walter LaGrand . . .

The second constraining factor was the character of the United States of America as a
federal republic of divided powers."

96. The United States also alleges that the "terms of the Court's 3 March Order did not
create legal obligations binding on [it]". It argues in this respect that "the language used by
the Court in the key portions of its Order is not the language used to create binding legal
obligations" and that

"the Court does not need here to decide the difficult and controversial legal question of
whether its orders indicating provisional measures would be capable of creating
international legal obligations if worded in mandatory . . . terms".

It nevertheless maintains that those orders cannot have such effects and, in support of that
view, develops arguments concerning "the language and history of Article 41 (1) of the
Court's Statute
and Article 94 of the Charter of the United Nations", the "Court's and State practice under
these provisions", and the "weight of publicists' commentary".

Concerning Germany's argument based on the "principle of effectiveness", the United

States contends that

"in an arena where the concerns and sensitivities of States, and not abstract logic, have
informed the drafting of the Court's constitutive documents, it is perfectly understandable
that the Court might have the power to issue binding final judgments, but a more
circumscribed authority with respect to provisional measures".

Referring to Germany's argument that the United States "violated the obligation to refrain
from any action which might interfere with the sub-[p 501]ject matter of a dispute while
judicial proceedings are pending", the United States further asserts that:

"The implications of the rule as presented by Germany are potentially quite dramatic,
however. Germany appears to contend that by merely filing a case with the Court, an
Applicant can force a Respondent to refrain from continuing any action that the Applicant
deems to affect the subject of the dispute. If the law were as Germany contends, the
entirety of the Court's rules and practices relating to provisional measures would be
surplussage. This is not the law, and this is not how States or this Court have acted in
practice."

97. Lastly, the United States states that in any case, "because of the press of time stemming
from Germany's last-minute filing of the case, basic principles fundamental to the judicial
process were not observed in connection with the Court's 3 March Order" and that

"thus, whatever one might conclude regarding a general rule for provisional measures, it
would be anomalous - to say the least - for the Court to construe this Order as a source of
binding legal obligations".
98. Neither the Permanent Court of International Justice, nor the present Court to date, has
been called upon to determine the legal effects of orders made under Article 41 of the
Statute. As Germany's third submission refers expressly to an international legal obligation
"to comply with the Order on Provisional Measures issued by the Court on 3 March 1999",
and as the United States disputes the existence of such an obligation, the Court is now
called upon to rule expressly on this question.

99. The dispute which exists between the Parties with regard to this point essentially
concerns the interpretation of Article 41, which is worded in identical terms in the Statute
of each Court (apart from the respective references to the Council of the League of Nations
and the Security Council). This interpretation has been the subject of extensive controversy
in the literature. The Court will therefore now proceed to the interpretation of Article 41 of
the Statute. It will do so in accordance with customary international law, reflected in
Article 31 of the 1969 Vienna Convention on the Law of Treaties. According to paragraph
1 of Article 31, a treaty must be interpreted in good faith in accordance with the ordinary
meaning to be given to its terms in their context and in the light of the treaty's object and
purpose.

100. The French text of Article 41 reads as follows:

"1. La Cour a le pouvoir d'indiquer, si elle estime que les circons-[p 502]tances l'exigent,
quelles mesures conservatoires due droit de chacun doivent etre prises a titre provisoire.

2. En attendant l'arret definitif, l'indication de ces mesures est immediatement notifiee aux
parties et au Conseil de securite." (Emphasis added.)

In this text, the terms "indiquer" and "l'indication" may be deemed to be neutral as to the
mandatory character of the measure concerned; by contrast the words "doivent etre prises"
have an imperative character.

For its part, the English version of Article 41 reads as follows:

"1. The Court shall have the power to indicate, if it considers that circumstances so require,
any provisional measures which ought to be taken to preserve the respective rights of either
party.

2. Pending the final decision, notice of the measures suggested shall forthwith be given to
the parties and to the Security Council." (Emphasis added.)

According to the United States, the use in the English version of "indicate" instead of
"order", of "ought" instead of "must" or "shall", and of "suggested" instead of "ordered", is
to be understood as implying that decisions under Article 41 lack mandatory effect. It
might however be argued, having regard to the fact that in 1920 the French text was the
original version, that such terms as "indicate" and "ought" have a meaning equivalent to
"order" and "must" or "shall".
101. Finding itself faced with two texts which are not in total harmony, the Court will first
of all
note that according to Article 92 of the Charter, the Statute "forms an integral part of the
present Charter". Under Article 111 of the Charter, the French and English texts of the
latter are "equally authentic". The same is equally true of the Statute.

In cases of divergence between the equally authentic versions of the Statute, neither it nor
the Charter indicates how to proceed. In the absence of agreement between the parties in
this respect, it is appropriate to refer to paragraph 4 of Article 33 of the Vienna Convention
on the Law of Treaties, which in the view of the Court again reflects customary
international law. This provision reads "when a comparison of the authentic texts discloses
a difference of meaning which the application of Articles 31 and 32 does not remove the
meaning which best reconciles the texts, having regard to the object and purpose of the
treaty, shall be adopted".

The Court will therefore now consider the object and purpose of the Statute together with
the context of Article 41.

102. The object and purpose of the Statute is to enable the Court to fulfil the functions
provided for therein, and in particular, the basic function of judicial settlement of
international disputes by binding decisions in accordance with Article 59 of the Statute.
The context in which Article 41 has to be seen within the Statute is to prevent the Court
from [p 503] being hampered in the exercise of its functions because the respective rights
of the parties to a dispute before the Court are not preserved. It follows from the object and
purpose of the Statute, as well as from the terms of Article 41 when read in their context,
that the power to indicate provisional measures entails that such measures should be
binding, inasmuch as the power in question is based on the necessity, when the
circumstances call for it, to safeguard, and to avoid prejudice to, the rights of the parties as
determined by the final judgment of the Court. The contention that provisional measures
indicated under Article 41 might not be binding would be contrary to the object and
purpose of that Article.

103. A related reason which points to the binding character of orders made under Article
41 and to which the Court attaches importance, is the existence of a principle which has
already been recognized by the Permanent Court of International Justice when it spoke of

"the principle universally accepted by international tribunals and likewise laid down in
many conventions . . . to the effect that the parties to a case must abstain from any measure
capable of exercising a prejudicial effect in regard to the execution of the decision to be
given, and, in general, not allow any step of any kind to be taken which might aggravate or
extend the dispute" (Electricity Company of Sofia and Bulgaria, Order of 5 December
1939, P.C.I.J, Series A/B, No. 79, p. 199).

Furthermore measures designed to avoid aggravating or extending disputes have frequently

been indicated by the Court. They were indicated with the purpose of being implemented
(see Nuclear Tests (Australia v. France), Interim Protection, Order of 22 June 1973, I.C.J.
Reports 1973, p. 106; Nuclear Tests (New Zealand v. France), Interim Protection, Order of
22 June 1973, I.C.J. Reports 1973, p. 142; Frontier Dispute, Provisional Measures, Order
of 10 January 1986, I.C.J. Reports 1986, p. 9, para. 18, and p. 11, para. 32, point 1 A;
Application of the Convention on the Prevention and Punishment of the Crime of
Genocide, Provisional Measures, Order of 8 April 1993, I.C.J. Reports 1993, p. 23, para.
48, and p. 24, para. 52 B; Application of the Convention on the Prevention and Punishment
of the Crime of Genocide, Provisional Measures, Order of 13 September 1993, I.C.J.
Reports 1993, p. 349, para. 57, and p. 350, para. 61 (3); Land and Maritime Boundary
between Cameroon and Nigeria, Provisional Measures, Order of 15 March 1996, I.C.J.
Reports 1996 (I), pp. 22-23, para. 41, and p. 24, para. 49 (1)).

104. Given the conclusions reached by the Court above in interpreting the text of Article 41
of the Statute in the light of its object and purpose, it does not consider it necessary to
resort to the preparatory work in order to determine the meaning of that Article. The Court
would nevertheless point out that the preparatory work of the Statute [p 504] does not
preclude the conclusion that orders under Article 41 have binding force.

105. The initial preliminary draft of the Statute of the Permanent Court of International
Justice, as prepared by the Committee of Jurists established by the Council of the League
of Nations, made no mention of provisional measures. A provision to this effect was
inserted only at a later stage in the draft prepared by the Committee, following a proposal
from the Brazilian jurist Raul Fernandes.

Basing himself on the Bryan Treaty of 13 October 1914 between the United States and
Sweden, Raul Fernandes had submitted the following text:

"Dans le cas ou la cause due differend consiste en actes determines deja effectues ou sur le
point de l'etre, la Cour pourra ordonner, dans le plus bref delai, a titre provisoire, des
mesures conservatoires adequates, en attendant le jugement definitif." (Comite consultatif
de juristes, Proces-verbaux des seances due comite, 16 juin-24 juillet 1920 (avec annexes),
La Haye, 1920, p. 609.)

In its English translation this text read as follows:

"In case the cause of the dispute should consist of certain acts already committed or about
to be committed, the Court may, provisionally and with the least possible delay, order
adequate protective measures to be taken, pending the final judgment of the Court."
(Advisory Committee of Jurists, Proces-verbaux of the Proceedings of the Committee, 16
June-24 July 1920 (with Annexes), The Hague, 1920, p. 609.)

The Drafting Committee prepared a new version of this text, to which two main
amendments were made: on the one hand, the words "la Cour pourra ordonner" ("the Court
may . . . order") were replaced by "la Cour a le pouvoir d'indiquer" ("the Court shall have
the power to suggest"), while, on the other, a second paragraph was added providing for
notice to be given to the parties and to the Council of the "measures suggested" by the
Court. The draft Article 2bis as submitted by the Drafting Committee thus read as follows:

"Dans le cas ou la cause due differend consiste en un acte effectue ou sur le point de l'etre,
la Cour a le pouvoir d'indiquer, si elle estime que les circonstances l'exigent, quelles
mesures conservatoires due droit de chacun doivent etre prises a titre provisoire.

"En attendant son arret, cette suggestion de la Cour est immediatement transmise aux
parties et au Conseil." (Comitee consultatif de juristes, Proces-verbaux des seances due
comite, 16 juin-24 juillet 1920 (avec annexes), La Haye, 1920, p. 567-568.)

The English version read:

"If the dispute arises out of an act which has already taken place or which is imminent, the
Court shall have the power to suggest, if it [p 505] considers that circumstances so require,
the provisional measures that should be taken to preserve the respective rights of either
party.

Pending the final decision, notice of the measures suggested shall forthwith be given to the
parties and the Council." (Advisory Committee of Jurists, Proces-verbaux of the
Proceedings of the Committee, 16 June-24 July 1920 (with Annexes), The Hague, 1920,
pp. 567-568.)

The Committee of Jurists eventually adopted a draft Article 39, which amended the former
Article 2bis only in its French version: in the second paragraph, the words "cette
suggestion" were replaced in French by the words "l'indication".

106. When the draft Article 39 was examined by the Sub-Committee of the Third
Committee of the first Assembly of the League of Nations, a number of amendments were
considered. Raul Fernandes suggested again to use the word "ordonner" in the French
version. The Sub-Committee decided to stay with the word "indiquer", the Chairman of the
Sub-Committee observing that the Court lacked the means to execute its decisions. The
language of the first paragraph of the English version was then made to conform to the
French text: thus the word "suggest" was replaced by "indicate", and "should" by "ought
to". However, in the second paragraph of the English version, the phrase "measures
suggested" remained unchanged.

The provision thus amended in French and in English by the Sub-Committee was adopted
as Article 41 of the Statute of the Permanent Court of International Justice. It passed as
such into the Statute of the present Court without any discussion in 1945.

107. The preparatory work of Article 41 shows that the preference given in the French text
to "indiquer" over "ordonner" was motivated by the consideration that the Court did not
have the means to assure the execution of its decisions. However, the lack of means of
execution and the lack of binding force are two different matters. Hence, the fact that the
Court does not itself have the means to ensure the execution of orders made pursuant to
Article 41 is not an argument against the binding nature of such orders.

108. The Court finally needs to consider whether Article 94 of the United Nations Charter
precludes attributing binding effect to orders indicating provisional measures. That Article
reads as follows:

"1. Each Member of the United Nations undertakes to comply with the decision of the
International Court of Justice in any case to which it is a party.

2. If any party to a case fails to perform the obligations incumbent upon it under a
judgment rendered by the Court, the other party may have recourse to the Security Council,
which may, if it [p 506] deems necessary, make recommendations or decide upon measures
to be taken to give effect to the judgment."

The question arises as to the meaning to be attributed to the words "the decision of the
International Court of Justice" in paragraph 1 of this Article. This wording could be
understood as referring not merely to the Court's judgments but to any decision rendered by
it, thus including orders indicating provisional measures. It could also be interpreted to
mean only judgments rendered by the Court as provided in paragraph 2 of Article 94. In
this regard, the fact that in Articles 56 to 60 of the Court's Statute, both the word "decision"
and the word "judgment" are used does little to clarify the matter.

Under the first interpretation of paragraph 1 of Article 94, the text of the paragraph would
confirm the binding nature of provisional measures; whereas the second interpretation
would in no way preclude their being accorded binding force under Article 41 of the
Statute. The Court accordingly concludes that Article 94 of the Charter does not prevent
orders made under Article 41 from having a binding character.

109. In short, it is clear that none of the sources of interpretation referred to in the relevant
Articles of the Vienna Convention on the Law of Treaties, including the preparatory work,
contradict the conclusions drawn from the terms of Article 41 read in their context and in
the light of the object and purpose of the Statute. Thus, the Court has reached the
conclusion that orders on provisional measures under Article 41 have binding effect.

110. The Court will now consider the Order of 3 March 1999. This Order was not a mere
exhortation. It had been adopted pursuant to Article 41 of the Statute. This Order was
consequently binding in character and created a legal obligation for the United States.

111. As regards the question whether the United States has complied with the obligation
incumbent upon it as a result of the Order of 3 March 1999, the Court observes that the
Order indicated two provisional measures, the first of which states that
"the United States of America should take all measures at its disposal to ensure that Walter
LaGrand is not executed pending the final decision in these proceedings, and should inform
the Court of all the measures which it has taken in implementation of this Order".

The second measure required the Government of the United States to [p 507] "transmit this
Order to the Governor of the State of Arizona". The information required on the measures
taken in implementation of this Order was given to the Court by a letter of 8 March 1999
from the Legal Counsellor of the United States Embassy at The Hague. According to this
letter, on 3 March 1999 the State Department had transmitted to the Governor of Arizona a
copy of the Court's Order. "In view of the extremely late hour of the receipt of the Court's
Order", the letter of 8 March went on to say, "no further steps were feasible".

The United States authorities have thus limited themselves to the mere transmission of the
text of the Order to the Governor of Arizona. This certainly met the requirement of the
second of the two measures indicated. As to the first measure, the Court notes that it did
not create an obligation of result, but that the United States was asked to "take all measures
at its disposal to ensure that Walter LaGrand is not executed pending the final decision in
these proceedings". The Court agrees that due to the extremely late presentation of the
request for provisional measures, there was certainly very little time for the United States
authorities to act.

112. The Court observes, nevertheless, that the mere transmission of its Order to the
Governor of Arizona without any comment, particularly without even so much as a plea for
a temporary stay and an explanation that there is no general agreement on the position of
the United States that orders of the International Court of Justice on provisional measures
are non-binding, was certainly less than could have been done even in the short time
available. The same is true of the United States Solicitor General's categorical statement in
his brief letter to the United States Supreme Court that "an order of the International Court
of Justice indicating provisional measures is not binding and does not furnish a basis for
judicial relief" (see paragraph 33 above). This statement went substantially further than the
amicus brief referred to in a mere footnote in his letter, which was filed on behalf of the
United States in earlier proceedings before the United States Supreme Court in the case of
Angel Francisco Breard (see Breard v. Greene, United States Supreme Court, 14 April
1998, International Legal Materials, Vol. 37 (1988), p. 824; Memorial of Germany, Ann.
34). In that amicus brief, the same Solicitor General had declared less than a year earlier
that "there is substantial disagreement among jurists as to whether an ICJ order indicating
provisional measures is binding . . . The better reasoned position is that such an order is not
binding."

113. It is also noteworthy that the Governor of Arizona, to whom the [p 508] Court's Order
had been transmitted, decided not to give effect to it, even though the Arizona Clemency
Board had recommended a stay of execution for Walter LaGrand.

114. Finally, the United States Supreme Court rejected a separate application by Germany
for a stay of execution, "given the tardiness of the pleas and the jurisdictional barriers they
implicate". Yet it would have been open to the Supreme Court, as one of its members
urged, to grant a preliminary stay, which would have given it "time to consider, after
briefing from all interested parties, the jurisdictional and international legal issues involved
. . ." (Federal Republic of Germany et al. v. United States et al., United States Supreme
Court, 3 March 1999).

115. The review of the above steps taken by the authorities of the United States with regard
to the Order of the International Court of Justice of 3 March 1999 indicates that the various
competent United States authorities failed to take all the steps they could have taken to give
effect to the Court's Order. The Order did not require the United States to exercise powers
it did not have; but it did impose the obligation to "take all measures at its disposal to
ensure that Walter LaGrand is not executed pending the final decision in these proceedings
. . .". The Court finds that the United States did not discharge this obligation.

Under these circumstances the Court concludes that the United States has not complied
with the Order of 3 March 1999.

116. The Court observes finally that in the third submission Germany requests the Court to
adjudge and declare only that the United States violated its international legal obligation to
comply with the Order of 3 March 1999; it contains no other request regarding that
violation. Moreover, the Court points out that the United States was under great time
pressure in this case, due to the circumstances in which Germany had instituted the
proceedings. The Court notes moreover that at the time when the United States authorities
took their decision the question of the binding character of orders indicating provisional
measures had been extensively discussed in the literature, but had not been settled by its
jurisprudence. The Court would have taken these factors into consideration had Germany's
submission included a claim for indemnification.

**

117. Finally, the Court will consider Germany's fourth submission, in which it asks the
Court to adjudge and declare

"that the United States shall provide Germany an assurance that it will not repeat its
unlawful acts and that, in any future cases of detention of or criminal proceedings against
German nationals, the United States will ensure in law and practice the effective exercise
of [p 509] the rights under Article 36 of the Vienna Convention on Consular Relations. In
particular in cases involving the death penalty, this requires the United States to provide
effective review of and remedies for criminal convictions impaired by a violation of the
rights under Article 36."

118. Germany states that:

"concerning the requested assurances and guarantees of non-repetition of the United States,
they are appropriate because of the existence of a real risk of repetition and the seriousness
of the injury suffered by Germany. Further, the choice of means by which full conformity
of the future conduct of the United States with Article 36 of the Vienna Convention is to be
ensured, may be left to the United States."

Germany explains that:

"the effective exercise of the right to consular notification embodied in [Article 36,]
paragraph 2, requires that, where it cannot be excluded that the judgment was impaired by
the violation of the right to consular notification, appellate proceedings allow for a reversal
of the judgment and for either a retrial or a re-sentencing".

Finally, Germany points out that its fourth submission has been so worded "as to . . . leave
the choice of means by which to implement the remedy [it seeks] to the United States".

119. In reply, the United States argues as follows:

"Germany's fourth submission is clearly of a wholly different nature than its first three
submissions. Each of the first three submissions seeks a judgment and declaration by the
Court that a violation of a stated international legal obligation has occurred. Such
judgments are at the core of the Court's function, as an aspect of reparation.

In contrast, however, to the character of the relief sought in the first three submissions, the
requirement of assurances of non-repetition sought in the fourth submission has no
precedent in the jurisprudence of this Court and would exceed the Court's jurisdiction and
authority in this case. It is exceptional even as a non-legal undertaking in State practice,
and it would be entirely inappropriate for the Court to require such assurances with respect
to the duty to inform undertaken in the Consular Convention in the circumstances of this
case." [p 510]

It points out that "U.S. authorities are working energetically to strengthen the regime of
consular notification at the state and local level throughout the United States, in order to
reduce the chances of cases such as this recurring" and adds that:

"the German request for an assurance as to the duty to inform foreign nationals without
delay of their right to consular notification . . . seeks to have the Court require the United
States to assure that it will never again fail to inform a German foreign national of his or
her right to consular notification",

and that "the Court is aware that the United States is not in a position to provide such an
assurance". The United States further contends that it "has already provided appropriate
assurances to Germany on this point".

Finally, the United States recalls that:

"with respect to the alleged breach of Article 36, paragraph 2, . . . Germany seeks an
assurance that, 'in any future cases of detention of or criminal proceedings against German
nationals, the United States will ensure in law and practice the effective exercise of the
rights under Article 36'".

According to the United States,

"[such an assurance] is again absolute in character . . . [and] seeks to create obligations on

the United States that exceed those that are contained in the Vienna Convention. For
example, the requirement of consular notification under Article 36, paragraph 1 (b), of the
Convention applies when a foreign national is arrested, committed to prison or to custody
pending trial or detained in any other manner. It does not apply, as the submission would
have it, to any future criminal proceedings. That is a new obligation, and it does not arise
out of the Vienna Convention."

The United States further observes that:

"even if this Court were to agree that, as a result of the application of procedural default
with respect to the claims of the LaGrands, the United States committed a second
internationally wrongful act, it should limit that judgment to the application of that law in
the particular case of the LaGrands. It should resist the invitation to require an absolute
assurance as to the application of US domestic law in all such future cases. The imposition
of such an additional obligation on the United States would . . . be unprecedented in
international jurisprudence and would exceed the Court's authority and jurisdiction."

120. The Court observes that in its fourth submission Germany seeks [p 511] several
assurances. First it seeks a straightforward assurance that the United States will not repeat
its unlawful acts. This request does not specify the means by which non-repetition is to be
assured.

Additionally, Germany seeks from the United States that

"in any future cases of detention of or criminal proceedings against German nationals, the
United States will ensure in law and practice the effective exercise of the rights under
Article 36 of the Vienna Convention on Consular Relations".

This request goes further, for, by referring to the law of the United States, it appears to
require specific measures as a means of preventing recurrence.

Germany finally requests that

"in particular in cases involving the death penalty, this requires the United States to provide
effective review of and remedies for criminal convictions impaired by a violation of the
rights under Article 36".

This request goes even further, since it is directed entirely towards securing specific
measures in cases involving the death penalty.
121. Turning first to the general demand for an assurance of non-repetition, the Court
observes that it has been informed by the United States of the "substantial measures [which
it is taking] aimed at preventing any recurrence" of the breach of Article 36, paragraph 1
(b). Throughout these proceedings, oral as well as written, the United States has insisted
that it "keenly appreciates the importance of the Vienna Convention's consular notification
obligation for foreign citizens in the United States as well as for United States citizens
travelling and living abroad"; that "effective compliance with the consular notification
requirements of Article 36 of the Vienna Convention requires constant effort and
attention"; and that

"the Department of State is working intensively to improve understanding of and

compliance with consular notification and access requirements throughout the United
States, so as to guard against future violations of these requirements".

The United States points out that

"this effort has included the January 1998 publication of a booklet entitled 'Consular
Notification and Access: Instructions for Federal, State and Local Law Enforcement and
Other Officials Regarding [p 512] Foreign Nationals in the United States and the Rights of
Consular Officials to Assist Them', and development of a small reference card designed to
be carried by individual arresting officers."

According to the United States, it is estimated that until now over 60,000 copies of the
brochure as well as over 400,000 copies of the pocket card have been distributed to federal,
state and local law enforcement and judicial officials throughout the United States. The
United States is also conducting training programmes reaching out to all levels of
government. In the Department of State a permanent office to focus on United States and
foreign compliance with consular notification and access requirements has been created.

122. Germany has stated that it "does not consider the so-called 'assurances' offered by the
Respondent as adequate". It says

"violations of Article 36 followed by death sentences and executions cannot be remedied

by apologies or the distribution of leaflets. An effective remedy requires certain changes in
US law and practice".

In order to illustrate its point, Germany has presented to the Court a "list of German
nationals detained after January 1, 1998, who claim not to have been informed of their
consular rights". The United States has criticized this list as misleading and inaccurate.

123. The Court notes that the United States has acknowledged that, in the case of the
LaGrand brothers, it did not comply with its obligations to give consular notification. The
United States has presented an apology to Germany for this breach. The Court considers
however that an apology is not sufficient in this case, as it would not be in other cases
where foreign nationals have not been advised without delay of their rights under Article
36, paragraph 1, of the Vienna Convention and have been subjected to prolonged detention
or sentenced to severe penalties.

In this respect, the Court has taken note of the fact that the United States repeated in all
phases of these proceedings that it is carrying out a vast and detailed programme in order to
ensure compliance by its competent authorities at the federal as well as at the state and
local levels with its obligation under Article 36 of the Vienna Convention.

124. The United States has provided the Court with information, which it considers
important, on its programme. If a State, in proceedings before this Court, repeatedly refers
to substantial activities which it [p 513] is carrying out in order to achieve compliance with
certain obligations under a treaty, then this expresses a commitment to follow through with
the efforts in this regard. The programme in question certainly cannot provide an assurance
that there will never again be a failure by the United States to observe the obligation of
notification under Article 36 of the Vienna Convention. But no State could give such a
guarantee and Germany does not seek it. The Court considers that the commitment
expressed by the United States to ensure implementation of the specific measures adopted
in performance of its obligations under Article 36, paragraph 1 (b), must be regarded as
meeting Germany's request for a general assurance of non-repetition.

125. The Court will now examine the other assurances sought by Germany in its fourth
submission. The Court observes in this regard that it can determine the existence of a
violation of an international obligation. If necessary, it can also hold that a domestic law
has been the cause of this violation. In the present case the Court has made its findings of
violations of the obligations under Article 36 of the Vienna Convention when it dealt with
the first and the second submission of Germany. But it has not found that a United States
law, whether substantive or procedural in character, is inherently inconsistent with the
obligations undertaken by the United States in the Vienna Convention. In the present case
the violation of Article 36, paragraph 2, was caused by the circumstances in which the
procedural default rule was applied, and not by the rule as such.

In the present proceedings the United States has apologized to Germany for the breach of
Article 36, paragraph 1, and Germany has not requested material reparation for this injury
to itself and to the LaGrand brothers. It does, however, seek assurances:

"that, in any future cases of detention or of criminal proceedings against German nationals,
the United States will ensure in law and practice the effective exercise of the rights under
Article 36 of the Vienna Convention on Consular Relations",

and that

"in particular in cases involving the death penalty, this requires the United States to provide
effective review of and remedies for criminal convictions impaired by the violation of the
rights under Article 36".

The Court considers in this respect that if the United States, notwithstanding its
commitment referred to in paragraph 124 above, should fail in its obligation of consular
notification to the detriment of German nationals, an apology would not suffice in cases
where the individuals concerned have been subjected to prolonged detention or convicted
and [p 514] sentenced to severe penalties. In the case of such a conviction and sentence, it
would be incumbent upon the United States to allow the review and reconsideration of the
conviction and sentence by taking account of the violation of the rights set forth in the
Convention. This obligation can be carried out in various ways. The choice of means must
be left to the United States.

126. Given the foregoing ruling by the Court regarding the obligation of the United States
under certain circumstances to review and reconsider convictions and sentences, the Court
need not examine Germany's further argument which seeks to found a like obligation on
the contention that the right of a detained person to be informed without delay pursuant to
Article 36, paragraph 1, of the Vienna Convention is not only an individual right but has
today assumed the character of a human right.

127. In reply to the fourth submission of Germany, the Court will therefore limit itself to
taking note of the commitment undertaken by the United States to ensure implementation
of the specific measures adopted in performance of its obligations under Article 36,
paragraph 1 (b), of the Vienna Convention, as well as the aforementioned duty of the
United States to address violations of that Convention should they still occur in spite of its
efforts to achieve compliance.

***

128. For these reasons,

THE COURT,

(1) By fourteen votes to one,

Finds that it has jurisdiction, on the basis of Article I of the Optional Protocol concerning
the Compulsory Settlement of Disputes to the Vienna Convention on Consular Relations of
24 April 1963, to entertain the Application filed by the Federal Republic of Germany on 2
March 1999;

IN FAVOUR: President Guillaume; Vice-President Shi; Judges Oda, Bedjaoui, Ranjeva,

Herczegh, Fleischhauer, Koroma, Vereshchetin, Higgins, Kooijmans, Rezek, Al-
Khasawneh, Buergenthal;

AGAINST: Judge Parra-Aranguren;

(2) (a) By thirteen votes to two,

Finds that the first submission of the Federal Republic of Germany is admissible;
IN FAVOUR: President Guillaume; Vice-President Shi; Judges Bedjaoui, Ranjeva,
Herczegh, Fleischhauer, Koroma, Vereshchetin, Higgins, Kooijmans, Rezek, Al-
Khasawneh, Buergenthal;

AGAINST: Judges Oda, Parra-Aranguren; [p 515]

(b) By fourteen votes to one,

Finds that the second submission of the Federal Republic of Germany is admissible;

IN FAVOUR: President Guillaume; Vice-President Shi; Judges Bedjaoui, Ranjeva,

Herczegh, Fleischhauer, Koroma, Vereshchetin, Higgins, Parra-Aranguren, Kooijmans,
Rezek, Al-Khasawneh, Buergenthal;

AGAINST: Judge Oda;

(c) By twelve votes to three,

Finds that the third submission of the Federal Republic of Germany is admissible;

IN FAVOUR: President Guillaume; Vice-President Shi; Judges Bedjaoui, Ranjeva,

Herczegh, Fleischhauer, Koroma, Vereshchetin, Higgins, Kooijmans, Rezek, Al-
Khasawneh;

AGAINST: Judges Oda, Parra-Aranguren, Buergenthal;

(d) By fourteen votes to one,

Finds that the fourth submission of the Federal Republic of Germany is admissible;

IN FAVOUR: President Guillaume; Vice-President Shi; Judges Bedjaoui, Ranjeva,

Herczegh, Fleischhauer, Koroma, Vereshchetin, Higgins, Parra-Aranguren, Kooijmans,
Rezek, Al-Khasawneh, Buergenthal;

AGAINST: Judge Oda;

(3) By fourteen votes to one,

Finds that, by not informing Karl and Walter LaGrand without delay following their arrest
of their rights under Article 36, paragraph 1 (b), of the Convention, and by thereby
depriving the Federal Republic of Germany of the possibility, in a timely fashion, to render
the assistance provided for by the Convention to the individuals concerned, the United
States of America
breached its obligations to the Federal Republic of Germany and to the LaGrand brothers
under Article 36, paragraph 1;
IN FAVOUR: President Guillaume; Vice-President Shi; Judges Bedjaoui, Ranjeva,
Herczegh, Fleischhauer, Koroma, Vereshchetin, Higgins, Parra-Aranguren, Kooijmans,
Rezek, Al-Khasawneh, Buergenthal;

AGAINST: Judge Oda;

(4) By fourteen votes to one,

Finds that, by not permitting the review and reconsideration, in the light of the rights set
forth in the Convention, of the convictions and sentences of the LaGrand brothers after the
violations referred to in paragraph (3) above had been established, the United States of
America breached its obligation to the Federal Republic of Ger-[p 516]many and to the
LaGrand brothers under Article 36, paragraph 2, of the Convention;

IN FAVOUR: President Guillaume; Vice-President Shi; Judges Bedjaoui, Ranjeva,

Herczegh, Fleischhauer, Koroma, Vereshchetin, Higgins, Parra-Aranguren, Kooijmans,
Rezek, Al-Khasawneh, Buergenthal;

AGAINST: Judge Oda;

(5) By thirteen votes to two,

Finds that, by failing to take all measures at its disposal to ensure that Walter LaGrand was
not executed pending the final decision of the International Court of Justice in the case, the
United States of America breached the obligation incumbent upon it under the Order
indicating provisional measures issued by the Court on 3 March 1999;

IN FAVOUR: President Guillaume; Vice-President Shi; Judges Bedjaoui, Ranjeva,

Herczegh, Fleischhauer, Koroma, Vereshchetin, Higgins, Kooijmans, Rezek, Al-
Khasawneh, Buergenthal;

AGAINST: Judges Oda, Parra-Aranguren;

(6) Unanimously,

Takes note of the commitment undertaken by the United States of America to ensure
implementation of the specific measures adopted in performance of its obligations under
Article 36, paragraph 1 (b), of the Convention; and finds that this commitment must be
regarded as meeting the Federal Republic of Germany's request for a general assurance of
non-repetition;

(7) By fourteen votes to one,

Finds that should nationals of the Federal Republic of Germany nonetheless be sentenced
to severe penalties, without their rights under Article 36, paragraph 1 (b), of the
Convention having been respected, the United States of America, by means of its own
choosing, shall allow the review and reconsideration of the conviction and sentence by
taking account of the violation of the rights set forth in that Convention.

IN FAVOUR: President Guillaume; Vice-President Shi; Judges Bedjaoui, Ranjeva,

Herczegh, Fleischhauer, Koroma, Vereshchetin, Higgins, Parra-Aranguren, Kooijmans,
Rezek, Al-Khasawneh, Buergenthal;

AGAINST: Judge Oda.

Done in English and in French, the English text being authoritative, at the Peace Palace,
The Hague, this twenty-seventh day of June, two thousand and one, in three copies, one of
which will be placed in the archives [p 517] of the Court and the others transmitted to the
Government of the Federal Republic of Germany and the Government of the United States
of America, respectively.

(Signed) Gilbert Guillaume,

President.

(Signed) Philippe Couvreur,

Registrar.

PRESIDENT GUILLAUME MAKES THE FOLLOWING DECLARATION:

Declaration of President Guillaume

Subparagraph (7) of the operative part of the Court's Judgment envisages a situation where,
despite the commitment by the United States noted by the Court in subparagraph (6), a
severe penalty is imposed upon a German national without his or her rights under Article
36, paragraph 1 (b), of the Vienna Convention on Consular Relations having been
respected. The Court states that, in such a case, "the United States, by means of its own
choosing, shall allow the review and reconsideration of the conviction and sentence by
taking account of the violation of the rights set forth in that Convention".

This subparagraph represents a response to certain submissions by Germany and hence

rules only on the obligations of the United States in cases of severe penalties imposed upon
German nationals.

Thus, subparagraph (7) does not address the position of nationals of other countries or that
of individuals sentenced to penalties that are not of a severe nature. However, in order to
avoid any ambiguity, it should be made clear that there can be no question of applying an a
contrario interpretation to this paragraph.

(Signed) Gilbert Guillaume.

Vice-President Shi appends a separate opinion to the Judgment of the Court; Judge Oda
appends a dissenting opinion to the Judgment of the Court; Judges Koroma and Parra-
Aranguren append separate opinions to the Judgment of the Court; Judge Buergenthal
appends a dissenting opinion to the Judgment of the Court.

(Initialled) G.G.
(Initialled) Ph.C. [p 518]

SEPARATE OPINION OF VICE-PRESIDENT SHI

Operative paragraph 128 (3) of the Judgment - Whether Article 36, paragraph 1 (b), of the
Vienna Convention creates individual rights - The Court's interpretation of the
subparagraph - Clarity of text and "rules of interpretation" - Text of Article 36, paragraph 1
(b), in the context and in light of the object and purpose of the Convention - Travaux
prparatoires of Article 36, paragraph 1 (b) - The Court's interpretation of Article 36,
paragraph 2 - Explanation of my vote on operative paragraph 128 (7) of the Judgment.

1. It was with a certain reluctance that I voted in favour of operative paragraph 128 (3) and
(4) of the Court's Judgment. The main reason for this is my belief that the Court's findings
in these two paragraphs were based on a debatable interpretation of Article 36 of the
Vienna Convention on Consular Relations (hereinafter called "the Convention").

2. In operative paragraph 128 (3), the Court finds that

"by not informing Karl and Walter LaGrand without delay following their arrest of their
rights under Article 36, paragraph 1 (b), of the Convention, and by thereby depriving the
Federal Republic of Germany of the possibility, in a timely fashion, to render the assistance
provided for by the Convention to the individuals concerned, the United States of America
violated its obligations to the Federal Republic of Germany and to the LaGrand brothers
under Article 36, paragraph 1".

I fully agree with the Court that the United States violated its obligations to Germany under
Article 36, paragraph 1, of the Convention. However, I have doubts as to the Court's
finding that the United States also violated its obligations to the LaGrand brothers. The
Court's decision is a consequence of its interpretation of Article 36, paragraph 1, in
particular subparagraph (b), of the Convention, regarding the differences between the
Applicant and the Respondent as to whether that subparagraph creates individual rights in
addition to the rights appertaining to the States parties.

Germany claimed that:

"the right to be informed upon arrest of the rights under Art. 36 (1) (b) of the Vienna
Convention does not only reflect a right of the sending State (and home State of the
individuals involved) towards the receiving State but also is an individual right of every
national of a foreign State party to the Vienna Convention [p 519] entering the territory of
another State party" (Memorial of Germany, Vol. I, p. 116, para. 4.91).

Whereas the United States contended that

"rights of consular notification and access under the Vienna Convention in any event are
rights of States, not individuals. Clearly they can benefit individuals by permitting - not
requiring - States to offer them consular assistance, but the Convention's role is not to
articulate or confer individual rights" (Counter-Memorial of the United States, p. 81, para.
97).

3. In paragraph 77 of the Judgment, the Court, basing its interpretation of the subparagraph
on the clarity of meaning of the text of the provision read in context, upheld that claim by
Germany. I can readily accept this finding of the Court only if its interpretation of Article
36, paragraph 1 (b), is appropriate in the present case. Undoubtedly, the Court's
interpretation is consistent with the well-known jurisprudence of this Court and of its
predecessor that, if the relevant words in their natural and ordinary meaning make sense in
their context, that is the end of the matter and there is no need to resort to other methods of
interpretation (Competence of the General Assembly for the Admission of a State to the
United Nations, Advisory Opinion, I.C.J. Reports 1950, p. 8). However, in my view,
indiscriminate reliance on such a dictum in any circumstances may not always be
dependable or helpful in determining the true intention of the parties to a treaty. It can
happen that for one reason or another - e.g., hasty or careless drafting, last-minute
compromise in negotiations - the meaning clearly apparent from the text does not
necessarily reflect that which the parties intended it to bear. Recourse to customary rules of
interpretation as reflected in Article 31 of the Vienna Convention on the Law of Treaties
may seem superfluous when the normal meaning of the text appears to be clear, but it does
serve as a double check to prevent any possibility of misinterpretation. In fact, in the case
concerning the Arbitral Award of 31 July 1989 (Guinea Bissau v. Senegal) the Court, while
affirming its dictum in its Advisory Opinion referred to above, stated that the rule of
interpretation according to the natural and ordinary meaning of the words employed is not
an absolute one and referred to a pronouncement in the case concerning South West Africa
as follows:

"Where such a method of interpretation results in a meaning incompatible with the spirit,
purpose and context of the clause or instrument in which the words are contained, no
reliance can be validly placed on it." (Preliminary Objections, Judgment, I.C.J. Reports
1962, p. 336). [p 520]

It may also be relevant to quote the following passage from Oppenheim's International
Law, (9th edition, 1992, Vol. I, p. 1267):

"The purpose of interpreting a treaty is to establish the meaning of the text which the
parties must be taken to have intended it to bear in relation to the circumstances with
reference to which the question of interpretation has arisen. It is frequently stated that if the
meaning of a treaty is sufficiently clear from its text, there is no occasion to resort to 'rules
of interpretation' in order to elucidate the meaning. Such a proposition is, however, of
limited usefulness. The finding whether a treaty is clear or not is not the starting point but
the result of the process of interpretation. It is not clarity in the abstract which is to be
ascertained, but clarity in relation to particular circumstances and there are few treaty
provisions for which circumstances cannot be envisaged in which their clarity could be put
in question."

4. In the present case, both the Applicant and the Respondent had no divergence of views
as to the normal meaning of the words of Article 36, paragraph 1 (b). However, the Parties
reached differing conclusions on the interpretation of the subparagraph. In these
circumstances I wonder whether it is proper for the Court, in approaching the issue, to
place so much emphasis on the purported clarity of language of the provision, putting aside
altogether the customary rules of interpretation. In my view it is not unreasonable for the
United States to contend that the rights of nationals of the sending State under detention or
arrest to consular notification and access under paragraph 1 (b) are not independent of, but
rather are derived from, the right of the State party to protect and assist its nationals under
the Convention, if the subparagraph is read, as the United States reads it, in context and in
the light of the object and purpose of the Convention.

5. In the first place, the very title of the Convention is none other than the "Vienna
Convention on Consular Relations". And the object and purpose of the conclusion of an
international convention on consular relations as indicated in the preamble is to "contribute
to the development of friendly relations among nations". Nowhere in the Preamble of the
Convention is reference made to the creation of rights of individuals under the Convention.

6. Secondly, Article 36, which bears the title "Communications and contact with nationals
of the sending State", begins with the words: "With a view to facilitating the exercise of
consular functions relating to nationals of the sending State". This clause serves as the
chapeau governing all the paragraphs of the Article, including paragraph 1 (b), where
"rights" of the concerned nationals of the sending State are provided. Clearly, the effect of
this clause is to limit the scope of Article 36 to facilitation of the exercise of consular
functions relating to nationals of the sending State. It is unfortunate that paragraph 77 of
the Judgment made [p 521] no mention of the chapeau of the Article, as if it were irrelevant
to the context of paragraph 1 (b).

7. Thirdly, according to Article 5 of the Convention, consular functions consist inter alia in
"protecting in the receiving State the interests of the sending State and of its nationals, both
individuals and bodies corporate, within the limits permitted by international law" (Art. 5
(a)) and "helping and assisting nationals, both individuals and bodies corporate, of the
sending State" (Art. 5 (e)). Article 36, paragraph 1, and specifically subparagraph (b), has
to be read in the context of these consular functions provided for in Article 5. It is obvious
that there cannot be rights to consular notification and access if consular relations do not
exist between the States concerned, or if rights of the sending State to protect and assist its
nationals do not exist.
8. Finally, it is clear, as the United States has contended, that the travaux prparatoires of
the 1963 Vienna Conference on Consular Relations do not confirm that Article 36,
paragraph 1 (b), is intended to create individual rights (Counter-Memorial of the United
States, pp. 82-84, paras. 99-100). Indeed, during the negotiating sessions of Article 36, the
delegation of Venezuela objected to the opening statement of paragraph 1 (a) of the
International Law Commission draft, concerning the right of nationals of the sending State
to communicate with and to have access to the competent consulate, contending that it was
inappropriate in a convention on consular relations, and that "foreign nationals in the
receiving State should be under the jurisdiction of that State and should not come within
the scope of a convention on consular relations" (United Nations Conference on Consular
Relations, 1963, Vol. I, p. 331, para. 32). In the end, on the motion of Venezuela, Ecuador,
Spain, Chile and Italy, the Second Committee of the Conference decided to reverse the
original order of Article 36, paragraph 1 (a), of the International Law Commission draft, so
that the subparagraph refers first to the right of consular officers to communicate with and
to have access to nationals of the sending State, and secondly to the right of nationals of the
sending State to have the same freedom with respect to communication with and access to
consular officers of the sending State (ibid., p. 334, para. 2, and p. 336, para. 22).

9. This reversal of order in Article 36, paragraph 1 (a), confirms the interpretation of that
subparagraph in the context and in the light of the object and purpose of the Convention.
Thus, there are good grounds for the contention by the United States in its Counter-
Memorial that

"That reversal underscores the fundamental point, that the position of the individual under
the Convention derives from the right of the State party to the Convention, acting through
its consular officer, to communicate with its nationals. The treatment due to individuals [p
522] is inextricably linked to and derived from the right of the State." (Counter-Memorial
of the United States, p. 84, para. 100.)

10. Furthermore, the original International Law Commission draft Article 36, paragraph 1
(b), makes mandatory the obligation of the receiving State to inform the competent
consulate of the sending State in case of detention of a national of that State. It reads:

"(b) The competent authorities shall, without undue delay, inform the competent consulate
of the sending State, if within its district, a national of that State is committed to prison or
to custody pending trial or is detained in any other manner. Any communications addressed
to the consulate by the person in prison, custody or detention shall also be forwarded by the
said authorities without undue delay" (Yearbook of the International Law Commission,
1961, Vol. II, p. 112).

11. During the negotiating sessions of the Vienna Conference, a number of delegations
stressed the importance of the draft subparagraph. Thus, the delegation of Tunisia stated
that it

"regarded paragraph 1 (b) as one of the most important in the draft. It was related to article
5 (Consular functions), . . . Detention (and he agreed with the French representative that
arrest should also be included) was a serious infringement of the freedom and dignity of the
individual. It was therefore unthinkable that the consul of the sending State should not be
notified, and the obligation of the receiving State to notify him should be firmly
established, for it was possible that in certain circumstances the foreign national might be
unable to inform the consul and ask him for help and protection" (United Nations
Conference on Consular Relations, 1963, Vol. I, p 339).

The delegation of the United Kingdom also stated that

"The rights of communication and contact with the nationals of sending States defined in
article 36 were especially important for the persons under detention referred to in sub-
paragraph (b). Such persons were obviously in very special need of consular help and the
notification stipulated in sub-paragraph (b) was in many cases a necessary condition for
providing it." (Ibid.)

12. However, during the negotiating sessions, this draft provision mainly aroused two
different reactions. Quite a number of States, though in agreement with the formulation of
the principle in the draft, were much concerned about the heavy burden that the mandatory
consular notification would impose on the receiving State, particularly on those States on
whose territories there are a sizeable number of resident aliens [p 523] and foreign tourists
or other short-term visitors. There were also some delegations, at least partly motivated by
the then Cold War mentality, who would have liked the subparagraph to reflect the free
will of the detained or arrested person to state whether or not he or she wished to be
approached by consular officials of his or her country.

13. In these circumstances, a seventeen-States amendment to paragraph 1 (b) was put

forward before the Conference. The delegation of Tunisia, representing the sponsors of the
amendment, stated that

"As far as sub-paragraph (b) was concerned, the sponsors had introduced the initial proviso
'unless he expressly opposes it', thereby relieving the receiving State of the automatic duty
to inform the consul of the arrest of the person concerned. The reason for that proviso was
the need to take into consideration the prisoner's own freedom of choice. It had been
argued that in some cases a prisoner might not wish the consul to know that he had been in
prison. The sponsors had hesitated at first; they had, however, ultimately agreed to take that
point into account, but with appropriate safeguards. It was for that reason that the proviso
was so drafted that the duty to notify would exist unless the person concerned explicitly
stated that he did not wish the consul to be advised." (United Nations Conference on
Consular Relations, 1963, Vol. I, p. 82, para. 56.)

14. In response to this proposed amendment, the delegation of the United Arab Republic
introduced a twenty-States joint amendment which would replace in paragraph 1 (b) the
words "unless he expressly opposes it" by the words "if he so requests". Explaining the
amendment, the delegation of the United Arab Republic stated that

"The purpose of the amendment was to lessen the burden on the authorities of receiving
Sates, especially those which had large numbers of resident aliens or which received many
tourists and visitors. The language proposed in the joint amendment would ensure that the
authorities of the receiving State would not be blamed if, owning to pressure of work or to
other circumstances, there was a failure to report the arrest of a national of the sending
State." (United Nations Conference on Consular Relations, 1963, Vol. 1, p. 82, para. 62.)

15. The result of the debate was the adoption of the twenty States' amendment with the
insertion of the words "if he so requests" at the beginning of the subparagraph. The last
sentence of Article 36, paragraph 1 (b), i.e., the provision that the competent authorities of
the receiving State "shall inform the person concerned without delay of his rights" (United
Nations Conference on Consular Relations, 1963, Vol. 1, pp. 336-343) was inserted
belatedly as a compromise between the aforesaid two opposing views. [p 524] Thus, it is
not possible to conclude from the negotiating history that Article 36, paragraph 1 (b), was
intended by the negotiators to create individual rights. Moreover, if one keeps in mind that
the general tone and thrust of the debate of the entire Conference concentrated on the
consular functions and their practicability, the better view would be that no creation of any
individual rights independent of rights of States was envisaged by the Conference.

16. With respect to operative paragraph 128 (4) of the Judgment, the Court's finding is a
consequence of its interpretation of Article 36, paragraph 2, of the Convention.

Article 36, paragraph 2, of the Convention provides:

"The rights referred to in paragraph 1 of this article shall be exercised in conformity with
the laws and regulations of the receiving State, subject to the proviso, however, that the
said laws and regulations must enable full effect to be given to the purposes for which the
rights accorded under this article are intended."

In the Court's view, since Article 36, paragraph 1, creates individual rights for the detained
person in addition to the rights accorded the sending State, the reference in paragraph 2 of
the Article to rights referred to in paragraph 1 of this Article "must be read as applying not
only to the rights of the sending State, but also to the rights of the detained individual"
(paragraph 89 of the Judgment).

As I have shown above, the view that Article 36, paragraph 1, specifically subparagraph
(b), creates individual rights is at the very least a questionable one. It follows that the
Court's finding in regard to the reference to "rights" in paragraph 2 is also questionable.

17. Finally, I should like to make it clear that it was not for reasons relating to the legal
consequences of the breach of Article 36, paragraph 1 (b), that I voted in favour of
operative paragraph 128 (7) of the Judgment. This operative paragraph is of particular
significance in a case where a sentence of death is imposed, which is not only a punishment
of a severe nature, but also one of an irreversible nature. Every possible measure should
therefore be taken to prevent injustice or an error in conviction or sentencing. Out of this
consideration, I voted in favour.
(Signed) Shi Jiuyong. [p 525]

DISSENTING OPINION OF JUDGE ODA

I. The Accumulation of Errors in the Present Case

1. I would like to begin this dissenting opinion by stating my view of the case as a whole.
This case is unique and most difficult to understand. I see it as one that has come before the
Court as a result of an accumulation of errors: the first made by Germany, as the Applicant;
the second made by the United States, as Respondent; and the third made by the Court
itself.[p 526]

1. The Error Made by Germany in Unilaterally Bringing before this Court Claims for
Alleged Violations by the United States of the Convention on Consular Relations rather
than the "Dispute" within the Meaning of the Optional Protocol

2. On 2 March 1999 Germany, "pursuant to Article I of the Vienna Convention's Optional

Protocol concerning the Compulsory Settlement of Disputes", filed in the Registry of the
Court an "Application instituting proceedings . . . against the United States of America for
violations of the Vienna Convention on Consular Relations" (Application of the Federal
Republic of Germany; emphasis added).

It is important to note that Germany never stated in the Application that it was instituting
proceedings in respect of a dispute arising out of the interpretation or application of the
Vienna Convention, although the Application did refer to Article I of the Optional
Protocol, which reads:

"Disputes arising out of the interpretation or application of the Convention shall lie within
the compulsory jurisdiction of the International Court of Justice and may accordingly be
brought before the Court by an application." (Emphasis added.)

This case stands in clear contrast to the case concerning Fisheries Jurisdiction (Federal
Republic of Germany v. Iceland), a case which Germany brought against Iceland nearly 30
years ago and in which Germany filed an "Application instituting proceedings . . . in
respect of a dispute" (Fisheries Jurisdiction (Federal Republic of Germany v. Iceland),
Merits, Judgment, I.C.J. Reports 1974, p. 176; emphasis added). This point is most
important and should not have been overlooked in connection with the issues concerning
the jurisdiction of the Court in the present case.

3. I submit, first of all, that before this case was instituted on 2 March 1999, neither the
United States, the Respondent, nor even Germany, the Applicant, considered there to be a
dispute between them which had "aris[en] out of the interpretation or application of the
[Vienna] Convention". There had been no negotiation, or even discussion, over any such
dispute.
4. The background to this case, involving Walter LaGrand, whose name is used by the
Court as the title of the case, and his brother Karl LaGrand, is set out in detail in
paragraphs 13 to 29 of the Judgment. The facts are: the LaGrand brothers committed
crimes on 7 January 1982 and were arrested on the same day; they were convicted by the
Superior Court of Pima County, Arizona, on 17 February 1984, and were sentenced to the
death penalty on 14 December 1984. These facts have not been disputed. Appeals against
the convictions and sentences to the Supreme Court of Arizona were rejected on 30
January 1987. Applica-[p 527]tions to the United States Supreme Court for further review
of those judgments were denied on 5 October 1987.

Petitions for post-conviction relief were denied by an Arizona state court in 1989. Review
of that decision was denied by the Supreme Court of Arizona in 1990 and by the United
States Supreme Court in 1991. The subsequent judicial proceedings, including a request to
the Supreme Court of Arizona for review of sentencing and a request for clemency, were
all dismissed. The Supreme Court of Arizona decided on 15 January 1999 that Karl
LaGrand and Walter LaGrand were to be executed on 24 February 1999 and on 3 March
1999 respectively. On 19 January 1999, the German Consulate learned of the Arizona
Supreme Court decisions setting the dates for the executions of the LaGrand brothers.

5. At the time of their arrest, neither of the LaGrand brothers was aware that he had
German nationality; nor were the competent United States authorities aware that the
LaGrands were not United States nationals. The present Judgment states that the
"competent authorities" of the United States became aware of the brothers' German
nationality at some point between mid-1983 and late 1984. While the United States
authorities failed to inform either brother of his true nationality until 1991, the LaGrands
had in fact been made aware of their nationality status before that date. The case was
brought to the attention of the German Consulate in June 1992 "by the LaGrands
themselves, who had learnt of their rights [under Article 36, paragraph (1) (b), of the
Vienna Convention] from other sources, and not from the Arizona authorities" (Judgment,
para. 22). The German Consulate had repeated contact with the LaGrand brothers between
December 1992 and February 1999. The Court states that "[o]n 21 December 1998, the
LaGrands were formally notified by the United States authorities of their right to consular
access" (Judgment, para. 24; emphasis added). I fail to see the significance of this "formal"
notification, given that "actual" notification had already occurred and that "on a number of
. . . occasions ... an official of the Consulate-General of Germany in Los Angeles [had]
visited the LaGrands in prison" (Judgment, para. 22).

6. At no point in the sequence of events related above did Germany ever raise the question
of the LaGrand brothers with the United States. Only in January/February 1999 did
Germany approach the United States at the highest national levels requesting clemency for
the LaGrand brothers (Judgment, para. 26). On 22 February 1999 just two days before
Karl LaGrand's execution the German Foreign Minister drew the attention of the United
States Secretary of State to the lack of consular notification.

It must be noted again that Germany did not institute proceedings in respect of a dispute
with the United States regarding application of the Vienna Convention on Consular
Relations. Even if Germany thought that the United States had violated the Vienna
Convention on Consular Relations, it raised no such claims with the United States and the
United [p 528] States was, of course, not privy to any unexpressed thoughts which
Germany might have had about possible violations of the Convention by the United States.
Neither State was aware before 2 March 1999 of any difference of views between them
concerning the Vienna Convention. There were no negotiations between the two States on
this point.

7.Suddenly, on 2 March 1999, Germany filed an "Application instituting proceedings . . .

for violations of the Vienna Convention on Consular Relations" (Application, introductory
paragraph) in the Registry of the Court pursuant to the Statute of the Court, Article 40,
paragraph 1,and the Rules of Court, Article 38, paragraph 1.

It was at that point that the United States could have first discovered that it was involved in
a "dispute" arising out of the interpretation or application of the Convention. It must have
been very odd indeed for the United States to learn, only after proceedings had been
brought against it, of the alleged existence of a "dispute".

The United States was informed by the Application filed by Germany on 2 March 1999
that Germany was claiming violations by the United States of the Vienna Convention on
Consular Relations. I am surprised that Germany unilaterally brought this case under such
circumstances. More than 17 years had already passed since the LaGrand brothers
committed the crimes in January 1982 and were arrested on the same day. Nearly 15 years
had passed since the Arizona state court sentenced them to death. During this period,
Germany had done nothing to indicate that it had claims against the United States for
violation of the Vienna Convention and that there was an issue giving rise to a "dispute"
between the two countries.

8.Germany filed its Application instituting proceedings against the United States for an
alleged violation of the Convention, but again I wish to emphasize this point not
instituting proceedings in respect of" disputes arising out of the interpretation or
application of the [Vienna]Convention on Consular Relations", which could have fallen
within the compulsory jurisdiction of the Court pursuant to the Optional Protocol. A
dispute arising out of the interpretation or application of the Convention either did not in
fact exist between Germany and the United States or, if it did exist, had not been the
subject of any diplomatic negotiations between them. All that existed at that time was
Germany's potential claim, unbeknownst to the United States, of alleged violations of the
Convention by the United States.

I believe that Germany erred: it presented its Application of 2 March 1999 instituting
proceedings for violations of the Vienna Convention as if it were submitting a "dispute"
under the Optional Clause. I maintain that this is a case of a unilateral application made in
reliance upon subsequent consent to the Court's jurisdiction to be given by the respondent
State. A dispute would then have come into existence once the Court was seised of the case
after the United States consented to the Court's jurisdiction. [p 529]
9. I would hazard a guess that the German Government was prompted to bring this case
before the International Court of Justice by the outcry raised by some in Germany, by the
emotional reaction on the part of some people there where the death penalty has been
abolished to a case involving the existence and application of the death penalty in the
United States, a reaction made even stronger by the realization that the nationality of a
fellow German (Karl LaGrand) had been ignored and that he had been executed after being
afforded the same treatment a United States citizen would have received and that another
German national (Walter LaGrand) whose execution was imminent had been treated in the
same way.

It appears to me that the main aim was to save the life of Walter LaGrand, which aim was
further supported by the Request for the indication of provisional measures filed together
with the Application. It is unlikely that any human rights group in Germany ever thought
that this case involved the Vienna Convention on Consular Relations. This may be mere
supposition, but is there any other convincing reason to explain why the German
Government referred an alleged violation of the Vienna Convention on Consular Relations
to the Court without ascertaining through consultation or negotiation with the United States
Government whether there existed any difference of views concerning the Vienna
Convention between the two countries?

I am and have always been fully aware of the humanitarian concerns raised by the fate of
the LaGrand brothers. However, I also drew attention to the rights of the victims of the
LaGrand brothers' crimes and stated in my declaration appended to the Order of 3 March
1999 that:

"if Mr. Walter LaGrand's rights as they relate to humanitarian issues are to be respected
then, in parallel, the matter of the rights of victims of violent crime (a point which has often
been overlooked) should be taken into consideration" (LaGrand (Germany v. United States
of America), Provisional Measures, Order of 3 March 1999, I.C.J. Reports 1999 (I), p. 18,
declaration of Judge Oda).

10. I very much fear that the Court's acceptance of this Application presented unilaterally
pursuant to the "optional clause" will in future lead States that have accepted the
compulsory jurisdiction of the Court, either under Article 36, paragraph 2, of the Statute or
under the Optional Protocol concerning the Compulsory Settlement of Disputes attached to
multilateral treaties, to withdraw their acceptance of the Court's jurisdiction.

2. The Error Made by the United States in Not Responding in an Appropriate Manner to
Germany's Application

11. The United States, which learned of Germany's views concerning the dispute allegedly
"arising out of the interpretation or application of [p 530] the [Vienna] Convention" only
upon the filing of Germany's Application, should, in my view, have raised preliminary
objections to the case. The United States could have done this immediately after the
Application was filed on 2 March 1999 or shortly afterwards. In fact, the United States did
not do so. Instead, on 5 March 1999, the Court ordered that, since this was a case begun by
means of a unilateral application to the Court, the applicant State (Germany) and the
respondent State (the United States) both of which are parties to the Optional Protocol
should submit their written pleadings within the respective time-limits set by the Court,
namely, 16 September 1999 and 27 March 2000.

The United States could still have presented an objection to the case prior to 27 March
2000, the time-limit set for the presentation of the Counter-Memorial. I found it surprising
that the United States, as Respondent, raised no objection during that one-year period. One
might suppose that the United States felt itself to be in a weak position in its defence
against this Application. From the earliest stages, the United States knew that it had failed
to give prompt notice to the German Consulate of the facts involving the two German
nationals. The United States would also have been aware that by that omission it had at that
time violated the Vienna Convention on Consular Relations to a certain limited extent. If
Germany had raised only the matter of the failure to give timely consular notification, the
United States would have been without any strong counter-argument.

12. Upon receiving Germany's Memorial on 16 September 1999, the United States must
have realized that Germany was essentially attempting to change the character of the
Application as it then stood. Having incorporated the issues relating to compliance or non-
compliance by the United States with the Court's Order of 3 March 1999 indicating
provisional measures, the submissions presented by Germany in its Memorial of 16
September 1999 appeared to me to be far different in nature and broader in scope than
those in its Application of 2 March 1999.

Once again, the United States could, pursuant to Article 79 of the Rules of Court, have
raised objections before 27 March 2000 (namely, the time-limit set by the Court for the
submission of its Counter-Memorial), and it should have done so, especially in the light of
this significant change in the issues. The United States did not do so and instead presented
its Counter-Memorial on that date. It was only in its Counter-Memorial of 27 March 2000
that the United States stated that "all other claims and submissions of. . . Germany [i.e.,
those other than the alleged breach of Article 36 (1) (b) of the Vienna Convention on
Consular Relations] [should be] dismissed" (Counter-Memorial, p. 140, para. 175 (2)). It
was there that the United States challenged the inclusion in the Application of 2 March
1999 of some of Germany's submissions contained in its Memorial of 16 September 1999.

13.The United States may have chosen not to raise an objection at the outset simply
because it did not think that Germany would, in its subse-[p 531]quent Memorial, redefine
the dispute referred to in its earlier Application, but the United States must have realized
upon receipt of the Memorial in September 1999 that Germany had broadened and
modified the definition of the "dispute". The case has been greatly complicated by the
approach thus adopted by the United States.

14. In my view the improper filing of Germany's Application, as explained above, and the
very indifferent reaction of the United States to Germany's Application form the essence of
this case.
3. The Error Made by the International Court of Justice in Indicating Provisional Measures
in its Order of 3 March 1999

15. In response to Germany's request submitted on 2 March 1999together with its

Application of the same date, the Court on 3 March 1999issued an Order granting
provisional measures. In my view, the issuing of that Order was not entirely proper. In
order to maintain the solidarity of the Court and out of humanitarian concerns, I voted
albeit very reluctantly in favour of the Order of 3 March 1999, and it was therefore
adopted unanimously.

I now regret that I voted in favour of that Order, since I did so against my judicial
conscience. It should, however, be clear from my declaration appended to the Court's Order
of 3 March 1999 that I was, in substance, opposed to the issuance of that Order.

At that time, I held the view (which I still hold now) that:

"as a general rule, provisional measures are granted in order to preserve rights of States
exposed to an imminent breach which is irreparable and these rights of States must be those
to be considered at the merits stage of the case, and must constitute the subject-matter of
the application instituting proceedings or be directly related to it" (LaGrand (Germany v.
United States of America), Provisional Measures, Order of 3 March 1999, I.C.J. Reports
1999 (I), p. 19, declaration of Judge Oda)

and that

"the request for provisional measures should not be used by applicants for the purpose of
obtaining interim judgments that would affirm their own rights and predetermine the main
case" (ibid.).

16. Let us reflect on the circumstances surrounding the Order of3 March 1999. Karl
LaGrand had already been executed, and the request for provisional measures was
submitted to the Court together with the Application instituting proceedings at 7.30 p.m. on
2 March1999, when Walter LaGrand's execution was imminent. Only on the morning of 3
March 1999 was the request dated 2 March 1999 provided to Members of the Court.
Another case had been scheduled for that day, [p 532] and all Members of the Court
therefore happened to be present at The Hague.

The Court made its Order at 7.15 p.m. on 3 March 1999, that is, on the very same day on
which the consideration of Germany's request had begun the sole reason for such haste
being that Walter LaGrand's execution was imminent without having given the United
States a chance to express its views in writing and without having held a court sitting for
oral hearings. (The times of day are those reported in Judge Buergenthal's dissenting
opinion.) This Court was clearly faced with an extraordinary situation for which there was
no precedent; it was only because of the exceptional circumstances of the case that the
Court was able to make such an extraordinary Order in the limited time available to it.
17. This was not, however, a situation entailing rights of States exposed to an imminent,
irreparable breach. The rights of States in question must be those to be considered at the
merits stage of the case and must constitute the subject-matter of the application instituting
proceedings or be directly related to it.

I submit that the provisional measures ordered by the Court on 3 March 1999, aimed at
staying the execution and therefore preserving the life, at least temporarily of Walter
LaGrand, were not directly related to the rights of States under the Vienna Convention and
that the Court made a significant error in issuing an Order indicating provisional measures
in this case, since the issue for which interim relief was sought did not figure among those
for which provisional measures may be properly ordered by this Court. I am confident in
my view that the Court did indeed err in issuing that Order.

This error was, however, quite understandable, as a human life hung in the balance and the
Court was given very little time to decide upon the request for an order. As I stated earlier,
I believe that Germany is responsible for the ensuing difficulties in this case, since it chose
to file its Appli-cation at the last minute before Walter LaGrand's execution, and for
placing the Court in a very difficult and delicate position. Now, with the benefit of a full
hearing of both Parties and exposition of all the facts, it should be clear to the Court (as it
was already clear to me on 3 March 1999) that it should not have issued the Order.

II. Errors in the Court's Present Judgment

A. Introduction

18. As explained in Part I above, I believe that the Court is confronted with a situation
which resulted from an accumulation of three separate errors: the first error was made by
Germany in improperly bringing the case before the Court; the second by the United States
in not raising objections to Germany's Application at the proper time; and the third by the
Court in handing down an order improperly granting provisional measures. The Court
appears to be making an ultimate error on top of those cumulative errors. I am unable to
support the Court's decision as a whole in the present Judgment.

19. Before explaining how I voted on each of the paragraphs of the operative part, I would
like, in particular, to mention five principal issues involved in the present case.

First, the United States admitted its failure to give prompt consular notification and the
ensuing violation of the Vienna Convention on Consular Relations in that respect. There
was no dispute on this point between Germany and the United States.

Second, I see no relation between the delay in consular notification on the part of the
United States authorities, on the one hand, and the handing down of the death sentence by
the Arizona state court and the execution of the LaGrand brothers, on the other.

Third, the question of compliance with the Order for the indication of provisional measures
of 3 March 1999 bears no relation to the present case, which was submitted by Germany in
respect of alleged violations by the United States of the Vienna Convention on Consular
Relations.

Fourth, the Court seems to cherish the illusion that a national of the sending State should,
under the Convention, be accorded greater protection and enjoy more rights than nationals
of the receiving State.

Fifth, it seems to me that the Court has confused the right, if any, of the arrested foreign
national accorded under the Vienna Convention with the rights of foreign nationals to
protection under general international law or other treaties or conventions, and, possibly,
even with human rights.

B. Specific Critiques of the Operative Part 1. Subparagraph (I) of the operative part
(Judgment, para. 28)

20. In subparagraph (1) of the operative part of the Judgment the Court states that "it has
jurisdiction ... to entertain the Application filed by [Germany] on 2 March 1999". As stated
in Part I, section 1,above, there is no basis for believing that there existed a dispute
between Germany and the United States arising out of the interpretation or application of
the Vienna Convention on Consular Relations in respect of which an Application could
have been filed. I voted in favour of the Court's determination that the Court has
jurisdiction to entertain Germany's Application of 2 March 1999 solely for the reason that
the [p 534] United States, the Respondent, raised no preliminary objection to that
Application.

However, I must stress that the Court's jurisdiction is over the Application of 2 March
1999, as originally filed, not as subsequently qualified by Germany's submissions
extensively altering and supplementing the Application so as to change the very essence of
it. It is to be noted in this regard that the United States, in its Counter-Memorial and in the
oral arguments heard on 17 November 2000, submitted that Germany's claims and
submissions, other than those concerning the breach by the United States of Article 36,
paragraph 1 (b), of the Vienna Convention, should be dismissed.
21. In this respect I must refer also to Germany's third submission, regarding the Court's
Order of 3 March 1999 indicating provisional measures, which, according to the present
Judgment, "concerns issues that arise directly out of the dispute between the Parties before
the Court over which the Court has already held that it has jurisdiction . . . and which are
thus covered by Article I of the Optional Protocol" (Judgment, para. 45). The Court goes
on to state:

"The Court reaffirms, in this connection, what it said in its Judgment in the Fisheries
Jurisdiction case, where it declared that in order to consider the dispute in all its aspects, it
may also deal with a submission that 'is one based on facts subsequent to the filing of the
Application, but arising directly out of the question which is the subject-matter of that
Application. As such it falls within the scope of the Court's jurisdiction ...' (Fisheries
Jurisdiction (Federal Republic of Germany v. Iceland), Merits, Judgment, I.C.J. Reports
1974, p. 203, para. 72)." (Ibid.)
From these statements the Court concludes:

"Where the Court has jurisdiction to decide a case, it also has jurisdiction to deal with
submissions requesting it to determine that an order indicating measures which seeks to
preserve the rights of the Parties to this dispute has not been complied with." (Ibid.)

I would like to point out that in the Fisheries Jurisdiction case, Germany referred a
difference which had already ripened into a dispute with Iceland to the Court on the basis
of, inter alia, an optional clause in the Exchange of Notes dated 19 July 1961. This
differentiates it from the present case, which, as I stated in paragraphs 6 to 8 above, cannot
be considered to have been brought under the Optional Protocol. In addition, in the
Fisheries Jurisdiction case provisional measures were indicated to protect the rights of a
State, Germany, from possible infringements which might arise from Iceland's exercise of
its competence pursuant to its previously enacted national legislation. There is no basis [p
535] for likening the present case to the Fisheries Jurisdiction case as regards orders
indicating provisional measures.

2. Subparagraph (2) of the operative part (Judgment, para. 128)

22. In connection with subparagraph (2) of the operative part, I believe that the Court
should have decided on the admissibility of Germany's Application of 2 March 1999, not of
Germany's submissions set out subsequently in the Memorial and repeated in its oral
pleadings on 16 November 2000. For this reason, I voted against the whole of
subparagraph (2),notwithstanding the fact that I note that the United States raised no
preliminary objection in connection with the admissibility of the present case.

3. Subparagraph (3) of the operative part (Judgment, para. 128)

23. Subparagraph (3) appears to me to proceed from the premise that the Vienna
Convention on Consular Relations placed a legal obligation on the United States not only
to Germany but also to the LaGrand brothers. Let me follow the reasoning set out in the
present Judgment. The Court begins by stating:
"The Court cannot accept the argument of the United States which proceeds, in part, on the
assumption that paragraph 2 of Article 36 applies only to the rights of the sending State and
not also to those of the detained individual. The Court has already determined that Article
36, paragraph 1, creates individual rights for the detained person in addition to the rights
accorded the sending State, and that consequently the reference to 'rights' in paragraph 2
must be read as applying not only to the rights of the sending State, but also to the rights of
the detained individual (see paragraph 77 above)." (Judgment, para. 89; emphasis added.)

What "[t]he Court has already determined" is as follows:

"The Court notes that Article 36, paragraph 1 (b), spells out the obligations the receiving
State has towards the detained person and the sending State. It provides that . . . the
receiving State must inform the consular post of the sending State ... It provides further that
any communication by the detained person . . . must be forwarded to [the consular post of
the sending State] by authorities of the receiving State . . . Significantly, this subparagraph
ends with the following language: 'The said authorities shall inform the person concerned
... of his rights . . .'. Moreover, under Article 36, paragraph 1 (c), the sending State's right to
provide consular assistance to the detained person may not be exercised 'if he expressly
opposes such action'. The clarity of these provisions [Article 36, para-[p 536]graph 1 (b),
(c)], viewed in their context, admits of no doubt. It follows, as has been held on a number
of occasions, that the Court must apply these as they stand . . . Based on the text of these
provisions, the Court concludes that Article 36, paragraph 1, creates individual rights,
which, by virtue of Article I of the Optional Protocol, may be invoked in this Court by the
national State of the detained person. These rights were violated in the present case."
(Judgment, para. 77; original emphasis by the Court deleted; emphasis is added.)

I see no convincing argument to support the determination of the Court that

"Article 36, paragraph 1, creates individual rights for the detained person in addition to the
rights accorded the sending State, and . . . consequently the reference to 'rights' in
paragraph 2 must be read as applying not only to the rights of the sending State, but also to
the rights of the detained individual" (Judgment, para. 89).

24. I shall take the liberty of expressing my puzzlement at the reason for and relevance of
the Court's reference in the Judgment to Article 36, paragraph 1 (c), of the Convention in
connection with the rights of a detained person. I believe that this provision was included
in the Convention simply to provide for the situation in which an arrested foreign national
waives consular notification in order to prevent his criminal conduct or even his presence
in a foreign country from becoming known in his home country; that provision may not
have any further significance.

25. Article 36, paragraphs 1 and 2, of the Vienna Convention on Consular Relations is
perceptively interpreted by Vice-President Shi in his separate opinion and I fully share his
views.

4. Subparagraph (4) of the operative part (Judgment, para. 128)

26. In connection with this subparagraph (4), the Court admits that "[i]n itself, the
[procedural default] rule does not violate Article 36 of the Convention" but concludes that
in the present case:

"the procedural default rule does not allow the detained individual [in this case the
LaGrand brothers] to challenge a conviction and sentence by claiming, in reliance on
Article 36, paragraph 1, of the Convention, that the competent national authorities failed to
comply with their obligation to provide the requisite consular information 'without delay',
thus preventing the person from seeking and obtaining consular assistance from the
sending State" (Judgment, para. 90).
This conclusion may be connected with the refusal on 23 February 1999 by the Arizona
Superior Court in Pima County to entertain a further petition, as noted in the Judgment
(para. 28). I fail to understand the factual situation underlying the Court's assertion that "the
procedural default rule had the effect of preventing 'full effect [from being] given to the
purposes for which the rights accorded under [Article 36 of the Convention] are intended',
and thus violated paragraph 2 of Article 36" (Judgment, para. 91).

26. I am not convinced of the correctness of the Court's holding that the Vienna
Convention on Consular Relations grants to foreign individuals any rights beyond those
which might necessarily be implied by the obligations imposed on States under that
Convention. In addition, I can-not but think that the Court holds the view that the Vienna
Convention on Consular Relations grants more extensive protection and greater or broader
individual rights to foreign nationals (in this case, German nationals in the United States)
than would be enjoyed by nationals in their home countries (in this case, Americans in the
United States).

If the Vienna Convention on Consular Relations is to be interpreted as granting rights to

individuals, those rights are strictly limited to those corresponding to the obligations borne
by the States under the Convention and do not include substantive rights of the individual,
such as the rights to life, property, etc. I find the Judgment devoid of any convincing
explanation of this point.

5. Subparagraph (5) of the operative part (Judgment, para. 128)

28. As stated in paragraph 21 above, compliance or non-compliance with the Order

indicating provisional measures of 3 March 1999 does not fall within the scope of the
present case, brought before the Court by Germany's Application of 2 March 1999 in
respect of violations of the Convention on Consular Relations. Apart from this point, it
appears to me that the Court has not properly understood the meaning of the indication of
provisional measures. As stated above in paragraphs 15 to 17, the Court was mistaken in
March 1999 in granting provisional measures.

29. The Court appears to be mostly concerned with the question of whether or not
provisional measures indicated by it are binding. In the present Judgment, the Court
dedicates as many as 25 paragraphs (paras. 92-116) to this issue. After summarizing the
views of Germany and the United States (paras. 92-97), the Court attempts to explain at
length in 19 paragraphs (paras. 98-116) why an order indicating provisional measures has
binding effect or binding force.

30. Commencing with a general discussion of the meaning of Article 41, concerning
provisional measures, of the Court's Statute, the Court states that [p 538]

"in accordance with customary international law, reflected in Article 31 of the 1969 Vienna
Convention on the Law of Treaties ... a treaty must be interpreted in good faith in
accordance with the ordinary meaning to be given to its terms in their context and in the
light of the treaty's object and purpose" (Judgment, para. 99).

Noting the difference between the authentic French text and the authentic English text, the
Court then "consider[s] the object and purpose of the Statute together with the context of
Article 41" (Judgment, para. 101). The Court goes on to state that:

"The object and purpose of the Statute is to enable the Court to fulfil the functions provided
for therein, and, in particular, the basic function of judicial settlement of international
disputes by binding decisions in accordance with Article 59 of the Statute. The context in
which Article 41 has to be seen within the Statute is to prevent the Court from being
hampered in the exercise of its functions because the respective rights of the parties to a
dispute before the Court are not preserved." (Judgment, para. 102.)

The Court further states that:

"It follows from the object and purpose of the Statute, as well as from the terms of Article
41 when read in their context, that the power to indicate provisional measures entails that
such measures should be binding, inasmuch as the power in question is based on the
necessity, when the circumstances call for it, to safeguard, and to avoid prejudice to, the
rights of the parties as determined by the final judgment of the Court." (Ibid.)

The Court immediately concludes that "[t]he contention that provisional measures
indicated under Article 41 might not be binding would be contrary to the object and
purpose of that Article" (ibid.; emphasis added). I fail to find any affirmative reason in the
above argument to support the binding force of an order for the indication of provisional
measures.

31. As "[a] related reason which points to the binding character of orders made under
Article 41 and to which the Court attaches importance" (Judgment, para. 103), the
Judgment refers to the jurisprudence of the Permanent Court of International Justice in the
1939 case concerning Electricity Company of Sofia and Bulgaria (Electricity Company of
Sofia and Bulgaria, Interim Measures of Protection, Order of 5 December 1939, P.C.I.J.,
Series A/B, No. 79, p. 194) and to many other orders of the present Court in which that
case was cited (Judgment, para. 103). In my view, however, the "principle universally
accepted by international tribunals and likewise laid down in many conventions"
mentioned in that Order was nothing more than a general statement concerning provisional
measures "to the effect that the parties to a case must abstain from any measure capable of
exercising a prejudicial effect in regard to the execu-[p 539]tion of the decision to be
given" (P.C.I.J., Series A/B, No. 79, p. 199) and cannot be interpreted as supporting the
contention that an order on provisional measures has binding force.

32.The Court, though "not consider[ing] it necessary to resort to the preparatory work",
"nevertheless point[s] out that the preparatory work of the Statute does not preclude the
conclusion that orders under Article 41 have binding force" (Judgment, para. 104;
emphasis added).
After stating that "the lack of means of execution and the lack of binding force are two
different matters" (Judgment, para. 107) and quoting Article 94 of the United Nations
Charter, which states that "[e]ach Member of the United Nations undertakes to comply
with the decision of the International Court of Justice in any case to which it is a party"
(Judgment, para. 108), the Court concludes that "Article 94 of the Charter does not prevent
orders made under Article 41 from having a binding character" (ibid.; emphasis added).
The present Judgment further states that

"none of the sources of interpretation . . . including the preparatory work, contradict the
conclusions drawn from the terms of Article 41 read in their context [that is, the binding
character of orders] and in the light of the object and purpose of the Statute" (Judgment,
para. 109; emphasis added).

33. After this extensive discussion, which seems to me a rather vain and unproductive
undertaking, the Court states that "[t]hus, [it] has reached the conclusion that orders on
provisional measures under Article 41 have binding effect" (ibid.). I fail to understand
either this roundabout method of analysis to which the Court dedicates as many as 25
paragraphs or the process by which that analysis led the Court to that conclusion.

34. In my view, addressing the general question as to whether or not an order indicating
provisional measures "is binding" or "has binding force" is an empty, unnecessary exercise.
I wonder what the Court really wants to say in holding that an order indicating provisional
measures is binding. Is the Court trying to raise the question of responsibility of the State
which allegedly has not complied with the order? This question has not arisen in the past
jurisprudence of this Court. It suffices that provisional measures "ought to be taken" or, in
the French, "doivent etre prises" (Statute, Art. 41). Whether an order indicating provisional
measures has been complied with or not is decided by the Court in its judgment on the
merits.

35. In paragraph 111 of the Judgment, the Court then considers the "the question whether
the United States has complied with the obligation incumbent upon it as a result of the
Order of 3 March 1999". After a [p 540] circuitous analysis the Court concludes that
"under these circum-stances . . . the United States has not complied with the Order of 3
March 1999" (Judgment, para. 115), simply because Walter LaGrand was executed.

Even if I were to accept that the issuance of the Order indicating provisional measures of 3
March 1999 was a valid exercise of the Court's jurisdiction, I believe that that Order was
complied with by the United States, which took all measures at its disposal in an attempt to
respect the terms. At any rate, the stay of an execution, in this case of Walter LaGrand,
could not be and, in fact, was not mandated by the Court in its Order indicating
provisional measures. 1 reiterate: it is extraordinary that the Court, in its Order of 3 March
1999, determined not the rights and duties of a State but the rights of an individual. In any
case, the question as to whether or not the Order of 3 March 1999 indicating provisional
measures was complied with should never have been raised.
6. Subparagraph (6) of the operative part (Judgment, para. 128)

36.Given my opinion that there was no other violation of the Vienna Convention on
Consular Relations on the part of the United States than its failure to notify the German
consular officials without delay of the incident involving the LaGrand brothers and the fact
that the United States did indeed take various measures to prevent the reoccurrence of that
violation, 1 do not believe there is any more to be said on this subject in the Judgment.
However, I voted in favour of this subparagraph for thesole reason that the statement in this
subparagraph cannot cause any harm.

7. Subparagraph (7) of the operative part (Judgment, para. 128)

37. I am utterly at a loss as to what the Court intends to say in this subparagraph. My
failure to understand may stem from the fact that I hold a diametrically different view on
"the rights set forth in [the Vienna]Convention". However, I believe that the sole subject-
matter of the Court's consideration should have been the violations of the Vienna
Convention by a party to it, as explained in paragraphs 23 to 25 above.

(Signed) Shigeru Oda. [p 540]

SEPARATE OPINION OF JUDGE KOROMA

Issue of procedural default in relation to breach - Court's findings - Misgivings - Orders for
provisional measures under the Court's Statute binding - Need for caution not to cast doubt
on previous orders issued.

1. Although I support the Court's findings in this case, there are one or two conclusions
about which I have some misgivings, in particular to the extent that they are also embodied
in the operative paragraph of the Judgment.

2. Germany has asked the Court to adjudge and declare

"that the United States, by applying rules of its domestic law, in particular the doctrine of
procedural default, which barred Karl and Walter LaGrand from raising their claims under
the Vienna Convention on Consular Relations, and by ultimately executing them, violated
its international legal obligation to Germany under Article 36, paragraph 2, of the Vienna
Convention to give full effect to the purposes for which the rights accorded under Article
36 of the said Convention are intended".

3. In paragraph 125 of the Judgment, the Court states that it

"can determine the existence of a violation of an international obligation. If necessary, it

can also hold that a domestic law has been the cause of this violation. In the present case
the Court has made its findings of violations of the obligations under Article 36 of the
Vienna Convention when it dealt with the first and second submission of Germany. But it
has not found that a United States law, whether substantive or procedural in character, is
inherently inconsistent with the obligations undertaken by the United States in the Vienna
Convention." (Emphasis added.)

But then, the Court goes on to say that:

"In the present case the violation of Article 36, paragraph 2, was caused by the
circumstances in which the procedural default rule was applied, and not by the rule as
such." (Emphasis added.)

Earlier in the Judgment, the Court had stated as follows:

"Under these circumstances, the procedural default rule had the [p 542] effect of preventing
'full effect [from being] given to the purposes for which the rights accorded under this
article are intended'" (para. 91; emphasis added).

4. Article 36, paragraph 2, of the Vienna Convention provides that:

"The rights referred to in paragraph 1 of this Article shall be exercised in conformity with
the laws and regulations of the receiving State, subject to the proviso, however, that the
said laws and regulations must enable full effect to be given to the purposes for which the
rights accorded under this Article are intended."

The paragraph thus sets out how the rights referred to in paragraph 1 are to be exercised
and the conditions for their application.

5. Among the rights set out in Article 36, paragraph 1, are the following: the right to
request the competent authorities of the receiving State to inform the relevant consular post
without delay of an arrest or detention; the right to have any communication addressed by a
detained or arrested person forwarded to the relevant consular post by the receiving State
authorities without delay; and the right of the sending State that its nationals be informed
without delay of their right to consular notification. In my opinion, these rights are the
rights referred to in Article 36, paragraph 2, of the Convention and they are obligations for
the receiving State. For them to be violated therefore, the competent authorities of the
receiving State must have failed to comply with them. Clearly, the breach of the obligation
that occurred in the present case was caused neither by the procedural default rule nor by
its application. It was not because of the procedural default rule that the LaGrand brothers
were not informed in a timely manner of their rights to consular protection or assistance. In
my view, neither the rule nor its application can be held in this regard to have violated
Article 36, paragraph 2, of the Convention, as it was not the rule which prevented full
effect being given to the rights under Article 36, paragraph 1. Indeed, as the Court itself has
held, the doctrine of procedural default is not inherently inconsistent with the obligations
assumed by the United States under the Convention. On the other hand, it is both
inconsistent and unsustainable to hold that the violation of Article 36, paragraph 2, in the
present case was caused by its application, and not by the rule as such. Having thus
formulated its conclusion, the Court would appear to be saying that the rule is
simultaneously both consistent and inconsistent with the United States obligations under
the Convention. If, as the Court would appear to hold, the rule is a proper part of the United
States criminal justice system, the Court cannot at the same time hold that its application
on this occasion is the cause of the violation of the United States obligations. The point
which the Court should have determined, in my view, was not whether aspects of the
criminal process were the cause of the breach of the obligations, which they were not, but
rather whether the obligations assumed under the Convention were breached as a result of
the non-observance of the rele-[p 543]vant provisions. In other words, the breach of the
relevant obligations would still have occurred to the extent that the relevant provision of
the Convention had not been complied with irrespective of the criminal process.

6. But lest there be a misunderstanding of my position, I strongly subscribe to the position

that everyone is entitled to benefit from judicial guarantees, including the right to appeal a
conviction and sentence, and this position is universally shared by States. For me, the main
issue which the Court is required to determine is whether the United States conduct, in not
informing Germany and the LaGrand brothers promptly of their rights under the
Convention, was inconsistent with the United States obligation to Germany under the
Convention, as well as the appropriate remedies for that breach.

7. I also cannot concur entirely with the reasoning of the Court regarding its finding on
Article 41 of the Statute. The real issue is whether the Order for Provisional Measures
issued by the Court on 3 March 1999 was binding on the United States, and not the
interpretation of Article 41 of the Statute which the Court decided to undertake. I do not
think its jurisprudence on this matter was in doubt. Nor do I subscribe to the theory of the
linguistic ambiguity of the said provision. In my view the meaning of the provision is clear
and objective and there can be no fundamental misunderstanding as to its purpose and
meaning. It is also part of the Statute of the Court. The object and purpose of an order for
provisional measures is to preserve and protect the rights and interests of the parties in a
dispute before the Court, pending the final decision of the Court. It is for the Court to grant
or reject a request for an order. It follows that, when an order is granted in accordance with
the Statute, it is binding. Otherwise, there would be no purpose in making an order, or the
purpose would be defeated. This is how I have understood the provision and this Judgment
should be seen in that light and not as casting doubt, albeit unwittingly, on previous orders
for provisional measures issued by this Court.

8. Finally, with regard to operative paragraph 128 (7) of the Judgment and as I have stated
above, it is my understanding that everyone, irrespective of nationality, is entitled to the
benefit of fundamental judicial guarantees, including the right of appeal or review against
conviction and sentence, irrespective of nationality. In other words the judicial process
must be fair and regular.

(Signed) Abdul G. Koroma. [p 544]

SEPARATE OPINION OF JUDGE PARRA-ARANGUREN

Article I of the Optional Protocol - Existence of a dispute as an essentially preliminary
question - Definition of a dispute - There is no dispute between the Parties as to the breach
by the United States of Article 36, paragraph 1 (b), of the Vienna Convention - No
jurisdiction of the Court on this point - The claim made by Germany in its third submission
does not arise out of the interpretation of the Vienna Convention but of Article 41 of the
Court's Statute - No jurisdiction of the Court to decide this matter under Article I of the
Optional Protocol.

1. I have voted against operative paragraph 128 (1), (2) (a), (2) (c) and (5) of the Judgment
for the following reasons:

2. The Court bases its jurisdiction on Article I of the Optional Protocol concerning
Compulsory Settlement of Disputes to the Vienna Convention on Consular Relations of 24
April 1963 (hereinafter referred to as the "Optional Protoco1").

3. Article I of the Optional Protocol prescribes that

"Disputes arising out of the interpretation or application of the Convention shall lie within
the compulsory jurisdiction of the International Court of Justice and may accordingly be
brought before the Court by a written application made by any party to the dispute being a
Party to the present Protocol."

II

4. The existence of a dispute is a condition sine qua non established by Article I of the
Optional Protocol for the compulsory jurisdiction of the Court. It is also required by the
Statute of the Court. Article 38, paragraph 1, of the Statute states that the function of the
Court in contentious cases "is to decide in accordance with international law such disputes
as are submitted to it". Article 36, paragraph 2, and paragraph 1 of Article 40 also refer to
the dispute between the Parties. Accordingly, the Court has stated that the existence of a
dispute is an "essentially preliminary" question and that it is "the primary condition for the
Court to [p 545] exercise its judicial function" (Nuclear Tests (Australia v. France),
Judgment of 20 December 1974, I.C.J. Reports 1974, p. 260, para. 24; pp. 270-271, para.
55).

5. The first submission of the Federal Republic of Germany (hereinafter referred to as

"Germany") requests the Court to adjudge and declare inter alia

"(1) that the United States, by not informing Karl and Walter LaGrand without delay
following their arrest of their rights under Article 36 subparagraph 1 (b) of the Vienna
Convention on Consular Relations . . ., violated its international legal obligations to
Germany, in its own right . . ., under Articles 5 and 36 paragraph 1 of the said Convention."
6. The first sentence of the first submission of the United States of America (hereinafter
referred to as the "United States") requests the Court to adjudge and declare that

"(1) There was a breach of the United States obligation to Germany under Article 36 (1) (b)
of the Vienna Convention on Consular Relations, in that the competent authorities of the
United States did not promptly give to Karl and Walter LaGrand the notification required
by that Article . . ."

7. As recognized in many paragraphs of the Judgment, e.g., the first sentence of paragraph
39, the Parties agree that the United States did not inform the LaGrand brothers without
delay following their arrest of their rights under Article 36, paragraph 1 (b), of the Vienna
Convention, thus violating that provision. Paragraph 39 of the Judgment adds that the
United States did not deny that such violation "has given rise to a dispute between the two
States".

8. However, the Court explained in its Judgment of 11 June 1998 that

"'in the sense accepted in its jurisprudence and that of its predecessor, a dispute is a
disagreement on a point of law or fact, a conflict of legal views or interests between parties
. . .' (East Timor (Portugal v. Australia), Judgment, I.C.J. Reports 1995, pp. 99-100, para.
22); and that '[i]n order to establish the existence of a dispute, "It must be shown that the
claim of one party is positively opposed by the other" (South West Africa, Preliminary
Objections, Judgment, I.C.J. Reports 1962, p. 328); and further, "Whether there exists an
international dispute is a matter for objective determination" (Interpretation of Peace
Treaties with Bulgaria, Hungary and Romania, First Phase, Advisory Opinion, I.C.J.
Reports 1950, p. 74)' (I.C.J. Reports 1995, p. 100)." (Land and Maritime Boundary
between Cameroon [p 546] and Nigeria (Cameroon v. Nigeria). Preliminary Objections,
I.C.J. Reports 1998, pp. 314-315, para. 87).

9. The Court has also stated that

"it is not sufficient for one party to a contentious case to assert that a dispute exists with the
other party. A mere assertion is not sufficient to prove the existence of a dispute any more
than a mere denial of the existence of the dispute proves its non-existence. Nor is it
adequate to show that the interests of the two parties to such a case are in conflict." (South
West Africa Cases (Ethiopia v. South Africa; Liberia v. South Africa), Preliminary
Objections, Judgment of 21 December 1962, I.C.J. Reports 1962, p. 328.)

10. On the basis of these criteria, even assuming that the United States had not denied the
existence of a dispute, it has not been shown objectively to the Court that the Parties
maintain positively opposed positions on this point. On the contrary, as it appears from the
submissions quoted above, they agree on the breach by the United States of its violation of
Article 36, paragraph 1 (b), of the Vienna Convention. Therefore, in my opinion, the Court
does not have jurisdiction under Article I of the Optional Protocol to decide whether the
United States breached Article 36, paragraph 1 (b), when arresting the LaGrand brothers.
Nor can the Court exercise its functions under Article 38, paragraph 1, of its Statute. For
this reason I voted against operative paragraph 128 (1) and (2) (a) of the Judgment.

11. A different problem is the consequences of the violation by the United States of Article
36, paragraph 1 (b), of the Vienna Convention. The Parties disagree upon them. Therefore
the Court has jurisdiction to decide that dispute under Article I of the Optional Protocol.

III

12. Germany's third submission requests the Court to adjudge and declare

"(3) that the United States, by failing to take all measures at its disposal to ensure that
Walter LaGrand was not executed pending the final decision of the International Court of
Justice on the matter, violated its international legal obligation to comply with the Order on
Provisional Measures issued by the Court on 3 March 1999, and to refrain from any action
which might interfere with the subject matter of a dispute while judicial proceedings are
pending". [p 547]

13. Germany, advancing the arguments summarized in the Judgment (para. 93), maintains
that the measures indicated by the Court pursuant to Article 41 of its Statute are obligatory.
This contention is disputed by the United States (para. 91 of the Judgment).

14. The majority of the Court states:

"The dispute which exists between the Parties with regard to this point essentially concerns
the interpretation of Article 41, which is worded in identical terms in the Statute of each
Court (apart from the respective references to the Council of the League of Nations and the
Security Council). These difficulties have been the subject of extensive controversy in the
literature. The Court will therefore now proceed to the interpretation of Article 41 of the
Statute." (Para. 99 of the Judgment.)

15. As the Judgment acknowledges, the dispute between Germany and the United States on
this point arises out of the interpretation of Article 41 of the Court's Statute. Therefore, it is
not a dispute arising out of the interpretation of the Vienna Convention as required by the
Optional Protocol, which is the basis for the jurisdiction of the Court in the present case.
Consequently, in my opinion, the Court does not have jurisdiction to decide Germany's
third submission. For this reason I have voted against operative paragraph 128 (1), (2) (c)
and (5) of the Judgment.

(Signed) Gonzalo Parra-Aranguren. [p 548]

DISSENTING OPINION OF JUDGE BUERGENTHAL

1. Since I find myself in disagreement with the Court's ruling that Germany's third
submission is admissible, I regret that I must dissent from that part of the Court's Judgment.
2. In the submission, which I consider to be inadmissible, Germany requests the Court to
adjudge and declare:

"that the United States, by failing to take all measures at its disposal to ensure that Walter
LaGrand was not executed pending the final decision of the International Court of Justice
on the matter, violated its international obligation to comply with the Order on Provisional
Measures issued by the Court on 3 March 1999, and to refrain from any action which might
interfere with the subject matter of a dispute while judicial proceedings are pending".

3. Germany filed its Application in this case, together with its request for provisional
measures, at 7.30 p.m. The Hague time on 2 March 1999, some 27 hours before the
scheduled execution of Walter LaGrand. On 3 March 1999, at 9.00 a.m. The Hague time,
the Vice-President of the CourtFN1 met with the representatives of Germany and the
United States to discuss the subsequent course of the proceedings. At this meeting
Germany's representative asked the Court to indicate the requested provisional measures
proprio motu pursuant to Article 75 of the Rules of Court and without holding any hearing
on the subject. Responding to this request, the representative of the United States
explained, inter alia:

--------------------------------------------------------------------------------------------------------------
-------
FN1 The President of the Court, Judge S. Schwebel of the United States, relinquished the
presidency in this case pursuant to Article 32, of the Rules of Court.
--------------------------------------------------------------------------------------------------------------
-------

"that the United States would have strong objections to any procedure such as that
proposed only that very morning by the repre-[p 549]sentative of Germany which would
result in the Court making an Order proprio motu without having first duly heard the two
Parties"2.

------------------------------------------------------------------------------------------------------------
FN2 LaGrand (Germany v. United States of America), Provisional Measures, Order of 3
March 1999, I.C.J. Reports 1999, p. 13, para. 12.
------------------------------------------------------------------------------------------------------------

4. Article 74, paragraph 1, of the Rules of Court specifies that "[a] request for the
indication of provisional measures shall have priority over all other cases", and paragraph 3
of that Article provides in part that "[t]he Court, or the President if the Court is not sitting,
shall fix a date for a hearing which will afford the parties an opportunity of being
represented at it".

Under Article 75, paragraph 1, of the Rules:

"The Court may at any time decide to examine proprio motu whether the circumstances of
the case require the indication of provisional measures which ought to be taken or
complied with by any or all of the parties."

5. On 3 March 1999, at 7.15 p.m. The Hague time, the Court issued the Order for
provisional measures requested by Germany. It did so without the prior hearing provided
for in Article 74, paragraph 3, of the Rules, without an exchange of pleadings, and having
before it only Germany's Application and request for provisional measures, which set out
Germany's allegations in justification of its request.

6. In issuing the requested Order, the Court explained its decision to proceed in this ex
parte fashion in the following terms:

"Whereas, the sound administration of justice requires that a request for the indication of
provisional measures founded on Article 73FN3 of the Rules of Court be submitted in good
time;

------------------------------------------------------------------------------------------------------------
FN3 Article 73 of the Rules of Court, which Germany had also invoked, reads as follows:

"1. A written request for the indication of provisional measures may be made by a party at
any time during the course of the proceedings in the case in connection with which the
request is made.

2. The request shall specify the reasons therefor, the possible consequences if it is not
granted, and the measures requested. A certified copy shall forthwith be transmitted by the
Registrar to the other party."
------------------------------------------------------------------------------------------------------------

"Whereas, Germany emphasizes that it did not become fully aware of the facts of the case
until 24 February 1999 and that since then it has pursued its action at diplomatic level;

"Whereas, under Article 75, paragraph 1, of the Rules of Court, the latter 'may at any time
decide to examine proprio motu whether the circumstances of the case require the
indication of provisional measures which ought to be taken or complied with by any or all
of the parties'; whereas a provision of this kind has substantially[p 550] featured in the
Rules of Court since 1936, and whereas, if the Court has not, to date, made use of the
power conferred upon it by this provision, the latter appears nonetheless to be clearly
established; whereas the Court may make use of this power, irrespective of whether or not
it has been seised by the parties of a request for the indication of provisional measures;
whereas in such a case it may, in the event of extreme urgency, proceed without holding
oral hearings; and whereas it is for the Court to decide in each case if, in the light of the
particular circumstances of the case, it should make use of the said power."FN4

---------------------------------------------------------------------------------------------------
FN4 LaGrand (Germany v. United States of America), Provisional Measures, Order of 3
March 1999, I.C.J. Reports 1999, p. 14, paras. 19-21.
---------------------------------------------------------------------------------------------------
7. The Court issued its Order only four hours before the scheduled execution of Walter
LaGrand, which was to take place in the State of Arizona. The United States authorities
were thus left with very little time to assess and act upon the Order with the deliberateness
its gravity required under American law and constitutional practice applicable to federal-
state relations as well as under international law. It is to be observed, however, that the
Court was presented by Germany with claims regarding a set of facts that called for
immediate action to save the life of a human being who had allegedly been deprived of his
rights under international law. In light of these circumstances, it is difficult to fault the
Court for issuing the Order in the manner it did. But there is no excuse for Germany's
conduct in waiting until the last minute to seek the Order. This is so particularly since it is
now clear that the grounds Germany alleged in justification of its late filing do not
withstand scrutiny. The late filing, as will be shown below, had serious negative
consequences for the position of the United States in defending its rights before this Court.
In my opinion, these circumstances now require the Court to hold the third submission
inadmissible.

8. Germany sought to excuse its last minute request for provisional measures on the ground
that it did not know until 23 or 24 February 1999 that the authorities of the State of Arizona
had been aware at least as far back as 1982 or 1984 that the LaGrand brothers were
German nationals. In issuing its Order, the Court attached considerable importance to this
claim. This is readily apparent from the specific reference the Court makes to Germany's
claim in setting out the reasons motivating its decision and from the context within which
the reference appears in its Order (see para. 6, above).

9. Even assuming that Germany's late filing could be justified on the ground advanced by it
- something that is open to some doubt - the record now before the Court indicates that the
information Germany [p 551] claimed it did not have was in fact available to Germany at
least since 1993.

10. Germany learned in 1992 that the LaGrands had been arrested in 1982 and that they
had been tried and convicted in Arizona in 1984. According to Germany, its involvement
in this case begins with a prison visit to the brothers on 8 December 1992. It explained this
involvement to the Court in the following words:

"In the following [after December 1992], Germany helped the brothers' attorneys to
investigate the brothers' childhood in Germany, both by financial and logistical support,
and to raise this issue and the omission of consular advice in Court proceedings."FN5
(Emphasis added.)

------------------------------------------------------------------------------------------------------------
FN5 Memorial of Germany, Vol. I, p. 11, para. 2.06.
------------------------------------------------------------------------------------------------------------

Among the court proceedings instituted by the LaGrands' lawyers in co-ordination with
German consular officials was an appeal to the United States District Court for the District
of Arizona, filed on 8 March 1993. "In these proceedings", according to Germany, "the
attorneys raised for the first time the lack of consular advice and the violation of Art. 36 of
the Vienna Convention on Consular Relations."FN6 In support of their claim, the attorneys
provided the United States District Court on the same date with the presentence reports
prepared in 1984 by the probation officials of Pima County, Arizona, in connection with
the sentencing of the LaGrand brothersFN7. Each of these presentence reports stated very
clearly that the LaGrands were German citizensFN8. The reports had been provided to the
defence attorneys of the LaGrands a decade before and they formally acknowledged receipt
of these reports in open court on 12 December 1984FN9.

--------------------------------------------------------------------------------------------------------------
-------
FN6 Ibid., p. 12, para. 2.07.
FN7 See Memorial of Germany, Vol. III, Ann. 46, p. 853, at 1009.
FN8 See Presentence Reports on Karl and Walter LaGrand, dated 2 April 1984, Memorial
of Germany, Vol. II, Ann. 2, pp. 261 and 276.
FN9 See Memorial of Germany, Vol. II, Ann. 8, pp. 461-462.
--------------------------------------------------------------------------------------------------------------
-------

11. In other words, the information contained in the presentence reports, including the fact
that the Arizona authorities knew as far back as the early 1980s that the LaGrands were
German nationals, was known to the attorneys of the LaGrands by 1984, if not earlier.
These attorneys filed the presentence reports with the United States District Court for
Arizona in March 1993 in connection with their habeas corpus motion on behalf of the
LaGrands. As of that date, these reports were available to Germany which, as we have
seen, emphasized to this Court that it "helped the brothers' attorneys . . . to raise . . . the
omission of consular advice" and "the violation of Art. 36 of the Vienna Convention on
Con-[p 552]sular Relations" in the proceedings they instituted in 1993 (see para. 10 above).

12. The foregoing facts raise serious doubts about the legitimacy of Germany's contention
in this Court that the late filing (on 2 March 1999) of its request for provisional measures
was attributable to the fact that it discovered only on 23 February 1999 that the Arizona
authorities knew as far back as 1984 that the LaGrands were German nationals. Even
assuming that Germany did not actually know these facts, it certainly had no excuse for not
knowing them, given its insistent claim in this Court of its close involvement in the
LaGrand case after 1992 and its collaboration with the LaGrands' attorneys after that date,
particularly in assisting them in raising issues relating to the Vienna Convention.

13. In its oral argument, Germany responded in the following terms to the contention of the
United States that the 1984 presentence reports provided the answer to the question
concerning the date when the Arizona authorities learned that the LaGrands were German
citizens:

"the only question that makes sense at all in this context is whether German officials did or
did not have easy access to the Presentence Reports in 1992 or thereafter. Although we do
not attribute any conclusive weight to this issue, we can provide you with a clear answer.
We have filed with the Court a Memorandum regarding the Presentence Reports issue in
the LaGrand matter, drafted by the Federal Public Defender for the District of Arizona at
the request of the German Consulate General in Los Angeles. Let me summarize what this
Memorandum says: According to a local rule of the Pima County Superior Court, the
Presentence Reports concerning Karl and Walter LaGrand were filed under seal and kept
confidential even after sentencing. When the Federal Public Defender tried to locate this
report in June of this year [2000], they could not be found. In the words of the Public
Defender:

'The exhibits clerk at the superior court advised that the clerk did not have pre-sentence
reports information on either LaGrand, and they had no idea where the pre-sentence reports
were filed. It appears that the pre-sentence reports are not even in the superior court file.'

Mr. President, if not even the competent US authority managed to retrieve the reports, does
it make sense to say, as the Counter-Memorial [of the United States] does, that it is 'hard to
understand how these reports were not already familiar to German consular officers'? Can
one really accuse a foreign consulate of negligence [p 553]when it failed to get hold of
documents which could not even be traced by the competent local authorities?"FN10

------------------------------------------------------------------------------------------------------------
FN10 CR 2000/26, p. 38.
------------------------------------------------------------------------------------------------------------

14. The answer to the question counsel for Germany asked in the last sentence of the
preceding paragraph is a resounding "yes". As we have seen, the presentence reports were
in the possession of the LaGrands' attorneys and transmitted by them to the United States
District Court in 1993. Moreover, even assuming that these reports were confidential or
under seal after the conviction in 1984 of the LaGrands, they became a matter of public
record when provided to the United States District Court. Since the reports were thus
available to Germany by 1993, it is quite irrelevant that the Public Defender, quoted above
by Germany, was unable allegedly to find them in the year 2000.

15. It is noteworthy, too, that between 1992, when Germany learned of the detention, trial
and sentencing of the LaGrands, and the beginning of 1999, when Germany claimed that it
found out for the first time that the Arizona authorities had known since the early 1980s
that the LaGrands were German citizens, Germany never asked the United States
Department of State to investigate the case of the LaGrands. Moreover, in 1998 the
Department of State expressly invited all embassies in Washington "to bring possible
failures of consular notification to its attention, so that it could investigate and take any
appropriate action"FN11. Such an investigation, had it been requested by Germany
consistent with the practice routinely followed in these types of cases, would have
determined the date as of which the LaGrands' German nationality was known to the
Arizona authorities. This information was in fact contained in the report prepared by the
State Department following its own investigation of the case in 1999-2000FN12.
--------------------------------------------------------------------------------------------------------------
-------
FN11 Counter-Memorial of the United States, p. 51, para. 61.
FN12"Karl and Walter LaGrand. Report of Investigation into Consular Notification
Issues." United States Department of State, 17 February 2000, Counter-Memorial of the
United States, Exhibit 1, pp. 7-8.
--------------------------------------------------------------------------------------------------------------
-------

16. Germany's lack of diligence in ascertaining the facts it advanced to justify its late filing
deprived the United States of an opportunity to be heard on Germany's request for
provisional measures. What is more, it left the Court little choice but to accept on face
value Germany's claim of its lack of knowledge, since the absence of a hearing prevented
the United States from rebutting Germany's contention in this regard. Germany's conduct
raises issues analogous to those the Court addressed in the case concerning Legality of Use
of Force (Yugoslavia v. Belgium), [p 554] where Yugoslavia attempted to invoke a new
basis of jurisdiction at a very late stage of the proceedings. In that case, the Court ruled as
follows:

"Whereas the invocation by a party of a new basis of jurisdiction in the second round of
oral argument on a request for the indication of provisional measures has never before
occurred in the Court's practice; whereas such action at this late stage, when it is not
accepted by the other party, seriously jeopardizes the principle of procedural fairness and
the sound administration of justice; and whereas in consequence the Court cannot, for
purpose of deciding whether it may or may not indicate provisional measures in the present
case, take into consideration the new title of jurisdiction which Yugoslavia sought to
invoke on 12 May 1999."FN13

------------------------------------------------------------------------------------------------------------
FN13 Provisional Measures, Order of 2 June 1999, I.C.J. Reports 1999, para. 44.
------------------------------------------------------------------------------------------------------------

17. Germany's justification for its late filing, which the information now before the Court
has shown to have been based on spurious claims, had the effect of obtaining a ruling from
the Court that "seriously jeopardize[d] the principle of procedural fairness and the sound
administration of justice". This result, as we have seen, was brought about because of
Germany's lack of diligence. It alone justifies holding the submission inadmissible on the
grounds invoked by the Court in Yugoslavia v. Belgium, above.

18. In addressing the issue of the admissibility of Germany's third submission, the Court
makes the following finding (para. 57):

"The Court recognizes that Germany may be criticized for the manner in which these
proceedings were filed and for their timing. The Court recalls, however, that
notwithstanding its awareness of the consequences of Germany's filing at such a late date,
it nevertheless considered it appropriate to enter the Order of 3 March 1999, given that an
irreparable prejudice appeared to be imminent. In view of these considerations, the Court
considers that Germany is now entitled to challenge the alleged failure of the United States
to comply with the Order. Accordingly, the Court finds that Germany's third submission is
admissible."

19. I have no disagreement with the Court's view that given the imminence of "an
irreparable harm" in the instant case it was "appropriate" to enter the Order of 3 March
1999 on the facts then known to the Court. But it does not follow therefrom, contrary to
what the Court says, that "in view of these considerations, the Court considers that
Germany is [p 555] now entitled to challenge the alleged failure of the United States to
comply with the Order". The fact that it was appropriate for the Court to issue the Order
does not compel the admissibility of Germany's third submission once it is apparent that
Germany's justification for its late filing is shown not to withstand scrutiny. It is to be
regretted that the Court fails to address this issue since it bears directly on the admissibility
of Germany's third submission.

20. Germany's negligence had other detrimental consequences for the United States, as far
as concerns the Order of 3 March 1999. In its request for provisional measures, Germany
asked the Court for an Order that tracked verbatim the language of the Court's Order of 9
April 1998 in the Breard caseFN14. When the Breard Order was before the United States
Supreme Court, the Solicitor General of the United States explained why the Government
believed that the Order was not binding. He made three points in this regard. He submitted,
first, that "there is substantial disagreement among jurists as to whether an ICJ order
indicating provisional measures is binding. See Restatement (Third) of Foreign Relations
Law of the United States, Sec. 903, Reporter's Note 6, at 369-370 (1986). The better
reasoned position is that such an order is not binding" FN15. The Solicitor General then
attempted to show, by analysing Article 41 of the Statute of the Court, why that was the
better reasoned view. The Solicitor General's second argument in support of the non-
binding character of the Court's Article 41 orders was that:

--------------------------------------------------------------------------------------------------------------
-------
FN14 Vienna Convention on Consular Relations (Paraguay v. United States of America),
Provisional Measures, Order of 9 April 1998, I.C.J. Reports 1998, p. 258, para. 41 (I).
FN15 Brief for the United States as Amicus Curiae, Republic of Paraguay v. Gilmore,
Memorial of Germany, Vol. II, Ann. 34, p. 737.
--------------------------------------------------------------------------------------------------------------
-------

"the ICJ itself has never concluded that provisional measures are binding on the parties to a
dispute. That court has indicated provisional measures in seven other cases of which we are
aware; in most of those cases, the order indicating provisional measures was not regarded
as binding by the respondent."FN16

------------------------------------------------------------------------------------------------------------
FN16 Ibid., p. 738.
------------------------------------------------------------------------------------------------------------

Finally, the Solicitor General argued that, even assuming that "parties to a case before the
ICJ are required to heed an order of that court indicating provisional measures", the Order
in the Breard case was not worded in mandatory termsFN17. Consistent with the view of
the Solicitor General, the Supreme Court of the United States denied the stay of execution
in [p 556] the Breard case called for by the Order of the International Court of Justice in
that caseFN18.

--------------------------------------------------------------------------------------------------------------
-------
FN17 Ibid., p. 739.
FN18Breard v. Greene, Republic of Paraguay v. Gilmore, 118 S.Ct. 1352 (1998), 37
International Legal Materials (1998), p. 829.
--------------------------------------------------------------------------------------------------------------
-------

21. Germany was aware of the position of the United States Government regarding the
non-binding character of orders of this Court indicating provisional measures in general
and with its interpretation of the Order in the Breard case in particular

. It is difficult to understand, therefore, what Germany sought to achieve with its 2 March
1999 request for provisional measures. It certainly could not have been surprised that the
United States would adopt the same position with regard to the requested order as it did in
relation to the Breard Order of 9 April 1998. There was nothing in the order Germany
requested on 2 March 1999 that would have provided the authorities of the United States
with a legal basis justifying the Solicitor General to reverse his official position adopted
less than a year earlier. In the absence of such a justification, it would have been
unprecedented for him not to adhere to his earlier view. Moreover, and that is even more
important, the Court itself had not in the meantime clarified its position on the subject.
Consequently, when Germany asked the Court to proceed proprio motu and without a
hearing, and sought an order identical to that the Court issued in the Breard case, Germany
breached an obligation of elementary fairness it owed the United States in the
circumstances of this case. It is true, of course, that a party in proceedings before this
Court, as before any other court, must bear the consequences of having assumed,
erroneously in retrospect, that a given order is non-binding and being held responsible for
the resulting violation. But this fact does not relieve Germany of responsibility for having
engaged in a litigation strategy prejudicial to the United States.

23. To summarize, the claim advanced by Germany to justify its late filing has been shown
to be without merit. In fact, it is now clear that Germany had no good reason for not
bringing its request for provisional measures to the Court at least a year or two earlier, if
not much earlier. Its late filing did nevertheless have the consequence of preventing the [p
557] United States from being heard in a timely fashion on the German request for
provisional measures. The absence of a hearing also deprived the United States of the
opportunity to address the question of the binding character of the Court's orders and their
 effect on the laws of the United States. What is more, Germany sought an Order from this
Court that it had every reason to anticipate the United States would consider to be non-
binding and hence not requiring enforcement - a litigation strategy that is very difficult to
understand unless that was its very purpose.

24. Accordingly, I consider that the manner in which Germany proceeded in obtaining the
Court's Order of 3 March 1999 amounted to procedural misconduct prejudicial to the
interests of the United States as a party to the instant proceedings. Such misconduct
provides the requisite justification - it compels it, in my opinion - for declaring Germany's
third submission inadmissible.

(Signed) Thomas Buergenthal.

Brief Fact Summary. A suit against the United States

(D) was filed by Germany (P) in the International Court
of Justice, claiming the U.S. law enforcement agent
failed to advice aliens upon their arrests of their rights
under the Vienna Convention.

Synopsis of Rule of Law. A state that breaches its

obligations to another under the Vienna Convention on
Consular Relations by failing to inform an arrested alien
of the right to consular notification and to provide judicial
review of the aliens conviction and sentence also violate
individual rights held by the alien under international law.

Facts. The Vienna Convention on Consular Relations,

Article 36(1)(b), provides that a state trying an alien in a
death sentence case must inform the alien of his rights
to have his consular authorities informed of the arrest. A
suit which claimed the United States law enforcement
personnel f ailed to advice aliens upon their arrest of
their rights was filed by Paraguay (P), Germany (P) and
Mexico (P) at the international Court of Justice. The
plaintiffs also claimed that as a remedy for violation of
the Vienna Convention, state courts should review and
reconsider the death sentences to determine if the lack
of consular access prejudiced the aliens. The Germans
(P) case involved LaGrand and his brother who were
executed before the matter came to the I.C.J. the Court
found that the U.S. (D) had breached its obligations to
Germany (P) under the Vienna Convention by not giving
notice about LaGrand and his brother of right to consular
notification, and by failing to provide judicial review of the
conviction and sentence.

Issue. Does a state which breaches its obligations to

another under the Vienna Convention on Consular
Relations by failing to inform an arrested alien of the right
to consular notification and to provide judicial review of
the aliens conviction and sentence also violate
individual rights held by the alien under international
law?
Held. Yes. A state that breaches its obligations to
another under the Vienna Convention on Consular
Relations by failing to inform an arrested alien of the right
to consular notification and to provide judicial review of
the aliens conviction and sentence also violate
individual rights held by the alien under international law.
The meaning adduced to the phrase authorities shall
inform the person concerned without delay of his rights
under this subparagraph of Article 36 suggests that the
rights to be informed of their rights under the Convention
is an individual right of every national of a state that is
party to the Convention.

Discussion. The Arizona Governor Jane Dee Hull

insisted that the executions of the LeGrand brothers
would be carried out despite the diplomatic efforts made
by the German Ambassador and German Members of
Parliament and the recommendation of the Arizonas
clemency board. On February 24, 1999, Karl LaGrand
was executed by lethal injection and Walter LaGrand
was executed March 3, 1999 by gas chamber. Compare
this case to a ruling by the I.C.J. involving Mexican
nationals, Avena and other Mexican Nationals (Mexico
v. United States), 2004 I.C.J. 12 and the U.S. Supreme
Courts refusal to give effect to the I.C.J.s Avena
decision in Medelin v. Texas 128 S. Ct. 1346 (2008)
[G.R. No. L-4352. September 28, 1951.]

VICTOR BOROVSKY, Petitioner, v. THE COMMISSIONER OF IMMIGRATION and THE DIRECTOR OF

PRISONS, Respondents.

Victor Borovsky in his own behalf.

First Assistant Solicitor General Roberto Gianzon and Solicitor Florencio Villamor,
for Respondents.

SYLLABUS
 1. ALIENS; STATELESS ALIENS HABEAS CORPUS. Aliens illegally staying in the Philippines have no right
of asylum therein (Soewapadji v. Wixon, Sept. 13, 1946, 157 F. ed., 289, 290) even if they are "stateless."
It is no less true however that foreign nationals, not enemy, against whom no criminal charges have been
formally made or judicial order issued, may not indefinitely be kept in detention. The protection against
deprivation of liberty without due process of law and except for crimes committed against the laws of the
land is not limited to Philippine citizens but extends to all residents, except enemy aliens, regardless of
nationality. Whether an alien who entered the country in violation of its immigration laws may be detained
as long as the Government is unable to deport him, is beside the point. Therefore, the writ of habeas
corpus will issue commanding the respondents to release the petitioner from custody upon these terms: The
petitioner shall be placed under the surveillance of the immigration authorities or their agents in such form
and manner as may be deemed adequate to insure that he keep peace and be available when the
Government is ready to deport him. The surveillance shall be reasonable and the question of reasonableness
shall be submitted to this Court or to the Court of First Instance of Manila for decision in case of abuse. He
shall also put up a bond for the above purpose in the amount of P5,000 with sufficient surety or sureties,
which bond the Commissioner of Immigration is authorized to exact by Section 40 of Commonwealth Act No.
613.

DECISION

TUASON, J.:

This is a second petition for habeas corpus filed by the petitioner with this Court, the first having been
denied in a decision promulgated on June 30, 1949.

Victor A. Borovsky, the petitioner, claims to be a stateless citizen, born in Shanghai, China, of Russian
parentage. He came to the Philippines in 1936 and had resided therein ever since, if the period of his
detention be included.

On June 24, 1946, by order of the Commissioner of Immigration, the petitioner was arrested for
investigation as to his past activities. Following his arrest, a warrant for his deportation was issued by the
Deportation Board, which is said to have found him an undesirable alien, a vagrant and habitual drunkard.
The petitioner protests that he was not given a hearing, nor informed of the charges preferred against him.
This point however is unimportant in this proceeding.

In May, 1947, the petitioner was put on board a ship which took him to Shanghai, but he was not allowed to
land there because he was not a national of China and was not provided with an entry visa. He was
therefore brought back to Manila and was confined to the new Bilibid Prison in Muntinlupa until December 8,
1947, when he was granted provisional release by the President through the Secretary of Justice for a
period of six months. Before the expiration of that period, namely, on March 20, 1948, the Commissioner of
Immigration caused his rearrest and he has been in confinement in the abovementioned prison ever since.

In his return to the writ, the Solicitor General in behalf of the respondents alleges that the Commissioner of
Immigration "has availed of every opportunity presented to carry out the deportation order as shown by the
fact that when the petitioner was enjoying his provisional release after the unsuccessful attempt to deport
him to Shanghai, China, he was again re-arrested and flown to Cebu for the purpose of placing him on board
a Russian vessel which had called at the port, with a view to carrying out the deportation order issued
against him, but said deportation was not carried out for the reason that the captain of the said boat refused
to take on board the herein petitioner on the ground that he had no permission from the Russian
government to take on board the petitioner." It is further alleged that "the immigration officials have taken
steps regarding the disposition of those foreigners subject to deportation while awaiting availability of
transportation or arrangements to the place where they may be sent." cralaw virtua1aw l ibra ry

In this Courts majority decision on the first application it was observed that the applicants detention was
temporary, and it was held that "temporary detention is a necessary step in the process of exclusion or
expulsion of undesirable aliens and that pending arrangements for his deportation, the Government has the
right to hold the undesirable alien under confinement for a reasonable length of time." It took note of the
fact that "this Government desires to expel the alien, and does not relish keeping him at the peoples
expense . . . making efforts to carry out the decree of exclusion by the highest officer of the land." No period
was fixed within which the immigration authorities were to carry out the contemplated deportation beyond
the statement that "The meaning of reasonable time depends upon the circumstances, specially the
difficulties of obtaining a passport, the availability of transportation, the diplomatic arrangements with the
governments concerned and the efforts displayed to send the deportee away," but the Court warned that
"under established precedents, too long a detention may justify the issuance of a writ of habeas corpus." cralaw virtua 1aw lib rary

Mr. Justice Paras, now Chief Justice, Mr. Justice Feria, Mr. Justice Perfecto, and the writer of this decision
dissented. Mr. Justice Feria and Mr. Justice Perfecto voted for outright discharge of the prisoner from
custody. Mr. Justice Paras qualified his dissent by stating that he might agree "to a further detention of the
herein petitioner, provided that he be released if after six months, the Government is still unable to deport
him." This writer joined in the latter dissent but thought that two months constituted reasonable time.

Over two years having elapsed since the decision aforesaid was promulgated, the Government has not found
ways and means of removing the petitioner out of the country, and none are in sight, although, it should be
said in justice to the deportation authorities, it was through no fault of theirs that no ship or country would
take the petitioner.

Aliens illegally staying in the Philippines have no right of asylum therein (Soewapadji v. Wixon, Sept. 13,
1946, 157 F. ed., 289, 290), even if they are "stateless," which the petitioner claims to be. It is no less true
however as impliedly stated in this Courts decision, supra, and numerous American decisons, that foreign
nationals, not enemy, against whom no criminal charges have been formally made or judicial order issued,
may not indefinitely be kept in detention. The protection against deprivation of liberty without due process
of law and except for crimes committed against the laws of the land is not limited to Philippine citizens but
extends to all residents, except enemy aliens, regardless of nationality. Whether an alien who entered the
country in violation of its immigration laws may be detained for as long as the Government is unable to
deport him, is beside the point and we need not decide. There is no allegation that the petitioners entry into
the Philippines was not lawful; on the contrary, the inference from the pleadings and the Deportation
Boards findings is that he came to and lived in this country under legal permit.

Moroever, by its Constitution (Art. II, sec. 3) the Philippines "adopts the generally accepted principles of
international law as part of the law of Nation." And in a resolution entitled "Universal Declaration of Human
Rights" and approved by the General Assembly of the United Nations of which the Philippines is a member,
at its plenary meeting on December 10, 1948, the right to life and liberty and all other fundamental rights as
applied to all human beings were proclaimed. It was there resolved that "All human beings are born free and
equal in degree and rights" (Art. 1); that "Everyone is entitled to all the rights and freedom set forth in this
Declaration, without distinction of any kind, such as race, colour, sex, language, religion, political or other
opinion, nationality or social origin, property, birth, or other status (Art. 2); that "Everyone has the right to
an effective remedy by the competent national tribunals for acts violating the fundamental rights granted
him by the Constitution or by law" (Art. 8); that "No one shall be subjected to arbitrary arrest, detention or
exile" (Art. 9); etc.

In U. S. v. Nichols, 47 Fed. Supp., 201, it was said that the court "has the power to release from custody an
alien who has been detained an unreasonably long period of time by the Department of Justice after it has
become apparent that although a warrant for his deportation has been issued, the warrant can not be
effectuated;" that "the theory on which the court is given the power to act is that the warrant of
deportation, not having been able to be executed, is functus officio and the alien is being held without any
authority of law." The decision cited several cases which, it said, settled the matter definitely in that
jurisdiction, adding that the same result had been reached in innumerable cases elsewhere. The cases
referred to were United States ex rel. Ross v. Wallis, 2 Cir. 279 F. 401, 404; Caranica v. Nagle, 9 Cir., 28 F.
2d 955; Saksagansky v. Weedin, 9 Cir., 53 F. 2d 13, 16 last paragraph; Ex parte Matthews, D.C.W.D.
Wash., 277 F. 857; Moraitis v. Delany, D.C. Md. Aug. 28, 1942, 46 F. Supp. 425.

The most recent case, as far as we have been able to find, was that of Staniszewski v. Watkins (1948), 80
Fed. Supp. 132, which is nearly foursquare with the case at hand. In that case a stateless person, formerly a
Polish national, resident in the United States since 1911 and many times serving as a seaman on American
vessels both in peace and in war, was ordered excluded from the United States and detained at Ellis Island
at the expense of the steamship company, when he returned from a voyage on which he had shipped from
New York for one or more European ports and return to the United States. The grounds for his exclusion
were that he had no passport or immigration visa, and that in 1937 had been convicted of perjury because
in certain documents he represented himself to be an American citizen. Upon his application for release
on habeas corpus, the Court released him upon his own recognizance. Judge Leibell, of the United States
District Court for the Southern District of New York, said in part:
jgc:chan roble s.com.p h
"When the return to the writ of habeas corpus came before this court, I suggested that all interested parties
. . . make an effort to arrange to have the petitioner ship out to some country that would receive him as a
resident. He is a native-born Pole but the Polish Consul has advised him in writing that he is no longer a
Polish subject. This Government does not claim that he is a Polish citizen. His attorney says he is stateless.
The Government is willing that he go back to the ship, but if he were sent back aboard ship and sailed to the
port (Cherbourg, France) from which he last sailed to the United States he would probably be denied
permission to land. There is no other country that would take him, without proper documents.

"It seems to me that this is a genuine hardship case and that the petitioner should be released from custody
on proper terms . . .

"What is to be done with the petitioner? The government has had him in custody almost seven months and
practically admits it has no place to send him out of this country. The steamship company, which employed
him as one of a group sent to the ship by the Union, with proper seamans papers issued by the United
States Coast Guard, is paying $3.00 a day for petitioners board at Ellis Island. It is no fault of the steamship
company that petitioner is an inadmissible alien as the immigration officials describe him . . .

"I intend to sustain the writ of habeas corpus and order the release of the petitioner on his own
recognizance. He will be required to inform the immigration officials at Ellis Island by mail on the 15th of
each month stating where he is employed and where he can be reached by mail. If the government does
succeed in arranging for petitioners deportation to a country that will be ready to receive him as a resident,
it may then advise the petitioner to that effect and arrange for his deportation in the manner provided by
law."cralaw virt ua1aw lib rary

Although not binding upon this Court as a precedent, the case aforecited offered a happy solution to the
quandary in which the parties here find themselves, solution which we think is sensible, sound and
compatible with law and the Constitution. For this reason, and since the Philippine law on immigration was
patterned after or copied from the American law and practice, we choose to follow and adopt the reasoning
and conclusions in the Staniszewski decision with some modifications which, it is believed, are in consonance
with the prevailing conditions of peace and order in the Philippines.

It was said or insinuated at the hearing of the petition at bar, but not alleged in the return, that the
petitioner was engaged in subversive activities, and fear was expressed that he might join or aid the disloyal
elements if allowed to be at large. Bearing in mind the Governments allegation in its answer that "the
herein petitioner was brought to the Philippines by the Japanese forces," and the fact that Japan is no longer
at war with the United States or the Philippines nor identified with the countries allied against those nations,
the possibility of the petitioners entertaining or committing hostile acts prejudicial to the interest and
security of this country seems remote.

If we grant, for the sake of argument, that such a possibility exists, still the petitioners unduly prolonged
detention would be unwarranted by law and the Constitution, if the only purpose of the detention be to
eliminate a danger that is by no means, actual, present, or uncontrollable. After all, the Government is not
impotent to deal with or prevent any threat by such measure as that just outlined. The thought eloquently
expressed by Mr. Justice Jackson of the United States Supreme Court in connection with the application for
bail of ten Communists convicted by a lower court of advocacy of violent overthrow of the United States
Government is, in principle pertinent and may be availed of at this juncture. Said the learned Jurist: jg c:chan roble s.com. ph

"The Governments alternative contention is that defendants, by misbehavior after conviction, have forfeited
their claim to bail. Grave public danger is said to result from what they may be expected to do, in addition
to what they have done since their conviction. If I assume that defendants are disposed to commit every
opportune disloyal act helpful to Communist countries, it is still difficult to reconcile with traditional American
law the jailing of persons by the courts because of anticipated but as yet uncommitted crimes.
Imprisonment to protect society from predicted but unconsummated offenses is so unprecedented in this
country and so fraught with danger of excesses and injustice that I am loath to resort to it, even as a
discretionary judicial technique to supplement conviction of such offenses as those of which defendants
stand convicted.

x x x

"But the right of every American to equal treatment before the law is wrapped up in the same constitutional
bundle with those of these Communists. If in anger or disgust with these defendants we throw out the
bundle, we also cast aside protection for the liberties of more worthy critics who may be in opposition to the
government of some future day.

x x x

"If, however, I were to be wrong on all of these abstract or theoretical matters of principle, there is a very
practical aspect of this application which must not be overlooked or underestimated - that is the disastrous
effect on the reputation of American justice if I should now send these men to jail and the full Court later
decide that their conviction is invalid. All experience with litigation teaches that existence of a substantial
question about a conviction implies a more than negligible risk of reversal. Indeed this experience lies back
of our rule permitting and practice of allowing bail where such questions exist, to avoid the hazard of
unjustifiably imprisoning persons with consequent reproach to our system of justice. If that is prudent
judical practice in the ordinary case, how much more important to avoid every chance of handing to the
Communist world such an ideological weapon as it would have if this country should imprison this handful of
Communist leaders on a conviction that our own highest Court would confess to be illegal. Risks, of course,
are involved in either granting or refusing bail. I am not naive enough to underestimate the troublemaking
propensities of the defendants. But, with the Department of Justice alert to the dangers, the worst they can
accomplish in the short time it will take to end the litigation is preferable to the possibility of national
embarrassment from a celebrated case of unjustified imprisonment of Communist leaders. Under no
circumstances must we permit their symbolization of an evil force in the world to be hallowed and glorified
by any semblance of martyrdom. The way to avoid that risk is not to jail those men until it is finally decided
that they should stay jailed." cralaw virtua1aw li bra ry

If that case is not comparable with ours on the issues presented, its underlying principle is of universal
application. In fact, its ratio decidendi applies with greater force to the present petition, since the right of
accused to bail pending appeal of his case, as in the case of the ten Communists, depends upon the
discretion of the court, whereas the right to be enlarged before formal charges are instituted is absolute. As
already noted, not only are there no charges pending against the petitioner, but the prospects of bringing
any against him are slim and remote.

Premises considered, the writ will issue commanding the respondents to release the petitioner from custody
upon these terms: The petitioner shall be placed under the surveillance of the immigration authorities or
their agents in such form and manner as may be deemed adequate to insure that he keep peace and be
available when the Government is ready to deport him. The surveillance shall be reasonable and the
question of reasonableness shall be submitted to this Court or to the Court of First Instance of Manila for
decision in case of abuse. He shall also put up a bond for the above purpose in the amount of P5,000.00
with sufficient surety or sureties, which bond the Commissioner of Immigration is authorized to exact by
Section 40 of Commonwealth Act No. 613. No costs will be charged.

Paras, C.J., Feria, Bengzon, Padilla and Reyes, JJ., concur.

Jugo, J., concurs in the result.

Separate Opinions

PABLO, M., disidente: chan rob1es v irt ual 1aw li bra ry

La primera causa de Habeas Corpus (G. R. No. L-2852) presentada por el hoy recurrente ha sido denegada
por este Tribunal en 30 de junio de 1949. Las conclusiones de hecho de dicha decision son las siguientes: jgc:chan roble s.com.p h

"In December, 1946, the President of the Philippines ordered petitioners deportation as undesirable alien,
after a proper investigation by the Deportation Board upon charges of being a vagrant and habitual
drunkard, engaged in espionage activities, whose presence and conduct endangered the public interest.
Pursuant to such order, Borovsky was placed aboard a vessel bound for Shanghai; but the authorities there
declined to admit him for lack of the proper visa, which the Chinese consulate in this country had refused to
give. Wherefore he was brought back to the Philippines. Thereafter he was temporarily released pending
further arrangements for his banishment. And when subsequently a Russian boat called at Cebu, Borovsky
was re- arrested and transported to Cebu for deportation; however, the captain of the boat declined to take
him, explaining he had no permission from his government to do so. Wherefore the petitioner is now
confined in the premises of the New Bilibid Prisons not exactly as a prisoner while the Government is
exerting efforts to ship him to a foreign country."cralaw virtua1aw l ibra ry

Por segunda vez el recurrente reclama que tiene derecho a ser puesto in libertad. En mi opinion, esta
segunda solicitud debe denegarse. Hay una orden de deportacion contra el y si esa orden no se ha realizado
an, no es porque el gobierno no lo quiera, sino porque no ha encontrado hasta ahora medios para
efectuarlo.

Un vago, borracho y espia no debe permanecer ni un minuto en Filipinas; es un elemento indeseable no

solamente aqui sino tal vez en su propio pais. Si las autoridades de Shanghai de donde el habia procedido al
venir aqui, le habian rechazado cuando alli fue deportado, debian tener buenas razones; y si el capitan del
barco ruso no quiso recibir al recurrente alegando que no tenia permiso de su gobierno, sera porque el
recurrente no debia merecer ninguna clase de consideracion. El capitan del barco hubiera podido ingeniar
cualquier medio para repatriar al recurrente si este merecia la pena de tal esfuerzo.

El recurrente no tiene derecho a estar aqui libre por sus defectos personales, especialmente hoy en que
elementos malguiados desean destruir la sociedad matando a mansalva viejos, nios y mujeres
embarazadas. El recurrente seria otro elemento mas que empeoraria la situacion. Si esta hoy detenido
provisionalmente en Muntinglupa no es porque lo quiera el Gobierno; tan pronto como haya transporte
disponible o en cuanto el encuentre medios de salir de Filipinas, se le pondria en libertad.

Citaremos un caso hipotetico: Si al anochecer, el dueo de una casa encuentra en el portico de ella un
borracho, vago y andrajoso, suplicando se le de pan y, por compasion, se le alimenta y se le cede una
habitacion en la cochera, y durante su estancia se dedica a actividades de espia, se emborracha y da mal
ejemplo a la servidumbre, esta obligado el dueo de la casa a retenerle y dejarle libre a deambular por
donde quiera? Creemos que el intruso ha abusado de los privilegios de un huesped. El dueo de la casa
tiene perfecto derecho a echarle y que vaya con sus impertinencias a otra parte. La hospitalidad nacional no
debe ser menos que la domestica o individual. El extranjero puede permanecer en un territorio mientras se
porta bien, pero en cuanto se dedica a actividades de espionaje, en cuanto se deja llevar por el vicio de la
borrachera y no busca trabajo honrado, desde ese momento pierde su derecho a permanecer. De ahi es que
el ingenio humano invento la deportacion como un instrumento de que se vale el gobierno para expulsar del
territorio a extranjeros indeseables.

Se invoca la "Universal Declaration of Human Rights", una de cuyas disposiciones establece que "no one
shall be subjected to arbitrary arrest, detention or exile." (Art. 9). El recurrente no tiene derecho a invocar a
su favor esta disposicion puesto que no se le arresto arbitrariamente ni se le detiene sin ningn motivo. Su
arresto y detencion estan justificados por su conducta. Un beodo empedernido, un espia, un vago, es peor
que un microbio del colera morbo; debe ser desechado para que no cause males a la sociedad. Su
deportacion es un medio necesario e indispensable para preservar la salud de la nacion.

Se cita el caso de U. S. contra Nichols, en el cual se dice que el Juzgado tiene poder para liberar a un
extranjero que ha sido detenido por un tiempo irrazonablemente largo por el Departamento de Justicia,
aunque se haya expedido una orden de deportacion, cuando aparece que esta no se puede efectuar (47 Fed.
Rep. 201). No existen pruebas de que ya es imposible encontrar barcos para la deportacion del recurrente.
Las condiciones pueden mejorar. El recurrente solamente fue detenido desde diciembre de 1946; no han
transcurrido cinco aos. En cambio, William Martin Jurgans fue arrestado en 9 de marzo de 1920; en 20 de
mayo se decreto su deportacion por el Secretario del Trabajo por sus actividades comunistas; solicito su
libertad por medio del recurso de habeas corpus, que se denego en 16 de febrero de 1927; transcurrieron
mas de seis aos y no se le pudo deportar porque "the necessary arrangements for his deportation could
obviously not be made." (District Court of Minnesota, 17 F, 2nd Series, 507).

La duracion de la detencion no tiene importancia en casos de la misma naturaleza; depende de muchas

circunstancias. Asi en Moraitis v. Delany, 46 F. Supp. 425, se dijo: jgc:c hanrobles. com.ph

"What constitutes a reasonable time for the detention of the petitioner in custody for deportation depends
upon the facts and circumstances of particular cases. This court cannot shut its eyes to the vitally important
interests of this country at this time with respect to the bottleneck of shipping, when every available ship,
domestic and foreign, must be utilized to the utmost without delay consequent upon the lack of available
seamen. Under this present conditions the court should be liberal indeed in aiding the executive branch of
the government in the strict enforcement of laws so vitally necessary in the common defense. There is
sound authority for this view in United States ex. rel. Schlimm v. Howe, D.C.N.Y. 222 F. 96, 97, where
Circuit Judge Lacombe refused to release an alien who had come here from Germany and was ordered
deported in 1915 when, by reason of the then existing war between Germany and England, his deportation
to Germany was not possible. It was said: jgc:chan roble s.com.p h

"At the present time there is no regular passenger ocean service to German ports, so the authorities are
unable to forward him, and are holding him until some opportunity of returning him to Germany may
present itself. His continual detention is unfortunate, but certainly is not illegal. His present condition can be
alleviated only by the action of the executive branch of the government. A federal court would not be
justified in discharging him.

x x x

"If he is not really fit for sea service, it is not probable that he would be forced into it, although he may be
able to serve his government in some other capacity. But however that may be, while this country has no
power under existing legislation to impress him into sea service against his will, he has no just cause to be
relieved from the strict enforcement of our deportation laws, and to remain at liberty in this country as a
sanctuary contrary to our laws." cralaw virtua 1aw lib rary

Se invoca tambien el asunto de Staniszewski v. Watkins (80 Fed. Supp., 132) que no tiene similitud con la
presente causa. Staniszewski habia estado residiendo en America desde 1911, trabajando como marino en
barcos mercantes americanos en tiempos de paz y de guerra, y se ordeno su detencion en Ellis Island
cuando volvio a America procedente de un viaje a Europa, por no tener papeles de inmigracion.
Staniszewski ya era habitante de los Estados Unidos por bastante tiempo; se dedicaba a la ocupacion de
marino, que es un oficio honroso y decente; pero el recurrente, como ya ha dicho este Tribunal, es un
borracho habitual, un vago, y se dedicaba al espionaje. No debe confundirse un marino con un vago; el
primero se alimenta con el producto del sudor de su frente, el segundo no hace nada, explota la caridad
pblica, y, si no consigue alimento por las buenas, indudablemente tendra que emplear recursos ilicitos. Un
espia, especialmente en estos tiempos criticos por que atraviesa el pais, pone en peligro la seguridad del
estado; su libertad representa un peligro para el estado y se le debe denegar. Opino que el recurrente debe
ser detenido hasta que se encuentren medios de deportarle.

Poner al recurrente bajo la vigilancia de las autoridades de inmigracion o de sus agentes es aumentar las
atenciones y gastos del gobierno por motivos baladies; el Estado no esta hoy en condiciones de emplear
policias para el uso exclusivo del recurrente. Tampoco estoy conforme con que se le exija que preste fianza
de P5,000. Tal exigencia equivale a una burla. Quien se fiara de un beodo, vago y espia? Si consigue prestar
fianza, sera porque alguien esta interesado en su libertad para que pueda continuar con sus actividades de
espia.

G.R. No. L-40177 March 15, 1934

LI SENG GIAP & CO., applicant-appellant,

vs.
THE DIRECTOR OF LANDS, oppositor-appellee.

Manly and Reyes for appellant.

Office of the Solicitor-General Hilado for appellee.

DIAZ, J.:

On August 16, 1932, Li Seng Giap & Co., a partnership composed of individuals who are not citizens
of the Philippine Islands nor of the United States, but aliens, instituted these proceedings in the
Court of First Instance of Camarines Sur, for the registration in its name in the registry of deeds, of
the three parcels of land described in the plans Exhibits A and B, and technical descriptions attached
to its application, in accordance with the provisions of Act No. 496 and of Chapter VIII or Title II of
Act No. 2874.
The Director of Lands filed an opposition to the said application alleging as his grounds that the
three parcels of land in question were public lands belonging to the Government of the United States
under the administration and control of the Government of the Philippine Islands, and that, being an
alien, the applicant partnership cannot invoke the benefits of the provisions of section 45 of the said
Act No. 2874. The aforecited section is contained in Chapter VIII of Title II of the said Act invoked by
the applicant. The Director of Lands has made no reference to Act No. 496 in his opposition for the
reason that the Act in question merely prescribes, in general terms, the manner or procedure to be
followed by an applicant in the obtainment of the certificate of title applied for, or in the denial or
issuance thereof, as the case may be, by the court or by the Government agencies therein
mentioned.

After the trial, the Court of First Instance of Camarines Sur rendered judgment therein denying the
application of the applicant partnership on the ground that it is an alien, and holding, at the same
time, that the parcels of land it sought to register in its name are a portion of the public domain. The
said applicant took exception to and appealed from such judgment, claiming that the trial court
committed the following alleged errors, to wit:

I. The trial court erred in holding that the applicant, Li Seng Giap & Co. being a partnership
made up of individuals who are neither citizens of the Philippine Islands nor of the United
States, is not entitled, for this reason, to register the land described in its application under
the provisions of the Land Registration Act.

II. The lower court also erred in declaring the land described in the application a part of the
public domain.

III. The lower court also erred in denying the applicant's motion for reconsideration as well as
its motion for new trial.

It is unnecessary to discuss the nature of the three parcels of land in question. The record shows
that they are agricultural lands which at present contain coconut trees, abaca and cacao with which
they have been planted for over forty years. The coconut trees there on range from one to forty
years in age. The said three parcels had likewise been cultivated and had actually been occupied for
many years during the Spanish regime by several natives of the Province of Camarines Sur, named
Inocencio Salon, Lazaro Ceron, Margarita Labordes, Doroteo Quitales and Cornelio Vargas. The
occupation or possession thereof by the above-named persons was under claim of ownership but
neither the exact date when such possession began nor the circumstances under which they
acquired the property in question has been determined. However, it seems certain that such
occupation began some fifty-five years ago and continued without interruption from that time until
said persons decide to sell them to Sebastian Palanca who is also an alien like the herein applicant.
Neither is there anything of record to show when the sale was made but it also seems certain that it
took place during the Spanish regime. Sebastian Palanca continued in possession of the aforesaid
three parcels of land from the time he acquired them in the manner hereinbefore stated until July 22,
1930, when he sold them to the herein applicant-appellant. However, before selling them and while
he was in possession thereof under claim of ownership, as alleged, he failed to obtain a gratuitous
title or even a mere possessory information therefor, which would serve to protect his claim of
ownership, by taking advantage of the benefits afforded by the Royal Decree of February 13, 1894,
which was promulgated in the Philippines and published in the Gaceta de Manila, No. 106, of April
17th of the same year.

The pertinent parts of said decree, which are also articles 1, 19 and 21 of the Maura Law, and which
had been in force in the Philippines during the last years of the Spanish regime and continued to be
so until the enactment of the Public Land Act and the amendments thereto, read as follows:
 ARTICLE 1. All uncultivated lands, soil, earth, and mountains not included in the following
exceptions shall be considered alienable public lands: First, those which have become
subjected to private ownership and have a legitimate owner. Second, those which belong to
the forest zones which the State deems wise to reserve for reasons of public utility.

xxx xxx xxx

ART. 19. Possessors of alienable public lands under cultivation who have not obtained nor
applied for composition on the date this decree shall be published in the Gaceta de Manila,
may obtain a gratuitous title of property, by means of a possessory information in conformity
with the law of civil procedure and the mortgage law whenever they establish any of the
following conditions:

First. Having, or having had, them under cultivation without interruption during the preceding
six years.1vvphi1.ne+

Second. Having had possession of them for twelve consecutive years, and having had them
under cultivation until the date of the information, and for three years before that date.

Third. Having had them in possession ostensibly and without interruption, for thirty or more
years, although the land is not under cultivation.

xxx xxx xxx

ART. 21. A term of one year, without grace, is granted order to perfect the informations
referred to in articles 19 and 20.

Article 80 of the regulations for the carrying out of the Royal Decree above-mentioned provided as
follows:

ART. 80. By virtue of the provision of article 21 of the Royal Decree of February 13, 1894,
the inextensible period for carrying out the informations referred to in the two preceding
articles, shall be counted as on the 17th day of April, 1895.

Upon the expiration of this period the right of cultivator and possessors to the obtainment of
free title shall lapse, and the full property right in the land shall revert to the State or, in a
proper case, to the public domain.

Therefore, there can be no doubt but that under the last aforecited article the three parcels of land in
question reverted to the State as property of the public domain upon the expiration of the period
specified therein, by reason of negligence on the part of the possessors thereof.

The applicant-appellant contends that under the provisions of section 54, paragraph 6, of Act No.
926, it has necessarily acquired the right to have the corresponding certificate of title issued to it
upon registration of the said parcels of land in its name in the registry of deeds, inasmuch as it had
actually been in the open, continuous, exclusive and notorious possession thereof, under claim of
ownership, not only by itself but also through Sebastian Palanca from whom it had purchased them,
for more than ten years prior to July 26, 1904, the date on which the aforesaid Act went into effect, in
accordance with the proclamation of the Governor-General of the Philippine Islands of the same
date.
The section invoked by the applicant-appellant reads as follows:

SEC. 54. The following-described persons or their legal successors in right, occupying public
lands in the Philippine Islands, or claiming to own any such lands or an interest therein, but
whose titles to such lands have not been perfected, may apply to the Court of Land
Registration of the Philippine Islands for confirmation of their claims and the issuance of a
certificate of title therefor to wit:

1. All persons who prior to the transfer of sovereignty from Spain to the United States had
fulfilled all the conditions required by the Spanish laws and royal decrees of the Kingdom of
Spain for the purchase of public lands, including the payment of the purchase price, but who
failed to secure formal conveyance of title;

2. All persons who prior to the transfer of sovereignty from Spain to the United States, having
applied for the purchase of public lands and having secured a survey, auction, and an award,
or a right to an award, of such lands, did not receive title therefor through no default upon
their part;

3. All persons who prior to the transfer of sovereignty from Spain to the United States, having
applied for the purchase of public lands and having secured a survey and award of same, did
not, through negligence upon their part, comply with the conditions of full or any payment
therefor, but who after such survey and award shall have occupied the land adversely,
except as prevented by war or force majeure until the taking effect of this Act;

4. All persons who were entitled to apply and did apply for adjustment or composition of title
to lands against the Government under the Spanish laws and royal decrees in force prior to
the royal decree of February thirteenth, eighteen hundred and ninety-four, but who failed to
receive title therefor through no default upon their part;

5. All persons who were entitled to a gratuitous title to public lands by "possessory
proceedings" under the provisions of articles nineteen and twenty of the royal decree of the
King of Spain issued February thirteenth, eighteen hundred and ninety-four, and who, having
complied with all the conditions therein required, failed to receive the title therefor through no
default upon their part; and

6. All persons who by themselves or their predecessors in interest have been in the open,
continuous, exclusive, and notorious possession and occupation of agricultural public lands,
as defined by said Act of Congress of July first, nineteen hundred and two, under a bona fide
claim of ownership except as against the Government, for a period of ten years next
preceding the taking effect of this Act, except when prevented by war or force majeure, shall
be conclusively presumed to have performed all the conditions essential to a government
grant and to have received the same, and shall be entitled to a certificate of title to such land
under the provisions of this chapter.

All applicants for lands under paragraphs one, two, three, four and five of this section must
establish by proper official records or documents that such proceedings as are therein
required were taken and the necessary conditions complied with: Provided, however, That
such requirements shall not apply to the fact of adverse possession.

It may be noted that the case of the applicant does not come under paragraph 1, 2, 3, 4 or 5 of the
aforecited section, which, by the way, conclusively shows that prior to the enactment of Act No. 926,
the said Maura Law was the last law which regulated the acquisition of alienable public lands and
the issuance of the corresponding title to those who could establish their claim that they were
entitled thereto. Being aware of this fact, the applicant has never invoked said paragraphs. He
merely confines himself to invoking the provisions of paragraph 6 thereof, in support of which he
cites the rulings of this court in the cases of Tan Yungquip vs. Director of Lands (42 Phil., 128) and
of Central Capiz vs. Ramirez (40 Phil., 883).

In the former case, it was held that inasmuch as the applicant Tan Yungquip, who was a Chinaman,
had proven: That he had acquired the parcels of land which he sought to register in his name, some
by purchase and others by inheritance; that he and his predecessors in interest had been in the
open, peaceful, continuous and notorious possession of the same for at least thirty years, and that
such parcels of land were agricultural lands, therefore, he was entitled to have them registered in his
name under the provisions of the aforecited section 54 of Act No. 926, for the reason that he filed his
application to that effect more than one year prior to the enactment and enforcement of Act No.
2874. It was likewise held therein that the matter should be decided in favor of said Tan Yungquip on
the ground that no valid law could be found, at least on that occasion, which prohibited the
registration in his name in the registry of deeds, of the parcels of land of which he claimed to be the
owner.

In the latter case above cited, that is, the case of Central Capiz vs. Ramirez, it was likewise held that
lands held in private ownership constitute no part of the public domain and cannot, therefore, come
within the purview of said Act No. 2874 on the ground that said subject (lands held in private
ownership) is not embraced in any manner in the title of the Act, and that the intent of the Legislature
in enacting the same was to limit the application thereof exclusively to lands of the public domain.

Although nothing has been said in the decision rendered in the aforecited case of Tan
Yungquip vs. Director of Lands to the effect that the application of the therein applicant should be
granted on the ground that the provisions of section 54 of Act No. 926, which were therein under
consideration and interpretation, do not distinguish between citizens of the Philippine Islands or of
the United States and aliens, however, the appellant contends that the aforecited section has such
scope and that the question raised in this case should be decided under the latter interpretation.

We do not believe that the rulings it the aforecited two cases and that in the case
of Agari vs. Government of the Philippine Islands (42 Phil., 143), are decisive and applicable to the
case under consideration, on the ground that although it is true that Agari, who was the applicant in
the last case, was an alien, it was likewise true that the persons, from whom he had acquired the
land which he sought to register in his name in the registry of deeds during the time Act No. 926 was
still in force, were natives of the Philippine Islands, who, in turn, had acquired it through their father,
who was likewise a native of the Islands, by composition with the State in accordance with the laws
then in force; nor that, under the provisions of the aforecited section 54 of Act No. 926, the applicant-
appellant Li Seng Giap & Co. could have succeeded in securing the certificate of title which it now
seeks; in the first place, because the three aforecited decisions refer to cases which are different
from the one now under consideration; in the second place, because said decisions were based on
the supposition that the parcels of land in question therein were of private ownership and at that time
no law was known to be in existence, which prohibited the registration of said parcels of land in the
registry of deeds, in the name of the aforesaid applicants Tan Yungquip, Central Capiz and Agari,
and in the third place because while Act No. 926 was still in force (it is no longer in force, having
been expressly repealed by section 128 of Act No. 2874, on December 28, 1919), it should have
been interpreted in the light of the provisions of the Act of Congress of July 1, 1902, commonly
known as the Organic Law of the Philippine Islands, inasmuch as the former had been approved
under the authority of sections 13, 14, 15 and 62 of the latter Act. The very title of Act No. 926 above
referred to shows that one of the purposes for which it was approved was to carry out the provisions
of sections, 13, 14, 15 and 62 of the aforecited Act of Congress, which title reads in part:
 An Act . . . providing for the determination by the Philippines Court of Land Registration of all
proceedings for completion of imperfect titles and for the cancellation or confirmation of
Spanish concessions and grants in said Islands, as authorized by sections thirteen, fourteen,
fifteen, and sixty-two of the Act of Congress of July first, nineteen hundred and two, entitled
"An Act temporarily to provide for the administration of the affairs of civil government in the
Philippine Islands, and for other purposes".

Sections 14 and 15 of the aforesaid Act of Congress, which bear relation to the question under
consideration, provide as follows:

SEC. 14. That the government of the Philippine Islands is hereby authorized and empowered
to enact rules and regulations and to prescribe terms and conditions to enable persons to
perfect their title to public lands in said Islands, who, prior to the transfer of sovereignty from
Spain to the United States, had fulfilled all or some of the conditions required by the Spanish
laws and royal decrees of the Kingdom of Spain for the acquisition of legal title thereto, yet
failed to secure conveyance of title; and the Philippine Commission is authorized to issue
patents, without compensation, to any native of said Islands, conveying the title to any tract
of land not more than sixteen hectares in extent, which were public lands and had been
actually occupied by such native or his ancestors prior to and on the thirteenth of August,
eighteen hundred and ninety-eight.

s. SEC. 15. That the Government of the Philippine Islands in hereby authorized and
empowered, on such terms as it may prescribe, by general legislation, to provide for the
granting or sale and conveyance to actual occupants and settlers and other citizens of said
Islands such parts and portions of the public domain, other than timber and mineral lands, of
the United States in said Islands as it may deem wise, not exceeding sixteen hectares to any
one person and for the sale and conveyance of not more than one thousand and twenty-four
hectares to any corporation or association of persons: Provided, that the grant or sale of
such lands, whether the purchase price be paid at once or in partial payments, shall be
conditioned upon actual and continued occupancy, improvement, and cultivation of the
premises sold for a period of not less than five years, during which time the purchaser or
grantee cannot alienate or encumber said land or the title thereto; but such restriction shall
not apply to transfers of rights and title of inheritance under the laws for the distribution of the
estates of decedents.

It may be noted that both of the above-cited sections provide that gratuitous title to property may be
issued only to natives of the Philippine Islands who are in possession of the necessary qualifications
specified therein. It may therefore be inferred from the foregoing that Act No. 926 could not have a
different scope from that given it by the aforecited Act of Congress and, therefore, the phrase "all
persons" employed in paragraph 6 of section 54 of the former Act should be understood to mean
only citizens of the Philippine Islands or citizens of the United States or of any insular possession
thereof.

The parcels of land involved in this case, which as hereinbefore stated, have reverted to the State
after April 17, 1895, by virtue of the Maura Law, not of private ownership. Neither were they so on or
after the aforesaid date. The applicant herein did not show any title thereto either by possessory
proceedings or otherwise, which may be considered as having been issued by the Government. The
only basis on which it now claims the right to have them registered in its name is its alleged
possession thereof together with that of Sebastian Palanca and of the former possessors, as if to
say, that it is entitled to the registration thereof in its name, inasmuch as the parcels of land in
question already belong to it, having acquired them by prescription through the continuous, open,
exclusive and notorious possession thereof, under claim of ownership, at least since the Spanish
regime in the Philippine Islands. However, the truth is that the law expressly provides that no public
land may be acquired by prescription, and that such mode of acquisition does not hold as against
the Government. This provision is contained precisely in the very law invoked by the applicant, that
is section 54, paragraph 6, of Act No. 926. In the case of Ongsiaco vs. Magsilang(50 Phil., 380,
386), this court said:

". . . in a controversy between private individuals, where the Government has not intervened, and
where it appears that the land has ceased to be of public domain and has come to be of private
ownership, a petitioner may obtain registration of land upon a title acquired by adverse possession
as against individual opponents. The same rule does not maintain with respect to land claimed by
the Government and as to which the Government is opposing." In the case of Government of the
Philippine Islands vs. Abad (56 Phil., 75, 80), this court, deciding a question similar to the one raised
herein by the appellant, said as follows: "Subsection (b) of section 45 of Act No. 2874 is not
obnoxious to the constitutional provision relied upon by the appellant, as depriving the appellant of
property without due process of law. That provision has reference to property to which the citizen
has acquired a vested right. It does not extend to privileges and inchoate rights which have never
been asserted or perfected. The contention of the appellant . . . is therefore without merit." There is
no justifiable reason for disturbing the holdings of this court in the aforecited two cases. On the
contrary, it is considered timely to reiterate them herein inasmuch as they decide the same question.

The provisions of section 54 of Act No. 926 as well as those of section 45, paragraph (b), of Act No.
2874 should necessarily be so construed as not to permit aliens to obtain title to lands in their favor.
It should not be understood, however, that the constitutional guaranty that no person shall be denied
the equal protection of the laws, is violated thereby, because, as this court has said in the case of In
re Patterson (1 Phil., 93, 95, 96), "Unquestionably every State has a fundamental right to its
existence and development, as also to the integrity of its territory and the exclusive and peaceable
possession of its dominions which it may guard and defend by all possible means against any attack
. . . . Superior to the law which protects personal liberty, and the agreements which exist between
nations for their own interest and for the benefit of their respective subjects is the supreme and
fundamental right of each State to self-preservation and the integrity of its dominion and its
sovereignty." It is upon grounds of public policy that the rights of individuals, particularly of aliens,
cannot prevail against the aforesaid right of the Government of the Philippine Islands. and more
particularly when, as in the present case, far from violating any constitutional law, it deals precisely
with the enforcement of the provisions of the first organic law of the country and those of the Jones
Law (section 9), to the effect that lands of the public domain should not be disposed of or alienated
to persons who are not inhabitants or citizens of the Philippine Islands.

Wherefore, finding that the judgment appealed from is in accordance with the law, it is hereby
affirmed in toto, with the costs against the appellants. So ordered.

Radich v. Hutchins, 95 U.S. 210 (1877)

Radich v. Hutchins

95 U.S. 210

Syllabus

1. Carlisle v. United States, 16 Wall. 147, cited and approved.

2. A foreigner, domiciled during the year 1864 in Texas, who, in order to obtain
permission of the rebel government to export his cotton, sold at a nominal price, and
delivered to its agents or officers for its use, an equal amount of other cotton, which he
subsequently redeemed by paying a stipulated sum therefor, directly contributed to the
support of the enemy, and gave him aid and comfort. Out of such a transaction no
demand against such agents or officers can arise which will be enforced in the courts of
the United States.

3. The coercion or duress which will render a payment involuntary must consist of some
actual or threatened exercise of power possessed, or believed to be possessed, by the
party exacting or receiving the payment over the person or property of another from
which the latter has no other means of immediate relief than by making payment.

This was an action brought by Radich against Hutchins and Wells. He alleges in his
petition that he is a subject of the Emperor of Russia, and that he was, in 1864, the
owner of four hundred and fifty bales of cotton of the value of $50,000 which he
designed to export from Texas, where he then resided, to Mexico, and which were then
in transit on their way to Matamoras; that the defendant Hutchins, claiming to be a
lieutenant-colonel in the army of the Confederate States, and chief of the cotton office at
Houston in that state, combining with the defendant Wells and others, had, without
warrant of law, by a public notice, prohibited the exportation of cotton from the state
except upon written permits from his office; that such permits would not be issued
except upon condition that the person desiring to export cotton should sell to them an
equal amount, at a nominal and arbitrary price, for the benefit of the Confederate
States; that, being desirous to export and sell his cotton because of the risk incurred of
its destruction or loss during the war, and knowing that if he should attempt to send it
beyond

Page 95 U. S. 211

the frontier of the state into Mexico, the armed forces of the Confederate States,
provided to carry out the illegal exactions of the defendants and their confederates,
would capture and confiscate it, he was compelled to submit and did submit to the
condition imposed, and accordingly delivered to the defendants one-half of his cotton --
namely two hundred and twenty-five bales -- at a nominal and arbitrary price as a
consideration for a permit to export the other half, but upon a stipulation, however,
insisted upon by himself, that he should have the privilege of redeeming the bales sold
and exporting them upon the payment of such sum as the defendants might demand;
and that afterwards he paid them $13,357 in specie and in goods, wares, and
merchandise at specie values in redemption of the bales and for a permit to export
them. He alleges that the amount thus paid was illegally and oppressively exacted, and
that he submitted to the wrong because of the armed forces to support and enforce it.

The defendants demurred. The demurrer was sustained and the petition dismissed.
Radich thereupon sued out this writ of error.
 AMBATIELOS

GREECE
v.
UNITED KINGDOM

JUDGMENT

Return Home

BEFORE: Vice-President: Guerrero, Acting President;

President: Sir Arnold McNair;
Judges: Alvarez, Basdevant, Hackworth, Winiarski, Zoricic, Klaestad, Badawi
Pasha, Read, Hsu Mo, Levi Carneiro, Sir BenegalRAU, Armand-Ugon ;
Judge ad hoc: M. Spiropoulos

PermaLink: http://www.worldcourts.com/icj/eng/decisions/1952.07.01_ambatielos.htm

Citation: Ambatielos, Greece v. U.K., Judgment, 1952 I.C.J. 28 (July 1)

Represented By: United Kingdom: Mr. V. J. Evans, Assistant Legal Adviser of the Foreign
Office, as Agent; assisted by Sir Eric Beckett, K.C.M.G., Q.C., Legal Adviser of
the Foreign Office; Mr. D. H. N. Johnson, Assistant Legal Adviser of the
Foreign Office; Mr. J. E. S. Fawcett, D.S.C., Member of the English Bar, as
Counsel;

Greece: M. N. G. Lely, Envoy Extraordinary and Minister

Plenipotentiary of H.M. the King of the Hellenes in the Netherlands, as
Agent; assisted by The Right Honourable Sir Hartley Shawcross, Q.C.,
M.P., former Attorney-General of the United Kingdom; Mr. C. J,
Colombos, Q.C., LL.D., Member of the English Bar; M. Henri Rolin,
Professor of International Law at Brussels University, former President
 of the Belgian Senate; M. Jason Stavropoulos, Legal Adviser of the
Ministry for Foreign Affairs, as Counsel.

[p28]

The Court,

composed as above,

adjudicating on the Preliminary Objection of the Government of the United Kingdom,

delivers the following Judgment: [p30]

9
On April 9th, 1951, the Greek Minister in the Netherlands, duly authorized by his
Government, filed in the Registry an Application instituting proceedings before the Court
against the United Kingdom of Great Britain and Northern Ireland concerning the claim
relating to the rights of a Greek shipowner, Nicolas Eustache Ambatielos, alleged to have
suffered considerable loss in consequence of a contract which he concluded in 1919 with
the Government of the United Kingdom (represented by the Ministry of Shipping) for the
purchase of nine steamships which were then under construction, and in consequence of
certain adverse judicial decisions in the English Courts in connection therewith.

The Hellenic Application refers to the Treaty of Commerce and Navigation between
Greece and Great Britain, signed at Athens on November 10th, 1886, and to the Treaty of
Commerce and Navigation between the same Contracting Parties signed at London on
July i6th, 1926, including the Declaration. The Application requests the Court:

"To declare that it has jurisdiction :

To adjudge and declare....

1. That the arbitral procedure referred to in the Final Protocol of the Treaty of 1886 must
receive application in the present case;

2. That the Commission of Arbitration provided for in the said Protocol shall be
constituted within a reasonable period, to be fixed by the Court".

Pursuant to Article 40, paragraphs 2 and 3, of the Statute, the Application was notified to
the Government of the United Kingdom and to the States entitled to appear before the
Court. It was also transmitted to the Secretary-General of the United Nations.

The Memorial of the Hellenic Government was filed within the time-limit prescribed by
Order of May 18th, 1951, and later extended by Order of July 30th, 1951. It sets out the
following Submissions:

the Hellenic Government requests the Court to adjudge and declare:

(1) That the United Kingdom Government is under an obligation to agree to refer its
present dispute with the Hellenic Government to arbitration, and to carry out the Judgment
which will be delivered;

(2) that the arbitral procedure instituted by the Protocol of the Greco-British Treaty of
Commerce and Navigation of 1886, or alternatively, that of the Treaty of Commerce of
1926, must be applied in this case;

(3) that any refusal by the United Kingdom Government to accept the arbitration provided
for in those Treaties would constitute a denial of justice (Anglo-Iranian Oil Company
case, Order of July 5th, 1951 : I.C.J. Reports, 1951, p. 89);
(4) that the Hellenic Government is entitled to seise the Court of the merits of the dispute
between the two Governments without [p31] even being bound to resort beforehand to the
arbitration mentioned under submissions 1 and 2 above;

(5) alternatively, that the United Kingdom Government is under an obligation, as a

Member of the United Nations, to conform to the provisions of Article 1, paragraph 1, of
the Charter of the United Nations, one of whose principal purposes is: 'to bring about by
peaceful means, and in conformity with the principles of justice and international law,
adjustment or settlement of international disputes or situations', and to those of Article 36,
paragraph 3, of the Charter, according to which 'legal disputes should, as a general rule, be
referred by the Parties to the International Court of Justice'. There is no doubt that the
dispute between the Hellenic Government and the United Kingdom Government is a legal
dispute susceptible of adjudication by the Court."

On February 9th, 1952, within the time-limit prescribed by Order of July 30th, and later
extended by Orders of November 9th, 195.1, and January 16th, 1952, the Government of
the United Kingdom filed a Counter-Memorial in which, whilst setting out its arguments
and submissions on the merits of the case, it contended that the Court lacked jurisdiction,
expressly presenting this contention as a Preliminary Objection under Article 62 of the
Rules of Court. As regards jurisdiction, the Counter-Memorial requests the Court to
adjudge and declare that it has no jurisdiction:

"(a) to entertain a request by the Hellenic Government that it should order the United
Kingdom Government to submit to arbitration a claim by the Hellenic Government based
on Article XV or any other Article of the Treaty of 1886;

or

(b) itself to decide on the merits of such a claim",

and that, likewise, it has no jurisdiction :

"(a) to entertain a request by the Hellenic Government that it should order the United
Kingdom Government to submit to arbitration a claim by the Hellenic Government for
denial of justice based on the general principles of international law or for unjust
enrichment, or

(b) itself to decide upon the merits of such a claim."

The filing of the Preliminary Objection having suspended proceedings on the merits, a
time-limit was prescribed by Order of February 14th, 1952, for the presentation by the
Hellenic Government of a written statement of its Observations and Submissions on the
Objection. Furthermore, the States entitled to appear before the Court were informed of
the deposit of the Objection. [p32]
The Observations and Submissions of the Hellenic Government were filed on April 4th,
1952. They contain the following Submissions:

the Hellenic Government asks that it may please the Court to dismiss the Objection to
the jurisdiction lodged by the British Government and, adjudicating upon the Submissions
relating to the competence of the Court, formulated in the Application instituting
proceedings and hereinafter clarified:

1. in the first place, to hold that the United Kingdom Government is bound to accept the
submission to the International Court of Justice, sitting as an arbitral tribunal, of the
dispute now existing between that Government and the Hellenic Government, and
accordingly to fix time-limits for the filing by the Parties of the Reply and the Rejoinder
dealing with the merits of the dispute;

2. alternatively, to authorize the British Government to notify to the Greek Government,

within the time-limit of one month, its preference, if any, for the submission of the dispute
to the decision of a Commission of Arbitration as provided for in the Protocol of 1886, it
being understood that in the event of a failure by the British Government to exercise this
option within the time-limit laid down, the proceedings on the merits will be resumed
before the Court, the President of which, upon the Application of the Hellenic
Government, shall fix time-limits for the riling of the Reply and the Rejoinder;

3. in the further alternative, to direct the Parties to put into execution the procedure for a
Commission of Arbitration as provided for by the Protocol of 1886;

4. in the final alternative, if the Court should hold that it cannot decide as to its
competence without further information as to the merits, by application of Article 62 of
the Rules, to join the Objection to the merits."

After the deposit of the Hellenic Government's Observations and Submissions, the case
was ready for hearing, in so far as the Preliminary Objection was concerned. As the Court
included upon the Bench a judge of the nationality of one of the Parties, the other Party
the Hellenic Governmentavailed itself of the right conferred on it by Article 31,
paragraph 2, of the Statute of the Court and appointed Professor Jean Spiropoulos to sit as
judge ad hoc. As the President of the Court was the national of one of the Parties, he
transferred the Presidency for the present case to the Vice-President, in accordance with
Article 13, paragraph 1, of the Rules of Court. Public hearings were held on May 15th,
16th and 17th, in the course of which the Court heard Sir Eric Beckett, Counsel, on behalf
of the Government of the United Kingdom; and M. Lely, Agent, Sir Hartley Shawcross
and M. Henri Rolin, Counsel, on behalf of the Hellenic Government. [p33]

In the course of the argument before the Court, the following Submissions were presented
:

On behalf of the United Kingdom Government:

"The formal conclusion of the United Kingdom is that the International Court of Justice
has no jurisdiction to deal with the claim brought against the Government of the United
Kingdom by the Hellenic Government in respect of the treatment of M. Ambatielos."

On behalf of the Hellenic Government:

"In the light of the Submissions of the Parties:

Having regard to Article 29 of the Treaty of Commerce between the United Kingdom and
Greece, signed in London on July 16th, 1926, and, in so far as it may be necessary, to the
Declaration of the same date,

May it please the Court: to record a finding for the Hellenic Government:

1. that the complaints formulated by that Government in its Memorial, relating to the
breach of the contract of sale of the ships, to the unjust enrichment, to the non-production
at the trial of certain documents of which M. Ambatielos was unaware and to the improper
administration of justice (denial of justice stricto sensu), all have, in the opinion of that
Government, a legal foundation in Articles I, X, XV, paragraph 3, of the Treaty of
Commerce and Navigation of November 10th, 1886, and likewise in Articles 1, 3 and 4 of
the Treaty of July 16th, 1926, which are in identical or equivalent terms to the first two
provisions referred to above ;

2. that the British Government has, through its Counsel, Sir Eric Beckett, expressed its
willingness that the Court should undertake the function of arbitration in the event of its
holding that it has jurisdiction to decide the question whether the Greek claim should be
submitted to arbitration, as provided for by the Protocol annexed to the Treaty of 1886,
and in the event of the Court's giving an affirmative decision on this question.

This having been done, for the reasons indicated in the Hellenic Observations and
enlarged upon by Counsel;
to hold that it has jurisdiction to deal with the merits of the Hellenic claim, and
accordingly to fix time-limits for the filing by the Parties of the Reply and the Rejoinder
on the merits;

in the alternative, if the Court should hold that it cannot reach a decision as to its
jurisdiction without going into the merits, by application of Article 62 of its Rules, to join
the Objection to the merits." [p34]

The Treaty provisions herein before mentioned are as follows: Treaty of Commerce and
Navigation of November 10th, 1886

"Article I
There shall be between the dominions and possessions of the two High Contracting
Parties reciprocal freedom of commerce and navigation. The subjects of each of the two
Parties shall have liberty freely to come, with their ships and cargoes, to all places, ports
and rivers in the dominions and possessions of the other to which native subjects generally
are or may be permitted to come, and shall enjoy respectively the same rights, privileges,
liberties, favours, immunities and exemptions in matters of commerce and navigation
which are or may be enjoyed by native subjects without having to pay any tax or impost
greater than those paid by the same, and they shall be subject to the laws and regulations
in force.

Article X

The Contracting Parties agree that, in all matters relating to commerce and navigation, any
privilege, favour, or immunity whatever which either Contracting Party has actually
granted or may hereafter grant to the subjects or citizens of any other State shall be
extended immediately and unconditionally to the subjects or citizens of the other
Contracting Party ; it being their intention that the trade and navigation of each country
shall be placed, in all respects, by the other on the footing of the most-favoured nation.

Article XV

The dwellings, manufactories, warehouses and shops of the subjects of each of the
Contracting Parties in the dominions and possessions of the other, and all premises
appertaining thereto destined for purposes of residence or commerce shall be respected.

It shall not be allowable to proceed to make a search of, or a domiciliary visit to, such
dwellings and premises, or to examine and inspect books, papers, or accounts, except
under the conditions and with the form prescribed by the laws for subjects of the country.

The subjects of each of the two Contracting Parties in the dominions and possessions of
the other shall have free access to the Courts of Justice for the prosecution and defence of
their rights, without other conditions, restrictions, or taxes beyond those imposed on
native subjects, and shall, like them, be at liberty to employ, in all causes, their advocates,
attorneys or agents, from among the persons admitted to the exercise of those professions
according to the laws of the country."

Protocol of November 10th, 1886

"At the moment of proceeding this day to the signature of the Treaty of Commerce and
Navigation between Great Britain [p35] and Greece, the Plenipotentiaries of the two High
Contracting Parties have declared as follows:

Any controversies which may arise respecting the interpretation or the execution of the
present Treaty, or the consequences of any violation thereof, shall be submitted, when the
means of settling them directly by amicable agreement are exhausted, to the decision of
Commissions of Arbitration, and the result of such arbitration shall be binding upon both
Governments.

The members of such Commissions shall be selected by the two Governments by common
consent, failing which each of the Parties shall nominate an Arbitrator, or an equal number
of Arbitrators, and the Arbitrators thus appointed shall select an Umpire.

The procedure of the Arbitration shall in each case be determined by the Contracting
Parties, failing which the Commission of Arbitration shall be itself entitled to determine it
beforehand.

The undersigned Plenipotentiaries have agreed that this Protocol shall be submitted to the
two High Contracting Parties at the same time as the Treaty, and that when the Treaty is
ratified, the agreements contained in the Protocol shall also equally be considered as
approved, without the necessity of a further formal ratification."

Treaty of Commerce and Navigation of July 16th, 1926

"Article 1

There shall be between the territories of the two Contracting Parties reciprocal freedom of
commerce and navigation.

The subjects or citizens of each of the two Contracting Parties shall have liberty freely to
come, with their ships and cargoes, to all places and ports in the territories of the other to
which subjects or citizens of that Contracting Party are, or may be, permitted to come, and
shall enjoy the same rights, privileges, liberties, favours, immunities and exemptions in
matters of commerce and navigation as are, or may be, enjoyed by subjects or citizens of
that Contracting Party.

Article 3

The subjects or citizens of each of the two Contracting Parties in the territories of the
other shall enjoy, in respect of their persons, their property, right's and interest, and in
respect of their commerce, industry, profession, occupation, or any other matter, in every
way the same treatment and legal protection as the subjects or citizens of that Party or of
the most-favoured foreign country, in as far as taxes, rates, customs, imposts, fees which
are substantially taxes, and other similar charges are concerned.

Article 4

The two Contracting Parties agree that in all matters relating to commerce, navigation and
industry and the exercise of professions or occupations, any privileges, favour or
immunity which either of the two Contracting Parties has actually granted, or may [p36]

hereafter grant, to the ships and subjects or citizens of any other foreign country shall be
extended, simultaneously and unconditionally, without request and without compensation,
to the ships and subjects or citizens of the other, it being their intention that the-
commerce, navigation and industry of each of the two Contracting Parties shall be placed
in all respects on the footing of the most-favoured nation.

Article 29

The two Contracting Parties agree in principle that any dispute that may arise between
them as to the proper interpretation or application of any of the provisions of the present
Treaty shall, at the request of either Party, be referred to arbitration.

The court of arbitration to which disputes shall be referred shall 'be the Permanent Court
of International Justice at The Hague, unless in any particular case the two Contracting
Parties agree otherwise."

Declaration of July 16th, 1926

"It is well understood that the Treaty of Commerce and Navigation between Great Britain
and Greece of to-day's date does not prejudice claims on behalf of private persons based
on the provisions of the Anglo-Greek Commercial Treaty of 1886, and that any
differences which may arise between our two Governments as to the validity of such
claims shall, at the request of either Government, be referred to arbitration in accordance
with the provisions of the Protocol of November 10th, 1886, annexed to the said Treaty."

The Agents of the Parties have informed the Court that the commercial relations between
the United Kingdom and Greece were regulated in accordance with the provisions of the
Treaty of 1886 until the Treaty of 1926 came into force.

Although the Treaty of 1886 was denounced by Greece in 1919 and 1924, nevertheless,
by successive agreements and exchanges of notes, it was continued in force from time to
time; in the final exchange of notes, it was agreed that the provisional modus vivendi by
which the Treaty was continued until August 31st, 1926, would lapse on the date on
which the Treaty of 1926 came into force.
It is necessary for the Court at the outset to review briefly the Submissions of the Parties
as they were developed during the proceedings.

In the Application of the Hellenic Government there were three requests, the first of
which was that the Court should declare that it had jurisdiction; the second that the Court
should declare and adjudge that the arbitral procedure referred to in the Final Protocol of
the Treaty of 1886 must receive application in the present case; and the [p37] third related
to the constitution of the Arbitration Commission. In the Memorial which followed the
Application, the request, inter alia, was that the Court should declare and adjudge that the
arbitral procedure aforesaid should receive application, which implies a previous decision
that the Court had jurisdiction so to do. In the Hellenic Government's Observations and
Submissions on the United Kingdom Government's Counter-Memorial, the Court was
asked to dismiss the United Kingdom Government's Objection to the jurisdiction, and,
adjudicating upon the competence of the Court as requested in the Application, to direct
the Parties to put into execution the procedure for a Commission of Arbitration as
provided for by the Protocol of 1886 (this latter Submission being an alternative to the
Submission asking the Court to hold that the United Kingdom Government is bound to
accept the submission of the difference to this Court acting as an arbitral tribunal). Finally,
at the conclusion of the oral arguments, the Hellenic Government, after reciting inter alia
that the United Kingdom Government had, through its Counsel, expressed its willingness
that the Court should undertake the function of arbitration upon certain conditions, asked
that the Court should hold that it had jurisdiction to deal with the merits, or, in the
alternative, that it should join the Objection to the merits. These conditions, as stated by
the Hellenic Government in its final Submissions, were, first, that the Court should hold
that it had jurisdiction to decide the question whether the claim should be submitted to
arbitration under the Protocol of 1886, and secondly, that the Court should actually decide
this question in the affirmative.

The United Kingdom Government's final Submission is that the Court "has no jurisdiction
to deal with the claim brought against the Government of the United Kingdom by the
Hellenic Government in respect of the treatment of M. Ambatielos". The Submissions in
the Counter-Memorial of the United Kingdom were more detailed. So far as they related
to jurisdiction, with which alone the Court is now concerned, they were:

(i) That for certain reasons the Court has no jurisdiction

"(a) to entertain a request by the Hellenic Government that it should order the United
Kingdom Government to submit to arbitration a claim by the Hellenic Government based
on Article XV or any other article of the Treaty of 1886, or, (b) itself to decide on the
merits of such a claim."

(ii) That for certain reasons, the Court has no jurisdiction

"(a) to entertain a request by the Hellenic Government that it should order the United
Kingdom Government to submit to arbitration a claim by the Hellenic Govern-[p38]ment
for denial of justice based on the general principles of international law or for unjust
enrichment, or

(b) itself to decide upon the merits of such a claim."

The brief but comprehensive final Submission obviously includes the jurisdictional
objections more particularly set out in the Counter-Memorial.

It is evident from the above summary that, apart from the jurisdiction of the Court on the
merits,- the question of its jurisdiction to decide upon the obligation to submit the
difference to arbitration is implicit in the final Submissions of both Parties.

The Hellenic Government's final Submissions refer to an offer of the United Kingdom
Government (through its Counsel), upon certain conditions, that the Court itself should
undertake the function of arbitration. It is true that the United Kingdom Government has
made some such offer, but the conditions attached to it are not very clear. In paragraph III
of the Submissions at the end of the Counter-Memorial, the United Kingdom Government
stated that if, contrary to its contentions, the Court should hold that it had "jurisdiction to
order arbitration of a claim by the Hellenic Govern-ment based on the Treaty of 1886 and
that the Hellenic Government is not precluded by lapse of time from submitting any such
claim", then the Court should substitute itself for the Commission of Arbitration under the
Protocol of 1886 and itself decide all relevant issues. This condition does not appear to
involve the necessity of examining whether the Ambatielos claim is in truth based on the
Treaty of 1886. It implies that the United Kingdom Government's contention is that the
Court has no jurisdiction even where a claim is based on the Treaty. But, during the oral
arguments, Counsel said at one stage that the Court would have jurisdiction to decide
whether the United Kingdom had committed a breach of the Declaration of 1926 in regard
to the Ambatielos claim if (1) the Declaration was a provision of the Treaty of 1926 and
(2) the Hellenic Government's claim in respect of M. Ambatielos was both a claim based
on the Treaty of 1886 and a claim which that Declaration covers. A little later Counsel
said:

"Before I go further, I wish to repeat what we have said in the Counter-Memorial, that if,
contrary to our contentions, the Court should hold (1) that the Declaration is a provision of
the Treaty of 1926, and as such is covered by Article 29, and (2) that the claim in this case
is a claim to which the Declaration applies, and (3) that the claim is one which the United
Kingdom is legally obliged to arbitrate, then the United Kingdom is, at any rate to [p39]
this extent, in accord with its opponents, that it will, in that event, agree that this Court
should itself replace the arbitral tribunal provided for in the 1886 Treaty, and should deal
with the merits of the case in the same manner and to the same extent that the arbitral
tribunal would have had to deal with them if it had been constituted."

These conditions seem to go beyond those in the Counter-Memorial; for they require, in
effect, that the Court should not only find in favour of jurisdiction but should also actually
decide that the Ambatielos claim is in fact a claim based on the Treaty of 1886 and that
the United Kingdom is legally obliged to submit it to arbitration. This discrepancy throws
some doubt on the existence of any unequivocal agreement between the Parties upon this
matter. The Court has, however, no doubt that in the absence of a clear agreement
between the Parties in this respect, the Court has no jurisdiction to go into all the merits of
the present case as a commission of arbitration could do.

As regards the reference in the Counter-Memorial to the Hellenic Government being

precluded by lapse of time from submitting the present claim, the Court holds that this is a
point to be considered with the merits and not at the present stage.

The Court can now proceed to deal with the various arguments put forward by the United
Kingdom Government in support of its Preliminary Objection to the Court's jurisdiction.
Seven main points have been raised, the first two of which are:

"(1) The jurisdiction of the Court, if it exists at all, must be derived from Article 29 of the
Treaty of 1926.
(2) Article 29 of the Treaty of 1926 only confers jurisdiction on the Court to deal with
disputes relating to the interpretation or application of the provisions of the Treaty of 1926
itself."

Greece has not accepted the compulsory jurisdiction of the Court under Article 36 (2) of
its Statute and therefore can invoke the jurisdiction of the Court only under Article 36 (1),
by virtue of a special agreement or the provisions of a treaty. The Hellenic Government
relies, in the present case, on Article 29 of the Treaty of 1926, read in the light of Article
37 of the Statute of the Court, which in effect provides that all references in treaties to the
Permanent Court of International Justice must now be construed as references to the
International Court of Justice. Article 29 of the Treaty of 1926 between Great Britain and
Greece is in the following terms:

"The two Contracting Parties agree in principle that any dispute that may arise between
them as to the proper interpretation or [p40] application of any of the provisions of the
present Treaty shall, at the request of either Party, be referred to arbitration.

The court of arbitration to which disputes shall be referred shall be the Permanent Court
of International Justice at The Hague, unless in any particular case the two Contracting
Parties agree otherwise."

It follows, therefore, that any dispute as to the interpretation or application of any of the
provisions of the Treaty of 1926 is referable by either Party to this Court.

The third and fourth points raised on behalf of the United Kingdom Government are that:

"(3) The Treaty of 1926 only came into force in July 1926, and none of its provisions are
applicable to events which took place or acts which were committed before that date. This
is so whether or not the 1886 Treaty, which the Treaty of 1926 replaced, contained
provisions similar to those of the Treaty of 1926.
(4) The acts on which the Greek Government's claim is based took place in 1922 and
1923, and therefore the provisions of the Treaty of 1926 are not applicable to them."

These points raise the question of the retroactive operation of the Treaty of 1926 and are
intended to meet what was described during the hearings as "the similar clauses theory",
advanced on behalf of the Hellenic Government. The theory is that where in the 1926
Treaty there are substantive provisions similar to substantive provisions of the 1886
Treaty, then under Article 29 of the 1926 Treaty this Court can adjudicate upon the
validity of a claim based on an alleged breach of any of these similar provisions, even if
the alleged breach took place wholly before the new treaty came into force. The Court
cannot accept this theory for the following reasons:

(i) To accept this theory would mean giving retroactive effect to Article 29 of the Treaty
of 1926, whereas Article 32 of this Treaty states that the Treaty, which must mean all the
provisions of the Treaty, shall come into force immediately upon ratification. Such a
conclusion might have been rebutted if there had been any special clause or any special
object necessitating retroactive interpretation. There is no such clause or object in the
present case. It is therefore impossible to hold that any of its provisions must be deemed
to have been in force earlier.

It was contended on behalf of the Hellenic Government that the arbitral procedure
stipulated in Article 29 of the Treaty of 1926 differed from that in the Protocol of 1886
only in respect of the tribunal provided for arbitration: under the Treaty of 1926 the
arbitral tribunal was to be the Permanent Court of International [p41] Justice, while under
the Protocol of 1886 the tribunal was to be an ad hoc commission of arbitration. This, it
was argued, was a procedural variation and in matters of procedure, at least in English
law, the presumption as to procedural statutes is in favour of retroactive application. Now,
whatever may be the position in national law in various countries of the worlda matter
which the Court has not thought it necessary to investigateand without examining
whether questions of procedure cover questions of jurisdiction, the Court observes that, in
any event, the language of Article 32 of the Treaty of 1926 precludes any retroactive
effect being given to selected provisions of that Treaty.

(ii) Accompanying the Treaty of 1926whether as a part thereof or not is a question

which will be dealt with laterwas a Declaration which provided, in effect, that any
differences which might arise as to the validity of claims based on the Treaty of 1886
should be referred, at the request of either Government, to arbitration under the Protocol
annexed to the Treaty of 1886. That was the understanding between the Parties. The
language of the Declaration makes no distinction between claims based on one class of
provisions of the 1886 Treaty and those based on another class; they are all placed on the
same footing and differences relating to their validity are referable to arbitration under the
Protocol of 1886. To argue that differences relating to claims based on those of the
provisions of the earlier Treaty, which were similar to provisions of the later Treaty, were
intended to be referred to arbitration in accordance with Article 29 of the later Treaty,
while differences relating to other claims based on the earlier Treaty were meant to be
arbitrated under the Protocol of the earlier Treaty, introduces a distinction for which the
Court sees no justification in the plain language of the Declaration.

The fifth point raised on behalf of the United Kingdom Government is that:

"The Declaration which was signed at the same time as the Treaty of 1926 was not a part
of that Treaty and the provisions of that Declaration are not provisions of that Treaty
within the meaning of Article 29."

Both Parties agree that this is the most important issue in the case. In support of the
contention that the Declaration is not a part of the Treaty, it is said that the Declaration
was signed separately from the Treaty proper, though by the same signatories and on the
same day. It is also pointed out that the Declaration refers to the Treaty not as "this
Treaty" or "the present Treaty" which would have been the proper mode of reference if
the Declaration had been regarded as part of the Treatybut as "the Treaty [p42] .... of to-
day's date", thereby indicating that the Treaty had already been completed and signed.
Moreover, it is urged, the Declaration does not say that it is to be regarded as a part of the
Treaty, presenting in this respect a marked contrast to one of the Declarations annexed to
the Greco-Italian Commercial Treaty of November 24th, 1926, which is followed by two
Declarations, one expressed to be an integral part of the Treaty and the other not so
expressed, the latter being almost identical in form and purpose with the 1926 Anglo-
Greek Declaration with which the Court is now concerned.

On the other hand, it is to be noted that the Plenipotentiaries included the Treaty and the
Customs Schedule (which is unquestionably a part of the Treaty) and the Declaration in a
single document of 44 pages, the Declaration being on page 44. Again, shortly after the
exchange of ratifications, the Government of the United Kingdom issued Treaty Series
No. 2 (1927), a single document entitled "Treaty of Commerce and Navigation between
the United Kingdom and Greece and accompanying Declaration", and presented it to
Parliament. Furthermore, the British Foreign Office and the Charge d'Affaires of the
Hellenic Republic at Berne communicated official texts to the League of Nations at
Geneva for registration, which led to their inclusion in the League of Nations Treaty
Series under a single number, as "No. 1425. Treaty of Commerce and Navigation between
the United Kingdom and Greece and accompanying Declaration signed at London, July
16th, 1926."

Cogent evidence as to what both Parties intended is furnished by the instruments of

ratification exchanged between the United Kingdom and Greece. The instrument of
ratification by Greece was in the following terms : "We declare that the Treaty of
Commerce and Navigation having been signed in London on the 16th July of this year
between Greece and Great Britain with annexed Customs Schedule and Declaration, the
texts of which follow : [Here follow the Greek and English texts of the Treaty, Schedule
and Declaration.] We accept, approve and ratify the Treaty, the Customs Schedule and the
Declaration in all their provisions, promising to faithfully observe and not to violate the
same, or to permit their violation by any other person whatsoever", etc.

Thus, this instrument made no distinction between the Treaty, on the one hand, and the
Customs Schedule which is indisputably a part of the Treaty, and the Declaration annexed
to the Treaty, on the other. It is clear, therefore, that Greece treated the Declaration as a
part of the Treaty.[p43]

The United Kingdom's instrument of ratification is even more explicit. It reads:

"GEORGE, by the Grace of God .... greeting. Whereas a Treaty between Us and Our good
friend the President of the Hellenic Republic, relative to commerce and navigation, was
concluded and signed at London on the sixteenth day of July in the year of Our Lord one
thousand nine hundred and twenty-six by the Plenipotentiaries of Us and of Our said good
friend duly and respectively authorized for that purpose, which Treaty is, word for word,
as follows: [here follow the English and Greek texts of the Treaty, Schedule and
Declaration.]

"We, having seen and considered the Treaty aforesaid, have approved, accepted and
confirmed the same in all and every one of its articles and clauses", etc.

From the words "which Treaty is, word for word, as follows" and the text that follows the
words, it is clear that the United Kingdom also regarded the Declaration, as well as the
Customs Schedule, as included in the Treaty. The ratification of a treaty which provides
for ratification, as does the Treaty of 1926, is an indispensable condition for bringing it
into operation. It is not, therefore, a mere formal act, but an act of vital importance. When
the Government of the United Kingdom speaks of the Treaty in its own instrument of
ratification, as being "word for word as follows" and includes the Declaration in the text
that follows, it is not possible for the Court to hold that the Declaration is not included in
the Treaty.

The nature of the Declaration also points to the same conclusion. It records an
understanding arrived at by the Parties before the Treaty of 1926 was signed as to what
the Treaty, or as Counsel for the Government of the United Kingdom preferred to put it,
the replacement of the Treaty of 1886 by the Treaty of 1926, would not prejudice. This is
clear from the opening words "It is well understood that the Treaty .... of to-day's date,
does not prejudice claims on behalf of private persons based on the provisions of the
Anglo-Greek Commercial Treaty of 1886." From the series of instruments which from
time to time continued the Treaty of 1886 in force after its initial denunciation by Greece,
it is evident that ultimately it was the coming into force of the Treaty of 1926 that finally
terminated the operation of the Treaty of 1886. But for the Declaration, Article 32 of the
Treaty of 1926, which brought that Treaty into force upon ratification, might, in the
absence of any saving clause, have been regarded as putting the Treaty into full operation
so as completely to wipe out the Treaty of 1886 and all its provisions, including its
remedial provisions, and any claims based thereon. Indeed, the United Kingdom
Government, before proceeding to the signature of the Treaty of 1926, asked for an
assurance that the Hellenic Government would not regard "the conclusion of the Treaty"
as prejudicing certain claims of British subjects based on the older Treaty. [p44]

The intention of the Declaration was to prevent the new Treaty from being interpreted as
coming into full force in this sweeping manner and thus prejudicing claims based on the
older Treaty or the remedies provided for them. It follows that, for the proper
interpretation or application of the provisions of the Treaty of 1926, some such words as
"Save as provided in the Declaration annexed to this Treaty" have to be read into Article
32 before the words "It shall come into force". Thus, the provisions of the Declaration are
in the nature of an interpretation clause, and, as such, should be regarded as an integral
part of the Treaty, even if this was not stated in terms.

For these reasons, the Court holds that either expressly (by virtue of the United Kingdom's
own instrument of ratification) or by necessary implication (from the very nature of the
Declaration) the provisions of the Declaration are provisions of the Treaty within the
meaning of Article 29. Consequently, this Court has jurisdiction to decide any dispute as
to the interpretation or application of the Declaration and, in a proper case, to adjudge that
there should be a reference to a Commission of Arbitration. Any differences as to the
validity of the claims involved will, however, have to be arbitrated, as provided in the
Declaration itself, by the Commission.

It may seem at first sight that there is here a possibility of a conflict between a decision of
the Court finding that there is an obligation to submit a difference to a Commission of
Arbitration and an eventual decision by the Commission. There is in reality no such
possibility.

The Court would decide whether there is a difference between the Parties within the
meaning of the Declaration of 1926. Should the Court find that there is such a difference,
the Commission of Arbitration would decide on the merits of the difference.

It may be contended that because a special provision overrides a general provision, the
Declaration should override Article 29 of the Treaty of 1926 and, as it lays down a special
arbitral procedure, it excludes the jurisdiction of the Court under Article 29. While it is
true that the Declaration excludes the Court from functioning as the Commission of
Arbitration, it is equally true that it lies with the Court to decide precisely whether there
should be a reference to a Commission of Arbitration.

The sixth argument of the United Kingdom Government is that:

"The claim which the Greek Government is making on behalf of M. Ambatielos in so far
as it is based on any provision of the Treaty of 1886, is not a claim covered by the
Declaration of 1926, [p45] because that Declaration only covered claims which had been
formulated under that Treaty before the Declaration was signed, and the Greek
Government did not formulate any legal claim in respect of M. Ambatielos until 1933, nor
indeed any legal claim under the Treaty of 1886 until 1939."

The phrase used in the Declaration is "claims based on the provisions of the Anglo-Greek
Commercial Treaty of 1886". There is no reference whatever in the Declaration to the date
of formulation of the claims; the only requirement is that they should be based on the
Treaty of 1886. Counsel for the United Kingdom attempted to support his contention by
referring to the negotiations which led to the signature of the Declaration. The records of
the negotiations, however, do not support the contention. They show that although the
Hellenic Government originally suggested a draft of the Declaration referring to "anterior
claims eventually deriving from the Anglo-Greek Commercial Treaty of 1886", this draft
was ultimately not accepted, and both Parties adopted, instead, the text of the Declaration
as it now appears, omitting the word anterior. In any case where, as here, the text to be
interpreted is clear, there is no occasion to resort to preparatory work.

If the United Kingdom Government's interpretation were accepted, claims based on the
Treaty of 1886, but brought after the conclusion of the Treaty of 1926 would be left
without solution. They would not be subject to arbitration under either Treaty, although
the provision on whose breach the claim was based might appear in both and might thus
have been in force without a break since 1886. The Court cannot accept an interpretation
which would have a result obviously contrary to the language of the Declaration and to
the continuous will of both Parties to submit all differences to arbitration of one kind or
another.

There now remains the final argument that "the Treaty of 1886 contains no provisions
incorporating in the Treaty the general principles of international law with regard to the
treatment of foreigners in courts of justice or otherwise and in consequence it cannot be
said that the alleged denial of justice in breach of the general principles of international
law is a breach of the Treaty of 1886, merely because it is a breach of the general
principles of international law".

The point raised here has not yet been fully argued by the Parties, and cannot, therefore,
be decided at this stage. [p46]

For these reasons,

The Court,

adjudicating on the Preliminary Objection filed by the Government of the United

Kingdom of Great Britain and Northern Ireland to the Application of the Royal Hellenic
Government,

by thirteen votes to two,

finds that it is without jurisdiction to decide on the merits of the Ambatielos claim;

by ten votes to five,

finds that it has jurisdiction to decide whether the United Kingdom is under an obligation
to submit to arbitration, in accordance with the Declaration of 1926, the difference as to
the validity of the Ambatielos claim, in so far as this claim is based on the Treaty of 1886;

decides that the time-limits for the filing of a Reply and a Rejoinder shall be fixed by
subsequent Order.
Done in English and French, the English text being authoritative, at the Peace Palace, The
Hague, this first day of July, one thousand nine hundred and fifty-two, in three copies, one
of which will be placed in the archives of the Court and the others will be transmitted to
the Royal Hellenic Government and to the Government of the United Kingdom of Great
Britain and Northern Ireland, respectively.

(Signed) J. G. Guerrero,
Vice-President.

(Signed) E. Hambro,
Registrar. [p47]

Judge Levi Carneiro and M. Spiropoulos, Judge ad hoc, availing themselves of the right
conferred on them by Article 57 of the Statute, append to the Judgment of the Court
statements of their individual opinions.

Judge Alvarez declares that there are in the present case sufficient grounds for holding
that the Court has jurisdiction to deal with the merits of the Ambatielos claim.

The President Sir Arnold McNair, Judges Basdevant, Zoricic, Klaestad and Hsu Mo,
availing themselves of the right conferred on them by Article 57 of the Statute, append to
the Judgment statements of their dissenting opinions.

(Initialled) J. G. G.

(Initialled) E. H. [p48]

INDIVIDUAL OPINION OF JUDGE LEVI CARNEIRO

[Translation]

Though I have voted with the majority on nearly all the questions and have accepted the
conclusions of the Judgment, I nevertheless venture to draw attention to some secondary
differences of view, and to refer to certain considerations which have influenced my
attitude in regard to questions which have been raised, but which have not been dealt with
in the Judgment.

2. It has been decided not to join the Objection to the merits, in conformity with Article
62, paragraph 5, of the Rules of Court, as had been requested by one of the Parties.

I consider that such a joinder should only be made when it is absolutely necessary.
However, it often happens that, although no joinder is made, the decision on the
jurisdiction involves a summary, superficial, or prima facie consideration of certain
questions pertaining to the merits. Such an examination is mainly confined to the legal
issues, without dealing with the facts that are in dispute, and the decision on the
jurisdiction may then be founded on considerations which touch upon these questions,
without dealing exhaustively with them and without prejudging them.

3. In my opinion, in order to establish the Court's jurisdiction in the present case, it should
have been decided that the Ambatielos claim is "based" on the Treaty of November 10th,
1886that is to say, that it has given rise, in the words of the Protocol of the same date, to
a controversy "respecting the interpretation or the execution" of the Treaty.

The United Kingdom Counter-Memorial has correctly indicated the line of argument by
which the Hellenic Government justifies the Court's jurisdiction:

it contends that the treatment accorded to the claimant gave rise to a claim against the
United Kingdom under Article XV of the Treaty of 1886; that, since the United Kingdom
rejects this claim, it should be submitted to arbitration under the Protocol annexed to that
Treaty and continued in force after the termination of the Treaty by the Declaration made
on the date of signature of the Treaty of 1926 ; and finally that the refusal of the United
Kingdom to go to arbitration raises a dispute as to the application of the Declaration
which the Court has jurisdiction to decide under Article 29 of the Treaty of 1926"
(paragraph 10, British Counter-Memorial) (my italics).

Certainly, the Hellenic Government's argument was correctly summarized in that passage.
The Greek Memorial expressly contended that there had been a violation of Article XV,
para-[p49]-graph 3, of the Treaty of 1886, consisting of a denial of justice, and of Article
X of the said Treaty, consisting of inequality of treatment (Memorial, paragraphs 14 and
22).

The invocation of these provisions of the Treaty seems to be relevant. Without passing on
the facts stated in the Memorial, or recognizing the correctness of these allegations, it
would not be possible to say whether the invocation of the clauses of the Treaty of 1886
was justified. The Court cannot do so at the present stage of the proceedings. However,
this invocation must, prima facie, be regarded as acceptable. That is both sufficient and
necessary to enable the Court's jurisdiction to be asserted. If the claim manifestly went
beyond the terms of the Treaty of 1886, the Court would have no jurisdiction. For
example, if the claim related to facts prior to the Treaty of 1886, the Court's lack of
jurisdiction would have to be at once admitted; the invocation of this Treaty wouldeven
prima facieappear to be ill-founded. In fact, what has to be decided is simply whether
the claim is or is not admitted by the Treaty.

4. In the present case, recognition of the fact that the claim is based on the Treaty of 1886
follows from the declarations of the Parties.

In the Counter-Memorial (paragraph 11), after the summary of the Hellenic Government's
reasoning, which I have quoted above, the-Agent for the United Kingdom Government
submitted that this reasoning ought to be rejected because:
"(a) the Declaration does not form part of the Treaty of 1926 and Article 29 of the Treaty
is therefore not applicable to it, and because

(b) the Declaration was only intended to apply to claims brought before the date of its
signature (16th July 1926)."

The British Government did not reject the reasoning on the ground that the claim was not
based on the Treaty of 1886, although it disputed the denial of justice and the inequality of
treatment. On the contrary, it admitted that the claim was, prima facie, based on the Treaty
of 1886.

Its first submission was that the Court

"has no jurisdiction to entertain a request by the Hellenic Government that it should order
the United Kingdom Government to submit to arbitration a claim by the Hellenic
Government based on Article XV or any other article of the Treaty of 1886".

Subsequently, during the oral proceedings before the Court, the recognition of this fact
became quite clear. Counsel for the United Kingdom, at the hearing on May 15th, stated
the conditions which he regarded as necessary for the admission of the Court's
jurisdiction: (1) that the Declaration was a provision of [p50] the Treaty of 1926 ; (2) that
the Greek claim was both "based on the Treaty of 1886" and covered by the Declaration
(Oral Argument, page 16). He sought to show that the Declaration did not form part of the
Treaty of 1926, and that it did not cover the claim; but he did not attempt to show that the
claim was not based on the Treaty of 1886.

In conclusion, the Greek Counsel said:

even our opponents agreed that our legal bases included at least one which they
recognized as pertinent: that was Article XV, paragraph 3, of the Treaty of 1886....".
I think that this fact should have been recognized. The Court's jurisdiction results from the
fact that the dispute is within the framework of the Declaration of 1926: the claim is
"based" on the Treaty of 1886.

5. It might perhaps have been possible to anticipate the final decision of this case by at
once affirmingor denyingthe obligation of the United Kingdom Government to
submit to arbitration its dispute with the Hellenic Government in regard to M.
Ambatielos's claim.

The fullness of the arguments appeared to allow of such a decisionand I myself was in
favour of giving it. I now recognize that the present Judgment deals solely with the
Objection to the jurisdiction. In presenting it, the British Government very clearly
separated the question of jurisdiction from the question of the merits. In regard to the
latter, it said that the claim of the Hellenic Government was barred by reason of the delay
in its submission, and that the Court should, in accordance with the Hellenic
Government's proposal, substitute itself for the Arbitration Commission, etc. On the
preliminary question, what was alleged was the Court's lack of jurisdiction to order the
British Government to submit to arbitration a claim by the Hellenic Government, etc.

The present decision of the Court, in its Judgment on the Preliminary Objection, is limited
to an affirmation of its competence to give the ruling referred to.

Subsequently, in the next stage of the procedure, the Hellenic Government's request will
be adjudicated upon. Then, and only then, will the Court be in a position to adjudge and
declare, as requested by the Hellenic Government:

"that the United Kingdom Government is under an obligation to refer its present dispute
with the Hellenic Government to arbitration....".

It is true that the Hellenic Government itself, in its "Observations and Submissions"
departed from this attitude and asked the Court [p51]

"to hold that the United Kingdom Government is bound to accept the submission to the
International Court of Justice, sitting as an arbitral tribunal, of the dispute now existing
between that Government and the Hellenic Government, and accordingly to fix time-
limits for the filing by the Parties of the Reply and the Rejoinder dealing with the merits
of the dispute".

A modification resulted from the acceptance by Counsel of the two Parties, during the oral
proceedings, of the principle that the Court should exercise the functions of the
Commission of Arbitration referred to in the Protocol of 1886. This proposal, which was
proposed by Counsel for the Hellenic Government, was accepted by the United Kingdom
Counsel, subject to the condition that the Court should first hold that it was competent. It
has been very correctly decided in the Judgment that the Court has not thereby been
invested with jurisdiction to decide on the merits.

In my view, it should be declared expressly that the Court could assume the function of
the Arbitral Commission as a result of a Special Agreement between the two
Governments. The declarations of the Agents, or even of Counsel, in the course of the
proceedings, may suffice to establish the competence of the Court, by a prorogation of
jurisdiction. However, in the present case, the Court holds that competence belongs to the
Commission of Arbitration provided for in the Protocol of 1886. In my opinion, the Court
could not agree to any derogation from the clause contained in this inter-governmental
agreement on the basis of the mere declarations of Counsel; nor could it admit that
jurisdiction to adjudicate on the dispute has been transferred to it by virtue of such
declarations.

In short, in the submission which I have quoted from its "Observations", the Greek
Government envisages, in addition to this proposal regarding the Court's competence
which is unac-ceptablethe continuation of the proceedings by a Reply and a Rejoinder.
This is required by Articles 41, paragraph 2, and 62, paragraph 5, of the Rules of Court,
just as Articles 47 et sqq. call for further oral argument.
In this second phase, the question whether the claim is based on the Declaration of 1926
will be fully examined. One of the points that will then have to be decided is that raised by
Counsel for the United Kingdom in his sixth argument, where he contended that the
alleged denial of justice committed in violation of the general principles of international
law did not constitute a violation of the Treaty of 1886, because this Treaty contained no
provision to that effect. I agree that this question ought not to be decided at the present
stage of the proceedings, but not on the ground that it has not yet been fully argued by the
Parties. That omission by the Parties might be interpreted by the Court; but I consider that
it would not be a ground for failing to decide this question, [p52] if it were opportune to
do so. In fact, it is because this question pertains to the merits of the case that the Court
cannot decide it at this time. That is all the more true because it is not necessary to
consider this question in order to assert the Court's jurisdiction.

There will still be a third phase if the Parties agree, only after the end of the second phase,
to confer the arbitral function upon the Court.

The Court's concern not to delay the proceedings cannot be allowed to prevent this
prolongation of the case if the Parties do not find means of avoiding it.

6. The Court's future decision on the merits, being confined to a decision on the question
whether the Ambatielos claim falls within the framework of the Declaration of 1926, there
is no reason to fear that the judgment of the Commission of Arbitration would conflict
with such a decision. The only point which the Court will have to decide will be the
competence of that Commission. It is clear that even the Commission itself could not then
declare that it lacks jurisdiction. If the Court should hold the Commission competent, it
will be for it to decide the sole question of the validity of the Ambatielos claim. If the
Commission, its competence having thus been established by the Court, refuses to decide
this question, the Court will have to-order a new commission to be constituted. Something
has been said of the autonomy of the arbitral commissions; in my view, their autonomy is
limited by the instrument which institutes themand in the present case that instrument is
constituted by the Judgment of this Court.
While not exceeding the limits of a decision as to its competence, the Court should not
reduce its decision to a doctrinal, abstract or theoretical assertion; it must necessarily
relate its decision to the specific case. The Court's jurisdiction is derived from treaties, and
from the features of the particular case before it. And so the Court will definitively
determine the extent of its jurisdiction and that of any other organ which has to act in the
same case.

7. The most important of the questions submitted is, as has been recognized in the
Judgment, whether the Declaration annexed to the Treaty of July 16th, 1926, is a part of
that Treaty. The Court's reasons in this connection are amply sufficient.

There is, however, I suppose, some doctrinal interest in emphasizing the juridical nature
of this Declaration.
It isit must be so describedaccording to a current expression, an "interpretative
declaration". Declarations of this sort are often made by one of the parties concerned to
define the attitude adopted towards a given treaty, a method of executing [p53] it
(Fenwick, International Law, p. 438; Oppenheim, International Law, 6th edit., Vol. I, p.
787).

In the British Year Book of International Law (1948, pp. 201202), Mr. A. B. Lyons,
referring to a declaration by the French Government on the most-favoured-nation clause,
observed that the competent court had "held that the interpretative declaration must be
read with and deemed to form part of the text of the treaty and was binding on the courts".

The Declaration of 1926, which has been referred to, was signed by the same
representatives of the two Governments who were signatories of the Treaty of the same
date. It has the significance of an authentic interpretation, embodied in the Treaty itself.
The Treaty consists of three partsArticles, Customs Schedule and Declaration.

Marcel Sibert has said that a declaration removes various uncertainties from the principles
which are considered as the expression of the international law in force. Thus, the
Declaration embodied in the Treaty of 1926 removes some uncertainties in regard to the
application of that Treaty and of the earlier treaty which it replaced.

It is true that the Declaration relates to the Treaty of 1886, in that it saves claimswhich
have been or may yet be presented based on the provisions of that Treaty, and ensures
the continuity of their remedies in certain cases. Now, this safeguard only became
necessary because a new treaty made its appearance in 1926. Thus, the Declaration
restricted the application of the Treaty of 1926 by providing that it should not apply to the
cases it mentioned. In virtue of that fact, it could be inserted in the new treaty, and it
forms an integral part thereof; it was so regarded by the two Governments in their
instruments of ratification.

From an intellectual, ideological and juridical point of view, the Declaration forms part of
the Treaty of 1926.

8. There is another consideration which supports that conclusion: if it were not adopted,
there would be no pre-established procedure for the settlement of a dispute between the
two Governments on the interpretation and application of the Declaration.

But such a situation must be avoided, more especially in the case of two friendhly
nationslike Greece and the United Kingdomwhich are united by their love of
democracy and of peace: they would not fail to provide for a friendly settlement of
disputes which might arise in connection with their two successive commercial treaties. I
could never believe that the United Kingdom and Greece, having concluded two treaties,
forty years apart, in the operation of which there was no interruption, motivated by the
same solicitude for the safeguarding and assisting of their respective nationals in the
territory of the other State, and having expressly provided, in two instruments, for the
friendly settlement [p54] of their disputes (Protocol annexed to the Treaty of 1886, Article
29 of the Treaty of 1926), should find themselves unable to agree on the application of
one of these Treaties, without there being any solution for such disagreement, either by
arbitration or by recourse to some organ of international justice.

9. I consider such a situation all the more strange and unacceptable because the progress
of international law, in its efforts to prevent war and promote international co-operation, is
above all directed to the pacific settlement of disputes.

The interpretation and application of treaties constitute the special domain of arbitration
for the very reason that they give rise to purely juridical questions. This was declared by
the Second Hague Conference in 1907 and in Article 13 of the Covenant of the League of
Nations and now, once more, in Article 36 of the Court's Statute.

If it is held that the Declaration of the 16th July, 1926, forms part of the Treaty signed on
that day, the difference regarding the interpretation or application of that Declaration must
be settled by the International Court of Justice, in accordance with Article 29 of the said
Treaty in conjunction with Article 37 of the Statute of the Court.

10. In regard to the retroactive application of procedural provisions, and provisions

relating to jurisdictionwhich the Court has rejectedI venture to add that, in the sphere
of international law, such an application can only be allowed when it is expressly
provided for. Even when the organ which was formerly competent has been abolished, its
powers cannot be regarded as automatically transferred to the new organ which replaces
it. Thus, in order that this Court might inherit the powers of the Permanent Court of
International Justice, it was necessary that this should be expressly laid down in Article 37
of the Statute. But, in the Treaty of 1926, there is no provision abolishing the Arbitral
Commissions provided for in the Treaty of 1886. On the contrary, there is nothing to
prevent these Commissions from being constituted, should that be necessary. From
another point of view, the Declaration annexed to the Treaty of 1926 expressly maintains
the means of settlement by arbitration, in accordance with the Protocol annexed to the
Treaty of 1886, of disputes based on that Treaty; Article 29 of the Treaty of 1926 limits
the powers of the International Court to the settlement of disputes as to the interpretation
or application of any of the provisions of the new treaty. The retroactive application of
Article 29 would not be justified and has been expressly excluded.

(Signed) Levi Carneiro. [p55]

INDIVIDUAL OPINION OF M. SPIROPOULOS

[ Translation]

Though I am one of the majority, I am unable, to my great regret, to agree with it on all
the points considered in and settled by the Judgment. I will confine myself, in what
follows, to stating the points on which I disagree with the wording of paragraph 2 of the
operative part thereof, in which the Court establishes its jurisdiction to adjudicate on the
merits.

The drafting of paragraph 2 of the operative part would seem to impose upon the applicant
State the duty of establishing that the Ambatielos claim "is based on a provision of the
Treaty of 1886".

I differ from the view of the majority for the following reasons: The Declaration annexed
to the Treaty of 1926 provides that differences between the Parties, as to the validity of
claims based on the provisions of the Treaty of 1886, must be referred to arbitration as
provided for by the Protocol of 1886.

This Protocol creates for the Parties concerned, in the event of differences between them,
an obligation to nominate their arbitrators for the purpose of setting up a Commission of
Arbitration as provided for by the Protocol of 1886. This is a case of compulsory
arbitration.

If the United Kingdom had nominated an Arbitrator, as requested by the Hellenic

Government, it would be for the Commission of Arbitration to decide as to the validity of
the Ambatielos claim. And this Commission would be unable to consider the Ambatielos
claim as valid unless, in fact, it were based on the Treaty of 1886.

But, in questions of arbitration, it is at the present time well recognized that if one of the
parties should, for any reason, consider that the arbitral tribunal lacks jurisdiction to deal
with the dispute, the question whether it in fact has jurisdiction is one that cannot be
decided, as an exercise of sovereignty, by the party raising the objection to the
jurisdiction, but it must be decided by the arbitral tribunal itself. The tribunal which
adjudicates on the case must also adjudicate on the objection. This is a point on which, at
the present time, no one can have any doubt.

If this principle is applied to the present case, it must follow that, if the United Kingdom
Government had accepted recourse to arbitration as proposed by the Hellenic
Government, it would have been for the Commission of Arbitration instituted under the
Protocol of 1886 to decide whether the Ambatielos claim was, or was not, based on the
provisions of the Treaty of 1886. [p56]

In the light of these observations, the Court ought not to require that the Hellenic
Government should establish that the Ambatielos claim "is based on a provision of the
Treaty of 1886", since the obligation of the United Kingdom to accept arbitration is
independent of the question whether that claim is, in fact, based on the Treaty of 1886.
This obligation would exist even if the claim were not, in fact, based on the Treaty in
question. It is a different thing thatas has already been saidthe Commission of
Arbitration would only have been able to recognize the Ambatielos claim as valid to the
extent that it was, in fact, based on the Treaty of 1886. And it was to secure a decision on
the United Kingdom's obligation to accept arbitration that the Hellenic Government seised
the Court (see the Hellenic Application and subsequent submissions).
Moreover, since the Court is at present called upon to decide only the objection to the
jurisdiction raised by the United Kingdom, it cannot, for procedural reasons, at the present
time pass upon the validity of the Hellenic claim that it should hold that the United
Kingdom is under an obligation to accept arbitration, a decision necessarily pertaining to
the merits. From a procedural point of view the Court cannot give a decision upon the
substance of the Greek claim until it has held that it has jurisdiction to do so.

Since, however, in my opinion, the Court is not called on to enquire whether the
Ambatielos claim "is based on the provisions of the Treaty of 1886", it may be asked
whether, in deciding on the merits of this Hellenic claim (that is to say, on the question
whether the United Kingdom is under an obligation to accept arbitration), the Court
should confine itself, after hearing the Parties, to referring them to the arbitration provided
for by the Protocol of 1886, without being able to consider any other matter.

In answering this question it is necessary to bear in mind that, when a State has bound
itself by a compulsory arbitration clause and the Protocol of 1886 is an example of such
a provisionthat State cannot, in principle, have any ground for refusing an offer of
recourse to arbitration. It is only in quite exceptional cases, where the invitation to resort
to arbitration'is manifestly an abuse on the part of the State requesting it, that recourse to
arbitration is not compulsory. An example of such abuse would be a case in which one of
the parties demanded the setting-up of the arbitral tribunal where no real dispute existed.
In such a case it is indeed necessary to admit the other party's right to refuse to nominate
its arbitrator. Such an allegation, if made, could of course be considered by the Court,
when deciding upon the validity of the claim of the Hellenic Government in this case.
[p57]

In conclusion, the Court, in my opinion, might well have limited itself to a finding that it
has jurisdiction to decide whether the United Kingdom is under an obligation to submit to
arbitration, in accordance with the Declaration of 1926, the difference as to the validity of
the Ambatielos claim without adding the words "in so far as this claim is based on the
Treaty of 1886", since those words would appear to impose upon the applicant State the
duty of establishing that the claim in question is, in fact, based on a provision of the
Treaty of 1886.

(Signed) Spiropoulos. [p58]

DISSENTING OPINION OF PRESIDENT McNAIR

I have voted in favour of the first rinding of the Court, namely, "that it is without
jurisdiction to decide on the merits of the Ambatielos claim", though I go further than that
and consider that the Court has no jurisdiction at all in this case. I regret that I am not able
to concur in the second finding of the Court.

The question before the Court is whether or not the Court has jurisdiction to deal with a
certain claim made upon the United Kingdom by the Hellenic Government on behalf of
one of its nationals, M. Ambatielos. The United Kingdom Government has accepted the
compulsory jurisdiction of this Court by making the Declaration specified in Article 36 of
the Court's Statute, but the Hellenic Government has not done so, with the result that the
Court is not invested with compulsory jurisdiction under this Article. The Hellenic
Government, however, claims that Article 2q of the Anglo-Greek Commercial Treaty of
1926, coupled with Article 37 of the Statute of the Court which substituted this Court for
the Permanent Court of International Justice, confers compulsory jurisdiction in this case.

Article 29 of the Treaty above mentioned is as follows:

"The two Contracting Parties agree in principle that any dispute that may arise between
them as to the proper interpretation or application of any of the provisions of the present
Treaty shall, at the request of either Party, be referred to arbitration.

The court of arbitration to which disputes shall be referred shall be the Permanent Court
of International Justice at The Hague, unless in any particular case the two Contracting
Parties agree otherwise."

The Treaty is accompanied by the following Declaration:

"It is well understood that the Treaty of Commerce and Navigation between Great Britain
and Greece of to-day's date does not prejudice claims on behalf of private persons based
on the provisions of the Anglo-Greek Commercial Treaty of r886, and that any differences
which may arise between our two Governments as to the validity of such claims shall, at
the request of either Government, be referred to arbitration in accordance with the
provisions of the Protocol of November 10th, 1886, annexed to the said Treaty."

[p59]
The claim is said to be based upon an Anglo-Greek Commercial Treaty of 1886 and thus
to fall within the scope of this Declaration.

Both in the British Treaty Series, 1927, and in the League of Nations Treaty Series, Vol.
LXI, p. 16, the title is "Treaty of Commerce and Navigation between the United Kingdom
and Greece and accompanying Declaration signed at London, July 16th, 1926." The
Treaty is followed by a Schedule and, below the Schedule, by the Declaration quoted
above. The Schedule is specifically incorporated in the Treaty by Article 8 of the Treaty
which contains the following sentence:
"The articles enumerated in the schedule to this Treaty, produced or manufactured in
Great Britain and Northern Ireland, shall not on importation into Greece be subjected to
higher duties than those specified in the schedule."

There is no such specific incorporation of the Declaration in the Treaty.

The Treaty ends as follows:

"In the event of doubt hereafter arising as to the proper interpretation of the English or
Greek text, the English text shall be considered authoritative.
In witness whereof the respective plenipotentiaries have signed the present Treaty and
have affixed thereto their seals.
Done in duplicate at London in the English and Greek languages this 16th day of July
1926.
Austen Chamberlain.
D. Caclamanos.
A. Vouros."

The accompanying Declaration ends as follows:

"Done at London the 16th July, 1926.

Austen Chamberlain
D. Caclamanos.
A. Vouros."

The Schedule, for obvious reasons, contains no date and no signatures.

***

Three questions arise in regard to ratification.

(a) Article 32 of the Treaty of 1926 provides that "The present Treaty shall be ratified...."
There is no corresponding provision in the accompanying Declaration. In fact, what
appears to have happened is that a printed text of the Treaty, Schedule and accompanying
Declaration was sandwiched into the middle of the traditional standard printed form of the
United Kingdom [p60] Instrument of Ratification (for a copy see Satow, Guide to
Diplomatic Practice, 3rd ed., pp. 408, 409), that is to say, between the formal introductory
part and the formal concluding part, and then the Instrument was tied up with ribbon,
dated, sealed, and exchanged for the Greek Instrument of Ratification.

There has been some controversy on the question whether or not the Declaration was also
ratified by the United Kingdom, though, according to the practice of the United Kingdom,
the Declaration did not require ratification, and the United Kingdom Government docs not
contend that the Declaration is not binding upon it. It appears that owing to the destruction
of the Greek archives during the recent war, the United Kingdom Instrument of
Ratification could not be found in Athens. The explanation given to the Court by the
United Kingdom Agent is as follows:

"I have, however, found in the Foreign Office records a copy of the United Kingdom's
instrument of ratification, which was printed, and from this it appears that the United
Kingdom did not ratify the Declaration. A certified photostat copy of this document is
enclosed herewith. It is true that the Declaration is printed on the back of the copy of the
Treaty contained in the ratification, but this is only because the printed edition of the
Treaty prepared for signature (which had the Declaration printed on the back) was also
used, as is customary, for the instrument of ratification, and it should not be inferred that
the ratifi-cation was intended to cover the Declaration as well as the Treaty."

Nevertheless, I consider that the fact that the United Kingdom Government handed to the
Hellenic Government, by way of exchange, an Instrument of Ratification duly sealed and
embodying the text of the Treaty, the Schedule and the accompanying Declaration, makes
it necessary to hold that the Declaration was ratified at the same time, and by the same
instrument, as the Treaty with its Schedule.

(b) There arises a different question, namely, whether a global ratification has the effect of
making all the documents comprised in it parts of the Treaty which was the main subject-
matter of the ratification, unless they would be so incorporated by virtue of the intention
of the Parties, express or implied. My answer to this question is in the negative. The
question whether documents accompanying a treatyby whatever name they may be
called, Declarations, Protocols, Additional Articles, Exchanges of Letters, etc.are
incorporated in the treaty or not, depends upon the intention of the contracting Parties.
The intention to incorporate such a document in a treaty is frequently evidenced expressly
by a written stipulation to the effect that it shall form an integral part of the treaty; or,
alternatively, it may be implied from the juridical nature of the document and its relation
to the treaty. [p61]

Of an express stipulation there are countless illustrations, old and recent ; for instance, in
the Jay Treaty of 1794 between the United States of America and Great Britain (Miller,
Treaties of the United States of America, Vol. 2, p. 272), where President Washington did
"hereby declare that the said Treaty, and the said Additional Article form together one
Instrument and are a Treaty between the United States of America and His Britannic
Majesty" ; or the Greco-Italian Commercial Convention of 24th November, 1926 (League
of Nations Treaty Series, Vol. 63, No. 1480), where one of the two accompanying
Declarations is expressed to be an integral part of the Treaty, while the other (which,
incidentally, bears some resemblance to the Declaration of 1926 now under consideration)
contains no such term ; or, again, Article 92 of the Charter of the United Nations, which
states that the "annexed Statute" of this Court "forms an integral part of the present
Charter". (Notice, incidentally, "the present Charter", not-"the Charter of the United
Nations signed at San Francisco the 26th day of June, 1945".) I shall deal later with the
question whether the incorporation of the Declaration in the Treaty of 1926 can be
implied.

(c) It is also suggested that it must be inferred from the expression "which treaty is, word
for word, as follows", occurring in the United Kingdom's Instrument of Ratification, that
all the documents (Treaty, Schedule and Declaration) which follow these words must be
regarded as forming one treaty. If the history of this phrase is examined, I do not consider
that it can sustain this argument. Either in this form or in some such phrase as "duquel la
teneur de mot mot s'ensuit", in Latin, French, English or German, this traditional
formula has been in use in treaties and other public documents for at least 600 years. (See,
for instance, Dumont, Corps universel diplomatique du Droit des Gens et Recueil des
Traits, Vol. 2, pp. 22-26, where the formula, occurs in two Acts of Cession and
Renunciation between the King of France and the King of England dated 1360, "de
quelles Lettres la teneur de mot mot s'ensuit", or "de mot en mot", and many similar
illustrations throughout the volumes of Dumont; see also a Russian Instrument of
Ratification of 1739 in Mervyn Jones, Full Powers and Ratification, p. 167, "desquels la
teneur suit, transcrite de mot mot"; and President Washington's ratification of the Jay
Treaty of 1794, "which Treaty is word for word as follows; to wit", in U.S. Senate
Document No. 26 of 1919, "Ratification of Treaties, Methods and Procedure, etc.". p. 49.)
The formal parts of treaties, and the documents connected with the making of treaties,
such as Full Powers, Instruments of Ratification, Procs-verbaux of Exchange of
Ratifications, etc., [p62] contain many expressions of an archaic and purely routine
character, and I do not find it possible to infer from the expression "which treaty is, word
for word, as follows" the intention of the Contracting Parties to incorporate all the
documents which follow into the treaty; that is, I do not think that Article 36 (1) of the
Statute of this Court envisages as one of the bases of its jurisdiction so slender a
consensual foundation as is afforded by the use of one of these venerable and routine
formulas. The corresponding expression in the Greek Instrument of Ratification is "the
texts of which follow"

***

Too much importance must not be attached to consistency in language, but it must be
noted that Articles 8, 14, 19, 21, 25, 29, 30 and 32 of the Treaty of 1926, when referring to
that Treaty, use the expression "the present Treaty" or "this Treaty", whereas the
accompanying Declaration refers to it as "the Treaty of Commerce and Navigation
between Great Britain and Greece of to-day's date", just as later on it refers to the Anglo-
Greek Commercial Treaty of 1886. This language suggests to my mind that the signatories
of the Declaration did not regard it as a part of the Treaty of 1926. If they had done so,
they would have found it shorter, more natural and more consistent with the language of
that Treaty itself to use the expression "the present Treaty" or "this Treaty" ; moreover, it
is unlikely that they would have lapsed into the first person and used the expression "our
two Governments", which is more appropriate to an exchange of assurances by Ministers
on behalf of their respective Governments than to a treaty.

***
I shall now turn from questions of form and language to examine the juridical nature of
the Declaration and its relation to the Treaty.

The genesis of the Declaration must be noted. It is not necessary" for the Court, nor open
to it at this stage, to construe the Declaration for the purpose of forming an opinion on the
question whether or not the Ambatielos claim falls within it. It is, however, both
permissible and necessary to examine the question why, and how, the Declaration came
into being. It must be remembered that, until a date in 1926 about to be mentioned, the
commercial relations between Greece and the United Kingdom were governed by the
Anglo-Greek Commercial Treaty of 1886. This Treaty was denounced by the Hellenic
Government in 1919, no doubt with [p63] the intention that it should be replaced by a
treaty more appropriate to modern conditions. The operation of the denunciation was
suspended from time to time, and it did not actually take effect until the 28th July, 1926.
Attached to the "Observations and Submissions of the Hellenic Government on the
Objection to the Jurisdiction" is the following letter from Mr. Miles Lampson (as he then
was) of the United Kingdom Foreign Office:

"Foreign Office.
22nd June, 1926.
The Greek Minister.
Sir,
Before proceeding to the signature of the commercial treaty between Greece and this
country, I would ask for an assurance that the conclusion of the treaty will not be regarded
by your Government as prejudicing the claims of British subjects for compensation or
relief on the ground that the recent Greek loan is contrary to Article 13 of the Anglo-
Greek Commercial Treaty of 1886, and for a further assurance that in the event of any
difference of opinion between our two Governments with reference to the validity of these
claims, the matter shall, at the request of either Government, be referred to arbitration in
accordance with the provisions of the Protocol of November 10th, 1886, annexed to the
said Treaty.
M. Lampson,
For the Secretary of State."

Upon receipt of this letter, the Hellenic Government, in order to generalize the reference
to claims arising under the Treaty of 1886 and to make the proposed assurance reciprocal,
submitted a draft Declaration, the terms of which are to be found in paragraph 13 of the
Counter-Memorial of the United Kingdom dated 4th February, 1952. The United
Kingdom Government, in reply, proposed the form of Declaration which was in fact
adopted. The Declaration is evidently an elliptical document and seems to be due to the
desire of both Parties that the expiry of the Treaty of 1886, then imminent, should not
adversely affect claims "based" upon it, and the procedure of arbitration provided therein
for them. I do not see how the provisions of the Treaty of 1926 could prejudice claims
"based" on the Treaty of 1886 because, in my opinion, such claims acquire an existence
independent of the treaty whose breach gave rise to them. Neither the expiry of the Treaty
of 1886, nor the entry into force of the Treaty of 1926, could affect the survival and
validity of claims "based" on a breach of the Treaty of 1886 which had already occurred.
In other words, I consider that the first sentence of the Declaration was, however prudent,
strictly speaking unnecessary and was [p64] inserted ex abundanti cautela. On the other
hand, the second sentence of the Declaration, that is, the sentence dealing with the arbitral
procedure, was necessary to preserve that procedure, because it would otherwise lapse
upon the expiry of the Treaty of 1886. What made the first sentence of the Declaration
prudent, and the second sentence of the Declaration necessary, was not the Treaty of 1926
but the imminent expiry of the Treaty of 1886, which took effect on 28th July, 1926, by
reason of its denunciation by the Hellenic Government. The Declaration does not touch or
concern anything contained in the Treaty of 1926 but regulates something external and
collateral to it.

***
There are two other factors which support the conclusion that the Declaration is not part
of the Treaty of 1926: first, the difference between the Treaty and the Declaration as to the
respective periods of their duration, and, secondly, the difference in their respective
provisions for the settlement of disputes. The effect of Article 32 of the Treaty of 1926 is
that the Treaty was intended to last for at least three years from the date of its coming into
force and thereafter would remain in force until the expiration of one year's notice given
by either Part}' to the other. Thus it was capable of expiring at the end of three years from
the date of its coming into force. On the other hand, no date is fixed for the expiry of the
duration of the Declaration, and it would have been highly inconvenient and contrary to
the intentions of the Parties that the arbitral procedure expressly maintained by the
Declaration should fall to the ground at the same moment as the Treaty of 1926. This was
an additional reason for making the Declaration a separate document and not making it a
provision of the Treaty.

Moreover, it is necessary to note that the Declaration contains its own machinery for the
settlement of disputes between the two Governments as to the validity of claims arising
under the Treaty of 1886, namely, the arbitral procedure provided by the Protocol of
November 10th, 1886, annexed to that Treaty. The fact that the Parties maintained this
special machinery for dealing with these claims makes it difficult to believe that the
general machinery of Article 29 of the Treaty of 1926 was intended to apply to any
dispute concerning such a claim.

***

The conclusion that I reach is that the Declaration is precisely what it is said to be in the
League of Nations Treaty Series, Vol.[p65] LXI, p. 16, namely, an "accompanying
Declaration", and that it is not among the "provisions of the present Treaty" within the
meaning of Article 29. It is a collateral and contemporaneous agreement between the
Parties, entered into because one of them, at any rate, was not prepared to sign the new
Treaty, and to contemplate the expiry of the old Treaty of 1886 on the 28th July, 1926,
without having previously made sure that claims based on the old Treaty would survive
these events and, what is more important, that the arbitral procedure provided in the old
Treaty for dealing with these claims should also survive with them. But even if the
provisions of the Declaration are among the provisions of the Treaty of 1926, in my
opinion the existence of the special machinery for dealing with disputes contained in the
Declaration excludes the application of the general provisions of Article 29 of that Treaty.

For these reasons, the Court has, in my opinion, no jurisdiction at all in this case.

(Signed) Arnold D. McNair. [p66]

DISSENTING OPINION OF JUDGE BASDEVANT

[Translation]
I greatly regret that I am able only to concur in part with the operative portion of the
Judgment, and as I also disagree with the way in which the Court arrives at its decision, I
think that I should indicate my main reasons for my view and the conclusions which I
draw from those reasons.

***

The United Kingdom filed an objection to the jurisdiction in answer to the Application
submitted by the Hellenic Government on April 9th. 1951. This objection to the
jurisdiction was expressed in brief terms, but in terms having a very wide scope, by the
United Kingdom Agent at the hearing in Court on May. 17th, 1952. The course of the
arguments made it clear that this objection to the jurisdiction met a twofold claim by the
Hellenic Government. The latter Government asked the Court, in the first place, to deal
with the merits of a claim by that Government regarding the treatment of M. Ambatielos
by the British authorities and, secondly, to decide as to the obligation to refer this claim to
the arbitration provided for by the Protocol of November 10th, 1886.

It is in this order that the validity of the Preliminarv Objection raised by the United
Kingdom should be considered. If the Court should find that it has jurisdiction to deal
itself with the Ambatielos claim and if it accordingly retains this claim for its
consideration, the request for a declaration that the claim must be referred to the
arbitration provided for in the Protocol of 1886 becomes devoid of object and therefore
the challenge to the jurisdiction to which it gave rise need not be further considered.

***

In accordance with the principle laid down by the Court in other cases (I.C.J. Reports
1949, pp. 177-178, and 1950, p. 71), which is not disputed in the present case, the
jurisdiction of the Court depends upon the consent of the States parties to the dispute.
Therefore, since no special agreement has been concluded, we are here concerned with
Article 29 of the Treaty of July 16th, 1926, between Greece and the United Kingdom, the
only text relied upon as conferring jurisdiction upon the Permanent Court of International
Justice so far as these two States arc concerned; such a conferring of jurisdiction has now
been extended to the International Court of Justice by the operation of Article 37 of the
Statute of the Court. [p67]

Article 29 of the Treaty of 1926 confers upon the Court jurisdiction to decide any disputes
that may arise between the contracting parties "as to the proper interpretation or
application of any of the provisions of the present Treaty". The facts which the Hellenic
Government submits for the Court's decision as to their conformity, or otherwise, with the
United Kingdom's international obligations, occurred before the conclusion of the Treaty
of 1926. The complaints which the Hellenic Government seeks to base upon these facts
cannot be judged upon the basis of obligations flowing from the Treaty of 1926. These
complaints are therefore outside the sphere of applicability of Article 29 : this Article
provides no ground entitling the Court to deal with them.
The fact that the Treaty of 1926 is said to contain provisions more or less similar to those
of the Treaty of 1886 cannot make the provisions of the Treaty of 1926 applicable to facts
which occurred before the coming into force of this Treaty, and thus extend to such facts
the effect of Article 29, the only provision conferring jurisdiction on the Court.

The Declaration which follows the Treaty of 1926 shows the correctness of this
conclusion. That Declaration refers to differences as to the validity of claims based on the
Treaty of 1886. The Hellenic Government contends that the Ambatielos claim is one of
the claims referred to in the Declaration of 1926; there is no need to decide as to the
correctness of this contention, for it is sufficient to observe that the Declaration provides,
for the settlement of differences relating to such claims, the arbitral procedure created by
the Protocol of 1886; it does not substitute judicial proceedings before the Court for this
procedure. Furthermore, the Greek Legation in London stated in a note of August 6th,
1940: "The Arbitral Committee provided for by the final Protocol of the Greco-British
Commercial Treaty of 1886 is the only competent authority in the matter."

The Court therefore has no jurisdiction to deal with the merits of the Ambatielos claim as
formulated in paragraph 1 of the Conclusions presented on behalf of the Hellenic
Government at the hearing of May 17th.

***

Having no jurisdiction to deal with the Greek claim relating to the treatment of
Ambatielos, the Court is confronted by another aspect of the dispute. The Hellenic
Government asked that the Ambatielos case should be referred to the arbitral procedure
established by the Protocol of 1886; the United Kingdom Government refused. The
Hellenic Government then asked the Court to say that this arbitral procedure should be
applied in this case. This second dispute, which thus relates to the existence in this [p68]
case of an obligation to have recourse to the arbitral procedure of the Protocol of 1886,
has been described in different terms in the course of the proceedings, and the jurisdiction
of the Court to deal with it is disputed by the United Kingdom. The Court must therefore
decide whether it has jurisdiction to deal with this point.

In the Conclusions submitted in its Counter-Memorial, the United Kingdom has employed
an abstract form for the statement of its objection to the jurisdiction. The Court cannot
deal with a submission so formulated. It has before it a concrete claim that it should state
whether the United Kingdom is under an obligation to accept the submission to arbitration
of the Hellenic claim relating to the Ambatielos case. The Court has to determine whether
it is competent to adjudicate upon the existence of such an obligation in the present case.

The obligation which the Hellenic Government asks the Court to find in this case derives
from the Protocol of 1886, which provides for the submission to a Commission of
Arbitration, constituted by the two Governments, in each case, for this purpose, of
disputes arising between them respecting the interpretation or the execution of the Treaty
of r886, or the consequences of any violation thereof. The Hellenic Government requested
that its claim in the Ambatielos case should be submitted to arbitration; the United
Kingdom Government refused, and the arbitration clause of the Protocol of 1886 therefore
did not take effect.
There was thus an example of the gap existing in the machinery of an arbitration clause
which, as is frequently the case, can only become effective as the result of the joint action
of the two States in conflict: in this case such joint action was necessary for the
constitution of the Commission of Arbitration. Where one of the States adopts the view
that the case is not one calling for arbitration, the operation of the arbitration clause
becomes impossible. This gap, which exists also in respect of other treaty provisions, has
manifested itself in other cases besides the present one. Attempts have at times been made
to fill this gap. One such attempt was made in Article 53 of The Hague Convention I of
October 18th, 1907, a provision which has however been made inoperative, so far as they
were concerned, by a number of States, including Greece, by means of a reservation.

The Protocol of 1886 left the gap unfilled. It does not itself provide and remedy for this
defect. The Hellenic Government contends that a remedy is provided by Article 29 of the
Treaty of 1926, and the Declaration following this Treaty, on the ground that the Court, by
virtue of these texts, has jurisdiction to decide whether the Ambatielos claim should be
submitted to arbitration in application of the Protocol of 1886. According to this
argument, Article 29 and the Declaration of 1926 impliedly added to the undertaking to
arbitrate given in 1886 a further clause conferring [p69] jurisdiction on the Court to
adjudicate upon disputes arising with regard to the interpretation or the application of the
arbitration clause in the Protocol of 1886.

The Declaration of 1926 provides that any differences which may arise between the two
Governments as to the validity of claims on behalf of private persons based on the
provisions of the Treaty of 1886 "shall, at the request of either Government, be referred to
arbitration in accordance with the provisions of the Protocol of November 10th, 1886".
Article 29 of the Treaty of 1926 confers jurisdiction on the Court to deal with disputes as
to the interpretation or application "of any of the provisions of the present Treaty". It was
contended, on behalf of the Hellenic Government, that the Declaration of 1926 was an
integral part of the Treaty of the same date, that what was therein provided was to be
regarded as a provision of that Treaty, that, consequently, a dispute as to the interpretation
or application of the Declaration was within the jurisdictional clause contained in Article
29 and that thus a way was opened for the admission of the Court's jurisdiction to decide
as to the interpretation or application of the arbitration clause contained in the Protocol of
1886 and referred to in the Declaration of 1926.

Underlying this argument is the idea that the Declaration is an integral part of the Treaty
of 1926, that it is a provision of this Treaty. If this proposition be not accepted, the whole
argument founded upon it falls to the ground, for the Declaration makes no reference to
the Court and does not directly confer any jurisdiction upon it.

In order to determine whether the Declaration is or is not part of the Treaty, the Parties
presented lengthy arguments concerning the external features of the Declaration in
relation to the Treaty of 1926, the references that have been made to both of them,
andthe place attributed to them in the documents connected with them. For a proper
appreciation of the significance which ought to be attributed to any factor of this nature a
preliminary observation is called for.

The drafting and the signature of an international agreement are the acts by means of
which the will of the contracting States is expressed ; ratification is the act by which the
will so expressed is confirmed by the competent authority, for the purpose of giving it
binding force. All these acts are concerned with the substance itself of an international
agreement. But the recording of these acts in the instruments which are designed to give
them material existence involves the physical operations of writing, printing, transmission
by one party to the other, etc., operations which do not contribute to the formation of the
will of the contracting States; those who have the task of forming, expressing or
confirming this will, do not, as a rule, take part in these physical operations; these
operations commonly take a form deriving from [p70] tradition, which is followed
scrupulously, and therefore blindly, by the officials entrusted with this material task. It
would be wrong to attribute to the details of form thus superimposed upon the juridical act
of the conclusion of a treaty any determining influence, when it becomes necessary, in
case of doubt, to ascertain the true meaning of the agreement which has been reached, the
character which the parties intended to give to any given agreement concluded between
them.

The scope to be given to a particular expression employed, or to a particular form which

has been followed, should be considered in the light of these remarks when it is sought to
determine whether the Declaration of 1926 is to be regarded as constituting a provision of
the Treaty of the same date.

In this connection, it is of particular significance that it was the very persons who were
responsible for expressing the will of the States who chose to use, in Article 29, the
expression "provisions of the present Treaty", and not a more comprehensive expression.
It was they who chose to give their agreement concerning claims based on the Treaty of
1886 the form of a separate provision, and not of an article in the Treaty of the same date;
it was they who gave it the title of Declaration and not that of an additional article, who
saw fit to append their signatures to it, separately from the Treaty, and to make no
reference to it in the Treaty, in contra-distinction to what they did in the case of the
Schedule which precedes it. All this, for the reasons indicated above, is of greater
importance in determining the character of the Declaration than the fact that the
Declaration was printed after the Treaty and the Schedule, in one document with
consecutive pagination, physical details which, like others of the same kind, are governed
by the actions of officials who, unlike plenipotentiaries, were not responsible for
elaborating and stating the will of the contracting Parties.

Similarly, when they signed the instruments of ratification act by which they confirmed
the agreement reached by their respective Plenipotentiaries and by which they gave the
Declaration a definitive character of the will of the contracting Statesthe President of
the Greek Republic and the British Monarch were merely confirming what had already
been declared by their Plenipotentiaries. They did not direct their minds to details, often
superfluous or incorrect, which officials, unqualified to interpret, complete or correct the
intentions of their Sovereigns, borrowed from forms which they traditionally and blindly
followed.

An examination of the various factors relied upon on either sideif undertaken with care
to attribute importance only to those considerations which throw light on the intentions of
those who alone were qualified to declare the will of their respective Governments and not
to considerations which do not relate to [p71] the formation of this willshould lead to
the view that the Declaration is distinct from the Treaty, and not a clause or provision of
the Treaty itself; such an examination should also lead to the reading of Article 29 as it is
writtenthat is to say, as giving the Court jurisdiction in respect of disputes as to the
interpretation or application of the "provisions of the present Treaty"and not to the
substitution, for these perfectly clear words, by means of interpretation, of the words
"provisions upon which agreement was reached by the Parties to-day", or some such
words of lesser precision.

This independent character of the Declaration also clearly appears if, putting aside
particularities of form and details of presentation, one has regard to the substance of the
matter, with a view to considering whether the Declaration, in spite of its separate
presentation, does not constitute a sort of supplementary provision of the Treaty, which it
would have been proper to describe as an additional article: that was the method adopted
by Max Huber in his Report on the British claims against Spain, when he had to decide as
to the independent character of an agreement which he was called upon to interpret
(Reports of International Arbitral Awards, II, pp. 632-633).

The Declaration does not explain any clause of the Treaty. Nor does it explain its general
effect, which has been said to be the abrogation of the Treaty of 1886 by the Treaty of
1926. In fact, not only did the Treaty of 1926 contain no provision abrogating the Treaty
of 1886, but it did not effect any tacit abrogation of the Treaty of 1886. The Treaty of
1886 did not cease to be in force as the result of any express or implied abrogation by the
Treaty of 1926, but as a result of its denunciation by the Hellenic Government on March
3rd, 1919. The date upon which this denunciation was to take effect was the subject of a
number of postponements, and it was finally fixed as at the date of the coming into force
of the new Treaty. The coming into force of the Treaty of 1926 thus provided a date
adopted by both Parties on which the earlier denunciation would have legal effect; it is not
itself the juridical source of the extinguishment of the Treaty of 1886: this extinguishment
resulted from the denunciation of the Treaty.

Consequently the Declaration of 1926, considered from the point of view of its content, is
not an instrument which explains the Treaty of 1926, but an agreement relating to one of
the effects of the lapsing of the Treaty of 1886, this lapsing being itself the result of the
denunciation of this Treaty. From the point of view of its substance, even more clearly
than from the point of view of its form, the Declaration must be regarded as separate from
the Treaty. It cannot be regarded as, or even assimilated to, a provision of the Treaty. It
follows that the jurisdictional clause of Article 29 of the Treaty is not applicable to it.
[p72]

The Declaration of 1926 was designed to preserve, in respect of the claims therein referred
to, the earlier regime resulting, so far as the merits were concerned, from the Treat}- of
1886, and, so far as the procedure for the settlement of disputes was concerned, from the
Protocol of 1886, to which it specifically refers. The earlier regime was preserved as it
stood, with its advantages and disadvantages. Its disadvantages (the possibility of
frustration of the arbitration procedure) only became apparent later. There is nothing to
suggest that in 1926 there was any thought of remedying this defect with regard to claims
arising falling within the Treaty of 1886. If this had been thought of, the system adopted
would not have been to entrust to the Court the settlement of a dispute which might arise
as to whether, in any given case, there was an obligation to resort to arbitration, while at
the same time preserving the arbitral procedure before a Commission of Arbitration
appointed ad hoc to deal with the principal dispute, that relating to the validity of the
claim ; rather would there have been a complete substitution of the Court's jurisdiction for
the arbitral procedure provided for in 1886. This was not the course adopted. It is
impossible to attribute to the framers of the Declaration an intention which they never
expressed, namely to create a system of such complexity, and one which, at the present
time, neither of the Parties would wish to be applied.

It is therefore necessary to recognize that the Declaration leaves the claims which a part}'
seeks to base upon the Treaty of 1886 legally in the same position as they occupied
formerly. It leaves unaffected the gap in the operation of the arbitration clause of the
Protocol of 1886. If we have regard to the stage of development of international law at
that period, and to the fact that in 1926 neither of the two States had subscribed to the
Declaration relating to the compulsory jurisdiction of the Court, there is nothing
surprising about this. The Court therefore has no jurisdiction to deal with a dispute
concerning the existence, in a given case, of an obligation to resort to arbitration pursuant
to the Protocol of 1886. In other words, Article 29 of the Treaty of 1926 does not appear
to me to be applicable to such a dispute.

Furthermore, if it be accepted that the Declaration is a provision of the Treaty of 1926,

that would mean that the Court has jurisdiction to deal with a dispute concerning the
interpretation and application of the Declaration: that would authorize the Court, in the
present case, to adjudicate upon the British contention that it is entitled to refuse to the
Ambatielos claim the benefits of the Declaration, on the ground that it was not presented
prior to the Declaration.

But a decision on this point is not sufficient to resolve the question whether there exists
any obligation to refer the Ambatielos claim to arbitration. Such an obligation, if it exists,
arises from the Treaty and the Protocol of 1886: the dispute as to the [p73] existence, in
this case, of such an obligation is a dispute concerning the interpretation and application
of that Treaty and that Protocol. But Article 29 did not confer on the Court jurisdiction to
deal with a dispute which, in the way now contemplated, relates exclusively to the
interpretation and the application of the Treaty and Protocol of 1886: it has never been
contendedand it is manifestly impossible to saythat the provisions of that Treaty and
Protocol are provisions of the Treaty of 1926.

In conclusion, the Court ought in this case simply to observe that the Declaration of 1926
left the Parties with the regime created by the Treaty and the Protocol of 1886, a regime
which remained completely unchanged by the Declaration, and that it is therefore for the
Parties to take such action as they deem proper in pursuance of the provisions of the
Treaty of 1886, and that the Court has not been invested by the Parties with any power to
substitute itself for them in determining the action which ought to be taken in pursuance
of those provisions in the present case.

***

The foregoing considerations lead me to the conclusion that the Court has not been given
jurisdiction either to deal with the merits of the claim presented by the Hellenic
Government in the Ambatielos case, or to consider and decide whether there is an
obligation binding the States at issue to submit this claim to the arbitration provided for by
the Protocol of 1886.

(Signed) Basdevant. [p74]

DISSENTING OPINION OF JUDGE ZORTCIC

[Translation]

The Court has found that it has jurisdiction to decide whether the United Kingdom is
under an obligation to submit to arbitration, in accordance with the Declaration of 1926,
the difference as to the validity of the Ambatielos claim, in so far as this claim is based on
the Treaty of 1886. I regret that I am unable to concur in this decision for the following
reasons:

It is common ground between the Parties that Article 29 of the Treaty of 1926 is the only
contractual clause between them which, in conjunction with Article 37 of the Court's
Statute, confers compulsory jurisdiction on the Court. Article 29, paragraph 1, is worded
as follows:

"The two Contracting Parties agree in principle that any dispute that may arise between
them as to the proper interpretation or application of any of the provisions of the present
Treaty shall, at the request of either Party, be referred to arbitration."

Paragraph 2 of the same Article lays down that the court of arbitration shall be the
Permanent Court of International Justice, and therefore, in the present circumstances, the
International Court of Justice.

On the other hand, the Declaration of July 16th, 1926, lays down that:

the Treaty of Commerce and Navigation between Great Britain and Greece of to-day's
date does not prejudice claims on behalf of private persons based on the provisions of the
Anglo-Greek Commercial Treaty of 1886, and that any differences which may arise
between our two Governments as to the validity of such claims shall, at the request of
either Government, be referred to arbitration in accordance with the provisions of the
Protocol of November 10th, 1886, annexed to the said Treaty."

The Protocol of November 10th, 1886, provides for the settlement of controversies by
commissions of arbitration, the members of which have to be selected by the two
Governments, by common consent, etc.

It was not disputed by the Parties that the Ambatielos claim was put forward by the
Hellenic Government on the basis of the Declaration. They disagree upon the question
whether the Decla-ration can, or cannot, be regarded as a provision of the Treaty [p75] of
1926, within the meaning of Article 29 of that Treaty, conferring jurisdiction on the Court.

The question whether a separate provision adopted by the parties on the occasion of the
conclusion of a treaty should or should not be considered as an integral part of the treaty
in question, dependsin the absence of any rule on that point entirely on the
circumstances of each individual case. These circumstances may include certain formal
elements, but what is of chief importance is the content of the provision in question.

In the case now before the Court, it has been argued that the plenipotentiaries inserted the
Treaty, the Customs Schedule, which is indisputably a part of the Treaty, and the
Declaration, in a docu-ment of 44 pages, the Declaration appearing on page 44.
Furthermore, great importance has been attached to the fact that the ratification of the
Declaration was effected by the two States, at the same time as the ratification of the
Treaty, and that, above all, the United Kingdom document of ratification does not mention
the Declaration separately, but conjointly with the Treaty, and under the designation
"Treaty".

In my opinion all these considerations are of secondary importance, and it can be argued
in the opposite sense that the Declaration was drawn up and signed as a separate
instrument from the Treaty, having a title of its own, and that neither the Treaty nor the
Declaration mentions the latter as being part of the Treaty, although the Parties were
careful, in Article 8 of the Treaty, to make express mention of the Customs Schedule
which precedes the Declaration. In regard to ratifications, the Hellenic ratification
mentions the Treaty and the Declaration separately, while the United Kingdom's
instrument of ratification, worded in the terms of a formula, doubtless of long standing,
certainly refers to the Treaty: "which is word for word as follows", but nevertheless
includes the Declaration under its own title. It follows, in my opinion, that the two
Governments undoubtedly considered the Treaty and the Declaration as forming part of a
simultaneous agreement, and as having to be ratified together, but that in no way proves
that the Declaration was "a provision" of the Treaty of 1926 within the meaning, and for
the purposes, of Article 29 of that Treaty; still less does it follow that the Parties intended
to submit disputes in regard to the application of that Declaration to the arbitration
provided for in Article 29. Again, the Declaration was drawn up subsequently to, and
independently of, the Treaty, a point on which I shall have more to say later on.

In these circumstances, the point of real importance is what are the terms of the text that
has to be construed, and what were the intentions of the Parties and the purposes which
the text was to serve, for: the Court's aim is always to ascertain whether an intention
on the part of the parties exists to confer jurisdiction upon it" (P.C.I.J., Series A, No. 8, p.
32). [p76]

In order to understand the aim of the Declaration and the intention of the Parties, it is
necessary to recall the situation which gave rise to this Declaration. Greece and the United
Kingdom had, in 1886, concluded a treaty of commerce and navigation, to which was
attached a protocol providing that any controversies which might arise respecting the
interpretation or the execution of the Treaty should be submitted to the decision of
commissions bf arbitration. The Treaty of 1886 was denounced by Greece in 1919, and
was afterwards renewed, for successive periods, the last time by an exchange of notes,
until August 31st, 1926, it being, however, understood that it would cease to be in force
on the date of the coming into force of the new Treaty, which was in course of pre-
paration. Before the signature of the new Treaty the United Kingdom Government had
realized that, owing to the termination of the Treaty of 1886, certain claims of its
nationals, based upon that Treaty, could no longer be referred to the arbitration provided
in the Protocol of 1886, and in order to safeguard these rightsthat is, rights founded on
the Treaty of 1886the United Kingdom Government approached the Hellenic
Government (see letter of June 22nd, 1926, from the Foreign Office to the Greek Minister,
annexed to the Greek Observations) seeking for assurances on this point before the
signature of the new Treaty, which had, it is clear, been already drafted. The two
Governments then agreed on the Declaration, which was signed on the same day as the
Treaty of July 16th, 1926. It is the interpretation and application of this Declaration which
have given rise to the present dispute.

In these circumstances, I do not consider that any support for the theory that the
Declaration was an interpretation of the Treaty of 1926, or a reservation to that Treaty, is
to be found, either in the terms of the Treaty, or in the purposes which the Declaration was
to serve, or in the terms of the Declaration. A reservation is a provision agreed upon
between the parties to a treaty with a view to restricting the application of one or more of
its clauses or to clarifying their meaning; it is therefore, by its very nature, closely linked
to the content of the Treaty. But in the present case, the Treaty makes no mention of the
Declaration; and the Declaration, for its part, does not explain anything; it neither adds
anything to, nor subtracts anything from, the provisions of the Treaty of 1926; all that it
says is that "the Treaty of to-day's date does not prejudice claims .... based on the ....
Treaty of 1886". Leaving on one side the indisputable fact that the Treaty of 1926 could
not, in the absence of any special provision to that effect, in any way prejudice rights
acquired under the regime of an earlier treaty, and that, in consequence, the words "the
Treaty .... of to-day's date" could not have reference to the content of the Treaty of 1926,
the only true interpretation of these terms seems to be that it was intended simply to fix
the date of the expiry of the Treaty of 1886; this event was in no way a consequence of
any [p77] clause in the Treaty of 1926, or of that Treaty as a whole, but was a
consequence of the denunciation by Greece of the Treaty of 1886 whichas has been
mentionedwas to be brought to an end, by means of a special agreement contained in an
exchange of notes, on the date of the coming into force of the new Treaty.

If that is the case, and I feel no doubt upon the subject, it seems impossible to hold that the
Declaration can be regarded as an interpretative clause or as a reservation to the Treaty of
1926, which does not contain any clause repealing the Treaty of 1886. Article 32 of the
Treaty of 1926 does not even mention the Treaty of 1886; it merely provides that the
Treaty of 1926 will come into force immediately after the ratification, that is, at an
uncertain date. As it had been agreed upon, in the exchange of notes mentioned above,
that this uncertain date should be the date of expiry of the Treaty of 1886, the only relation
between the coming into force of the treaty of 1926 and the termination of the Treaty of
1886 was a coincidence of dates resulting from a special agreement. Far from being a
reservation to the Treaty of 1926, the Declaration is, in my opinion, a reservation to the
expiry of the Treaty of 1886, or, in other words, it is a partial prolongation of the Treaty of
1886 in so far as it maintains in existence claims based on the Treaty of 1886 and the
means of arbitration provided for their settlement. The Declaration is, therefore, a special
agreement governing a situation which is entirely extraneous to the Treaty of 1926, and it
is not a provision of that Treaty within the meaning and for the purposes of Article 29 of
the Treaty.

That this is so is shown, in the first place, by the fact that, when drawing up the Treaty of
1926 and its Article 29, the Parties could not have had in mind any other provisions than
those contained in the Treaty itself ("provisions of the present Treaty") and by the fact that
the Declaration, prepared subsequently to the drafting of the Treaty and relating to a
subject foreign to that Treaty, could not even have been contemplated at the time when the
Treaty was drawn up. It follows that the Parties could not have had in mind the
application of Article 29 to the subsequent Declaration.

Secondly, the Declaration, which related solely to claims based on the Treaty of 18X6,
provided that "such claims" should be dealt with by means of the arbitration prescribed in
the Protocol of 1886, that is to say, by a special method of arbitration differing from that
of Article 29. The Parties could quite well have inserted in the Declaration a reference to
Article 20 of the Treaty of 1926, as was done in the entirely analogous Declaration
annexed to the Greco-Italian Treaty of November 24th of the same year. They did not do
so, and it must therefore be concluded that they deliberately maintained two methods of
arbitration, that is to say, arbitration by the Court under Article 29 for disputes arising
under the Treaty of 1926, and the arbitration provided for in the Protocol of 1X86 for
disputes arising in connection with claims based on the 'treaty of 1886.[p78]

That this was so and that the Hellenic Government itself considered that the arbitration
system of 1886 was the only one applicable to the disputes mentioned in the Declaration,
is clearly shown by the attitude which it observed throughout so many years subsequent to
the ratification and which it expressed in particular in its note of August 6th, 1940,
addressed to the United Kingdom Government, wherein it stated:
"From the enclosed memorandum it clearly appears, in the opinion of the Royal Hellenic
Government, that the arbitral committee provided for by the final protocol of the Greco-
British Commercial Treaty of 1886 is the only competent authority in the matter, and it is
their sincere hope that His Britannic Majesty's Government will see their way to inform
them of the appointment of their arbitrator or arbitrators for a final settlement of this
question." (My italics.)

II

To the foregoing considerations there should, in my opinion, be added another which is

even more important, namely, that the Parties could not have intended to introduce in
what has been called one and the same treaty, a dual jurisdiction, that of Article 29 and
that of the Declaration, for it is manifest that this must give rise to all kinds of
complications.

If the Declaration were to be regarded as a provision of the Treaty of 1926, within the
meaning of Article 29, it would follow, according to the terms of the latter Article, that
"any dispute that may arise between the Parties as to the proper interpretation or
application" of the Declaration must be submitted to this Court as the Court of arbitration
referred to in Article 29.

It would be impossible to draw a line of demarcation between the jurisdiction of the Court
and that of the commissions of arbitration provided for in the Declaration, so that the
Court would have jurisdiction only to decide whether the Parties were bound to have
recourse to the arbitration system of 1886, while the commissions of arbitration would be
competent to decide disputes concerning the validity of claims based on the Treaty of
1886. No foundation for such a division of jurisdiction can be found either in Article 29 or
in the Declaration, for they both confer jurisdiction without any qualification. Either the
Court has jurisdiction to interpret and apply the Declaration, or it has not. If it has
jurisdiction, it cannot confine itself to exercising only a part of its jurisdiction and to stop
at that point. On the contrary, the Court must decide, at the very least, whether the
conditions of the Declaration have been satisfieda point which pertains to the merits
that is to say, in particular, whether the claim was formulated and submitted in conformity
with the Declaration, whether the Hellenic Government's claim is not barred [p79] as the
result of the delay in its submission (a question which has, in fact, already been decided in
the Judgment), whether the claim is based on the Treaty of 1886, and so on. Only if the
Court were convinced that the conditions of the Declaration had really been fulfilled
would it be possible for it to refer the case to the arbitral commission of arbitration
provided for, as a special arbitration, for the sole purpose of determining the validity of
the claim.

But, according to the Declaration, it is not solely on the validity of the claims that the
commissions of arbitration are to decide. On the contrary, any examination of the
conditions of the applicability of the Declaration falls within the exclusive jurisdiction of
the commissions of arbitration provided for in the Protocol of 1886. It is these
commissions, and these alone, that are to decide "on the validity of such claims"; they
must, therefore, before undertaking an examination of the validity, satisfy themselves that
these claims are really "such" as are referred to in the Declaration. It follows that any
action by the Court in relation to the Declaration and based on Article 29 of the Treaty of
1926 would inevitably lead to overlapping and to a confusion between the Court's
jurisdiction and that of the commissions of arbitration referred to in the Declaration, an
extraordinary confusion which, I am convinced, the Parties certainly never intended to
create.

I have, therefore, reached the conclusion that, even if the Treaty and the Declaration are
regarded as being part of one and the same agreement between Greece and the United
Kingdom, the Decla-ration cannot be regarded as a provision of the Treaty of 1926, within
the meaning and for the purposes of Article 29 of that Treaty, and that, in consequence,
the Court is without jurisdiction in the present case.

(Signed) Zoricic. [p80]

DISSENTING OPINION OF JUDGE KLAESTAD

The Hellenic Government, which has not made any declaration under Article 36 (2) of the
Court's Statute, contends that the jurisdiction of the Court can be derived from Article 29
of the Treaty of Commerce and Navigation of 1926 between Great Britain and Greece.
The text of this Article is as follows:

"The two Contracting Parties agree in principle that any dispute that may arise between
them as to the proper interpretation or application of any of the provisions of the present
Treaty shall, at the request of either Party, be referred to arbitration.

The Court of arbitration to which disputes shall be referred shall be the Permanent Court
of International Justice at The Hague, unless in any particular case the two Contracting
Parties agree otherwise."

The facts invoked by the Hellenic Government relate to the period from 1919 to 1923.
Such facts can hardly involve an interpretation or application of provisions of a treaty
which did not exist at the time when the acts complained of were done. One cannot
commit a breach of non-existing treaty provisions, and it cannot make any difference if
such provisions in a future treaty might become more or less similar to some of the
provisions of the Anglo-Greek Commercial Treaty of 1886 actually existing at the time
when the alleged breaches of those provisions were committed. The two Treaties were
independent legal instruments, governed by different arbitration clauses.

The Hellenic Government further contends that the jurisdiction of the Court can be
derived from the Declaration attached to the Treaty of 1926. The text of this Declaration is
as follows:

"It is well understood that the Treaty of Commerce and Navigation between Great Britain
and Greece of to-day's date does not prejudice claims on behalf of private persons based
on the provisions of the Anglo-Greek Commercial Treaty of 1886, and that any
differences which may arise between our two Governments as to the validity of such
claims shall, at the request of either Government, be referred to arbitration in accordance
with the provisions of the Protocol of November 10th, 1886, annexed to the said Treaty."

As the Declaration itself does not refer any dispute to the Permanent Court of
International Justice, the contention of the Hellenic Government is that the Declaration is
a part of the 1926 Treaty and as such is covered by the arbitration clause in Article 29.
The [p81] appreciation of this contention depends on considerations of form as well as of
substance.

As to matters of form, it should be noted that the Treaty and the Declaration were treated
as two separate instruments, in so far as they were drafted and issued as separate
documents and signed separately. On the other hand, they were signed at the same time by
the same signatories, and the Declaration was ratified by both Governments, together with
the Treaty. That the two instruments were ratified together and covered by the ancient
routine formula for ratifications does not necessarily mean that the one is to be regarded
as a part of the other. As this point is developed in the Dissenting Opinion of President Sir
Arnold McNair, I shall not deal further with it.

As to matters of substance, it should be taken into consideration that nothing in the Treaty
or Declaration indicates that the Declaration shall be regarded as a part of the Treaty. The
Declaration does not present itself as an interpretation of any of the Treaty provisions, nor
does it appear as an application of any of those provisions. It does not in any way modify
the Treaty. It adds nothing to its provisions, nor does it subtract anything from them.

It has been argued that the Declaration affects the interpretation of certain articles of the
1926 Treaty in the sense that it prevents the coming into force of the Treaty from
extinguishing claims which have accrued out of facts governed by the 1886 Treaty. The
real and only scope of the Declaration is, however, in my opinion, that it provides what is
to be done with certain claims accrued under the 1886 Treaty when that Treaty disappears.
It keeps such claims alive, together with the arbitral procedure prescribed by the Protocol
attached to the 1886 Treaty. It relates to the 1886 Treaty, and to that Treaty only.

Having regard to these various considerations, I am inclined to hold that the Declaration
cannot be regarded as a part of the 1926 Treaty, and that Article 29 therefore does not
apply to it. I shall limit myself to these brief remarks with regard to this aspect of the
matter, since the following considerations are, in my opinion, more conclusive. I shall
now examine this preliminary dispute on the hypothesis that, contrary to my view, the
Declaration does form a part of the Treaty.

Article 29 contains a general arbitration clause by which the Parties "agree in principle
that any dispute that may arise between them as to the proper interpretation or application
of any of the provisions of the present Treaty shall, at the request of either Party, be
referred to arbitration"arbitration by the Permanent Court of International Justice (or
now by the International Court of Justice by the operation of Article 37 of the Court's
Statute). [p82]

The Declaration contains a special arbitration clause which refers disputes as to certain
particular claims based on the 1886 Treaty to arbitration in accordance with the provisions
of the 1886 Protocol. This special arbitration clause must, in accordance with general
principles of interpretation, prevail over the general arbitration clause.

In fact, the Parties agreed "in principle" that disputes as to the interpretation or application
of the provisions of the 1926 Treaty should be referred to the Court. But when they
considered the particular claims based on the 1886 Treaty, they expressly provided that
disputes as to such claims should be referred to the Arbitral Commission. They
maintained for such disputes the arbitral procedure of the 1886 Protocol. The Parties
agreed, in other words, that these two different methods of arbitration should exist side by
side. Even if the Declaration is to be regarded as a part of the Treaty of 1926, the method
of arbitration prescribed by Article 29 could not therefore be applied in the case of
disputes concerning claims based on the Treaty of 1886. For such disputes the other
method of arbitration was expressly maintained.

I shall now take a step further and assume that, contrary to my view, Article 29 does apply
to the Declaration, and that the Court has jurisdiction to interpret and apply this
Declaration and to decide whether the United Kingdom Government is under an
obligation to submit the present dispute to the Arbitral Commission.

The Declaration contains various conditions for the submission of a dispute to that
Commission. The claim must be "based on the provisions of the Anglo-Greek
Commercial Treaty of 1886". It must be made "on behalf of private persons". The
difference must have arisen "between our two Governments". It must relate "to the
validity of such claims". In this connection should also be men-tioned the contention of
the United Kingdom Government that the claim must have been formulated before the
Declaration was signed. This alleged condition invoked by the United Kingdom
Government relates, in my opinion, as do all the other above-mentioned conditions, to the
question of the interpretation or application of the Declaration and not to the question,
now under consideration, as to whether the Court has jurisdiction to interpret and apply
the Declaration. Further conditions are contained in the 1886 Protocol to which the
Declaration refers.

Before the Court could decide whether the United Kingdom Government is under an
obligation to submit the dispute to the Arbitral Commission, it would have to determine
the conditions prescribed for such a submission and to ascertain whether these conditions
are fulfilled. [p83]

On the other hand, the merits of the dispute could not in any case, by virtue of the
Declaration, be referred to the Court, since it is expressly provided in that Declaration that
differences as to the validity of claims based on the 1886 Treaty shall, at the request of
either Government, be referred to the Arbitral Commission.
On the hypothesis that the Court has jurisdiction to interpret and apply the Declaration,
there would thus be established a duality of jurisdiction with regard to disputes relating to
such claims. For one and the same dispute there would be two different processes of
arbitration. Questions relating to the interpretation or application of the Declaration and to
a part of the 1886 Protocol, including the question of the competence of the Arbitral
Commission, would have to be referred to the Court, while other questions arising out of
the same dispute, including the appreciation of the merits, would have to be submitted to
the Arbitral Commission. While, for instance, a difference as to the validity of a claim
would have to be referred to that Commission, as expressly prescribed by the Declaration,
the question whether the difference, in fact, does relate to the validity of the claim would
have to be referred to the Court, since this is a condition for submission to arbitration and
involves an interpretation or application of the Declaration.

Such a dual arbitral procedure for one and the same dispute would be so complicated and
artificial, so time-wasting and unusual, that it can hardly be believed to have been
contemplated and accepted by the Parties to the Treaty and Declaration of 1926. In fact,
they prescribed nothing of the kind, as far as I can see. They simply referred disputes
concerning claims based on the 1886 Treaty to arbitration in accordance with the 1886
Protocol. They did not refer any question relating to such disputes to the Court. They did
not prescribe that these disputes, or parts thereof, shall be settled by the method of
arbitration provided for by Article 29 of the 1926 Treaty, though they could easily have
done so if it had been their intention.

It should, moreover, be taken into consideration that, according to a recognized principle

of international law, an international tribunal has the power to determine its own
competence. It would accordingly be for the Arbitral Commission itself to decide whether
it is competent to deal with a dispute referred to it. The Commission could be excluded
from exercising such a competence only by an express and clear provision to that effect ;
but no such provision limiting the competence of the Commission is contained in Article
29 of the 1926 Treaty or in the Declaration. It is difficult to believe that the Parties, by the
provisions of Article 29, intended to confer also on the Permanent Court of International
Justice the competence to decide whether a dispute is within the competence of the [p84]

Arbitral Commission, thereby exposing themselves to the risk that the two tribunals might
arrive at opposite results.

For these reasons, I have arrived at the conclusion that the Court lacks jurisdiction in the
matter. This conforms with the view expressed by the Greek Government in a note to the
Foreign Secretary of the United Kingdom, dated 6th August 1940, in which it declared:
"From the enclosed Memorandum it clearly appears, in the opinion of the Royal Hellenic
Government, that the Arbitral Committee provided for by the final Protocol of the Greco-
British Commercial Treaty of 1886 is the only competent authority in the matter...." This
interpretation by the Greek Government itself as to the exclusive competence of the
Arbitral Commission confirms the conclusion that the Court has no jurisdiction in the
present case.
(Signed) Helge Klaestad. [p85]

DISSENTING OPINION OF JUDGE HSU MO

The principal issue in the present case is not simply whether or not the Declaration of
1926 is a part of the Treaty of 1926. It is the question whether the Declaration constitutes
a provision or provisions within the meaning of Article 29 of the Treaty so that that
Article must apply to these provisions just as it must apply to all the provisions contained
in the text of the Treaty itself.

The facts with which the Court is concerned at this stage are that the Hellenic Government
has taken up the claim of Ambatielos against the United Kingdom Government; that the
Hellenic Government, invoking the Declaration of 1926, contends that the claim should be
referred to arbitration in accordance with the provisions of the Protocol of November
19th, 1886; and that the United Kingdom Government has declined to go to arbitration on
the claim. There is thus a dispute between the two Governments relative to the
interpretation and application of the Declaration. The Court is called upon to determine
whether or not, acting by virtue of Article 37 of the Statute, it has jurisdiction to examine
and settle this dispute.

In order to determine this question, it is necessary to examine whether the Declaration

should be regarded as being included in the expression "any of the provisions of the
present Treaty" contained in Article 29, paragraph 1, of the Treaty of 1926. The fact that
the Declaration appears at the end of the Treaty, was signed on the same day as the Treaty,
and may be considered to have been ratified, together with the text of the Treaty, by the
United Kingdom Government as well as the Hellenic Government, merely tends to show
that the Parties attached equal importance in law and gave the same degree of solemnity to
the two documents, but does not necessarily prove that the Declaration is an integral part
of the Treaty, much less that Article 29 of the Treaty applies to the Declaration in the
same way that it applies to the provisions of the Treaty. The question at issue must be
resolved by considering the substance of the Declaration and its relation to the Treaty
itself.

Prior to the conclusion of the Treaty of 1926, the Hellenic and the United Kingdom
Governments had reached a modus vivendi, according to which the regime under the
Treaty of 1886 and the Protocol annexed thereto would terminate upon the coming into
force of the Treaty then under negotiation. The Declaration of 1926 produces no more
effect than keeping alive the provisions of the Treaty of 1886 for the purpose of dealing
with claims based thereon, as well as the arbitral procedure of settling any possible [p86]
disputes concerning the validity of such claims. The Declaration did not in any way
prevent the Treaty of 1926 from coming into full force upon the exchange of ratifications.
It does not alter the situation which results from the operation of that Treaty. It does not
add anything to nor detract from any of the provisions of the Treaty. It cannot be
considered as forming any reservation to Article 32 or any other article of the Treaty
which, as far as its own terms arc concerned, can be properly interpreted and applied
without reference to the Declaration at all. When any claims envisaged in the Declaration
have to be dealt with, it is not any of the provisions of the Treaty of 1926 which will be
relied upon by one or the other Party, but it is the Declaration and the relevant provisions
of the 1886 Treaty which will come into play. Any relationship which the Declaration
bears to the Treaty is purely negative in character. The Declaration says, in effect:
"Notwithstanding the conclusion of the new Treaty, the provisions of the old Treaty may
still be relied upon for certain purposes." But for the Declaration, no claims based on the
provisions of the 1886 Treaty could be entertained. This is not because the}' would have
been wiped out by the 1926 Treaty, but because the 1886 Treaty with the Protocol,
according to the modus vivendi, would have completely lost its force. The Declaration is
thus not an interpretative clause of the Treaty of 1926; it rather constitutes a separate
agreement whereby the Treaty of 1886, for certain purposes, has been given a new lease
of life. In short, the Declaration has its own field of operation; it stands on an equal
footing with the Treaty of 1926; it cannot be absorbed by Article 29 of that Treaty for the
"interpretation or application of any of the provisions of the present Treaty".

The independent nature of the Declaration is confirmed by an examination of the

distinctive methods of arbitration provided for respectively in the Declaration and in
Article 29 of the Treaty. In one case, it is arbitration by ad hoc commissions; in the other,
it is, in principle, arbitration by a permanently established international Court. From the
very terms of the Declaration and Article 29, it may be justifiably inferred that the
intention of the Parties was to make the two distinctive methods of arbitration exist side
by side so that one might be brought into operation without resort to the other. The Parties
wanted to have all disputes relative to the claims based on the old Treaty settled by the
original procedure of arbitration. They wanted to have all disputes relative to any
provisions of the new Treaty settled by the new procedure of arbitration. They envisaged
two distinctive sets of disputes and two distinctive methods of arbitration. There is no
connecting link between the new and the old method of arbitration.

It is difficult to believe that the Parties should have divided the process of settling disputes
concerning claims based on the Treaty [p87] of 1886 into two successive phases. In the
first phase any dispute concerning the obligation to submit to a Commission of Arbitration
any claim based on the provisions of the 1886 Treaty, should be referred, unless otherwise
agreed upon, to the Permanent Court of International Justice for settlement. Thus, the
question of the existence or non-existence of a claim, of its being presented or not
presented on behalf of private persons, or of its being based or not based on the provisions
of the Treaty of 1886in each case, a question concerning the interpretation or
application of the Declarationwould logically belong to the first phase and would
therefore fall within the jurisdiction of the Permanent Court of International Justice. After
the dispute as to the arbitrable character of the claim had been settled in favour of the
government making the claim, there would begin the second phase of settlement, which
would consist in referring the dispute as to the validity of the claim itself to a different
organ, a commission of arbitration to be set up in accordance with the Protocol of 1886.
There is absolutely no evidence to show that the contracting Parties desired to have what
is in reality one and the same dispute settled by these two different methods and through
 these two different stages. Such dual procedure is so uncommon in international practice
that it could not possibly be inferred from a reasonable interpretation of Article 29 of the
Treaty of 1926 in conjunction with the Declaration.

The procedure of arbitration prescribed in the Protocol annexed to the Treaty of 1886 is,
after all, an ordinary system of settling international disputes. It was apparently in reliance
upon mutual good faith that the Hellenic and the United Kingdom Governments kept alive
that system in the Declaration of 1926, just as so many other States, reposing the same
confidence in one another, have before and since accepted the same or similar system of
arbitration in so many treaties or conventions. If, in 1926, the two contracting Parties had
entertained any doubt as to the efficacy of arbitration by ad hoc commissions and had
desired to ensure compulsory arbitration by a permanently established international Court
in- the case of disputes concerning claims based on the Treaty of 1886, they could have
stipulated in the Treaty or in the Declaration, with the greatest ease and simplicity, that the
method of arbitration provided for in Article 29 shall also apply to such disputes. The fact
that they did not choose to do so shows clearly that it simply never occurred to them that
the arbitration clause contained in the Declaration should be itself subject to a different
method of arbitration.

Even assuming that the Declaration does form a part of the Treaty of 1926, the clause of
arbitration in the Declaration must be [p88] regarded as a specific provision, since it deals
with a specific kind of dispute, whereas the arbitration clause in Article 29 must be
regarded as a general provision, since it covers disputes relating to all the provisions of the
Treaty. It is a well-recognized principle of interpretation that a specific provision prevails
over a general provision. Therefore, even if the Declaration had actually been written into
the Treaty as an additional article, it must, nevertheless, in the absence of any indication
of intention to the contrary, form an exception to the applicability of Article 29.

It is thus clear that this Court, as the substitute for the Permanent Court of International
Justice, cannot exercise jurisdiction conferred upon it by Article 29 of the Treaty of 1926,
in a dispute relative to the interpretation or application of the Declaration of 1926.

The Panevezys-Saldutiskis Railway Case

Estonia v. Lithuania

Judgment

BEFORE: President: Guerrero

 Vice-
Sir Cecil Hurst
President:
Count Rostworowski, Fromageot, Altamira, Negulesco, Jhr.
Judges:
Van Eysinga, Nagaoka, Cheng, Hudson, De Visscher, Erich,
Judge(s)
Strandman, Rmer'is
ad hoc:

Represented
Estonia: Baron Boris Nolde, as Agent
By:
Lithuania:M. Andre Mandelstam, as Agent

http://www.worldcourts.com/pcij/eng/decisions/1938.02.28_panevezys-
Perm. Link:
saldutiskis.htm

Citation: Panevezys-Saldutiskis Railway (Est. v. Lith.), 1938 P.C.I.J. (ser. A/B)

No. 76 (Feb. 28)
Publication: Publications of the Permanent Court of International JusticeSeries A./B.
No. 76; Collection of Judgments, Orders and Advisory Opinions A.W.
Sijthoffs Publishing Company, Leyden, 1939.

[p5] The Court,

composed as above,
delivers the following judgment:

[1] By an Application filed with the Registry of the Court on November 2nd, 1937,
under Article 40 of the Statute, the Estonian Government instituted proceedings
before the Court against the Lithuanian Government owing to the refusal of the
latter Government to recognize the proprietary and concessionary rights claimed by
a Company known as the Esimene Juurdeveo Raudteede Selts Venemaal in respect
of the Panevezys-Saldutiskis railway, which had been seized and operated by the
Lithuanian Government. The Applicant, in submitting the case, relies upon the
declarations of Estonia and Lithuania accepting the compulsory jurisdiction of the
Court as provided in Article 36, paragraph 2, of the Statute of the Court.

[2] After a succinct statement of the facts and arguments adduced in support of the
claim, the Application prays the Court to adjudge and declare:
"1. That the Lithuanian Government has wrongfully refused to recognize the rights
of the Esimene Juurdeveo Raudteede Selts Venemaal Company, as owners and
concessionaires of the Panevezys-Saldutiskis railway line, and to compensate the
Company for the illegal seizure and operation of this line.
2. That the Lithuanian Government is under an obligation to make good the
prejudice which has been thus sustained by the Esimene Juurdeveo Raudteede Selts
Venemaal Company, and which is estimated, the proposals for a compromise made
by that Company having been withdrawn, at the sum of 14, 000, 000 Gold Lits, with
interest at 6% per annum as from January 1st, 1937. "

[3] On November 2nd, 1937, notice of the Application of the Estonian Government
was given to the Lithuanian Government, and on November 5th the communications
provided for in Article 40 of the Statute and Article 34 of the Rules of Court were
duly despatched. [p6]

[4] As the Court does not include upon the Bench any judge of the nationality of
either of the Parties to the case, the Estonian Government and the Lithuanian
Government availed themselves of their right under Article 31 of the Statute each to
nominate a judge, and nominated respectively M. Otto Strandman and M. Mykolas
Rmer'is. The two Governments appointed as Agents: the Estonian Government,
Baron Boris Nolde, and the Lithuanian Government, M. Andr Mandelstam.

[5] By an Order made on November 15th, 1937, the President of the Court fixed the
time-limits for the filing of the Memorial, Counter-Memorial, Reply and Rejoinder.

[6] In its Memorial, duly filed within the prescribed time-limit, the Estonian
Government prays the Court to adjudge and declare:

"1. That the Lithuanian Government has wrongfully refused to recognize the rights
of the Esimene Juurdeveo Raudteede Selts Venemaal Company, as owners and
concessionaires of the Panevezys-Saldutiskis railway line, and to compensate the
Company for the illegal seizure and operation of this line.
2. That the Lithuanian Government is under an obligation to make good the
prejudice which has been sustained by the Esimene Juurdeveo Raudteede Selts
Venemaal Company, and which is estimated at (I) the sum of 6, 850, 000 Gold Lits,
representing the price of the railway, plus (II) a sum representing the annual
payments due in respect of the exploitation of the railway by the Lithuanian
authorities from the date of seizure to the date of payment, each annual payment
being reckoned as equal to six per cent on the price of the railway fixed as above. "

[7] On March 15th, 1938, the date fixed for the filing of its Counter-Memorial, the
Lithuanian Government submitted preliminary objections accompanied by a
preliminary Counter-Memorial.

[8] The objections raised by the Lithuanian Government to the claims of the
Estonian Government were two in number, the first being based on "the non-
observance by the Estonian Government of the rule of international law to the effect
that a claim must be a national claim not only at the time of its presentation but also
at the time when the injury was suffered", and the second "on the non-observance by
the Estonian Government of the rule of international law requiring the exhaustion of
the remedies afforded by municipal law". The Lithuanian Government prayed the
Court to declare that the claims of the Estonian Government cannot be entertained.

[9] The proceedings on the merits having, under Article 62, paragraph 3, of the
Rules of Court, been suspended by the filing of the objections, the President of the
Court, on March 15th, 1938, made an Order fixing April 30th, 1938, as the date of
[p7] expiration of the time allowed to the Estonian Government for the presentation
of a written statement of its observations and submissions in regard to the objections
raised by the Lithuanian Government.

[10] The written proceedings in regard to the objections were brought to a close by
the filing within the prescribed time-limit of this statement in which it was
submitted that the Court should "overrule the objections".

[11] After hearings held on June 13th, 14th, 15th, 17th and 18th, 1938, the Court, on
June 30th, 1938, made an Order whereby, under Article 62, paragraph 5, of the
Rules, it joined "the objections raised by the Lithuanian Government to the merits of
the proceedings instituted by the Application of the Estonian Government filed with
the Registry on November 2nd, 1937, in order that it may adjudicate in one and the
same judgment upon these objections and, if need be, on the merits". At the same
time the Court fixed new time-limits for the filing of the Counter-Memorial, Reply
and Rejoinder.

[12] These documents were duly filed within the prescribed time-limits, the last of
which, that for the Rejoinder, expired on November 25th, 1938. Accordingly on that
date the case became ready for hearing.

[13] In its Counter-Memorial, the Lithuanian Government presented the following

submissions:

"The Lithuanian Government, reserving the right subsequently to present any further
arguments or submissions,
Prays the Permanent Court of International Justice to dismiss the claims of the
Estonian Government.
Alternatively,
And subject to the subsequent presentation of any further arguments and evidence,
In case the Court should hold that the legal personality of the former First Russian
Company persists in the Esimene Company and should recognize that the latter is
entitled to reparation, the Lithuanian Government, in accordance with Article 63 of
the Rules of Court, now presents a counter-claim" against the Estonian Government,
estimating the amount of the prejudice sustained at the sum of 7, 337, 271 Lits 98
cents, with interest at 6% per annum as from September 1st, 1938, until the date of
payment,
And prays the Permanent Court of International Justice to award it the amount of
this counter-claim. "

[14] In its Reply, the Estonian Government maintained. the submissions contained
in its Memorial and written statement and prayed the Court "to overrule the counter-
claim of the Lithuanian Government". [p8]

[15] In its Rejoinder, the Lithuanian Government maintained the submissions which
it had already made.

[16] In the course of public sittings held on January 19th, 20th, 24th, 25th, 27th and
30th, 1939, the Court heard the Agents of the two Parties, who at the conclusion of
their oral arguments presented the following final submissions.

[17] The Agent for the Estonian Government prayed the Court

"To dismiss the counter-claim of the Lithuanian Government presented in its

Counter-Memorial of August 30th, 1938,
To adjudge and declare
That the Lithuanian Government has wrongfully refused to recognize the rights of
the Esimene Juurdeveo Raudteede Selts Venemaal Company, as owners and
concessionaires of the Panevezys-Saldutiskis railway line, and to compensate the
Company for the illegal seizure and operation of this line;
That the Lithuanian Government is under an obligation to make good the prejudice
which has thus been sustained by the Esimene Juurdeveo Raudteede Selts Venemaal
Company, and which is estimated at (1) the sum of 6, 850, 000 Gold Lits
representing the price of the railway, plus (2) interest on this sum calculated at the
rate of six per cent per annum from the date of seizure to the date of payment;
That the above payment shall be made in the course of the month following delivery
of the judgment by means of a payment in pounds sterling to the account of the
Estonian State Bank (Eesti Pank) with the Royal Scotland Bank in London, for the
compensation of the Esimene Juurdeveo Raudteede Selts Venemaal Company;
That the said payment will involve total and final release of the Panevezys-
Saldutiskis railway and all the movable and immovable property appertaining
thereto, from all mortgages or liens which may belong to the bondholders of the
First Company of Secondary Railways in Russia (or the Esimene Juurdeveo
Raudteede Selts Venemaal Company). "

[18] The Agent for the Lithuanian Government, maintaining all submissions and
arguments previously presented by his Government, prayed the Permanent Court of
International Justice

"to declare that the claims of the Estonian Government cannot be entertained.
With regard to the merits, to dismiss the claims of the Estonian Government.
Alternatively,
In case the Court should hold that the legal personality of the former First Russian
Company persists in the Esimene Company and should recognize that the latter is
entitled to compensation, [p9]
To award to the Lithuanian Government the amount of its counter-claim, assessing
the prejudice sustained at the sum of 7, 337, 271 Lits 98 cents, with interest at 6 %
per -annum from September 1st, 1938, until the date of payment. "

[19] Documents in support of their contentions were filed on behalf of each Party
[FN1].

-----------------------------------------------------------------------------------------------------
----------------
[FN1] See list in Annex
-----------------------------------------------------------------------------------------------------
----------------

[20] The above being the state of the proceedings, the Court must now adjudicate.

***

[21] The facts are as follows:

[22] In 1892 a company was founded at St. Petersburg under the name of the "First
Company of Secondary Railways in Russia", and its statutes were approved by
Imperial decree on March 26th, 1892.

[23] Under 1 of its statutes, the Company had for its object "the construction and
operation of broad and narrow gauge approach and secondary railways in general
for public and private use, and the construction, operation and sale of transportable
railways". Under 2, the Company was authorized, subject to obtaining where
necessary the sanction of the competent administrative body, inter alia, to construct
and operate railways of every kind and type on its own account and at its own risk.
The Company might engage in these activities throughout the whole of the Russian
Empire. Under 26, the registered offices of the Company were established at St.
Petersburg.

[24] By an Imperial decree of November 21st, 1897, the Company was authorized to
construct and operate (under the conditions fixed by a decree of June 27th, 1894, for
another line, the Sventziany to Gloubokoe line) a railway between the station at
Sventziany, on the St. Petersburg-Warsaw railway, and the station at Panevezys, on
the Libau-Romny railway. The Company also possessed other lines in various parts
of the Russian Empire, in particular in the Baltic provinces and in the Ukraine.

[25] The statutes of the Company were revised and received Imperial sanction on
July 3rd, 1898, and subsequently various partial amendments were approved by
Imperial decrees of April 11th, 1900, November 6th, 1901, and April 24th, 1912.
[26] A general meeting of shareholders appears to have taken place in July 1917.
Three months later, the Bolshevist revolution the so-called October revolution
took place. Almost [p10] immediately afterwards, December 14th, 1917, a decree of
the Central Executive Committee concerning the nationalization of banks placed in
the hands of the Soviet Government the shares, assets and liabilities of companies
existing in Russia. Among these companies was the "First Company of Secondary
Railways"

[27] Political events then followed in rapid succession: on February 16th, 1918,
Lithuania proclaimed itself an independent State; on February 24th the same thing
happened in Estonia, and some days later, March 3rd, the Treaty of Brest-Litovsk
between Germany and her allies and Russia confirmed the abandonment of Russian
sovereignty over the former Baltic provinces and Lithuania which, however,
remained in the occupation of German troops.

[28] Furthermore, the Bolshevist leaders hurried on measures intended to establish

the communist Soviet regime confiscating private property throughout Russian
territory. On June 28th, 1918, a decree was promulgated declaring "to be the
property of the Russian Socialist Federated Soviet Republic" all industrial and
commercial undertakings in Soviet Russia including "all the undertakings of private
and secondary railway companies, whether in operation or under construction" (Art.
I). The competent sections of the Supreme Council of National Economy were
instructed to work out and carry through as-speedily as possible the organization of
the administration of the nationalized undertakings; in so far as railways were
concerned, the task was entrusted to the Commissariat of the People for
Communications, subject to the approval of the Council of Commissaries of the
People (Art. II). Until special orders were issued, undertakings which had been
declared the property of the Soviet Republic were "regarded as leased rent free to
the former owners; the Boards of Directors and former owners financing them under
the old conditions and receiving the revenues as before" (Art. III). The directors and
other managers responsible for nationalized undertakings were responsible for the
maintenance, upkeep and operation of the undertaking. If they abandoned their posts
or showed negligence, they incurred criminal liability (Art. IV). The responsible
administrators were declared to be in the service of the Russian Socialist Federated
Soviet Republic. If they abandoned their posts, members of the technical and
administrative staff were to be held responsible before the Revolutionary Tribunal
"with the utmost rigour of the law" (Art. V). Finally, all moneys belonging
personally to members of Boards, to the shareholders and owners of nationalized
undertakings were provisionally attached. [p11]

[29] Shortly afterwards, on September 4th, 1918, a second Soviet decree was
promulgated which was designed "to supplement" the preceding decree, particularly
with regard to railways. The Boards of former private railways which now became
the property of the Republic were abolished and replaced by a so-called liquidation
commission for each line.
[30] Some months later, March 4th, 1919, a third Soviet decree provided as follows:
"Article 1. The shares and foundation shares of joint-stock companies the
undertakings of which have been nationalized or sequestrated are annulled even in
cases where such undertakings have not yet passed under the control of
governmental boards and where they have been leased to the former owners rent
free. "

[31] In September 1919, the Lithuanian Government took possession of the

Panevezys-Sventziany railway which was situated in territory which had become
part of the State of Lithuania.

[32] Some months later, on February 2nd, 1920, the Russian Socialist Federated
Soviet Republic signed its first treaty with the new Baltic States: the Treaty of Tartu
with Estonia [FN1], which was followed on July 12th, 1920, by the Treaty
concluded at Moscow with Lithuania [FN2] and, on August 11th, 1920, by the
Treaty with Latvia [FN3], also signed at Moscow.

-----------------------------------------------------------------------------------------------------
----------------
[FN1] League of Nations, Treaty Series, Vol. XI, pp. 29-71.
[FN2] League of Nations, Treaty Series, Vol. III, pp. 105-137.
[FN3] League of Nations, Treaty Series, Vol. II, pp. 195-231.
-----------------------------------------------------------------------------------------------------
----------------

[33] In the present case, the Treaty of Tartu of February 2nd, 1920, concluded
between the Soviet Republic and Estonia merits special attention for the reason that,
unlike the two other treaties which followed it, it contains detailed provisions as to
the fate of private property situated in Estonian territory, particularly as to the
property of joint-stock companies.

[34] Under Article XI of this Treaty, of which the meaning and perhaps even the
translation are disputed between the Parties, Russia renounces "all the rights of the
Russian Treasury to the movable and immovable property of individuals which
previously did not belong to her, in so far as such property may be situated in
Estonian territory". All such property became "the sole property of Estonia" and was
freed from all obligations as from December 14th, 1917, which, as has been seen,
was the date of the decree nationalizing the banks.

[35] Further, an article supplementary to this Article XI provides that: "The Russian
Government will hand over to the Estonian Government inter alia the shares of
those joint-stock companies which had undertakings in Estonian territory, in so far
as such shares may be at the disposal of the Russian [p12] Government as a result of
the decree of the Central Executive Committee regarding the nationalization of the
banks of December 14th, 1917.... Similarly, the Russian Government agrees that the
registered offices of the joint-stock companies above mentioned shall be regarded as
transferred to Reval and that the Estonian authorities shall be entitled to amend the
statutes of such companies in accordance with the rules to be laid down by those
authorities. " But the Treaty points out that "the above-mentioned shares shall only
confer on Estonia rights in respect of those undertakings of the joint-stock
companies which may be situated in Estonian territory and that in no case shall the
rights of Estonia extend to undertakings of the same companies outside the confines
of Estonia".

[36] The Treaty then expressly mentions the "First Company of Secondary
Railways" as included amongst these joint-stock companies.

[37] The exchange of ratifications of the Treaty of Tartu took place on March 29th,
1920.

[38] In October 1920, some kilometres of the Panevezys-Sventziany railway line

situated between the latter station and Saldutiskis ceased to be under Lithuanian
sovereignty and passed subsequently into that of Poland.

[39] Some days after the coming into force of the Treaty of Tartu, the relevant
provisions of which have been quoted above, the Estonian Government
promulgated, on April 7th, 1920, a first set of provisional regulations regarding
joint-stock companies whose statutes had been approved by the Russian
Government, and which possessed undertakings or property in Estonian territory
and had hitherto not had themselves registered by the Estonian courts in accordance
with the regulations laid down. These companies apparently had to hold general
meetings within two months after the decree, since the decree provided that, if they
did not do so, all the powers of members of the Board of Directors would be held to
have lapsed, and that curators appointed by the courts would undertake the
administration and, if need be, the liquidation of the undertakings and property of
such companies, such undertakings and property being treated as ownerless
property.

[40] In order to establish the validity of a general meeting, the documentary

evidence was to be accompanied by the statutes which had been approved by the
Russian Government; the purpose of such general meeting was to be the bringing of
the statutes into conformity with Estonian law and a decision to have them
"registered by the judicial authorities of Estonia".

[41] A second Estonian ordinance, dated October 1st, 1921, provided that a
company would be no longer subject to curatorship when the general meeting of its
shareholders had elected its [p13] officers in accordance with the statutes approved
by the former Russian Government and had had its statutes registered in accordance
with Estonian law.

[42] On May 21st, 1922, the "First Company of Secondary Railways in Russia",
which had been sequestrated on April 7th, was placed under curatorship by order of
the District Court of Tallinn-Hapsal.

[43] It does not appear that any general meeting of this Company was held at this
period in Estonia. On the other hand, the documents produced to the Court show
that, on November 23rd, 1922, a general meeting of the Company the first since
the meeting of July 1917 was held, not in Estonia, but at Riga in Latvia, with the
sanction of the Latvian Government and under Latvian law, and that at this meeting
the Board of Directors was instructed to take the necessary steps to reacquire
possession of and to operate the property of the Company in Lithuania and Poland;
while the portion of the system situated in Latvia was to be ceded to a Latvian
company which was to be formed.

[44] On August 4th, 1923, a law was promulgated in Estonia declaring that, "in
accordance with 19 of the concession of the 'First Company of Secondary
Railways in Russia', all railways of this Company in the territory of the Estonian
Republic shall be bought out and become the property of the Treasury as from
October 1st, 1923". The concession referred to is that granted by the Czar in 1897,
and 19 concerns the Imperial Government's right of redemption.

[45] The next thing that happened was that the Estonian Government, on September
7th, 1923, authorized the holding of a general meeting of the Company (which, as
has been seen, had been under curatorship since May 21st, 1922) and the curators,
"in accordance with the statutes ( 60)", proceeded to convene a general meeting for
October 19th of the same year.

[46] This general meeting was actually held in Tallinn on November 2nd, 1923. It
proceeded to revise and amend the statutes in accordance with Estonian law and
with a view to the exercise of the powers thenceforward to be enjoyed by the
Company in Estonia: namely in respect of operation, works, tariffs, exemption from
taxes, the right of expropriation, subjection to the laws and regulations in regard to
railways, etc. The registered offices of the Company were fixed in Tallinn.

[47] These new statutes were approved on November 8th, 1923, and registered on
November 23rd.

[48] As stated in the Estonian Memorial, the "First Company of Secondary Railways
in Russia" was thus transformed "into an Estonian company having its registered
offices in Estonia under the name of the Esimene Juurdeveo Raudteede Selts
Venemaal [p14] a translation into Estonian of the name of the Russian company.

[49] On March 10th, 1924, a general meeting of the Esimene held in Tallinn
authorized the Board of Directors to sell the line situated in Lithuania and the lines
in Latvia and Poland. On October 3rd, 1924, another general meeting appears to
have been held at which particular consideration was given to the question of the
Panevezys-Saldutiskis railway.
On March 5th, 1925, a request was sent on behalf of the Board of the Esimene to the
Lithuanian Government, asking it "to give instructions for the necessary steps to be
taken for the handing over of the Panevezys-Saldutiskis line to its legal owners".

[50] It does not appear that any answer was made to this petition, and several years
elapsed in the course of which further petitions were made.

[51] On November 14th, 1931, a memorandum accompanied by a petition from the

Board of the Esimene was transmitted to the Lithuanian Government. In this
memorandum the Esimene pointed out that it was the former Russian company
transformed into an Estonian company with the same titles and rights, and
accordingly it claimed "in that capacity" fair compensation for the Panevezys line
which belonged to it and of which it had been unjustifiably deprived.

[52] On April 29th, 1932, after the chairman of the Company had approached the
Lithuanian Government, the Board of Directors, in a further petition of May 20th,
1932, stated that they consented to the non-restitution of the line in question but
hoped on the other hand that some equitable method would be found of
compensating the Company for the property of which it had been deprived.

[53] Further petitions were sent by the Board of Directors of the Esimene, in
particular one on May 20th, 1932.

[54] On January 25th, 1933, the Lithuanian Government referred to its Council of
State, which, under the organic law of August 21st, 1928, is an advisory body, the
question whether the Esimene Company was justified in putting forward a claim in
law against the Lithuanian Government in respect of the Panevezys railway. The
opinion given was in the negative.

[55] On September 15th, 1933, and October 25th, 1933, the Esimene Company
presented further petitions to which the Lithuanian Government replied, refusing to
admit the claim of the Company to be entitled to the rights of the former company
which, in its contention, no longer existed.

[56] The negotiations were thenceforward continued between the Estonian Minister
in Kaunas and the Lithuanian Government, the Company proposing the purchase of
its line by the Lithuanian Government (proposals of September 7th, 1934,
September 14th, [p15] 1936, and letter of December 3rd, 1936, addressed by the
Estonian Minister to the Lithuanian Government).

[57] In a letter of December 30th, 1936, the Lithuanian Government replied that the
dispute was a matter of civil law and within the jurisdiction of the Lithuanian courts.

[58] On February 1st, 1937, the Estonian Government renewed its representations,
the dispute bearing as before both on the question of the recognition of the Esimene
as entitled to the rights of the Russian company and on the question of the
jurisdiction of the Lithuanian courts. It was also argued that there had been a
violation of the Commercial Convention concluded on January 13th, 1934, between
Estonia and Lithuania and a denial of justice.

[59] On May 5th, 1937, the Lithuanian Government replied that it could not
entertain the Estonian claim.

[60] On August 20th, 1937, the Estonian Government informed the Lithuanian
Government that it intended to bring the case before the Permanent Court of
International Justice. The Lithuanian Government then replied that, while
maintaining its own view on the question of law, the friendly relations between the
two States might make it possible to reach a friendly settlement of the dispute,
should the Esimene Company not win its case before the Lithuanian courts.

[61] Such are the facts, which moreover do not appear to be disputed by the Parties,
and on the basis of which the Estonian Government on November 2nd, 1937, filed
with the Court the Application instituting the proceedings referred to at the
beginning of this judgment.

***

[62] Within the time-limit fixed for the filing of the Counter-Memorial by the
Lithuanian Government, the Agent for that Government submitted two preliminary
objections. After the usual proceedings and hearings in connection with these
objections, the Court, as has been explained, joined these objections to the merits by
its Order of June 30th, 1938, saying in the course of that Order that at the then stage
of the proceedings the Court could not take a decision either as to the preliminary
character of the objections or as to whether they were well founded, for any such
decision would raise questions of fact and law in regard to which the Parties were in
several respects in disagreement and which were too closely linked to the merits for
the Court to adjudicate upon them at that stage. Now that it has heard the arguments
of the Parties on the merits of the case as well as on the objections, the Court is in a
position to give its decision on the objections. [p16]

[63] Both the objections were submitted as preliminary objections under Article 62
of the Rules of Court. It is clear that Article 62 covers more than objections to the
jurisdiction of the Court. Both the wording and the substance of the Article show
that it covers any objection of which the effect will be, if the objection is upheld, to
interrupt further proceedings in the case, and which it will therefore be appropriate
for the Court to deal with before enquiring into the merits.

[64] The Lithuanian objections are based on the non-observance by the Estonian
Government: (1) of the rule of international law that a claim must be national not
only at the time of its presentation but also at the time of the injury; and (2) of the
rule requiring the exhaustion of the remedies afforded by municipal law.
[65] In the opinion of the Court, the rule of international law on which the first
Lithuanian objection is based is that in taking up the case of one of its nationals, by
resorting to diplomatic action or international judicial proceedings on his behalf, a
State is in reality asserting its own right, the right to ensure in the person of its
nationals respect for the rules of international law. This right is necessarily limited
to intervention on behalf of its own nationals because, in the absence of a special
agreement, it is the bond of nationality between the State and the individual which
alone confers upon the State the right of diplomatic protection, and it is as a part of
the function of diplomatic protection that the right to take up a claim and to ensure
respect for the rules of international law must be envisaged. Where the injury was
done to the national of some other State, no claim to which such injury may give
rise falls within the scope of the diplomatic protection which a State is entitled to
afford nor can it give rise to a claim which that State is entitled to espouse.

[66] The Estonian Agent both in the written pleadings and in the oral arguments has
endeavoured to discredit this rule of international law, if not to deny its existence.
He cited a certain number of precedents, but when these precedents are examined it
will be seen that they are cases where the governments concerned had agreed to
waive the strict application of the rule, cases where the two governments had agreed
to establish an international tribunal with jurisdiction to adjudicate on claims even if
this condition as to nationality were not fulfilled. In the present case no grounds
exist for holding that the Parties intended to exclude the application of the rule. The
Lithuanian Agent is therefore right in maintaining that Estonia must prove that at the
time when the injury occurred which is alleged to involve the international
responsibility of [p17] Lithuania the company suffering the injury possessed
Estonian nationality.

[67] Though it is true that an objection disputing the national character of a claim is
in principle of a preliminary character, this is not so in the actual case before the
Court. This is because the grounds on which Lithuania disputes Estonia's right to
take up the case on behalf of the Company, viz. that the claim lacks national
character, cannot be separated from those on which Lithuania disputes the
Company's alleged right to the ownership of the Panevezys-Saldutiskis railway.

[68] The question whether the Esimene Company is to be regarded as the owner or
concessionaire of the Panevezys-Saldutiskis railway undoubtedly forms part of the
merits of the dispute. The ground on which the Company claims the railway is that it
is the same as, or the successor to, the Russian company. The issue as to whether or
not it is so involves a decision with regard to the effect of the events and the
legislation in Russia at the time of the Bolshevist revolution, for it has been argued
that the events and the legislation in Russia put an end to the company's existence
and left the devolution of its property outside Russia to be governed by the law of
the country in which the property was situated. This question, however, closely
affects also the question whether or not there was in existence at the time of the
Lithuanian acts giving rise to the present claim an Estonian national whose cause the
Estonian Government was entitled to espouse.
[69] Similarly it would be necessary for the Court in dealing with the merits of the
Estonian claim to adjudicate on the interpretation of the Treaty of Tartu, for it has
been argued that the effect of that Treaty was to preserve the existence of the
Russian company and convert it automatically into an Estonian company. Here
again this same question has an intimate bearing on the nationality issue raised by
the first Lithuanian objection. If for the purpose of deciding the Lithuanian objection
the Court were to give a decision on the effect on Russian companies of the
measures of the Soviet Government at the time of the Russian revolution, and as to
the meaning and effects of the Treaty of Tartu, it would also have decided questions
which form an important part of the merits of the dispute.

[70] For these reasons the Court cannot regard the first Lithuanian objection as one
which in the particular circumstances of the case can be decided without passing on
the merits. The [p18] Court cannot therefore admit the objection as a preliminary
objection within the meaning of Article 62 of the Rules of Court.

[71] The second Lithuanian objection is based on the non-observance by the

Estonian Government of "the rule of international law requiring the exhaustion of
the remedies afforded by municipal law". The existence of this rule which in
principle subordinates the presentation of an international claim to such an
exhaustion is not contested by the Estonian Agent; his contention is that the case
falls within one or more of the admitted exceptions to the rule.
First it is maintained that the courts in Lithuania cannot entertain a suit in this case.
Secondly it is said that on one point and that a point which constitutes an
essential element in the Estonian case the highest court in Lithuania has already
given a decision adverse to the Estonian company's claim.

[72] If either of these points could be substantiated, the Court would be bound to
overrule the second Lithuanian objection. There can be no need to resort to the
municipal courts if those courts have no jurisdiction to afford relief; nor is it
necessary again to resort to those courts if the result must be a repetition of a
decision already given.

[73] Before examining in detail the second Lithuanian objection, it should be

observed that the Estonian submission in this case is based on Lithuania's refusal to
recognize the Esimene Company's proprietary and concessionary rights in the Pane-
vezys-Saldutiskis railway, i. e., it is based on a dispute as to the non-recognition of a
claim by an individual to a property right and to a contractual right. In principle, the
property rights and the contractual rights of individuals depend in every State on
municipal law and fall therefore more particularly within the jurisdiction of
municipal tribunals.

[74] The Estonian Agent has argued that the Lithuanian courts have no jurisdiction
to entertain a suit by the Esimene Company to establish the Company's title to the
Panevezys-Saldutiskis railway. His allegation is met with an emphatic assertion by
the Lithuanian Agent that the courts in Lithuania possess such jurisdiction. The
Lithuanian Agent also points to Article 2 of the Lithuanian Code of Civil Procedure
where it is laid down that "private persons.... whose legal rights are infringed by
decisions of administrative institutes or persons may bring an action in the courts".
[p19]

[75] The question whether or not the Lithuanian courts have jurisdiction to entertain
a particular suit depends on Lithuanian law and is one on which the Lithuanian
courts alone can pronounce a final decision. It is not for this Court to consider the
arguments which have been addressed to it for the purpose either of establishing the
jurisdiction of the Lithuanian tribunals by adducing particular provisions of the laws
in force in Lithuania, or of denying the jurisdiction of those tribunals by attributing a
particular character (seizure jure imperii) to the act of the Lithuanian Government.
Until it has been clearly shown that the Lithuanian courts have no jurisdiction to
entertain a suit by the Esimene Company as to its title to the Panevezys-Saldutiskis
railway, the Court cannot accept the contention of the Estonian Agent that the rule
as to the exhaustion of local remedies does not apply in this case because Lithuanian
law affords no means of redress.

[76] The second ground on which the Estonian Agent has maintained that the rule as
to the exhaustion of local remedies does not apply in this case is that the highest
court, the Supreme Court in Lithuania, has already held that there is no continuity
between the Russian company and the Estonian company, and has therefore already
given an adverse decision on a point which constitutes an essential element in the
Esimene Company's claim to the Panevezys-Saldutiskis railway. The rule of
international law as to the exhaustion of local remedies has never, it is contended,
been held to require that a claimant should be bound to institute proceedings on a
point on which the highest court has already given a decision.

[77] The Court does not regard the argument as applicable in this instance.

[78] The case in which it is alleged that the Supreme Tribunal in Lithuania gave
such a decision on March 26th, 1934,. is a suit brought against the Esimene
Company in the Lithuanian courts by one Jeglinas to recover the capital value and
the arrears of interest due on one of the bonds issued by the Russian company for
the construction of the railway in question, and to obtain a decision that holders of
the bonds were entitled to be paid in priority to other creditors, and also to obtain a
ruling as to the rate of exchange as between roubles and lits.

[79] The Lithuanian Agent stated that the Jeglinas case was not a genuine case.
Whatever may be the case on this point, it is sufficient for the Court to make the
following observations. [p20]

[80] After the case had been dealt with in the Court of the juge de paix and the
Tribunal d'arrondissement, Jeglinas entered an appeal to the Supreme Court in
Lithuania. The judges in that court ignored the contentions and admissions of the
parties, annulled the judgment of the Tribunal d'arrondissement and quashed all the
proceedings upon the ground that there was no properly qualified defendant before
the court. The following are the important paragraphs of the judgment according to
the French translation supplied to the Court:

"The defendant cited in this case as liable for the bond is not the First Company of
Secondary Railways in Russia, with its Board of Directors in Petrograd, but the First
Company of Secondary Railways in Russia, with its Board of Directors at Tallinn in
Estonia and whose managing director, Paul Klompus, at present resides in Kaunas,
at the Lithuania Hotel, No. 9, Daukant Street. Consequently, in order to bring this
case within the jurisdiction of the Lithuanian courts, a domicile has been artificially
created in breach of Article 220 of the Code of Civil Procedure which indicates
where a company is to be sued.
More especially since, as may be seen from the evidence produced by the defendant,
no company exists in Estonia in whose name the bond was issued and whose
statutes were in force in 1892, but there is a company newly founded under the
name of Esimene Juurdeveo Raudteede Selts Venemaal (which, translated, may
mean: 'First Company of Secondary Railways in Russia').
Evidence has not been produced in this case that the said Estonian company can be
recognized by our laws or by international treaties as successor to the old Russian
company, and the Court knows of no such laws or treaties. Only companies whose
statutes are registered in accordance with our laws and duly published (law
concerning joint-stock companies, 'Government Gazette', No. 179) may operate in
Lithuania. And only such joint-stock companies are entitled to have their enterprises
there, especially enterprises of such great importance as railways. Moreover the
Tribunal d'arrondissement, with the participation of the representative of the
Estonian company and on the basis of 14 of the bond, gave the claimant a
preferential right of execution upon the movable and immovable property of the
Sventziany-Ponvge railway, although, as has been stated., part of this line is in the
possession of the Lithuanian Ministry of Communications.
In view of the foregoing, there is no ground for regarding Paul Klompus, the
director of the Esimene Juurdeveo Raudteede Selts Venemaal Company, as a
defendant entitled to answer for bond No. 0742, issued by the 'First Company of
Secondary Railways in Russia', i. e., as qualified to be the defendant in accordance
with Article 4 of the Code of Civil Procedure, and consequently the whole of the
proceedings in this case which have taken place without the real defendant [p21]
having been summoned or heard must be annulled and the appeal in cassation
cannot be considered [FN1]."

-----------------------------------------------------------------------------------------------------
----------------
[FN1] Translation by the Registry
-----------------------------------------------------------------------------------------------------
----------------

[81] The passage quoted above in which it is said that the proofs had not been
submitted in the case to show that the Estonian company could be recognized as the
successor of the former Russian company has been thought to mean that the
Supreme Tribunal examined the evidence and gave a decision as to its effect. An
examination of the judgment shows however that the passage in the judgment means
no more than that no evidence had been submitted to the Lithuanian courts to show
the identity of the two companies.

[82] It must also be pointed out that if the Esimene Company instituted proceedings
in the Lithuanian court as to their right to be regarded as the owners and
concessionaires of the Panevezys-Saldutiskis railway, the parties to the suit would
not be the same as those in the Jeglinas case so that no question of res judicata
could arise; nor is there anything to show that the Esimene Company would find
itself confronted by a course of decisions (jurisprudence constante) of the Lithuanian
courts which would render the Company's suit hopeless, despite the difference of the
parties.

[83] The Estonian Agent has also drawn the attention of the Court to an opinion
rendered by the Lithuanian Council of State on January 25th, 1933, as to the
juridical basis of the Esimene Company's claim to the Panevezys-Saldutiskis
railway. The conclusion reached by the Council of State was that the Esimene
Company was neither the same as nor the successor to the Russian company and
therefore had no claim to the railway.

[84] The function of the Council of State in Lithuania is among others to notify to
the Council of Ministers or to the particular Minister concerned any case in which
the orders, regulations or instructions of the executive authorities are inconsistent
with the laws in force. It is not a judicial authority the opinions of which would be
binding on the Lithuanian courts. For this reason the fact that in 1933 it rendered an
opinion to the Lithuanian Government adverse to the validity of the Esimene
Company's claim cannot be regarded as excusing that Company from seeking
redress in the Lithuanian courts.

[85] Neither of the reasons put forward by the Estonian Agent for the non-
application of the rule as to the exhaustion of the local means of redress can
therefore be regarded as holding good in the present case. [p22]

[86] In consequence, on the one hand, the second Lithuanian preliminary objection
having been submitted for the purpose of excluding an examination by the Court of
the merits of the case, and being one upon which the Court can give a decision
without in any way adjudicating upon the merits, must be accepted as a preliminary
objection within the meaning of Article 62 of the Rules. On the other hand, as
regards the merits of the objection, it is common ground between the Parties that the
Estonian company has not instituted any legal proceedings before the Lithuanian
courts in order to establish its title to the Panevezys-Saldutiskis railway.

[87] The objection must therefore be regarded as one that can be entertained as an
objection of a preliminary character and as well-founded as regards its substance.

[88] FOR THESE REASONS,

The Court,
by ten votes to four,
Declares that the objection regarding the non-exhaustion of the remedies afforded by
municipal law is well founded, and declares that the claim presented by the Estonian
Government cannot be entertained.

[89] The present judgment has been drawn up in French and English, the French text
being authoritative.

[90] Done at the Peace Palace, The Hague, this twenty-eighth day of February, one
thousand nine hundred and thirty-nine, in three copies, one of which will be
deposited in the archives of the Court and the others will be communicated to the
Estonian Government and to the Lithuanian Government respectively.

(Signed) J. G. Guerrero,
President.
(Signed) J. Lpez Olivn,
Registrar. [p23]

[91] Count Rostworowski and M. De Visscher, Judges, declare that they are unable
to concur in that part of the judgment given by the Court concerning the first
objection raised by the Lithuanian Government and, availing themselves of the right
conferred upon them by Article 57 of the Statute, have appended to the judgment the
separate opinion which follows.

[92] M. Altamira, Judge, declares that he is unable to concur in this judgment in

regard either to the operative clause or to the grounds on which it is based.

[93] Jonkheer Van Eysinga, Mr. Hudson and M. Erich, Judges, declare that they are
unable to concur in the judgment given by the Court and, availing themselves of the
right conferred upon them by Article 57 of the Statute, have appended to the
judgment the respective separate opinions which follow.

[94] M. Rmer'is, Judge ad hoc, while in agreement with the operative clause of the
judgment, declares, with regard to the fact that the Court has refrained from
adjudicating upon the first Lithuanian preliminary objection on the ground that it
would be impossible to do so without entering into the merits, that he is unable to
concur in the opinion of the Court on this point and is in agreement with the separate
opinion delivered by M. De Visscher and Count Rostworowski, Judges.

(Initialled) J. G. G.
(Initialled) J. L. O. [p24]
Separate Opinion by M. De Visscher and Count Rostworowski.

[Translation]

[95] We regret that we are unable to concur in the decision by which the Court has
declined to adjudicate on the validity of the first objection, lodged by the Lithuanian
Government in reply to the Estonian application, its decision being based on. the
ground that that objection could not "in the particular circumstances of the case be
decided without passing on the merits". We are of opinion that this objection, which
is based upon the absence of Estonian nationality from the interests injured at the
time when the damage was suffered, is a preliminary objection ; that at the present
stage of the case there was reason to adjudicate upon it and, lastly, that it is well-
founded.

[96] The Court's Order of June 30th, 1938, joining the objections to the merits in no
way prejudged the issue as to the preliminary character of these objections nor as to
their justice. In joining them to the merits, the Court merely adjourned its decision
upon these two points until the moment when, having gained a full understanding of
all the aspects of the dispute, it would be in a position to deliver judgment with a
knowledge of the whole of the facts. It is therefore on those two points that the
Court in the present proceedings was required to adjudicate.

[97] Article 62 of the Rules of Court deals with preliminary objections from the
point of view of their submission during the course of the proceedings ; it does not
define them in such a way as to fix their essential features. Obviously, however, if
under this Article the preliminary objection suspends procedure on the merits, that is
because it aims at preventing in limine litis any examination of the merits, that is,
any decision as to the justice or injustice of the claim.

[98] It follows that an objection is prima facie preliminary when, by its nature or its
purpose, it appears directed against the judicial proceedings, that is, against the
conditions governing the institution of the proceedings and not against the law on
which they rest. In order, however, that it may definitely be granted this character, it
is necessary in each case to weigh the arguments cited in its support. The objection
will be treated either as preliminary or as a defence of the merits, according as these
arguments may or may not prejudge the justice or injustice of the claim. In the
present case the very purpose of joining the objections to the merits was to enable
[p25] the Court, being fully informed on all aspects of the case and thoroughly
acquainted with the arguments advanced in support of the objections, to determine
their real character as well as to pronounce upon their justice.

[99] It goes without saying, however, that an objection lodged in limine litis cannot
be treated as an argument on merits, simply because the Court, in order to pass upon
it, is obliged to refer to some extent to facts connected with the merits, when the
examination of these facts is in the first place essential to a decision about the
objection and, in the second place, does not prejudge the merits. With these
reservations the Court admitted, in its Judgment of August 25th, 1925 (Judgment
No. 6, Case concerning certain German interests in Polish Upper Silesia, p. 15), that
a decision concerning an objection to jurisdiction may "involve touching upon
subjects belonging to the merits of the case". It thus admitted the possibility of
referring to matters connected with the merits on condition that it did not encroach
upon those merits, that is, did not in any way compromise the position taken up by
each party in regard to them. This course appears especially justified after an Order
has joined the objections to the merits, since the very reason for. that Order is to
allow the Court to take account of certain matters concerned with merits which are
necessarily related either to the character of the objection or to its justice.

[100] Applying these rules to the case now before the Court, we consider that the
objection derived by the Lithuanian Government from the absence of nationality in
respect of the interests impaired at the time the injury was suffered, is a preliminary
objection. The Court could pass upon it without in any way prejudging the merits.

[101] To prove this point, we must first determine what here constitutes the merits
of the dispute and next fix the nature and the date of the illegal international act of
which the Estonian Government complains.

[102] In this matter the Estonian Government has not intervened in the defence of
any public or national interest ; its intervention is solely intended to protect private
interests against an act which is represented as a breach of international law. In these
circumstances the relation of nationality is simply the title of a given State to submit
a claim, and that title is independent of the merits of the claim itself. The merits of
the question, in a case like this, do not consist of the title to intervene ; they consist
in the justice or injustice of the claim for reparation. In principle, therefore, and
prima facie, the dispute over the relation of nationality, in an affair of this kind, does
not involve any appraisement of the justice of the claim as such. Far from involving
the merits, it aims at preventing their judicial examination. [p26]

[103] It remains to be seen, however, whether, in this case, the character of the
arguments invoked in support of the objection is not such as to prejudge certain
matters upon which the justice or injustice of the claim depends.

[104] Confronted with the objection derived from the absence of the claim's
nationality at the time when the injury was suffered, the judgment makes no mention
of essential particulars of this objection; it mentions neither the act of injury
complained of by the Estonian Government, nor the date of such act. Now, the
determination of these two particulars, as they figure in the submission of the
applicant Government, furnishes the necessary and fully ample basis upon which to
decide both the preliminary character of the objection and its justice.

[105] The written memorials plainly show that the seizure, that is, the taking
possession of the Panevezys-Saldutiskis railway, is the initial offence complained of
by the Estonian Government; its subsequent operation is only a result or
consequence of that first offence. Submission No. 1 of the Estonian Government
prays the Court to adjudge and declare :

"1. That the Lithuanian Government has wrongfully refused to recognize the rights
of the Esimene Juurdeveo Raudteede Selts Venemaal Company, as owners and
concessionaires of the Panevezys-Saldutiskis railway line, and to compensate that
Company for the illegal seizure and operation of this line."

[106] In the first part of the sentence the Estonian Government only asks the Court
for a statement of law, declaring that the refusal of Lithuania in the past to recognize
the Company's rights is illegal. In the second part of the sentence, beginning with
the words "and to compensate", the applicant Government defines the acts which in
its view involve the international responsibility of the defendant Government and
justify the compensation claimed "for the illegal seizure and operation of this line".

[107] Seizure then is here put forward as the illegal international act which,
according to the Estonian Government, involves the international responsiblity of
Lithuania. The Estonian Memorial, in Chapter VIII, entitled "International
Responsibility of the Lithuanian Government" (pp. 26-28), is definite on this point.
The Estonian Government there states that "the seizure and detention of the railway
.... are in its opinion an infringement of the property rights of the Esimene and, for
that reason, an infringement of Estonia's own right' " (p. 27). A little later it is still
more explicit : "For these breaches of [p27] international law and of treaties the
Lithuanian Government is directly responsible. The seizure of the Panevezys-
Saldutiskis railway was the act of organs of the Government." (P. 28.) The same
conclusion follows from the following passage in the Estonian Government's Reply,
where it explains the nature and amount of the damage caused "by seizure of the
Panevezys-Saldutiskis line" : "This damage is twofold: in the first place, seizure by
Lithuania dispossessed the First Company of property that belonged to it ; in the
second place, the Company from 1919 onwards was deprived of the enjoyment of its
concession."

[108] Finally - if further evidence were needed - these definite pronouncements are
strongly confirmed by the whole attitude of the Estonian Government, which, when
confronted with the Lithuanian objection based on the absence of nationality at the
time when the loss was suffered, has never throughout the proceedings disputed that
the initial act of injury it complains of was the seizure of 1919.

[109] As to the date of the seizure or taking possession of the railway, the Parties
agree in fixing this in 1919. It thus only remains to consider, in order to determine
the character of the objection, whether the absence of Estonian nationality from the
interests alleged to have been damaged by the seizure at that time can be proved
without prejudging certain matters upon which the decision as to merits depends.

[110] The following argument, in our opinion, furnishes an affirmative answer to

that question. The Estonian Government has tried to prove that the rule of law
underlying the objection is subject to various qualifications, but it has not claimed
that in 1919 the interests damaged by the seizure had already acquired Estonian
character. On its own admission, the First Russian Company, which is said to have
survived the nationalization decrees, was only transformed into an Estonian
company as a result of the Treaty of Tartu of February 2nd, 1920, and, to quote the
words of the Estonian Agent, "at the time and by the fact of the treaty of peace"
(oral statement of the Agent for the Estonian Government, June 14th, 1938; Oral
Statements, p. 40). Accordingly, even if it could be agreed that the change of
nationality dates back to the Treaty of Tartu, the change could still not operate in
regard to a fact which the Parties agree in dating 1919. Finally, either the interests
affected by the seizure were at that time still represented by the Russian company,
according to the Estonian Government's theory of survival, or they were no longer
represented by any company at all, according to the argument of the Lithuanian
Government to the effect that the nationalization decrees destroyed the Company's
legal personality. In either case - and this fact is alone decisive - there was in 1919
[p28] no Estonian company, and therefore the bond of nationality required by
international law to have existed at the time the injury was suffered, was manifestly
lacking.

[111] The Estonian Government has tried in vain to attach this question of
nationality to a question of merits, by arguing that a decision which denied Estonian
character to the Company at the time of seizure, but recognized it at a later date,
would constitute an implicit admission of the continuity of the Company, a question
which forms an essential aspect of the merits of the case (oral statement by the
Agent for the Estonian Government, June 14th, 1938, Oral Statements, p. 36). This
argument, which turns rather upon words, has no relevance. The objection does not
depend upon the continuity or lack of continuity of the First Company's legal
personality. The decision to be taken upon it would be the same if we were to accept
the Estonian argument and were to regard the Esimene Company as a continuation
of the Russian company. For the question raised in the objection is not a question of
identity, but a question of nationality. This question affects a company in the same
way as an individual: an individual whose identity since suffering injury had never
been disputed, would be equally without title to claim the diplomatic protection of a
State, if, at the time the injury was sustained, he was not a national of that State.

[112] We are therefore of opinion that the arguments invoked in support of the first
objection are altogether independent of the merits of the case and we cannot accept
the Court's view that "the basis of the objection whereby Lithuania disputes the right
of Estonia to intervene on the Company's behalf, that is, the claim's lack of
nationality, is inseparable from that same Government's reason for disputing the
Company's alleged right to the ownership of the Panevezys-Saldutiskis railway".

[113] The close relation which the judgment here seeks to establish between the
dispute about nationality and the denial of ownership rights seems to us ill-founded.
The judgment only arrives at this result by introducing into the argument the idea of
the identity or continuity of the companies. But, as we have seen, the dispute over
nationality is quite independent of that consideration.

[114] Since a decision upon the first objection, regarded as a preliminary objection,
is in our opinion possible, we consider that it should have been adjudicated upon
and that, by application of the rule on which it is based, it should have been declared
well-founded. [p29]

[115] The two objections lodged by the Lithuanian Government have neither the
same character nor the same scope, which makes it impossible to regard them as
equivalent and to fix upon one or the other indifferently. The first objection involves
the very title of the applicant State to intervene on the Company's behalf, a question
which logically precedes the question of exhausting local remedies raised by the
second objection. But it should be particularly noted that, unlike the second
objection, the first is of a decisive or peremptory character: if recognized to be well-
founded, its effect would have been to rule out altogether the claim by the Estonian
Government on behalf of the Esimene Company. By submitting it first in order, the
Lithuanian Government could hope for the final dismissal of an intervention which
the Court's judgment does not dispose of definitely.

[116] The validity of the objection is sufficiently evident from the considerations we
have already mentioned: the non-Estonian character of the interests damaged in
1919, the date at which the railway was seized, is obvious. This fact alone suffices
to justify the objection based on failure to observe the rule of international law
which requires that the claim shall be national not only at the time when it is
submitted, but at the time when the damage is suffered.

[117] The arguments adduced in general terms in favour of various qualifications of

this rule may have some force in the case of the protection of individuals, but they
can hardly apply to companies, whose nationality is determined by conditions very
different from those governing the nationality of private persons.

(Signed) De Visscher.
( ,, ) Rostworowski. [p30]

Dissenting Opinion by Jonkheer Van Eysinga.

[Translation]

[118] The judgment decides that the first objection raised by the Lithuanian
Government as a preliminary objection does not possess that character. This
decision had not yet been taken by the Court's Order of June 30th, 1938. The result
of this way of proceeding would be that if it were necessary to adjudicate on the
merits of this dispute between Estonia and Lithuania, the Court could only do so in a
third phase of the proceedings. It may be questioned whether this way of proceeding
is a very happy one. It is moreover not in accordance with the procedure laid down
by Article 62 of the Rules of Court with regard to preliminary objections. Under that
Article, which was introduced after mature reflection in 1926 as Article 38, the
Court must decide as to the preliminary character of objections as soon as they are
raised as such, after which, unless the Court upholds the objections, it has the choice
of rejecting them or joining them to the merits. Article 62 of the Rules very rightly
does not contemplate a third possibility consisting in leaving open the question
whether objections are or are not preliminary in character and joining them
nevertheless to the merits.

***

[119] The first preliminary objection of the Lithuanian Government to the Estonian
Government's claims is to the effect that the latter Government has not observed
"the rule of international law according to which a claim must be a national claim
not only at the time of its presentation but also at the time when the injury was
suffered".

[120] In this connection, the following observations should be made.

[121] It appears from the memorials and oral arguments which were already before
the Court in the first stage of the proceedings in regard to this dispute, that is to say
in June 1938, that the unlawful act complained of by the Estonian Government is the
seizure by the Lithuanian Government in September 1919 of the Panevezys-
Saldutiskis railway. And it is not denied that at that date the Esimene Juurdeveo
Raudteede Selts Venemaal (First Company of Secondary Railways in Russia),
whose case the Estonian Government has taken up, could not possess Estonian
nationality.

[122] The Lithuanian Government contends that the Company was only founded in
1923 and that consequently it then received [p31] Estonian nationality. On the other
hand, the Estonian Government contends that the Estonian Company is none other
than the First Russian Company, founded in 1892, the nationality and statutes of
which were altered following the world war and after 1919. It is therefore
unnecessary to settle the question which of the two Parties is right with regard to
this point a thing which it would only be possible to do by entering upon the
merits of the dispute in order to decide whether or not we are dealing with a
preliminary objection. For no matter which of the two lines of argument is correct,
the fact remains that at the time when the injury was suffered, the Company did not
possess Estonian nationality and that, consequently, the rule of international law
which the Lithuanian Government adduces is applicable, at all events if it exists in
the absolute form attributed to it by that Government.

[123] But it is precisely in regard to this point that there appears to be ground for
serious doubt; for the Lithuanian Agent has not succeeded in establishing the
existence of the rule in the absolute form attributed to it according to the Lithuanian
argument.

[124] To decide the question whether an unwritten rule of international law is really
a hard and fast rule, it does not suffice to present general considerations which in
some circumstances may be sufficient; it is also necessary to consider the legal
situation in which the rule has to be applied in a particular case. This has not been
done in the present case.

[125] It should be added that, if the Estonian contention that the Esimene is no other
than the First Company were correct, the rule adduced by the first Lithuanian
objection would be open to other criticisms besides that relating to the lack of proof
of the existence of such a rule. These criticisms will be set out first in the following
observations, which will do not more than touch upon the merits of the dispute.

[126] The train of events underlying the present dispute falls within the branch of
international law known as State succession. At a certain moment portions of the old
Russian Empire, including Lithuania, became independent States ; what had
previously been a part of Russia, of the Russian people and of the Russian
authorities, was now Estonia, the Estonian people and the Estonian authorities. All
the powers which the Estonian Government can now exercise are new in the sense
that these same powers previously belonged to another State, namely Russia.

[127] There exists no general statute governing the part of international law relating
to State succession, and the treaties which deal with the matter, such as the Treaty of
Peace of Tartu between Russia and Estonia, signed on February 2nd, 1920, which
came into force on March 29th, 1920, define sometimes [p32] one part, sometimes
another of the law of State succession; all depends on the degree of importance
attributed by the parties to the particular treaty to these sections of international law
in the actual conditions which confront them. That being so, it will be seen that the
question of the transfer of the registered offices of joint-stock companies and
consequently the question of their nationality would have assumed another aspect if
Russia had not passed through a tremendous revolution leading to a very far-
reaching nationalization of private property, but had remained a State attaching great
importance to the inviolability of private property.

[128] A treaty such as the Treaty of Tartu may provide that the local inhabitants and
likewise corporations, whether joint-stock companies or otherwise, which are
situated in the territory of the new State, shall acquire the latter's nationality. The
Treaty of Tartu does not say so expressis verbis. On the other hand, other aspects of
the law of State succession were dealt with therein in special articles covering such
matters as debts due to the Russian Treasury by Estonian subjects, which debts
passed into the hands of Estonia under Article XI, paragraph 2.

[129] But whether or not dealt with in the Treaty, the legal life of the new State in
all its aspects proceeds in succession to the legal life of the old State. Thus in all
matters where the Government of the latter had jurisdiction, its place is now' taken
by the Government of the new State. This holds good as regards diplomatic
protection. If the Estonian contention that the Esimene is the same as the First
Company were correct, the diplomatic protection of the Company would until a
certain date have been a matter for the Russian Government, but after that date it
would have fallen to the Estonian Government. It is the same principle as that found
in Article XI, paragraph 2, under which at a certain date debts owing to the Russian
Treasury passed into the hands of Estonia, and it is difficult to see why a "claim"
against a third State arising out of an unlawful act should not also pass from the old
to the new State. Regarded from this aspect of the law of State succession and
this is how the present dispute should be envisaged there is nothing surprising in
the fact that Estonia should have had the right to take up a case which previously
only Russia could have espoused. Such a "succession" is an absolutely characteristic
and even essential feature of the law of State succession. The successor State is
continually exercising rights which previously belonged exclusively to the old State,
and the same holds good as regards obligations. Accordingly it would be quite
normal that in this case the successor State should have protected both
diplomatically and before [p33] the Court a company the diplomatic protection of
which formerly fell to Russia alone.

[130] As has already been said, the rule that a claim must be a national claim not
only at the time of its presentation but also at the time when the injury was suffered,
if it were really a hard and fast rule, would apply not only if the Lithuanian
contention that the Esimene was only founded in 1923 were correct, but also if the
Estonian contention were well-founded. It follows from what has been said above
that it cannot be applied in the latter alternative. But apart from this the Lithuanian
Agent has not succeeded in establishing the existence of the rule in the absolute
form imputed to it by the Lithuanian argument.

[131] Those who maintain that this is a hard and fast rule rely mainly on the
jurisprudence of the Claims Commissions (Mixed Commissions). So does the
Lithuanian Agent.

[132] The Mixed Commissions are set up by treaty when, especially after stormy
events such as a revolution or civil war, a great number of the nationals of both
parties to the treaty have suffered injury. A desire to liquidate all these claims leads
the two parties to refer them by treaty to a commission set up especially to deal with
them. Accordingly the commission is a special tribunal for certain groups of the
nationals of both sides, and it is obvious that such treaties have in view only the
nationals of the two parties who have suffered injury, but not non-nationals, who
may be in the same situation and who, in order to take advantage of the existence of
the commission, get themselves naturalized, or nationals who may have bought the
claims of non-nationals. In the domain of treaties setting up Mixed Commissions,
the rule relied on by the Lithuanian Agent is perfectly comprehensible and perhaps
in this sphere it is possible to speak of a rule of international law in the sense that, in
the absence of a definite treaty provision, it must be observed by the Mixed
Commissions.
[133] The Lithuanian Agent, in order to support his contention as to the hard and
fast character of the rule adduced by him, has frequently cited the American
publicist Borchard. In this connection it should be observed that the quotation on
page 19 of the Lithuanian Preliminary Objections gives the impression that
Borchard, in his classic work, had laid down the rule that a claim must be a national
claim not only at the time of its presentation but also at the time of the injury as a
rule of general application. But if one continues to read on page 660 of Diplomatic
Protection of Citizens abroad, one realizes that Borchard really only has in mind the
line of [p34] conduct of the United States Department of State in the sphere of the
Claims Commissions. And the heading of paragraph 306 of Borchard explains that
this paragraph is merely concerned with the impossibility of "nationalizing" a claim
whether by the naturalization of the person advancing it or by the assignment of the
claim to a national. Accordingly he is dealing with abuses with which the Mixed
Commissions have constantly had to contend, but which are not present in the
Panevezys-Saldutiskis railway case.

[134] If therefore Borchard's book is not relevant in the present case, the same
applies with regard to the learned note of MM. de Lapradelle and Politis on the
Washington Mixed Commission of December 31st, 1862, which note is cited on
page 21 of the Lithuanian Preliminary Objections. In this note the part devoted to
the question of nationality begins with the following sentence : "Questions of
nationality are frequently put to Mixed Commissions." And some lines later: "In
Mixed Commissions, protection and nationality coincide. The States which set them
up only make them available to their respective nationals." It follows that this note is
only concerned with "Claims Commissions" set up by conventions and which the
contracting parties place at the exclusive disposal of their nationals. Moreover there
is nothing surprising in this, since the note deals only with such a mixed commission
and is not concerned with international jurisdiction in general.

[135] The passage quoted on page 21 of the Lithuanian Preliminary Objections : "In
the Medina case the theory of nationality is definitely and frankly introduced into
arbitration proceedings. And since then it has consistently developed", might give
the impression that the passage was intended to cover the whole sphere of
arbitration. But the context shows that this is not so. Moreover the note is careful to
emphasize the distinction between Mixed Commissions and arbitration properly so-
called: on page 179 it says that, in special circumstances, that is to say when all the
claims come from one side only when therefore reciprocity is absent "the
Mixed Commission nearly approaches an arbitration properly so-called".

[136] In the Institute of International Law, Borchard attempted to generalize that

which in his book related only to Mixed Commissions, and he then said a thing
which should be stressed and which indeed is quoted on page 20 of the Preliminary
Objections. "An extensive jurisprudence has established and crystallized the rule to
the effect that a claimant must have possessed the nationality of the claimant State
when the claim originated" (Year Book of the Institute of International Law, 1931, I,
p. 282). The jurisprudence referred to by Borchard and quoted [p35] by him is still
that of Mixed Commissions. It may be that this jurisprudence has crystallized the
rule which Borchard has in mind. But it may be observed that "crystallize" implies
the idea of rigidity. When the Court has to apply unwritten law, of course it often
encounters difficulties. But there are also advantages, in particular the advantage
that such rules of law, not being written, are precisely not rigid. It will suffice to
read, inter alia, the observations of M. Politis (Year Book, 1931, II, pp. 206-209) to
see that it is a happy thing that the rule adduced by Lithuania, which may be binding
in a certain number of cases, is by no means crystallized as a general rule. And in
this connection the question also arises whether it is reasonable to describe as an
unwritten rule of international law a rule which would entail that, when a change of
sovereignty takes place, the new State or the State which has increased its territory
would not be able to espouse any claim of any of its new nationals in regard to
injury suffered before the change of nationality. It may also be questioned whether
indeed it is any part of the Court's task to contribute towards the crystallization of
unwritten rules of law which would lead to such inequitable results.

[137] It follows from the foregoing that the Lithuanian Agent has not succeeded in
establishing the existence, in the absolute form alleged by him, of the rule of
international law to the effect that a claim must be a national claim not only at the
time of its presentation but also at the time when the injury was suffered, and that
this rule cannot resist the normal operation of the law of State succession.

[138] As the basis on which the first Lithuanian preliminary objection rests is thus
shown to be non-existant, that objection should have been rejected, and its rejection
would have been possible without prejudging the merits of the case.

***

[139] The second Lithuanian objection, which is likewise preliminary in character,

is of the same pattern as the first. It also adduces a rule of international law, "the rule
requiring the exhaustion of local remedies". The Lithuanian Agent in his speech on
June 13th, 1938, said that the rule would always be binding as between the two
States unless it had been set aside by a treaty, and, in Lithuania's contention, no such
treaty existed.

[140] It is this latter point which is open to doubt. It would seem that Lithuania
cannot rely upon this rule as against Estonia for the very reason that the acceptance
by the two [p36] States of the Court's compulsory jurisdiction under Article 36 of
the Court's Statute, which acceptance is unreserved (Series D., No. 6, p. 42 ; Series
E., No. 11, p. 257), implies the setting aside of the rule in question in relations
between the two States. We have here an exception to the rule which is accepted in
principle by Lithuania, but which in that country's contention does not operate in the
present case.

[141] The rule that the means of redress afforded by the national courts must be
exhausted before a government can take up the case of one of its nationals against a
foreign government is a rule of conduct which has been observed for a very long
time. It is a rule the observance of which dates back to the remote past, a past
antedating by far the "general and logically coordinated theory of State
responsibility", as M. De Visscher has called it, a theory which dates from the
beginning of this century and which owes its origin to the remarkable German
science of Laband and after him of Triepel.

[142] When a person approaches his government with a view to getting it to take up
his case against a foreign government, the former government will begin by
ascertaining whether the remedies afforded by the latter's courts have been
exhausted. If they have not, it will advise its national to apply to those courts before
it can take up the case on his behalf.

[143] Reciprocally, when a government receives a diplomatic complaint regarding a

foreigner, if the latter has not yet exhausted the remedies afforded him by the
national courts, that government will reply to the other government that the outcome
of action before the national courts or other authorities must be awaited. The same
will hold good if the diplomatic representations take the form of a proposal for
arbitration.

[144] The application of the local remedies rule is not restricted solely to diplomatic
relations between governments. Instances of its application are also to be found in
other spheres of international administration. Thus when the Central Commission on
the Navigation of the Rhine was assigned the task 6i dealing with complaints
regarding the non-observance of international law governing the Rhine, it also
determined to apply the rule.

[145] Though therefore the rule is normally followed in international practice, there
are also cases where it has not been followed. There are for instance cases where a
settlement of the claim by diplomacy has been effected notwithstanding the non-
exhaustion of local remedies, and also cases where an arbitrator has been appointed
who was to adjudicate in spite of the fact that all the national courts competent to
deal with [p37] the claim had not rendered a decision. When an arbitrator is
appointed in such circumstances, this constitutes a "prorogation" of jurisdiction.

[146] The local remedies rule encountered an important landmark in its history
when ad hoc arbitrations, the special agreements for which are not based on
compulsory arbitration clauses which at that date did not yet exist, began to be
replaced by such clauses or even by general arbitration conventions in which the
contracting States agreed beforehand to submit to arbitration certain categories of
legal disputes or even all such disputes which might arise. Compulsory or
institutional arbitration, as Lammasch calls it, constitutes, in so far as concerns
disputes in which one government is taking up the case of one of its nationals, a
"prorogation" of jurisdiction provided for in advance. As regards a particular dispute
it has the same effect as an agreement ad hoc with reference to a dispute in which
the local remedies have not been exhausted. In fact, compulsory arbitration,
accepted unconditionally, constitutes an exception to the applicability of the local
remedies rule.

[147] So true is this that when, at the instigation of the 1899 Peace Conference,
governments began to conclude general arbitration conventions, they realized the
necessity of making an explicit reservation in such conventions regarding the local
remedies rule if they wished to maintain that rule. Without such a reservation,
compulsory arbitration accepted beforehand, unconditionally, would constitute a
"prorogation" of jurisdiction whenever arbitration was obligatorily resorted to before
local remedies had been exhausted. On the other hand, the making of a reservation
postpones compulsory arbitration until the local courts have adjudicated.

[148] One of the first examples of this reservation is to be found in the General
Arbitration Convention between Denmark and the Netherlands of February 12th,
1904; and in Article 6 of the General Treaty of Arbitration between Italy and the
Netherlands of November 20th, 1909, we already find a formula very much like that
to be met with more and more frequently in compulsory jurisdiction or arbitration
conventions. Article 6 of the General Arbitration Treaty between Italy and the
Netherlands is as follows :

"In questions falling under the jurisdiction of the national judicial authorities,
according to the territorial laws, the Contracting Parties are entitled not to submit the
dispute to arbitration until the competent national courts have delivered a final
decision, except in the case of a denial of justice." [p38]

[149] A perusal of the collection of texts governing the Court's jurisdiction in Series
D., No. 6, and in the addenda to that collection, will suffice to realize that in a very
large number of conventions providing for the Court's compulsory jurisdiction, this
compulsory jurisdiction does not exist so long as local remedies have not been
exhausted. Thus for instance Article 3 of the Locarno Arbitration Conventions of
1925 runs as follows :

"In the case of a dispute the occasion of which, according to the municipal law of
one of the Parties, falls within the competence of the national courts of such Party,
the matter in dispute shall not be submitted to the procedure laid down in the present
Convention until a judgment with final effect has been pronounced, within a
reasonable time, by the competent national judicial authority."

[150] The General Act of Conciliation, Judicial Settlement and Arbitration, signed
at Geneva on September 26th, 1928, contains an article No. 31 the wording of
which very much resembles that of the Locarno instruments. This article is as
follows:

"1. In the case of a dispute the occasion of which, according to the municipal law of
one of the Parties, falls within the competence of its judicial or administrative
authorities, the Party in question may object to the matter in dispute being submitted
for settlement by the different methods laid down in the present General Act until a
decision with final effect has been pronounced, within a reasonable time, by the
competent authority.
2. In such a case, the Party which desires to resort to the procedures laid down in the
present General Act must notify the other Party of its intention within a period of
one year from the date of the afore-mentioned decision."

[151] It is not without interest to observe that both the text of Locarno and that of
the General Act, as well as the numerous treaties based on the text of these
important instruments, speak of disputes between States the subject (occasion) of
which falls within the competence of the courts (judicial or administrative
authorities) of one of the parties to the treaty. In a case where one of the parties has
espoused the claim of a physical or juristic person, the dispute between the two
States has therefore precisely the same subject (occasion) as the dispute between the
physical or juristic person and one of the two States.

[152] It seems clear that in all cases where the jurisdiction of the Court is
conditional upon the exhaustion of local remedies, an objection to the effect that an
application presented before such remedies have been exhausted cannot be
entertained must be sustained by the Court.

[153] The position however is different when the Court's jurisdiction is accepted
unconditionally. In the case, the Court's compulsory [p39] jurisdiction, if all the
remedies afforded by the national courts have not been exhausted, constitutes a
"prorogation" of jurisdiction; the Court is competent even before exhaustion of local
remedies.

[154] This is the position in the present case; for neither Article 36, paragraph 2, of
the Court's Statute nor the Lithuanian and Estonian declarations contain a
reservation respecting the exhaustion of local remedies.

[155] It follows from the foregoing that the local remedies rule cannot operate in the
present case. It is set aside by the unconditional acceptance of the Court's
jurisdiction.

[156] The same would hold good if an objection had been lodged based, not on the
non-exhaustion of the remedies afforded by the national courts but on the non-
exhaustion of international remedies, that is to say the diplomatic channel. In this
connection, the Court in Judgment No. 6, in the case concerning certain German
interests in Polish Upper Silesia, says that if a compulsory jurisdiction clause does
not stipulate that diplomatic negotiations must first be tried, recourse may be had to
the Court as soon as one of the parties considers that a difference of opinion exists
(p. 14).

[157] It is true that some States have been led to attach very great importance to the
local remedies rule because pressure, which has sometimes been unjustified, has
been brought to bear on them in order to induce them to recognize private claims
espoused by a government, although the remedies of municipal law have not been
exhausted. This circumstance however cannot invalidate the foregoing
considerations.

[158] Three further observations may be made.

[159] In the first place it has been said that the local remedies rule is implied in
Article 36 of the Court's Statute. When one considers the influence which the new
conception of compulsory arbitration has exercised on the old practice in regard to
the local remedies rule and that in order to maintain that rule in force side by side
with compulsory arbitration, it has been held necessary to make an express
reservation regarding it in general arbitration or jurisdictional conventions, it will
perhaps be realized that it is difficult to admit the existence of an implied reference
in view of so many explicit reservations.

[160] It has also been said that if the view put forward above were correct, the result
would be that governments would hesitate much before renewing or signing
declarations accepting the optional clause. It would seem that such hesitation is
unnecessary, for practice shows that these declarations often comprise a fairly wide
range of reservations. Thus, several Dominions when signing their declarations
have, in certain [p40] conditions, made a reservation respecting prior recourse to the
Council of the League of Nations. Accordingly, there is nothing to prevent States
from making a condition respecting the exhaustion of local remedies.

[161] In the third place, it has been said that since the Court, under Article 38 of the.
Statute of the Court, must apply the general principles of law recognized by
civilized nations, it must apply the local remedies rule. This obligation is not denied.
But one must also not lose sight of the fact that this is a rule to which there are many
exceptions. It is by no means a rule of public police which States must treat as
sacrosanct. They do not do so when they arrange an ad hoc arbitration without
previous exhaustion of local remedies ; they neither do when they accept the Court's
jurisdiction in advance without making the usual reservation concerning the rule.
The Court itself in Judgment No. 14, page 19 (the Serbian Loans case), recalled that
there were cases in which the rule did not apply.

[162] Even disregarding for the moment what has been said above, it is to be
observed that the highest court in Lithuania, the Lithuanian Supreme Court, in its
judgment of March 16th/26th, 1934, pronounced so definitely in regard to a cardinal
point which, if accepted by the Court, would entail complete success for Lithuania
in this case, that it would be useless for the Company to apply to the Lithuanian
courts before the Estonian Government took up its case before the Court. I refer to
the question whether the legal personality of the First Company persists in the
Esimene Company, or whether on the contrary the Esimene is a new company. The
Supreme Court of Lithuania definitely said that the Esimene was a new company.
The following are the relevant passages :

"The defendant cited in this case as liable for the bond is not the First Company of
Secondary Railways in Russia, with its Board of Directors in Petrograd, but the First
Company of Secondary Railways in Russia, with its Board of Directors at Tallinn in
Estonia and whose managing director, Paul Klompus, at present resides at Kaunas,
at the Lithuania Hotel, No. 9, Daukant Street. Consequently, in order to bring this
case within the jurisdiction of the Lithuanian courts, a domicile has been artificially
created in breach of Article 220 of the Code of Civil Procedure, which indicates
where a company is to be sued.
More especially since, as may be seen from the evidence produced by the defendant,
no company exists in Estonia in whose name the bond was issued and whose
statutes were in force in 1892, but there is a company newly founded under the
name [p41] of the Esimene Juurdeveo Raudteede Selts Venemaal (which, translated,
may mean : 'First Company of Secondary Railways in Russia')."

[163] It is difficult to imagine a clearer example of a definite pronouncement by a

highest national court on a question which decides the issue in favour of one of the
two Parties before the Court. In such a case an objection based on the local remedies
rule is inapplicable, even apart from what had been said concerning the impossibility
of presenting this objection in view of the unconditional acceptance by the two
Parties of the Court's compulsory jurisdiction under Article 36 of the Court's Statute.

(Signed) V. Eysinga. [p42]

Dissenting Opinion by Mr. Hudson.

[164] This is the first occasion in its history upon which this Court has upheld a
preliminary objection not offered as a challenge to the Court's jurisdiction. The
taking of this step is a matter of importance, and as I am unable to share the views
which have led to it, I feel that it is incumbent upon me to set forth my opinion in
dissent.

[165] At the threshold of this case is the question whether the two objections
presented by the Lithuanian Government the one relating to the national
character of the Estonian claims at the time of the injury complained of, and the
other relating to the alleged non-exhaustion of local remedies have a character
which requires them to be dealt with as preliminary objections. The Estonian
Government contends that the objections lack this character, that instead of being
preliminary objections they are in reality defenses offered by the Lithuanian
Government to the action instituted by Estonia, and that they should therefore be
rejected as preliminary objections.

[166] To a certain extent, it may be thought that this question has already been
answered, for in two stages procedural provisions of Article 62 of the Rules of Court
have been applied to the Lithuanian objections. In a first stage, paragraph 3 of
Article 62 of the Rules providing for the suspension of the proceedings on the merits
and the fixing of time-limits for the presentation of observations on the objections,
was applied as a matter of routine by the President's Order of March 15th, 1938. In a
second stage, paragraph 5 of Article 62 of the Rules providing for a possible joinder
of objections to the merits, was applied by the Court's Order of June 30th, 1938
(Series A/B, No. 75). Yet it was expressly stated in the Court's Order (p. 6) that, "at
the present stage of the proceedings, a decision cannot be taken either as to the
preliminary character of the objections or on the question whether they are well-
founded" ; it being thought that "any such decision would raise questions of fact and
law .... closely linked to the merits". Even if it must be said, therefore, that in June of
last year the Lithuanian objections were found to have a preliminary character for
the purpose of applying a procedural provision in Article 62 of the Rules, the
question is still open whether at the present stage of the case the objections have
such a preliminary character that the Court is now required to deal with them before
proceeding to give a judgment on the merits. [p43]

[167] The purpose of the joinder effected by the Court's Order of June 30th, 1938,
was stated to be to enable the Court to "adjudicate in one and the same judgment
upon the objections and, if need be, on the merits". If either of the objections has
preliminary character, it is now for the Court to adjudge whether it is well-founded.
If either objection does not have preliminary character, it should be rejected by the
Court ; but as the Court recognized at least implicitly in the Borchgrave case (Series
A/B, No. 72), the rejection of an objection will not prevent the same question from
being raised as a defense to the merits of the case.

***

[168] It is essentially a question of procedure whether an objection has preliminary

character. The answer to this question is not to be found in the Statute of the Court,
for preliminary objections are not there referred to ; the framers of the Statute wisely
left to the Court (Art. 30) a wide latitude in framing "rules for regulating its
procedure". Nor is the question answered by the Rules of Court adopted in
pursuance of the provision in Article 30 of the Statute. The 1922 Rules included no
mention of preliminary objections; Article 38 of the 1926 Rules, which was
continued without change in the 1931 Rules and which served as the basis of Article
62 of the 1936 Rules, contained no definition of a preliminary objection ; and
Article 62 similarly leaves open the question now before the Court. One may say
that Article 62 of the 1936 Rules furnishes some aid for framing a definition in the
distinction so sharply drawn between proceedings relating to the merits and
proceedings relating to an objection ; but much more is needed for definite
guidance. It would seem that when the Rules on preliminary objections were being
drafted, the attention of the Court was chiefly concerned with objections to
jurisdiction (Series D, addendum to No. 2, pp. 78-94; third addendum to No. 2, pp.
84-97, 148-150, 644-649, 705-708).

[169] One turns next, in search of the elements of preliminary character, to the
jurisprudence of the Court. When it was first confronted with an objection, in the
Mavrommatis case in 1924, the Court referred to the silence of the Statute and Rules
regarding the procedure to be followed, and asserted a "liberty [p44] to adopt the
principle which it considers best calculated to ensure the [good] administration of
justice, most suited to procedure before an international tribunal and most in
conformity with the fundamental principles of international law" (Series A, No. 2, p.
16). Though objections have been made in a number of cases before the Court, it has
not always been necessary to adjudicate upon them. In a number of cases objections
relating to the Court's jurisdiction have been upheld; in a somewhat larger number
of cases such objections have been rejected. Indeed, objections which have been the
subject of adjudication have related almost invariably [FN1] to the jurisdiction or
competence of the Court. It may be partly for this reason that the adjudications have
not established any criteria for determining when an objection is to be classed as
preliminary.

-----------------------------------------------------------------------------------------------------
----------------
[FN1] An objection to the admissibility of the suit was overruled in the case relating
to German interests in Polish Upper Silesia (Series A, No. 6, pp. 18-21); and a fin de
non-recevoir "incidentally raised" in the same case was also rejected (pp. 21-22).
-----------------------------------------------------------------------------------------------------
----------------

[170] Nor can definite criteria for determining preliminary character be derived from
a study of the jurisprudence of other international tribunals. The procedure of such
tribunals varies greatly, and it is not infrequently shaped with reference to special
provisions in the comfromis creating the tribunal. For example, the claims
commissions set up a decade or more ago by Mexico in co-operation with the
United States of America, Great Britain, France, Germany, Italy and Spain,
employed various forms of dilatory pleas demurrers, motions to dismiss, motions
to reject, and motions to declare claims inadmissible ; and these forms were made to
serve a variety of purposes. (See Feller, Mexican Claims Commissions, 1935, pp.
241-246.)

[171] Leaving aside objections relating to the Court's jurisdiction either ratione
person or ratione materi, can any logical line be drawn which would determine
the preliminary character of an objection ? It serves little purpose to say that any
objection is preliminary which is presented as a bar to the consideration of a case on
the merits ; that merely has the effect of replacing one problem by another it
would substitute the problem of defining merits for the problem of defining
preliminary objections.

[172] If the Court is not bound by logic to give a particular solution to this
procedural question, it is bound to consider the consequences which its own system
of procedure would attach to a determination that an objection is preliminary. Not
all [p45] of these consequences are set forth in Article 62 of the Rules of Court. The
filing of a preliminary objection has the effect of suspending the normal course of
the procedure in a case, and for the normal procedure it substitutes at least
temporarily a special procedure relating to the objection only. In a sense, it may be
said that the proceeding on the preliminary objection is independent of the
proceeding which for the time being it replaces. A new entry of it is made in the
"General List of cases submitted to the Court" provided for in Article 20 of the
Rules ; thus, No. 74 of that list is entitled "Panevezys-Saldutiskis Railway (merits)",
while No. 76 is entitled "Panevezys-Saldutiskis Railway (preliminary objections)".
(See Series E, No. 14, pp. 108-109.) In the new proceeding, the State which has
presented the objection occupies a position in some respects equivalent to that of an
applicant. (Series E, No. 3, p. 207.) Under the practice and procedure now
prevailing, unless a preliminary objection is sustained, the parties thus have to bear
the burden of an expenditure of time, effort and money for what is, in fact, a double
appearance before the Court.

[173] It must be admitted that the consequences which attach, or may attach, to the
presentation of a preliminary objection under the present practice are therefore
serious, so serious that the Court can hardly be justified in greatly enlarging the
category of preliminary objections. Objections to the jurisdiction of the Court have a
character which definitely stamps them as preliminary ; but it is not necessary that
objections which do not relate to the Court's jurisdiction should be too readily
admitted to that category. No essential interest will be neglected if in some cases
perhaps the lines are not to be rigidly drawn in advance the objection is denied to
have a character which requires it to be considered apart from and in advance of the
defenses offered on the merits.

[174] I conclude, therefore, that the Court must reserve to itself some latitude in
dealing with objections presented as preliminary, and that in exercising the "liberty
to adopt the principle which it considers best calculated to ensure the [good]
administration of justice", it may hesitate to admit the preliminary character of
certain types of objections which do not raise questions of jurisdiction.

***

[175] After these preliminary observations, I must address myself to the special
problem of this case, whether the two objections [p46] presented by the Lithuanian
Government should be said to have preliminary character in the sense that they must
be considered apart from and prior to any consideration of the defenses on the merits
which have been advanced by Lithuania.

[176] It may first be observed that neither of the Lithuanian objections can be said to
relate to the jurisdiction of the Court to deal with this case. The Estonian application
referred to the declarations made by Estonia and Lithuania under Article 36,
paragraph 2, of the Statute ; and the Lithuanian Government has at no time
challenged this basis of the Court's jurisdiction. The question raised by the first
objection as to the national character of the Estonian claims is sometimes said to
relate to the qualification of the State to espouse a claim ; but it is in no sense a
question as to the competence of the Court. Cases might arise in which the
exhaustion of local remedies would be presented as a jurisdictional question for
example, Article 31 of the Geneva General Act of September 26th, 1928, follows
provisions in numerous arbitration treaties in permitting a party to a dispute to
object to the dispute's "being submitted for settlement by the different methods laid
down in the present General Act" until its competent judicial or administrative
authority has pronounced a final decision ; but no such provision obtains between
Estonia and Lithuania.

[177] I agree with the conclusion reached by the Court that the first Lithuanian
objection, to the effect that the Estonian Government has failed to observe a rule of
international law which requires that "a claim must be a national claim not only at
the time of its presentation but also at the time when the injury was suffered", is not
a preliminary objection in the sense that it must be considered by the Court apart
from and prior to a consideration of defenses presented on the merits.

[178] The objection would call for a decision by the Court, not only as to whether
such a rule of international law exists, but also as to its applicability to the facts of
this case. Assuming that the rule may be said to exist, Estonia cannot be found to
have failed to observe it in this case without an enquiry into numerous questions
which have been raised in presenting the case on its merits. Asked to say whether
Estonia's claims possessed Estonian national character at the time of the injury [p47]
complained of, the Court can reply to this question only after enquiring into the
effect of various Soviet decrees on the existence of the Russian company, the effect
of certain provisions of the Treaty of Tartu between Estonia and the Russian
Socialist Federated Soviet Republic, the application of Estonian laws concerning
Russian companies, the extent to which the alleged change of nationality of the
Russian company was voluntary, and other questions. In other terms, the objection
raises the principal question discussed in connection with the merits, that of the
identity of the Esimene Company with the Russian company, or of the former's
succession to the latter.

[179] Where an objection thus raises so many of the questions which pertain to the
merits of a case, no useful purpose is to be served by requiring it to be dealt with
apart from a consideration of the merits. Hence, this first Lithuanian objection
should be rejected as lacking a preliminary character.

[180] I cannot agree with the conclusion reached by the Court that the second
Lithuanian objection, based upon the alleged "non-observance by the Estonian
Government of the rule of international law requiring the exhaustion of the remedies
afforded by municipal law", has a preliminary character which requires it to be dealt
with apart from and prior to a consideration of the defenses presented on the merits,
and which in this case justifies a holding that the Estonian claim cannot be
entertained. In my view, the objection lacks that character, and it ought to be
rejected ; hence the Estonian claim should be entertained, even if the principal
Estonian submissions should later have to be rejected because of the non-exhaustion
of local remedies.

[181] It is a very important rule of international law that local remedies must have
been exhausted without redress before a State may successfully espouse a claim of
its national against another State. This is not a rule of procedure. It is not merely a
matter of orderly conduct. It is a part of the substantive law as to international, i.e.
State-to-State, responsibility. If adequate redress for the injury is available to the
person who suffered it, if such person has only to reach out to avail himself of such
redress, there is no basis for a claim to be espoused by the State of which such
person is a national. Until the available means of local redress have been exhausted,
no international responsibility can arise. [p48]

[182] This is not a rule of thumb, however, to be applied in a more or less automatic
fashion. In each case account is to be taken of the circumstances surrounding the
means of redress which a State may hold out to the nationals of other States, and the
facts may justify an international tribunal in saying that international responsibility
has arisen even though local remedies have not been exhausted. Hence it is
sometimes said that there are exceptions to the rule ; that the rule does not apply if in
fact there are no local remedies to exhaust, or if it can be known in advance that the
exhaustion of local remedies would yield no redress.

[183] The second Lithuanian objection raises the question whether the rule is to be
applied on the facts of this case. Even if this question is susceptible of segregation, I
can see no advantage in saying that it must be dealt with apart from and prior to a
consideration of the defenses made on the merits. It is a question of substantive law.
As such I think it can better be dealt with as one of the defenses to the Estonian case,
along with the other defenses advanced. This solution would have the added
advantage of enabling the Court to deal with the other defenses, and perhaps thus to
contribute more helpfully to a settlement of the dispute between the Parties.

(Signed) Manley O. Hudson. [p49]

Dissenting Opinion by M. Erich.

[Translation.]
[184] Being unable, much to my regret, to concur in the Court's judgment, I feel
called upon to state my separate opinion on the points in the case upon which the
judgment gives a decision.
[185] In reply to the application by the Estonian Government, the Government of
Lithuania lodged with the Court two preliminary objections, one of which is of a
peremptory character, precluding debate, while the second may, in this case, leave
open the possibility of the Court's subsequently examining the merits of the case to
which its judgment refers.

[186] Both objections are in my opinion strictly preliminary. The defendant Party
placed them rightly in the order in which they stand. The first objection, in its
essence, is even more preliminary than the second, for the following reasons :

[187] The so-called nationality of the claim is really a metaphorical way of

speaking, an inexact term likely to cause some confusion and even at times to be
construed too widely. The alleged absence from the claim of a certain "nationality"
does not affect the claim itself. It refers to the relation between a private person and
a State. The individual or legal personality concerned may also have a claim which
is materially well-founded, but in order that he may be able to assert it in the
international sphere and bring an action against a foreign State, the State to which he
has recourse must be duly qualified to intervene on his behalf.

[188] The purpose of the first objection is to dispute Estonia's right to defend the
action brought by the Esimene Company. The objection opposes the institution by
Estonia of the proceedings before the Court. The terms in which it is couched may
conceal its purpose, but, stripped of its outward form, it aims at disqualifying the
applicant Party, at excluding it as a party to the proceedings and at preventing the
whole examination of the case by the Court.

[189] Accordingly, the first question that arises is this : can Estonia today grant her
diplomatic protection to a national, even if the latter's claim dates from a time when
he could not then possess Estonian nationality, because at that time such nationality
did not exist in law ? Is this legal capacity of Estonia well-founded, supposing that
Estonian nationality has been required through some international event? [p50]

[190] Had the objection been lodged in that form, its preliminary character would
have been unmistakable.

[191] In replying to such a question, we pronounce upon Estonia's capacity, at the

present time, to sue before the Court and we do not prejudge our later attitude
towards the merits of the case.

[192] If, in such circumstances, we admit the principle that Estonia has the
necessary title to espouse the cause of the Esimene Company, we are not in any way
prejudging subsequent questions as to the origin of the Company, its possible
connection, or even identity, with the former Russian Company referred to in the
additional Article XI of the Treaty of Tartu, the interpretation of certain clauses in
that Treaty, etc. Should it appear later that the Company was mistaken about its
origins and the date at which it acquired its legal personality, it will thereby be
established that the Estonian State, despite the tie of nationality between itself and
the protected person, was wrong in espousing the case of a person who is himself
not qualified in the particular matter at issue. However, the real preliminary question
concerning Estonia's present capacity as a Party to the proceedings falls in the first
place to be considered in the more limited sense mentioned above. If that capacity
had been admitted, the proceedings could have taken their normal course without
any relevant point being prejudged.

[193] I am not unaware that the first objection has been taken as it stands, on its
literal terms, on the basis of the "nationality of the claim", the "nationality of
interests", and without extracting the essential meaning of the objection, namely, the
incapacity of Estonia as a Party to the case at issue.

[194] On this basis it may admittedly be difficult to dispose of the first objection
without touching upon certain questions of merit necessarily related thereto. I think,
however, that we can do so without committing ourselves to an opinion and without
prejudice to - our final decision. According to an oft-cited formula, it is permissible
and on occasions necessary to "touch upon" merits when deciding upon a
preliminary objection. Lithuania's first objection may, I think, be dealt with in this
way, even when examined in the light of the terms used in it.

[195] In any event, it was essential, in my opinion, to decide before all else upon the
fundamental point upon which the whole case rests, namely, Estonia's legal
capacity. Estonia's title in this matter having been disputed, it should have been
decided whether she could or could not appear as a Party to the proceedings; in any
event, this objection, which is essentially a peremptory one, should in my opinion
have taken [p51] precedence of any other. It may be argued that a decision allowing
the first objection would rule out the second. But what interest could still attach to
the second, in that case ? None whatever for Estonia, if she were disqualified, and
practically none for the private company, if thus deprived of international protection.

[196] A decision concerning the second objection, given before a decision on the
first, appears to imply at any rate a provisional recognition of Estonia as a qualified
Party in the case. The Agent for the Lithuanian Government may have had this
consequence in mind, when he advanced the following argument, which incidentally
is inconsistent with the first objection (Oral Statements, Preliminary Objections, p.
64) : 'The Lithuanian Government only asks that, before submitting to the Court a
claim regarding the alleged violation of its national's rights, the Estonian
Government shall observe the rule prescribing the preliminary exhaustion of all
local remedies."

[197] I may be allowed to mention a point which may serve to emphasize some of
the arguments I have been developing. In 1936, that is, at the beginning of the
diplomatic conversations between the two Governments, the Government of
Lithuania, being in full possession of the facts, should, once it desired to dispute the
right of the other Party to intervene, have lodged this objection, reserving the right
to maintain it, if necessary, despite the continued conversations on the merits of the
claim. If this had been done, Estonia would have been justified in regarding this
difference of opinion as involving a point of international law which could be
submitted directly to the Court under Article 36, paragraph 2, of the Statute. The
dispute in that case would have been strictly a dispute between States.

***

[198] With regard to the second objection, which the Court has allowed, I have the
following remarks to make :

[199] Its text is not altogether correctly worded. It speaks of the non-observance by
the Estonian Government of the rule requiring exhaustion of remedies afforded by
municipal law. This condition, however, applies to the national concerned, and not
to the protecting State. It is for the State whose protection is asked to see that the
applicant has fulfilled the necessary condition.

[200] The rule of international law concerning exhaustion of local remedies is

generally accepted. It figures in many bilateral [p52] treaties and in general terms in
the "General Act" of 1928, Article 31 of which provides: "In the case of a dispute
the occasion of which, according to the municipal law of one of the parties, falls
within the competence of its judicial or administrative authorities, the party in
question may object to the matter in dispute being submitted for settlement by the
different methods laid down in the present General Act until a decision with final
effect has been pronounced, within a reasonable time, by the competent authority."

[201] If the rule were to be strictly and rigidly observed, and assuming there to be no
doubt that the Esimene's claim falls within the jurisdiction of the Lithuanian courts,
it would have to be admitted that the Company itself has not exhausted local
remedies and that its claim has not yet encountered a final decision.

[202] The rule is generally recognized, but all agree that it is subject to certain
reservations and exceptions; but the terms and scope of these are not easily defined
by definite formul. It is therefore difficult to prove convincingly that an exception
is valid.

[203] The rule is intended to protect States against ill-founded or premature claims
which have not been adequately considered by the competent national authorities. It
is a principle of law the aim of which is eminently practical.

[204] The essential feature of the rule concerning the exhaustion of local remedies is
not therefore that certain things shall have been done or certain formalities observed
before diplomatic protection, in its various forms, can begin to operate on behalf of
the individuals concerned. It may happen that the State to which a claim is presented
may be quite prepared to discuss its merits or even prepared to submit the claim to
an international tribunal, although no final decision has been rendered by the
competent judicial or administrative authority of the country. If in a particular case it
appears from the attitude of the government that it waives this condition and that it
is so to speak prepared to transfer the claim directly to the international plane., it
cannot subsequently retreat from that position.

[205] From the nature of the rule it follows that, practically speaking, local remedies
may have been exhausted even though the interested party itself has not gone as far
as the ultimate tribunal open to it. In actual fact it may happen either that passage
through all the courts to the final court of appeal would be of no real use or effect, or
that the competent authorities may at all events implicitly have passed upon
[p53] essential points of the case in such a way that practically speaking there
remains nothing to "exhaust". A situation of this kind may be tantamount to the
position which the rule as to the exhaustion of local remedies by the interested party
itself is designed to create.

[206] Certain arbitral decisions regarding the question of the exhaustion of local
remedies are based on considerations of this kind. Very rightly a distinction is drawn
between the procedure followed and the practical exhaustion of remedies. In some
cases where the claimant has not gone as far as the ultimate court of appeal
theoretically open to him, it has been held that an exception to the strict rule was
nevertheless justified.

[207] The case now before the Court is a somewhat curious one. When the
Lithuanian Government assures us that local remedies are fully open to the Esimene
Company, its statement is clearly correct. But the essential point is not whether at
the present time these remedies are available or not, but rather what the situation
was before the proceedings now before the Court. And it cannot be denied that the
situation was somewhat obscure. The legal title of the public authorities to
possession of the railway seems to have been more or less vague. Only in the course
of the proceedings before the Court has Lithuania invoked Articles 406 and 408 of
the Civil Law. Even in the Counter-Memorial (p. 27) the Soviet Government is
indicated as the owner of all property belonging to the "First Company" ; the decree
of June 28th, 1918, referred to all its property, "even that outside the borders of the
Soviet Republic". The Lithuanian Council of State declared in its opinion of January
25th, 1933, inter alia: "Having regard to the fact that the Russian nationalization
decrees did not affect .... the property of the First Company, the Lithuanian
Government has only succeeded to the rights which belonged to Russia, in
accordance with the concession granted to that Company...." With regard to the
Esimene Company, the Council of State pronounced upon its legal status in this
passage: "The Esimene Company .... is not legally entitled to submit to the
Lithuanian State any claim in civil law to the Panevezys-Saldutiskis narrow-gauge
railway." It would not appear necessary to consider more closely the question of the
competence of the Lithuanian courts in order to reach that conclusion.

[208] In view of this complexity of the legal position, the Lithuanian courts, if the
Esimene's claim had been referred to them, would probably have been much
embarrassed. No one can say how they would have decided the question of their
own jurisdiction. Now, a reasonable application of the rule concerning the [p54]
exhaustion of local remedies would seem to require that the competent authorities
should be clearly determined in law. In so far as one can judge from the evidence
produced, the authorities have barely informed the Esimene that the courts were at
their disposal; the Company has remained for years under the impression that a
solution of the question could be reached by way of negotiations.

[209] Some features of the Jeglinas case present a somewhat extraordinary and
irregular aspect, but this does not detract from the important nature of the findings
and conclusions of the High Court. The Supreme Court passed upon the question of
identity proprio motu, declaring quite categorically that there was no continuity of
legal personality between the First Russian Company and Esimene. It is to be
supposed that it was after careful consideration that the Court found that the alleged
defendant was not the person against whom the action had been brought. Of course
the Lithuanian Government does not appear as a party in the case, but its views were
doubtless well known.

[210] The Jeglinas case naturally differed from the dispute underlying the Estonian
application to this Court. There is no identity between the said action actually
submitted to the Lithuanian courts and an action that we are imagining brought by
Esimene against the Lithuanian State in virtue of certain rights. However, the
arguments contained in the Supreme Court's judgment, which results in no operative
provisions, but simply annuls the whole proceedings, are of exceptional importance.
The findings and conclusions are decisive in respect of the essence of the claim
submitted by the Esimene Company.

[211] From the point of view of the Lithuanian courts, the judgment of the Supreme
Court dealt a blow to the legal capacity of the Esimene Company to present a claim
respecting the Panevezys-Saldutiskis railway. It seems quite impossible that any
new arguments or evidence capable of overcoming the conviction of the Court could
be produced.

[212] It is clear that the judgment of the Court of Cassation cannot constitute res
judicata with respect to the Esimene's claim. If it were so, there would be no reason
to justify a departure from the general rule. The Court disputes the basis of that
claim by implication only, but nevertheless categorically. Nor can it be imagined
that the judgment of the Supreme Court would have been substantially different if a
case had been brought before it in due form by the Esimene Company against the
State of Lithuania. [p55]

[213] It is also evident that in this matter there is and can be no question of a fixed
rule. The Court was not concerned with the interpretation of certain rules of law; it
denned a legal situation proprio motu. A fixed rule in a case of this kind seems
inconceivable.
[214] The opinion given by the Lithuanian Council of State in 1933, which of
course has no binding force in law, must be regarded as an additional factor of some
importance. In every country the considered opinion of an authority invested with
powers such as those possessed by the Council, is entitled to serious respect,
especially if it seeks to determine a specific legal situation. The attitude of the
Lithuanian Government appears to be based upon this opinion. Incidentally, it
should be noted that the French translation uses the expression : "the Council of
State enacts".

[215] The Lithuanian Government's Rejoinder (p. 38) says: "If the Lithuanian
Government has not restored the railway to the Esimene Company, that is simply
because it is convinced that the Esimene is not the company referred to in the Act of
1897." If that is in the last resort the argument of the defendant Party, it may be
questioned whether the strict observance of the local remedies rule is not implicitly
admitted to be almost entirely superfluous.

***

[216] For the above reasons and after pondering deeply the various aspects of the
question, I have come to the conclusion that in this case there were reasons for
allowing a departure from the general rule for the exhaustion of local remedies. I
would emphasize that such a departure does not in any way invalidate this
recognized rule of international law.

(Signed) R. Erich. [p56]

Annex.

Documents Submitted To The Court.

I.Documents Produced By The Estonian Government.

Preliminary objections.

A. Written proceedings :

1. Statutes of the First Company of Secondary Railways in Russia (1898 version).

2. Imperial Decree of November 21st, 1897, granting to the First Company of
Secondary Railways in Russia a concession for the construction and operation of the
secondary narrow gauge railway between Sventziany and Ponvge.
3. Imperial Decree of June 27th, 1894, granting to the First Company of Secondary
Railways in Russia a concession for the construction and operation of the
Sventziany secondary railway.
4. Treaty of Peace between Russia and Estonia of February 2nd, 1920 (extract).
5. Provisional regulations adopted by the Government of the Estonian Republic on
April 7th, 1920, regarding the administration of joint-stock companies and
partnerships approved by the Russian Government.
6. Ordinance adopted on October 1st, 1921, by the Government of the Estonian
Republic regarding the release from trusteeship of the property of joint-stock
companies.
7. Ordinance of May 27th, 1922, placing the First Company of Secondary Railways
in Russia under trusteeship.
8. Riigi Teataja, lisa 1923, No. 115, p. 1605.
9. Certificate of the Estonian Ministry for Economic Affairs of September 10th,
10. Minutes of the second extraordinary general meeting of shareholders of the First
Company of Secondary Railways in Russia, held at Tallinn on November 2nd, 1923.
11. Statutes of the joint-stock company known as the "First Company of Secondary
Railways in Russia" (Esimene Juurdeveo Raudteede Selts Venemaal) (1923
version).
12. Law adopted by the Estonian Assembly of State on August 4th, 1923, regarding
the repurchase of the railways on the First Company of Secondary Railways in
Russia.
13. Law adopted by the Estonian Assembly of State on December 18th, 1925,
amending the law concerning the repurchase of the railways of the First Company of
Secondary Railways in Russia.
14. Proposal of the Minister of Communications, approved by the Head of the State
on June 18th, 1926.
15. Note of the Director-General of Latvian Railways, Riga, September 29th, 1937,
No. 904.
16. Note of the Estonian Secretary of State, October 9th, 1931.
17. Note of the Estonian Ministry for Economic Affairs, August 18th, 1932.
18. Letter of the Lithuanian Ministry of Communications, October 25th, 1933. [p57]
19. Opinion of the. Lithuanian Council of State of January 25th, 1933, regarding the
legal bases of the claim of the Esimene Juurdeveo Raudteede Selts Venemaal joint-
stock company to the Panevezys-Saldutiskis railway line.
20. Conditions governing the issue by the First Company of Secondary Rail ways
in Russia of debentures for the construction of the Ponvge-Sventziany railway.
21. Judgment of the Supreme Court of Lithuania of March 16th/26th, 1934, in the
case of Jeglinas v. the First Company.
22. Note of the Estonian Minister in Kaunas, December 3rd, 1936.
23. Note of the Lithuanian Minister for For. Aff., December 30th, 1936.
24. Note of the Estonian Minister in Kaunas, February 1st, 1937.
25. Note of the Lithuanian Minister for For. Aff., May 5th, 1937.
26. Soviet decree of June 28th, 1918, concerning the nationalization of the most
important undertakings.
27. Soviet Decree of September 4th, 1918, concerning the liquidation of private
railways.
28. Extract from the commentary on Article 406 of the Civil Law in Worms and
Eliachvitch, Civil Law, II, Moscow, 1913, 167-185.
29. Judgments of the Court of Cassation concerning Article 406 of the Civil Law.
30. Judgments of the Court of Cassation concerning the jurisdiction of the courts in
cases against the Administration.
31. The case of Jeglinas v. the First Company of Secondary Railways in Russia.

B. Oral proceedings :

1. Supplementary articles to the Treaty of Tartu of February 2nd, 1920. Certified

correct French translation.
2. Collection of treaties, agreements and conventions concluded by the R. S. F. S. R.
with foreign States. (Edition of the Commissariat of the People for For. Aff. ; fasc.
I-V, 1922-1923.)

Continuation of the proceedings.

A. Written proceedings :

1. Latvian law of April 20th, 1921, concerning joint-stock companies and

partnerships.
2. Judgment of the English Court of Appeal of May 6th, 1929, in the case of Hoff
Trading Company v. Union Insurance Society and others.
3. Minutes of the extraordinary general meeting of shareholders of the First
Company of Secondary Railways in Russia of March 10th, 1924.
4. Regulations of the Council of Commissaries of the People of March 4th, 1919,
concerning the liquidation of the liabilities of State enterprises.
5. Judgment of the Court of Appeal of Paris (1st Chamber) of June 15th, 1937 in the
case of Nobel v. Lessner and others.
6. Judgment of the Appeal Division of the Mixed Tribunal of Tangiers of May 21st,
1937, in the case of Stella and Johanna Preyer v. Baron de Nolde.
7. The Treaty of Peace between Estonia and Russia signed at Tartu on February 2nd,
1920 (Art. XI).
8. Letter of Professor Piip, former member of the Estonian delegation to the Peace
Conference between Estonia and Russia, former Estonian Minister for For. Aff.,
April 2nd, 1938.
9. Estonian law of March 1st, 1928, concerning the restitution of shares handed over
to the Estonian Government under the Treaty of Peace between Estonia and Russia
(extract).

10. Certificate of the Estonian Chamber of Commerce and Industry, March 31st,
1938.
11. Minutes of the Commission of Chief Engineer Sabalauskas (1927). [p58]

B. Oral proceedings :

1. Letter sent on December 21st, 1938, by the Estonian Legation in Lithuania to the
Board of Directors of the Esimene Juurdeveo Raudteede Selts Venemaal (with two
annexes).
2. Observations of the Estonian Government concerning the operation of the
Panevezys-Saldutiskis railway and the expenditure incurred for its. reorganization
after the great war and the revolution.
3. (a) Deposit certificate for 10,120 shares of the First Company made out by the
Swiss Bank Corporation in London, June 22nd, 1925.
(b) Proxy of the same Bank of the same date.
(c) Proxy of the same Bank of December 3rd, 1926, in respect of 9.959 shares of the
First Company deposited with the Bank.
(d) Certificate of Lloyd's Bank, London, dated December 2nd, 1926, in respect of
the deposit of 8,200 shares of the First Company.
(e) Certificate of the same Bank and bearing the same date in respect of the deposit
of 3,500 shares of the First Company.
4. Map showing the approximate position of the railways which belonged to the
First Company of Secondary Railways in Russia.

II. Documents Produced By The Lithuanian Government.

Preliminary objections.

A. Written proceedings :

1. The Soviet Decree of December 10th, 1921, published on December 28th, 1921,
regarding undertakings having become the property of the State (extract).
2. The Soviet Decree of March 4th, 1919, concerning the liquidation of duties
falling upon State undertakings (extract).
3. Request of the Board of Directors of the First Company of Secondary Railways,
dated March 5th, 1925.
4. Memorandum transmitted by the First Company of Secondary Railways on
November 14th, 1931 (extract).
5. Request of the Board of Directors of the First Company of Secondary Railways,
dated November 14th, 1931.
6. Request of the Board of Directors of the First Company of Secondary Railways,
dated May 20th, 1932.
7. Request of the Board of Directors of the First Company of Secondary Railways,
dated September 15th, 1933 (extract).
8. Letter from the Lithuanian Ministry of Communications, October 25th, 1933.
9. Articles 406 and 408 of the civil laws in force in Lithuania.
10. Interpretation of Article 406 (extracts from the commentary on the civil laws,
prepared by A. Worms and V. Eljachevitsch, 1913).
11. Articles 1 and 2 of the Code of Civil Procedure in force in Lithuania,
12. Interpretation of Articles 1 and 2 of the Code of Civil Procedure in force in
Lithuania (extracts from the commentary on the laws of civil procedure prepared by
V. Isatchenko).
13. Judgment No. 162 rendered in 1887 by the Russian Senate (extract).

B. Oral proceedings :

Official text of the Peace Treaty of Tartu of February 2nd, 1920. [p59]
Continuation of the proceedings.

A. Written proceedings :

1. Minutes of the extraordinary general meeting of shareholders of the First

Company of Secondary Railways in Russia held on November 23rd, 1922.
2. Extracts, translated into French, from the judgment in the case of the Trading
Company L. and J. Hoff v. Union Insurance Society of Canton Ltd. and C. I. de
Rougemont.
3. Request of M. Wolkenstein to the Procurator of the Court of Tallinn-Hapsal.
4. Decree of the Council of Commissaries of the People of June I5th/28th, 1918.
5. Decree of the Council of Commissaries of the People regarding the liquidation of
railways.
6. Note of the Commissariat of the People for For. Aff. dated November 14th, 1938.
7. Calculation of the capital invested in the Panevezys-Saldutiskis railway between
1919 and 1926.
8. Statement of the capital invested in the Panevezys-Saldutiskis railway between
1927 and 1937.
9. List of the locomotives in service on the Panevezys-Saldutiskis railway.
10. List of the waggons in service on the Panevezys-Saldutiskis railway.
11. Information concerning freight carried on the Panevezys-Saldutiskis rail way
line and on the normal gauge lines for the services of that railway.
12. Information concerning receipts from the carriage of mails on the Panevezys-
Saldutiskis railway up to January 1st, 1938.
13. Statement of receipts and expenditure for the period 1919 to 1937 on the
Panevezys-Saldutiskis railway.
14. Lloyd's List Law Reports; Vol. 32, No. 9, fasc. of January 3rd, 1929.

B. Oral proceedings :

Extract from the minutes of the meeting of the Committee of legal advisers to the
Ministries (of the Lithuanian Republic) of November 19th, 1925.

THE PANEVEZYS CASE (ESTONIA V. LITHUANIA)

Forum: Permanent Court of International Justice

Year: 1939
Citation: Series A/B, No. 76 (February 28, 1939)
Link to the Original Text of the Decision
The Government of Estonia filed an application with the court with a request for a judgment to
declare that Lithuania had wrongfully refused to recognise the rights of an Estonian company with
respect to a railway situated in the former Russian territory which had now become Lithuanian,
following the independence of the Baltic Republics. It required that Lithuania make good the
prejudice that the company suffered. Estonia contended that the company in question had
become the owner of the railway, having continued, or succeeded to, a former Russian company.
Lithuania raised two preliminary objections one being that Estonia had not observed the rule of
law that Lithuania claimed existed, to the effect that any claim made by a State must be a national
claim not only at the time of its presentation, but also at the time when the injury to which it refers
was suffered; the second objection related to the failure to exhaust national means of redress
afforded by municipal law, before taking proceedings before an international tribunal.
The court joined the objections to the merits, indicating that Lithuanias first objection could not
be decided without ruling on the merits. Although such an objection was in principle of a
preliminary nature, the Court considered that that was not so in the present case. The grounds of
the objection, namely that the claim lacked national character, could not be separated from those
on which the Lithuanian Government disputed the companys right to the ownership of the railway.
After considering the second objection, the Court found that it was common ground that the
Estonian Company had not instituted any legal proceedings before the Lithuanian courts in order
to establish its title to the railway. For those reasons, the Court declared that the claim presented
by the Estonian Government could not be entertained.

The
Mavrommati
s Palestine
Concessions

Greece v. Britain

Judgment

BEFORE: President: Mm. Loder,

Vice-
Weiss
President:

Lord Finlay, Mm. Niholm, Moore, de Bustamante, Altamira, Oda,

Judges:
Anzilotti, Huber, Pessa,

National
Caloyanni
Judge:
Represente
Greece: H.E. M. Kapsambelis, Greek Minister at The Hague
d By:

United
Sir Cecil J. B. Hurst, K.C.B., K.C., Legal Adviser to the Foreign Office
Kingdom:

http://www.worldcourts.com/pcij/eng/decisions/1924.08.30_mavrommatis.
Perm. Link:
htm

Citation: Mavrommatis Palestine Concessions (Greece v. U.K.), 1924 P.C.I.J. (ser. B)

No. 3 (Aug. 30)
Publication: Publications of the Permanent Court of International Justice Series A No. 2;
Collection of Judgments A.W. Sijthoffs Publishing Company, Leyden, 1924.

[p7]
Objection to the Jurisdiction of the Court Made by His Britannic Majesty's
Government.

[1] [p5] The Court, composed as above, having heard the observations and
conclusions of the Parties, delivers the following judgment:

The facts:

[2] The Government of the Greek Republic, by an application instituting

proceedings filed with the Registry of the Court on May 13th, 1924, in conformity
with Article 40 of the Statute and Article 35 of the Rules of Court, has submitted
to the Permanent Court of International Justice a suit arising out of the alleged
refusal on the part of the Government of Palestine, and consequently also on the
part of His Britannic Majesty's Government, since the year 1921 to recognise to
their full extent the rights acquired by M. Mavrommatis, a Greek subject, under
contracts and agreements concluded by him with the Ottoman authorities in regard
to concessions for certain public works to be constructed in Palestine.

[3] This application concludes with a request that the Court may be pleased to give
judgment to the effect that the Government of Palestine and consequently also the
Government of His Bri-tannic Majesty, have, since 1921, wrongfully refused to
recognise to their full extent the rights acquired by M. Mavrommatis under the
contracts and agreements concluded by him with the Ottoman authorities in regard
to the works specified above, and that the Government of His Britannic Majesty
shall make reparation for the consequent loss incurred by the said Greek subject, a
loss which is estimated at 234,339 together with interest at six per cent as from
July 20th, 1923, the date on which this estimate was made.

[4] The considerations leading up to these conclusions have been developed in the
Case filed with the Court by the claimant on May 23rd, 1924. It is therein
specified that the Greek Government, abandoning a portion of its original claim
relating to the irrigation works in the Jordan Valley, asks for judgment only in
respect of two groups of concessions, namely : those relating to the construction
and working of an electric tramway system, the supply of electric light and power
and of drinking water in [p8] the city of Jerusalem, and those relating to the
construction and working of an electric tramway system, the supply of electric
light and power and of drinking water in the city of Jaffa and the irrigation of its
gardens from the waters of El-Hodja.

[5] On the grounds stated in the Case, the Greek Government asks the Court to
give judgment as follows:

The Jerusalem Concessions:

(1) That, these concessions having begun to be put into operation, the British
Government, in its capacity as Mandatory for Palestine, is bound to maintain them
and to agree to their adaptation to the new economic conditions of the country, or
to redeem them by paying to the claimant reasonable compensation;
(2) that, having in fact already, made its choice, by rendering impossible, directly
or indirectly, the carrying out of the works for which the claimant holds a
concession, it must pay him compensation;
(3) that, taking into account all the various elements of the loss occasioned to the
claimant, he shall receive fair and reasonable compensation by means of the
payment to him of the sum of 121,045, together with interest at six per cent from
July 20th, 1923, until the date on which judgment is given.

The Jaffa Concessions:

(1) that the fact that these were granted after October 29th, 1914, does not justify
the British Government in refusing to recognise them;
(2) that the fact that they were not confirmed by Imperial irad, which is a simple
formality not to be withheld at discretion, does not deprive them of their
international value;
(3) that, though the British Government, in its capacity as Mandatory for Palestine,
is at liberty not to maintain them, it is nevertheless under an international
obligation to compensate their holder for the loss which it has inflicted upon him
by deciding -as it has done -not to allow him to proceed with them;
(4) that, taking into account all the elements of the loss thus sustained by the
claimant, he shall receive fair and reasonable compensation by means of the
payment to him of the sum of [p9] 113,294, together with interest at six per cent
from July 20th, 1923, until the date on which judgment is given.

[6] The application instituting proceedings was, in accordance with Article 40 of

the Statute, communicated to the Government of His Britannic Majesty on May
15th, 1924, and the Greek Case was transmitted to that Government on May 31st.
On June 3rd, His Britannic Majesty's Government informed the Court that it found
itself obliged to make a preliminary objection on the ground that the Court had no
jurisdiction to entertain the proceedings in question. In agreement with His
Britannic Majesty's Government, the President fixed June 16th as the date for the
filing of the objection to the Court's jurisdiction.

[7] On that date, the Agent of His Britannic Majesty's Government filed with the
Registry of the Court a preliminary objection to the Court's jurisdiction and a
preliminary counter-case in the proceedings respecting the Mavrommatis Palestine
Concessions.

[8] The objection concludes with a request that the Court may be pleased to give
judgment on the preliminary objection filed on behalf of His Britannic Majesty's
Government and, without entering at the present stage upon the merits of the case,
to dismiss the proceedings instituted by the Greek Government; whilst in
conclusion of the preliminary counter-case it is submitted on behalf of His
Britannic Majesty's Government that the proceedings instituted by the
Government of the Greek Republic should be dismissed upon the ground that the
Court has no jurisdiction to entertain them.

[9] The Agent of the Government of the Greek Republic (having been informed of
the filing of the objection made by the British Government) requested permission,
on behalf of his Government, to make a written reply to this objection.

[10] He was requested to submit his reply on June 30th.

[11] Accordingly, on the day fixed, the Greek Agent filed his Government's reply
to the British preliminary counter-case concerning the Court's jurisdiction.

[12] This reply, in conclusion, requests the Court to declare that the objection to
the jurisdiction of the Court has not been established and to dismiss it ; and to
reserve the suit for judgment on its merits.

[13] In support of their conclusions, the Parties have handed in to the Court a
number of documents as annexes to the case or preliminary counter-case. [p10]
[14] Furthermore, the Court has heard, in the course of public sittings held on July
15th and 16th, 1924, the statements of H.E. M. Politis, counsel for the applicant
Government, and of the Agent of the respondent Government.

***

The Law.

[15] Before entering on the proceedings in the case of the Mavrommatis

concessions, the Permanent Court of International Justice has been made cognisant
of an objection taken by His Britannic Majesty's Government to the effect that the
Court cannot entertain the proceedings.
The Court has not to ascertain what are, in the various codes of procedure and in
the various legal terminologies, the specific characteristics of such an objection; in
particular it need not consider whether "competence" and "jurisdiction",
incomptence and fin de non-recevoir should invariably and in every connection
be regarded as synonymous expressions. It will suffice to observe that the
extremely wide bearing of the objection upon which, before the case can be argued
on its merits, the Court has to take a decision (without, however, in so doing, in
any way prejudging the final outcome of such argument) has been indicated by the
Parties themselves in their preliminary counter-case and reply or in the course of
the oral statements made on their behalf. It appears in fact from the documents
before the Court and from the speeches of Sir Cecil Hurst and of H.E. M. Politis
that the preliminary question to be decided is not merely whether the nature and
subject of the dispute laid before the Court are such that the Court derives from
them jurisdiction to entertain it, but also whether the conditions upon which the
exercise of this jurisdiction is dependent are all fulfilled in the present case.

[16] The general basis of the jurisdiction given to the Permanent Court of
International Justice is set down in Articles 34 and 36 of the Statute, according to
which, in the first place, only States. or Members of the League of Nations may
appear before it and, in the second place, it has jurisdiction to hear and determine
"all cases which the Parties refer to it and all matters specially provided for in
Treaties and Conventions in force".

[17] In the application instituting proceedings the Greek Government relies on the
following:[p12]

Article 9 of Protocol XII annexed to the Peace Treaty of Lausanne of July 24th,
1923;
Articles 11 and 26 of the Mandate for Palestine conferred on His Britannic
Majesty on July 24th, 1922;
Article 36, first paragraph, and Article 40 of the Statute of the Court and Article
35, paragraph 2, of the Rules of Court.

[18] The Parties in the present case agree that Article 26 of the Mandate falls
within the category of "matters specially provided for in Treaties and Conventions
in force" under the terms of Article 36 of the Statute and the British Government
does not dispute the fact that proceedings have been duly initiated in accordance
with Article 40 of the Statute.

[19] Article 26 of the Mandate contains the following clause:

"The Mandatory agrees that, if any dispute whatever should arise between the
Mandatory and another Member of the League of Nations relating to the
interpretation or the application of the provisions of the Mandate, such dispute, if
it cannot be settled by negotiation, shall be submitted to the Permanent Court of
International Justice provided for by Article 14 of the Covenant of the League of
Nations."

[20] The question therefore arises whether the conditions laid down by Article 26
in regard to the acceptance of the Court's jurisdiction, the absence of which would
render such acceptance inoperative, are fulfilled in the case before the Court.

[21] Before considering whether the case of the Mavrommatis concessions relates
to the interpretation of application of the Mandate and whether consequently its
nature and subject are such as to bring it within the jurisdiction of the Court as
defined in the article quoted above, it is essential to ascertain whether the case
fulfils all the other conditions laid down in this clause. Does the matter before the
Court constitute a dispute between the Mandatory and another Member of the
League of Nations ? Is it a dispute which cannot be settled by negotiation ?

I.

[19] A dispute is a disagreement on a point of law or fact, a conflict of legal views

or of interests between two persons. The present suit between Great Britain and
Greece certainly possesses these characteristics. The latter Power is asserting its
own rights by [p12] claiming from His Britannic Majesty's Government an
indemnity on the ground that M. Mavrommatis, one of its subjects, has been
treated by the Palestine or British authorities in a manner incompatible with
certain international obligations which they were bound to observe.

[20] In the case of the Mavrommatis concessions it is true that the dispute was at
first between a private person and a State -i.e. between M. Mavrommatis and
Great Britain. Subsequently, the Greek Government took up the case. The dispute
then entered upon a new phase; it entered the domain of international law, and
became a dispute between two States. Henceforward therefore it is a dispute which
may or may not fall under the jurisdiction of the Permanent Court of International
Justice.

[21] Article 26 of the Mandate, in giving jurisdiction to the Permanent Court of

International Justice does not, in fact, merely lay down that there must be a dispute
which requires to be settled. It goes on to say that the dispute must be between the
Mandatory and another Member of the League of Nations. This is undoubtedly the
case in the present suit, since the claimant State Greece, like Great Britain, has
from the outset belonged to the League of Nations. It is an elementary principle of
international law that a State is entitled to protect its subjects, when injured by acts
contrary to international law committed by another State, from whom they have
been unable to obtain satisfaction through the ordinary channels. By taking up the
case of one of its subjects and by resorting to diplomatic action or international
judicial proceedings on his behalf, a State is in reality asserting its own rights -its
right to ensure, in the person of its subjects, respect for the rules of international
law.

[22] The question, therefore, whether the present dispute originates in an injury to
a private interest, which in point of fact is the case in many international disputes,
is irrelevant from this standpoint. Once a State has taken up a case on behalf of
one of its subjects before an international tribunal, in the eyes of the latter the State
is sole claimant. The fact that Great Britain and Greece are the opposing Parties to
the dispute arising out of the Mavrommatis concessions is sufficient to make it a
dispute between two States within the meaning of Article 26 of the Palestine
Mandate. [p13]

II.

[23] The second condition by which this article defines and limits the jurisdiction
of the Permanent Court in questions arising out of the interpretation and
application of the Mandate, is that the dispute cannot be settled by negotiation. It
has been contended that this condition is not fulfilled in the present case ; and
leaving out of account the correspondence previous to 1924 between
Mavrommatis or his solicitors and the British Government, emphasis has been laid
on the very small number and brevity of the subsequent communications
exchanged between the two Governments, which communications appear to be
irreconcilable with the idea of negotiations properly so-called. The true value of
this objection will readily be seen if it be remembered that the question of the
importance and chances of success of diplomatic negotiations is essentially a
relative one. Negotiations do not of necessity always presuppose a more or less
lengthy series of notes and despatches; it may suffice that a discussion should have
been commenced, and this discussion may have been very short; this will be the
case if a dead lock is reached, or if finally a point is reached at which one of the
Parties definitely declares himself unable, or refuses, to give way, and there can
therefore be no doubt that the dispute cannot be settled by diplomatic negotiation.
This will also be the case, in certain circumstances, if the conversations between
the Governments are only the continuation of previous negotiations between a
private individual and a government.

[24] It is true that the State does not substitute itself for its subject ; it is asserting
its own rights and, consequently, factors foreign to the previous discussions
between the individual and the competent authorities may enter into the diplomatic
negotiations. But it is equally true that if the diplomatic negotiations between the
Governments commence at the point where the previous discussions left off, it
may well happen that the nature of the latter was such as to render superfluous
renewed discussion of the opposing contentions in which the dispute originated.
No general and absolute rule can be laid down in this respect. It is a matter for
consideration in each case. In the case now before the Court, the negotiations
between M. Mavrommatis or his representatives and the Palestine or British
authorities had covered precisely the points on which the Greek Government
decided to rely, and did in fact rely as against [p14] the British Government with
regard to the recognition of the Mavrommatis concessions. And the negotiations
between the concessions holder and the authorities were throughout conducted on
the basis of international instruments subsequently relied on by the Greek
Government -when it approached His Britannic Majesty's Government. That this
is the case appears from the whole of the correspondence placed before the Court
and more especially from the letter sent by the Foreign Office on April 1st, 1924
to the Greek Legation in London, in which all the questions which had previously
been discussed between the interested person and the Colonial Office were
recapitulated. One proof that the Greek Government took this view is the fact that
it had associated itself with the steps taken by its subject by transmitting to the
Foreign Office the letter sent to the Greek Legation by M. Mavrommatis on
December 18th, 1922. The Greek Government moreover had already realized from
two letters, dated January 22nd and February 2nd, 1923, sent by Mr. G. Agar
Robartes of the Foreign Office to M.Melas, Secretary of the Greek Legation in
London, that the British Government was indisposed to enter into direct
negotiation with it regarding the claim of its subject. A year later, on January 26th,
1924, the Greek Legation in London wrote to the Foreign Office in order to
ascertain whether in the opinion of the British Government, "M. Mavrommatis'
claims could not be satisfactorily met" or submitted to arbitration either by a
member of the High Court of Justice or by a tribunal of which the president,
failing agreement between the Parties, should be appointed by the British
Government itself; and the note of His Britannic Majesty's Secretary of State for
Foreign Affairs, dated April 1st, 1924, was regarded by Greece as a definitely
negative reply.

[25] This note moreover is also of great importance from another point of view.
For it tends to show the official character of the correspondence which had taken
place regarding the Mavrommatis concessions between the Greek Legation in
London and the Foreign Office or certain of their officials. Thus the note of the
Secretary of State refers expressly to the note -above mentioned -signed by M.
Collas on January 26th, 1924; and the latter in its turn refers to the letter sent by
Mr. Robartes to M. Melas on February 2nd, 1923. It should also be observed that
all this correspondence bears the registration numbers of the Legation and of the
Foreign Office. [p15]

[26] The matter had reached this stage when the Greek Government, considering
that there was no hope of effecting a settlement by further negotiation and acting
upon a suggestion made by M. Mavrommatis' solicitors in their letter of April 1st,
1924, to the Greek Legation in London, sent to the Foreign Office a dispatch dated
May 12th, 1924, informing His Britannic Majesty's Government of its decision to
refer the dispute to the Court, a decision which -doubtless in view of the
approaching opening of the Court's ordinary Session -it proceeded to carry out on
the following day, when it filed the application instituting proceedings with the
Registry.

[27] The Court realises to the full the importance of the rule laying down that only
disputes which cannot be settled by negotiation should be brought before it. It
recognises, in fact, that before a dispute can be made the subject of an action at
law, its subject matter should have been clearly defined by means of diplomatic
negotiations. Nevertheless, in applying this rule, the Court cannot disregard,
amongst other considerations, the views of the States concerned, who are in the
best position to judge as to political reasons which may prevent the settlement of a
given dispute by diplomatic negotiation. When negotiations between the private
person and the authorities have already -as in the present case -defined all the
points at issue between the two Governments, it would be incompatible with the
flexibility which should characterise international relations to require the two
Governments to reopen a discussion which has in fact already taken place and on
which they rely. It should be observed in this connection that the Foreign Office,
in its reply of April 1st, states that the competent department to which the
negotiations had been entrusted had fully and carefully examined the question.

III.

[28] The Court has now to consider the condition which Article 26 of the Mandate
imposes upon its jurisdiction when laying down that the dispute must relate "to the
interpretation or the application of the provisions of the Mandate". The dispute
may be of any nature; the language of the article in this respect is as
comprehensive as possible (any dispute whatever -tout diffrend, quel qu'il [p16]
soit); but in every case it must relate to the interpretation or the application of the
provisions of the Mandate.

[29] In the first place, the exact scope must be ascertained of the investigations
which the Court must, under Article 36, last paragraph, of the Statute, pursue in
order to arrive at the conclusion that the dispute before it does or does not relate to
the interpretation or the application of the Mandate, and, consequently, is or is not
within its jurisdiction under the terms of Article
26. Neither the Statute nor the Rules of Court contain any rule regarding the
procedure to be followed in the event of an objection being taken in limine litis to
the Court's jurisdiction. The Court therefore is at liberty to adopt the principle
which it considers best calculated to ensure the administration of justice, most
suited to procedure before an international tribunal and most in conformity with
the fundamental principles of international law.
[30] For this reason the Court, bearing in mind the fact that its jurisdiction is
limited, that it is invariably based on the consent of the respondent and only exists
in so far as this consent has been given, cannot content itself with the provisional
conclusion that the dispute falls or not within the terms of the Mandate. The Court,
before giving judgment on the merits of the case, will satisfy itself that the suit
before it, in the form in which it has been submitted and on the basis of the facts
hitherto established, falls to be decided by application of the clauses of the
Mandate. For the Mandatory has only accepted the Court's jurisdiction for such
disputes.

[31] It is true that in Advisory Opinion No. 4 regarding the Nationality Decrees in
Tunis and Morocco (French Zone), the Court, which had to take a decision upon a
plea to the jurisdiction, declared that the jurisdiction of the Council of the League
of Nations must be considered to exist provided that the legal grounds (titres) of
an international character advanced by the Parties are such as to justify the
provisional conclusion that they are of juridical importance for the dispute.

[32] In that case, the plea was made under paragraph 8 of Article 15 of the
Covenant and was directed against the very general jurisdiction given by the first
paragraph to the Council of the League of Nations covering all disputes likely to
lead to a rupture. Whereas in the present case, the objection to the Court's
jurisdiction taken by the British Government relates to a jurisdiction limited to
[p17] certain categories of disputes, which are determined according to a legal
criterion (the interpretation and application of the terms of the Mandate), and tends
therefore to assert the general rule that States may or may not submit their disputes
to the Court at their discretion.

[33] The dispute brought before the Court by the Greek Government's application
relates to the question whether the Government of Palestine and consequently also
the British Government have, since 1921, wrongfully refused to recognise to their
full extent the rights acquired by M. Mavrommatis under the contracts and
agreements concluded by him with the Ottoman authorities in regard to certain
public works.

[34] In support of its application, the Greek Government cites Article 11 of the
Mandate, which runs as follows:

"The Administration of Palestine shall take all necessary measures to safeguard

the interests of the community in connection with the development of the country,
and, subject to any international obligations accepted by the Mandatory, shall have
full power to provide for public ownership or control of any of the natural
resources of the country or of the public works, services and utilities established or
to be established therein. It shall introduce a land system appropriate to the needs
of the country, having regard among other things to the desirability of promoting
the close settlement and intensive cultivation of the land.
"The Administration may arrange with the Jewish Agency mentioned in Article 4
to construct or operate, upon fair and equitable terms, any public works, services
and utilities, and to develop any of the natural resources of the country, in so far as
these matters are not directly undertaken by the Administration. Any such
arrangements shall provide that no profits distributed by such agency, directly or
indirectly, shall exceed a reasonable rate of interest on the capital, and any further
profits shall be utilised by it for the benefit of the country in a manner approved by
the Administration."

[35] The question to be solved is whether the dispute above mentioned should be
dealt with on the basis of this clause. Taken as a whole, Article 11 purports to
regulate the powers of the Palestine Administration as regards: a) public
ownership or control of the natural [p18] resources of the country or of the public
works, services and utilities; b) the introduction of a land system appropriate to the
needs of the country and, c) arrangements with the Jewish agency to construct or
operate, upon fair and equitable terms, any public works, services and utilities and
to develop any of the natural resources of the country.

[36] The Court feels that the present judgment should be based principally on the
first part of paragraph 1 of Article 11.

[37] After an introductory phrase laying down in general terms the fundamental
duty of the Administration, namely to "take all necessary measures to safeguard
the interests of the community in connection with the development of the
country", Article II continues to the effect that the Administration of Palestine
"shall have full power to provide for public ownership or control of any of the
natural resources of the country or of the public works, services and utilities
established or to be established therein"-aura pleins pouvoirs pour dcider quant
la proprit ou au contrle public de toutes les ressources naturelles du pays, ou
des travaux et services d'utilit publique dj tablis ou y tablir.

[38] The Court considers that, according to the French version, the powers thus
attributed to the Palestine Administration may cover every kind of decision
regarding public ownership and every form of "controle" which the
Administration may exercise either as regards the development of the natural
resources of the country or over public works, services and utilities. An
interpretation restricting these powers to certain only of the measures which the
Administration may take in regard to public ownership or to certain only of the
ways in which public "controle" may be exercised over the activities in question,
though not completely excluded by the very general wording of the French text, is
not the natural interpretation of its terms : that is to say that the right to grant
concessions with a view to the development of the natural resources of the country
or of public works, services and utilities, as also the right to annul or cancel
existing concessions, might fall within the terms of the French version of the
clause under consideration.
[39] The English version, however, seems to have a more restricted meaning. It
contemplates the acquisition of "public ownership" or "public control" over any of
the natural resources of the country [p19] or over the public works, services and
utilities established or to be established therein.

[40] Since no question of "public ownership" is raised in the present case, the
Court has devoted its whole attention to the meaning of the expression "public
control". It has ascertained that the word "control" may have a very wide sense but
that, used in conjunction with the expression "public ownership", it would appear
rather to mean the various methods whereby the public administration may take
over, or dictate the policy of, undertakings not publicly owned.

[41] The Court is of opinion that, where two versions possessing equal authority
exist one of which appears to have a wider bearing than the other, it is bound to
adopt the more limited interpretation which can be made to harmonise with both
versions and which, as far as it goes, is doubtless in accordance with the common
intention of the Parties. In the present case this conclusion is indicated with
especial force because the question concerns an instrument laying down the
obligations of Great Britain in her capacity as Mandatory for Palestine and
because the original draft of this instrument was probably made in English.

[42] The Mavrommatis concessions in themselves are outside the scope of Article
11, but the question before the Court is whether, by granting the Rutenburg
concessions - which cover at least a part of the same ground - the Palestine and
British authorities have disregarded international obligations assumed by the
Mandatory, by which obligations Greece is entitled to benefit.

[43] The connection between the Rutenberg and Mavrommatis concessions arising
out of the fact that they partially overlap, may be considered as admitted because
the Palestine and British authorities, when the question of the validity of the latter
concessions was brought up, invited the interested party to come to an
understanding with the Zionist organisation and with Mr. Rutenberg.

[44] If the Rutenberg concessions fall within the scope of Article 11, the dispute
undoubtedly relates to that article.

[45] In this connection, the Court has to decide whether the grant of the Rutenberg
concessions has given rise to the acquisition or exercise of "public control" in the
sense contemplated above.

[46] If the expression "public control" is contrasted with "private control" in the
very restricted sense of a public undertaking as opposed to a private undertaking
controlled by the public [p20] authorities, the Rutenberg concessions cannot be
considered as having conferred upon the Palestine Administration "public control"
over the services under concession.
[47] But it does not appear to be correct to maintain that the English expression
"public control only covers cases where the Government takes over and itself
directs undertakings of one kind or another. The expression is also used to indicate
certain forms of action taken by the State with regard to otherwise private
undertakings. Even in such cases, the world "control", in the sense in which it is
generally used, cannot be employed to describe practically all acts of public
authority; "control" always means measures of a special character in connection
with an economic policy consisting in subordinating, in one way or another,
private enterprise to public authority. This wider meaning of the English
expression appears to be the only one which does not nullify the expression
contrle public in the French version : it seems hardly possible to read the latter as
referring exclusively to cases where a public administration itself takes in hand an
undertaking. It is in this sense that even the grant of a concession of public utility
to an individual or to a company may be accompanied by measures which amount
to an exercise of "public control".

[48] In this respect it should be observed that Article 28 of the Rutenberg

concessions expressly lays down that "the undertaking of the company under this
concession shall be recognised as a public utility Body under Government control"
: it would not be correct to interpret this clause as reserving to the Government the
right, should it see fit, to assume control of the undertaking. This "Government
control" appears rather to be connected with the recognition of the undertaking as
a public utility body. Moreover, it is clearly of a different nature to the supervision
which the Palestine Administration may exercise over the financial operations of
the company under Article 36 of the concessions.

[49] Again it may be remarked that the concessions in question have been granted
to a company which Mr. Rutenberg undertakes to form and the statutes of which,
according to Article 2 of the agreement concerning the grant of the concession for
the Jordan and Article 34 of the Jaffa concession, were to be approved by the High
Commissioner for Palestine in agreement with the Jewish agency mentioned in the
Mandate. [p21]

[50] In order to form an idea of the significance of this clause, it must be

remembered that this Jewish agency is described as follows in Article 4 of the
Mandate:

"An appropriate Jewish agency shall be recognised as a public body for the
purpose of advising and co-operating with the Administration of Palestine in such
economic, social and other matters as may affect the establishment of the Jewish
national home and the interests of the Jewish population in Palestine, and, subject
always to the control of the Administration, to assist and take part in the
development of the country.
"The Zionist organisation... shall be recognised as such agency." Un organisme
juif convenable sera officiellement reconnu et aura le droit de donner des avis
l'Administration de la Palestine et de cooprer avec elle dans toutes questions
conomiques, sociales et autres, susceptibles d'affecter l'tablissement du foyer
national juif et les intrts de la population juive en Palestine, et, toujours sous
rserve du contrle de l'Administration, d'aider et de participer au dveloppement
du pays.
L'organisation sioniste sera reconnue comme tant l'organisme vis ci-dessus . . .
.

[51] This clause shows that the Jewish agency is in reality a public body, closely
connected with the Palestine Administration and that its task is to co-operate, with
that Administration and under its " control, in the development of the country. The
words used in paragraph 2 of Article n to indicate the action of the Jewish agency
are the same as those used in the first paragraph to indicate the use to be made of
the powers granted to the Palestine Administration. It is obviously a program of
economic policy which the Administration may carry out, either directly, or
through a public body acting under its control.

[52] The conclusion which appears to follow from the preceding argument is that
the Rutenberg concessions constitute an application by the Administration of
Palestine of the system of, "public control" with the object of developing the
natural resources of the country and of operating public works, services and
utilities. Thus envisaged, these concessions may fall within the scope of Article II
of the Mandate.

[53] But even if any doubt on this point remained, the Court believes [p22] that it
should disregard it in view of a passage in the Preliminary Counter-case filed by
His Britannic Majesty's Government on June 16th, 1924, containing a declaration
which, no matter in what connection it was made, refers directly to the relations
between the Rutenber.g concessions and Article 11 of the Mandate. This passage
runs as follows:

"The concessions granted to Mr. Rutenberg in September, 1921, for the

development of electrical energy and water power in Palestine (Annex to the
Greek Case, pp. 21-52 } were obliged to conform to this Article 11, and it would
have been open to any Member of the League to question provisions in those
concessions which infringed the international obligations which His Britannic
Majesty as Mandatory for Palestine had accepted. Les concessions accordes
enseptembre 1921 M. Rutenberg pour le dveloppement de l'nergie lectrique
et de laforce hydraulique en Palestine (Annexe au Mmoire grec, pages 21 52)
ont obligatoirement d tre faites en conformit de l'article 11 et il et t loisible
tout Membre de la Socit de mettre en question toute stipulation de ces
concessions qui et port atteinte aux obligations internationales assumes par Sa
Majest britannique en qualit de Mandataire pour la Palestine.

[54] The express reference to the "international obligations accepted by the

Mandatory" makes it clear that this statement refers to paragraph 1 of Article 11.

[55] Again the British Agent's oral pleading contains the following:

"Article 11 provides in the first part which I have read, that the Government of
Palestine may itself develop these natural resources. It shall have full power to
provide for public ownership or control of any of the natural resources of the
country, subject to the international obligations accepted by the Mandatory. Then
comes a second paragraph which enables the Administration to "arrange with the
Jewish agency" -that is the Zionist Organisation which had been mentioned in an
earlier portion -"to construct or operate, upon fair and equitable terms, any public
works, services and utilities, and to develop any of the natural resources of the
country", in so far as these [p23] matters are not directly undertaken by the
Administration. It will be noticed that there is no repetition in that second
paragraph of those words "subject to any international obligations accepted by the
Mandatory", but I think it is a limitation upon the powers of the Mandatory which
is so obvious that it is implied in the second paragraph just as much as in the first.
The Mandatory cannot, in making his arrangements for the development of the
natural resources of the country, ignore the international obligations which he has
accepted."

***

[56] The powers accorded under Article 11 to the Administration of Palestine

must, as has been seen, be exercised "subject to any international obligations
accepted by the Mandatory". This qualification was a necessary one, for the
international obligations of the Mandatory are not, ipso facto, international
obligations of Palestine. Since Article 11 of the Mandate gives the Palestine
Administration a wide measure of autonomy, it was necessary to make absolutely
certain that the powers granted could not be exercised in a manner incompatible
with certain international engagements of the Mandatory. The obligations
resulting from these engagements are therefore obligations which the
Administration of Palestine must respect ; the Mandatory is internationally
responsible for any breach of them since, under Article 12 of the Mandate, the
external relations of Palestine are handled by it. It has been contended on behalf of
the Greek Government that the Administration of Palestine, by arranging with the
Jewish agency for the construction or operation of the works or of a portion of the
works for which M. Mavrommatis already held concessions and not paying the
latter compensation, had disregarded the international obligations of the
Mandatory. At the present stage of the proceedings the question whether there
really has been a breach of these obligations can clearly not be gone into; to do so
would involve a decision as to the responsibility of the respondent, a thing which
the two Governments concerned do not at the moment ask the Court to do. But, in
accordance with the principles set out above, the Court is constrained at once to
ascertain whether the international obligations mentioned in Article 11 affect the
merits of the case and whether any breach of them would involve a breach of the
provisions of this article. [p24]

[57] There has been much discussion as to what international obligations of the
Mandatory's must be respected by the Administration of Palestine. The Greek
Government appears to hold that these are all international obligations in general;
on the other hand the submission of the British Government in its preliminary
Counter-case is that only various beneficent principles are intended, to the
maintenance of which the League of Nations, on whose behalf His Britannic
Majesty exercises the mandate over Palestine, is pledged, such as freedom of
transit and communications, equality of commercial opportunity for all Members
of the League, suppression of the arms traffic, etc. It is not however certain
whether this submission was maintained in the oral proceedings.

[58] The Court, whilst abstaining from giving an opinion on these opposing
contentions, feels constrained at once to make certain reservations in regard to
them. The former does not appear to take sufficient account of the peculiar
importance attaching to the words "accepted by the Mandatory", which obviously
contemplate obligations contracted, even though, in a sense, it may be said that the
whole body of international law has been accepted by States. Moreover, there
would appear to be no reason for such a clause in this connection. The second
interpretation is also unsupported by any argument and it is not easy to see any
connection between it and the subject matter of the clause of which it forms part.
In the opinion of the Court, the international obligations mentioned in Article
are obligations contracted having some relation to the powers granted to the
Palestine Administration under the same article.

[59] The Court has been informed that in the draft of the Mandate, prepared when
it was thought that the Treaty of Svres would shortly be ratified, the clause under
discussion was worded as follows : "subject to Article 311 of the Treaty of Peace
with Turkey", the article of the Mandate being in other respects identical with the
final text. Later, when it became clear that the Treaty of Svres would never come
into force, whilst the new Peace Treaty with Turkey had not yet been drafted, in
order to avoid delay in the adoption of the Mandate, the reference to the Treaty of
Svres was replaced by the words "international obligations accepted by the
Mandatory". This phrase therefore -whatever its scope may be in other directions -
includes at all events [p25] the provisions which, in the future Peace Treaty with
Turkey, were to take the place of the provisions of Article 311 of the Treaty of
Svres.

[60] This article which is the second of Section VI (Companies and Concessions)
of Part IX
(Economic Clauses) of that Treaty, is worded as follows:

"In territories detached from Turkey to be placed under the authority or tutelage of
one of the Principal Allied Powers, Allied nationals and companies controlled by
Allied groups or nationals holding concessions granted before October 29th, 1914,
by the Turkish Government or by any Turkish local authority shall continue in
complete enjoyment of their duly acquired rights, and the Power concerned shall
maintain the guarantee granted or shall assign equivalent ones.
"Nevertheless, any such Power, if it considers that the maintenance of any of these
concessions should be contrary to the public interest, shall be entitled, within a
period of six months from the date on which the territory is placed under its
authority or tutelage, to buy out such concession or to propose modifications
therein ; in that event it shall be bound to pay to the concessionnaire equitable
compensation in accordance with the following provisions.
"If the Parties cannot agree on the amount of such compensation, it will be
determined by Arbitral Tribunals composed of three members, one designated by
the State of which the concessionnaire or the holders of the majority of the capital
in the case of a company is or are nationals, one by the Government exercising
authority in the territory in question, and the third designated, failing agreement
between the Parties, by the Council of the League of Nations.
"The Tribunal shall take into account, from both the legal and equitable
standpoints, all relevant matters, on the basis of the maintenance of the contract
adapted as indicated in the following paragraph.
"The holder of a concession which is maintained in force [p26] shall have the
right, within a period of six months after the expiration of the period specified in
the second paragraph of this article, to demand the adaptation of his contract to the
new economic conditions, and in the absence of agreement direct with the
Government concerned, the decision shall be referred to the Arbitral Commission
provided for above."

[61] As Article 311 of the Treaty of Svres dealt with concessions in territories
detached from Turkey and as that article is now replaced by Protocol XII of the
Treaty of Lausanne, it follows that "the international obligations accepted by the
Mandatory", referred to in Article 11 of the Mandate, certainly include the
obligations arising out of Protocol XII of the Lausanne Treaty.

[62] These obligations limit the powers of the Palestine Administration to provide
for public ownership or control of any of the natural resources of the country or of
the public works, services and utilities established or to be established therein.
Since -as has been already stated -the Rutenberg concessions fall within the scope
of Article 11 of the Mandate, it is obvious that the Palestine Administration is, as
regards these concessions, bound to respect obligations which Great Britain has
accepted under Protocol XII. If the Administration has, by granting the Rutenberg
concessions, committed a breach of these obligations, there has been an
infringement of the terms of Article 11 of the Mandate which may be made the
subject of an action before the Court under Article 26.

[63] The Court considers that the reservation made in Article 11 regarding
international obligations is not a mere statement of fact devoid of immediate legal
value, but that, on the contrary, it is intended to afford these obligations within the
limits fixed in the article, the same measure of protection as all other provisions of
the Mandate.

[64] It now only remains to consider whether there are any international
obligations arising out of Protocol XII of Lausanne -hereinafter called "Protocol
XII" -which affect the Mavrommatis concessions.

[65] The instrument in question which is entitled "Protocol relating to certain

Concessions granted in the Ottoman Empire", concerns [p27] concessionary
contracts duly entered into before October 29th, 1914, between the Ottoman
Government or any local authority, on the one hand, and nationals (including
Companies) of. the Contracting Powers, other than Turkey, on the other. Greece is
one of these Powers. The Protocol includes two sections, the first of which
(Articles 1 to 8) concerns concessions in territories which continue to form part of
the Ottoman Empire, whereas the second (Articles 9 to 13) concerns concessions
in territories which have been detached. The fundamental principle of the Protocol
is the maintenance of concessionary contracts concluded before October 29th,
1914. In territories detached from Turkey, the State which acquires the territory is
subrogated as regards the rights and the obligations of Turkey; the greater part of
the provisions of Section I also apply to the contracts dealt with in Section II.
Beneficiaries under concessionary contracts entered into before October 29th,
1914, which, at the time of the coming into force of the Treaty of Peace, have
begun to be put into operation, are entitled to have their contracts readapted to the
new economic conditions; other beneficiaries are not entitled to such readaptation,
but their contracts may be dissolved at their request and in this case they are
entitled, if there is ground for it, to an equitable indemnity in respect of survey and
investigation work.

[66] It is not disputed that the Jerusalem concessions dated from before October
29th, 1914, and must therefore be dealt with in accordance with the terms of
Protocol XII. On the other hand, the Parties do not agree on the question whether
the holder of these concessions is entitled to benefit by the provisions of Article 4
of the Protocol and consequently to claim that they should be readapted to the new
economic conditions ; or whether, in accordance with Article 6, he is only entitled,
to request that the contract may be dissolved with reasonable compensation for
survey and investigation work. In accordance with the principles enunciated
above, the question whether the Administration of Palestine can withhold from M.
Mavrommatis the readaptation of his Jerusalem concessions, is a question
concerning the interpretation of Article 11 of the Mandate, and consequently the
provisions of Article 26 are applicable to it.

[67] With regard to the Jaffa concessions, the position is as follows: The
preliminary agreements are dated January 27th, 1914, and [p28] on March 6th of
the same year, the Ministry of Public Works at Constantinople authorised the
District of Palestine to grant the proposed concessions. They were not however
converted into concessions duly signed by the Ottoman authorities until January
28th, 1916. According to an Ottoman law promulgated in the meantime, they had
to be confirmed by Imperial Firman; but this condition was never fulfilled.

[68] It appears from the documents placed before the Court by the Greek
Government and dealing with the negotiations which had taken place between
those interested, that the Parties do not agree on the question whether Protocol XII
has the effect of depriving concessions obtained in Turkey after October 29th,
1914, of any value as against States acquiring former Ottoman territory, or
whether, on the contrary, "concessions granted between October 29th, 1914, and
the restoration of peace in countries where Turkey continued to exercise sovereign
power, hold good, in principle, as against the successor States, though the latter
cannot be compelled to maintain them."

[69] The Court has not to give an opinion on the merits of this contention. It will
suffice to observe that if on the one hand, Protocol XII being silent regarding
concessions subsequent to October 29th, 1914, leaves intact the general principle
of subrogation, it is, on the other hand, impossible to maintain that this principle
falls within the international obligations contemplated in Article 11 of the
Mandate as interpreted in this judgment. The Administration of Palestine would be
bound to recognise the Jaffa concessions, not in consequence of an obligation
undertaken by the Mandatory, but in virtue of a general principle of international
law to the application of which the obligations entered into by the Mandatory
created no exception.

[70] Though it is true that for the purpose of the settlement of a dispute of this
kind the extent and effect of the international obligations arising out of Protocol
XII must be ascertained, it is equally the fact that the Court is not competent to
interpret and apply, upon a unilateral application, that Protocol as such, for it
contains no clause submitting to the Court disputes on this subject.

[71] On the other hand, the Court has jurisdiction to apply the Protocol of
Lausanne in so far as this is made necessary by Article 11 of the Mandate. [p29]

[72] The foregoing reasoning leads to the following conclusions:

(a) That the dispute between the British and Greek Governments concerning M.
Mavrommatis' claim in respect of the Jerusalem concessions must be decided on
the basis of the provisions of Article 11 of the Mandate and that consequently it is
within the category of disputes for which the Mandatory has accepted the
jurisdiction of the Court ;
(b) that, on the other hand, the dispute between these Governments concerning M.
Mavrommatis' claims in respect of the Jaffa concessions has no connection with
Article 11 of the Mandate and consequently does not fall within the category of
disputes for which the Mandatory has accepted the jurisdiction of the Court.

[73] Although a single application has been filed with the Court for the payment
by Great Britain of a lump sum ; and although the case of the Mavrommatis
concessions, throughout the negotiations preceding the present action, has, all
things considered, been dealt with as one single question, the fact remains that, in
its Case, the Greek Government submitted its claim under three different headings.
One of these -that relating to the Jordan works -has been abandoned in the Case
itself ; the other two relating to Jerusalem and Jaffa respectively are dealt with
separately and separate claims for compensation are submitted. The Court
therefore, having ascertained that it only has jurisdiction to entertain the claim
relating to Jerusalem, reserves this claim for judgment on its merits and declares
that its jurisdiction does not extend to the claim relating to the works at Jaffa.

IV

[74] Having thus established its jurisdiction under Articles 26 and 11 of the
Palestine Mandate, the Court has to consider whether as concerns the dispute
regarding the Jerusalem concessions, this jurisdiction may not be limited by
another international instrument which might overrule the provisions of the
Mandate.

[75] If a State has recourse to the Court tinder a clause establishing the latter's
compulsory jurisdiction, it must be prepared for the contingency that the other
Party may cite agreements entered into [p30] between the opposing Parties which
may prevent the exercise of the Court's jurisdiction. Now His Britannic Majesty's
Agent in his "Preliminary Objection to the Jurisdiction of the Court", introducing
the "Preliminary Counter-Case", bases his request for the dismissal of the
proceedings instituted by the Greek Government, firstly on the contention that
Article 26 of the Mandate is not applicable in this case and, secondly on the
contention that the only international instrument dealing with the recognition of
concessions in Palestine is Protocol XII, and that this instrument contains no
provision giving the Permanent Court of International Justice jurisdiction to
decide disputes relating to the interpretation or application of that Protocol.

[76] Though His Britannic Majesty's Agent does not expressly contend that the
Court's jurisdiction under the Mandate - which he disputes - is incompatible with
the provisions of Protocol XII, the Court considers that the citation of this
document by the British Agent must be regarded as one of the grounds for the
objection to the Court's jurisdiction. In the circumstances, it will therefore not be
necessary to consider whether the Court, whose jurisdiction is dependent on the
will of the States concerned in the dispute, would be entitled, when giving
judgment in regard to its jurisdiction, to consider arguments other than those
advanced by the Parties.

[77] It is certain that Protocol XII is an international instrument, quite distinct

from and independent of the Mandate for Palestine. It deals specifically and in
explicit terms with concessions such as those of M. Mavrommatis, whereas Article
11 of the Mandate deals with them only implicitly. Furthermore it is more recent
in date that the Mandate. All the conditions therefore are fulfilled which might
make the clauses of the Protocol overrule those of the Mandate. Although the
provisions of the Mandate possess a special character by reason of the fact that
they have been drawn up by the Council of the League of Nations, neither of the
Parties has attempted to argue that a Member of the League of Nations cannot
renounce rights which he possesses under the terms of the Mandate.

[78] Before considering whether, and. if so, to what extent, the jurisdiction of the
Court under Article 26 might be affected by Protocol XII, it should be observed
that, as has already been established, Article refers to Protocol XII. This
international instrument [p31] must be examined by the Court not merely as a
body of rules which may limit its jurisdiction, but also and above all as applicable
under the terms of Article 11 of the Mandate which is the very clause from which
the Court derives its jurisdiction. In this respect, the Protocol is the complement of
the provisions of the Mandate in the same way as a set of regulations alluded to in
a law indirectly form part of it. Nevertheless, from whichever of the two aspects it
is regarded, Protocol XII remains the same and has the same effect.

[79] The fact that Article II only refers to the Protocol in general terms, and that
the Protocol is more recent in date than the Mandate, does not justify the
conclusion that the Protocol would only be applicable in Palestine in so far as it is
compatible with the Mandate. On the contrary, in cases of doubt, the Protocol,
being a special and more recent agreement, should prevail.

[80] If this is true, it is equally true that the provisions of the Mandate and more
particularly those regarding the jurisdiction of the Court are applicable in so far as
they are compatible with the Protocol. The reservation in Article II regarding
international obligations makes it quite clear that the intention is that these are to
be respected in their entirety but that they are not to have any general limitative
effect as regards the provisions of Article 11. The silence of Protocol XII
concerning the Mandate and the jurisdiction of the Permanent Court of
International Justice, does not justify the conclusion that the Parties intended to
exclude such jurisdiction ; for the Protocol does not only deal with mandated
territories, and it includes amongst its signatories a State which is not a Member of
the League of Nations. Though respect for Protocol XII, in so far as it constitutes a
body of rules applicable in Palestine as concerns any Member of the League of
Nations, is assured by Article 11 of the Mandate, the provision of Article 26
definitely establishing the jurisdiction of the Court in disputes relating to Article
11 cannot be in any way affected by the silence of the Protocol regarding this
jurisdiction.

[81] The Protocol XII and Article 11 of the Mandate are in no way incompatible.
This may clearly be seen by a comparison of the two documents. Article 11 does
not expressly mention concessions; it is confined to a definition of certain powers
of the Mandatory and of certain of the objects of the economic policy of the
Palestine Administration. On the other hand, the Protocol deals exclusively [p32]
and in detail with concessions ; it establishes tests according to which certain
concessions must be recognised; it lays down rules for the subrogation of the
successor States as regards the rights and obligations of the Turkish authorities.
This is substantive law. But the Protocol also contains clauses concerning the
procedure to be followed : provision is made for administrative negotiations
regarding the readaptation of certain concessions ; times are fixed within which
these negotiations may take place or certain declarations on the part of concession
holders may be made ; lastly it lays down a special procedure for the valuation by
experts of the indemnities to be granted to concession holders.

[82] It is these provisions of the Protocol concerning procedure which may be

regarded as incompatible, not with Article 11 of the Mandate, but with the
jurisdiction derived by the Court from that article. This incompatibility is twofold.
In so far as the Protocol establishes in Article 5 a special jurisdiction for the
assessment of indemnities, this special jurisdiction - provided that it operates
under the conditions laid down - excludes as regards these matters the general
jurisdiction given to the Court in disputes concerning the interpretation and
application of the Mandate. On the other hand, the provisions regarding
administrative negotiations and time limits in no way exclude the jurisdiction of
the Court ; their effect is merely to suspend the exercise of this jurisdiction until
negotiations have proved fruitless and the times have expired. Subject to the
special powers given to the experts, and to the time limits and the declarations
provided for, the Court's jurisdiction remains intact in so far as it is based on
Article 11. In particular, this is the case as regards disputes relating to the
interpretation and application of the provisions of the Protocol itself.

[83] Now in the present case it would appear that the dispute between the two
Parties relates to points which are preliminary points as regards the application of
Articles 9, 1 and 4 to 6 of the Protocol. Whilst a difference of opinion prevails
regarding the question whether the Mavrommatis concessions at Jerusalem fall
under the terms of Article 4 or Article 6 of the Protocol, the provisions relating to
the procedure to be followed in either event cannot be used in argument against
the Court's jurisdiction. For these reasons, neither the jurisdiction of the Court, nor
the exercise of its jurisdiction, is, at the present stage of the dispute, affected by
the [p33] provisions of Protocol XII regarding the special tribunal provided for in
Article 5 of the time limits mentioned in Articles 4 and 6. Nor can the argument
that the concession holder has not exercised the right of option provided for in
Article 4 be used against the Greek Government. The British Government cannot
insist on the exercise of this right so long as it denies that the consession fall under
the terms of that article. The question remains to be considered whether the
negotiations which have taken place with regard to the application of the Protocol
in anticipation of its coming into force can exert any influence as regards the
expiration of the times in question. This question however cannot arise until it has
been decided whether the time limits applicable to the concession are those laid
down in Article 4 or in Article 6.

V.
[84] The Treaty of Lausanne and Protocol XII were signed by Great Britain and
Greece on July 24th, 1923. When the final negotiations between Greece and Great
Britain in regard to the Mavrommatis concessions took place (January to April
1924), and at the moment when Greece filed its application (May 13th; 1924) the
deposit of ratifications, which was provided for in Article 143 of the Treaty of
Lausanne, had not taken place. This condition had to be fulfilled before the Treaty
and its supplementary instruments could come into effect as regards signatories
having then ratified it. The deposit was effected on August 6th, 1924. Already
before that date Greece Greek law of August 25th, 1923 : Greek official Gazette of
the same date) and Great Britain (Treaty of Peace - Turkey - Act of April 15th,
1924) had taken the necessary steps for ratification of the Treaty. Since the Treaty
is now in force and Protocol XII has become applicable as regards Great Britain
and Greece, it is not necessary to consider what the legal position would have been
if the Treaty had not been ratified at the time of the Court's judgment.

[85] As His Britannic Majesty's Agent relied on the fact that the Protocol was not
in force, the Court is constrained to state its opinion on the question whether its
jurisdiction may be affected by the fact that this Protocol is only effective as from
August 6th, 1924. [p34]

[86] Protocol XII was drawn up in order to fix the conditions governing the
recognition and treatment by the contracting Parties of certain concessions granted
by the Ottoman authorities before the conclusion of the Protocol. An essential
characteristic therefore of Protocol XII if that its effects extend to legal situations
dating from a time previous to its own existence. If provision were not made in the
clauses of the Protocol for the protection of the rights recognised therein as against
infringements before the coming into force of that instrument, the Protocol would
be ineffective as regards the very period at which the rights in question are most in
need of protection. The Court therefore considers that the Protocol guarantees the
rights recognised in it against any violation regardless of the date at which it may
have taken place.

[87] In the same connection it must also be considered whether the validity of the
institution of proceedings can be disputed on the ground that the application was
filed before Protocol XII had become applicable. This is not the case. Even
assuming that before that time the Court had no jurisdiction because the
international obligation referred to in Article 11 was not yet effective, it would
always have been possible for the applicant to re-submit his application in the
same terms after the coming into force of the Treaty of Lausanne, and in that case,
the argument in question could not have been advanced. Even if the grounds on
which the institution of proceedings was based were defective for the reason
stated, this would not be an adequate reason for the dismissal of the applicant's
suit. The Court, whose jurisdiction is international, is not bound to attach to
matters of form the same degree of importance which they might possess in
municipal law. Even, therefore, if the application were premature because the
Treaty of Lausanne had not yet been ratified, this circumstance would now be
covered by the subsequent deposit of the necessary ratifications.

[88] As has been explained above, the dispute relates to points preliminary to the
application of certain provisions of Protocol XII, namely those dealing with
negotiations to be undertaken and time limits to be observed. For this reason it
cannot be argued against the applicant that he is under an immediate obligation to
conform to these provisions. This conclusion is, in the present case, also pointed to
for another reason: the Parties, and before them, the [p35] persons interested, have
by mutual consent and at the instance of His Britannic Majesty's Government,
conducted their negotiations, since the signature of the Treaty of Lausanne, on the
basis of Protocol XII. There would appear to be precedents for this.

[89] Finally one last point remains which concerns the question of retrospective
effect raised by His Britannic Majesty's Agent. If the Court's jurisdiction is based
on Article n of the Mandate, this clause must be applicable to the dispute, not
merely ratione materice, but also ratione tempofis.

[90] It must in the first place be remembered that at the time when the opposing
views of the two Governments took definite shape (April 1924), and at the time
when proceedings were instituted, the Mandate for Palestine was in force. The
Court is of opinion that, in cases of doubt, jurisdiction based on an international
agreement embraces all disputes referred to it after its establishment. In the present
case, this interpretation appears to be indicated by the terms of Article 26 itself
where it is laid down that "any dispute whatsoever .... which may arise" shall be
submitted to the Court. The reservation made in many arbitration'treaties regarding
disputes arising out of events previous to the conclusion of the treaty seems to
prove the necessity for an explicit limitation of jurisdiction and, consequently, the
correctness of the rule of interpretation enunciated above. The fact of a dispute
having arisen at a given moment between two States is a sufficient basis for
determining whether as regards tests of time, jurisdiction exists, whereas any
definition of the events leading up to a dispute is in many cases inextricably bound
up with the actual merits of the dispute.

[91] Nevertheless, even supposing that it were admitted as essential that the act
alleged by the Applicant to be contrary to the provisions of the Mandate should
have taken place at a period when the Mandate was in force, the Court believes
that this condition is fulfilled in the present case. If the grant of the Rutenberg
Concessions, in so far as they may be regarded as incompatible, at least in part,
with those of Mavrommatis, constitutes the alleged breach of the terms of the
Mandate, this breach, no matter on what date it was first committed, still subsists,
and the provisions of the Mandate are therefore applicable to it. There is no doubt
that the Mandatory rgime was in force when the British Government, in its letter
[p36] of April 1st, 1924, adopted the attitude which, in the opinion of the Greek
Government, rendered it impossible to continue negotiations with a view to a
settlement and, by so doing, imparted to the breach of the Mandate, alleged by
Greece to have occurred, a definitive character.

[92] For these reasons the Court does not feel called to consider whether the
provisions of the Mandate, once they are in force, apply retrospectively to the
period when, according to the Greek application, the British Armies utilised, after
1918, certain of M. Mavrommatis'surveys, and when the Palestine Authorities and
the Colonial Office, in 1921, failed to regard themselves as bound to respect the
concessions in question to the extent claimed by M. Mavrommatis.

[93] Without dwelling further on this aspect of the problem, the Court feels
constrained to observe that the Mandate system including the Mandates to be
established for territories formerly belonging to the Ottoman Empire, dates back to
Article 22 of the Covenant of the League of Nations ; furthermore that the
Mandate for Palestine was entrusted to Great Britain by the Principal Allied
Powers in 1920, and, finally, that in 1921 the draft of the Mandate for Palestine
contained a reservation regarding Articles 311 and 312 of the Treaty of Svres.

[94] FOR THESE REASONS

The Court, having heard both Parties,
Upholds the preliminary objection submitted by His Britannic Majesty's
Government in so far as it relates to the claim in respect of the works at Jaffa and
dismisses it in so far as it relates to the claim in respect of the works at Jerusalem;
Reserves this part of the suit for judgment on the merits;
And instructs the President to fix, in accordance with Article 33 of the Rules of
Court, the times for the deposit of further documents of the written proceedings.

[95] Done in French and English, the French text being authoritative. [p37]

[96] At the Peace Palace, The Hague, this thirtieth day of August one thousand
nine hundred and twenty four, in three copies, one of which is to be placed in the
archives of the Court and the others to be forwarded to the Agents of the
Governments of His Britannic Maj esty and of the Greek Republic respectively.

(Signed) Loder,
President.
(Signed) . Hammarskjld,
Registrar.

[97] Lord Finlay and MM. Moore, de Bustamante, Oda and Pessa, declaring that
they are unable to concur in the judgment delivered by the Court, and availing
themselves of the right conferred on them by Article 57 of the Court Statute, have
delivered the separate opinions which follow hereafter.

(Initialled) L.
(Initialled) A. H. [p38]
Dissenting Opinion by Lord Finlay.

[98] I regret that I am unable to agree with the Judgment which has just been
delivered, so far as it relates to the Jerusalem Concessions. Three conditions must
be fulfilled in order that the jurisdiction of the Permanent Court under Article 26
of the Mandate should be compulsory. The dispute must be a dispute between the
Mandatory and another Member of the League of Nations, it must be a dispute
which cannot be settled by negotiation, and it must be a dispute relating to the
interpretation or the application of the provisions of the Mandate. In my opinion
none of these conditions are fulfilled in the present case.

I.

[99] The Permanent Court takes cognisance only of disputes between nations. It
has no jurisdiction to deal with a dispute one of the Parties to which is an
individual.

[100] Article 26 is express on this head. Its provisions apply only if a dispute as to
the Mandate has arisen between the Mandatory and another Member of the League
of Nations. Of course, there are many cases in which a genuine dispute between
two nations has originated in a wrong alleged to have been done to the subject of
one of these two nations by the other. Out of the dispute between the individual
and the State which is alleged to have committed the wrong there may develop a
dispute between the two nations. Many international disputes of great gravity have
originated in this way. It is obvious that Article 26 has reference to genuine
international disputes only and that any attempt to bring its provisions into play
with reference to claims of individuals against the Mandatory requires to be
carefully watched.

[101] It is a mistake to suppose that Article 26 can be made applicable to a dispute

between an individual and a mandatory State merely by the intervention, as
litigant, of the government of which that individual is a subject. To justify
proceedings under Article 26, there must have been in existence before the
Requte was filed a dispute between the Mandatory and another nation Member of
the League of Nations. [p39]

[102] Was there such an international dispute in the present case?

[103] The concessions to M. Mavrommatis dated from early in 1914, and in 1921
he urged the Government of Palestine to give effect to them. A very long
correspondence followed in which M. Mavrommatis and his solicitors urged his
rights in respect of these concessions upon the British Colonial Office. He also got
friends to write privately to persons in the British Foreign Office upon the subject.
One of the letters so written, dated January 26th, 1924, was from a M. Collas who
is stated to be in the Greek Foreign Office and was addressed to some person in
the British Foreign Office. M. Collas in this letter asked whether his correspondent
could let him know the views of His Majesty's Government about M.
Mavrommatis' claim, and whether in their opinion M. Mavrommatis' claim could
not be satisfactorily met. M. Collas added that M. Mavrommatis' solicitors said
that he would be prepared to submit the matter to a Court of Arbitration. With
reference to this note from M. Collas /Supp. Corr. pp. 9 and 10/ the Foreign Office
on April 1st, 1924, wrote to the Greek Legation stating that the Jerusalem
Concessions could be dealt with only under the Concessions Protocol of the
Treaty of Lausanne and were not suitable for arbitration, and that the Jaffa
Concessions could not be recognised being subsequent in date to October 29th,
1914.

[104] On the same date, April 1st, 1924, Messrs. Westbury, Preston and Stavridi,
M. Mavrommatis' Solicitors, wrote to the Greek Legation /Ibid, pp. I and II/
enclosing an opinion of
M. Mavrommatis' Counsel, and said: "From this you will see that in the opinion of
Counsel, with which we entirely agree, the only way this question can be solved is
by an appeal to the International Tribunal at The Hague, and on behalf of M.
Mavrommatis we have the honour to suggest that steps should be taken for this
submission to take place without delay." The enclosure in this letter contained a
copy of an opinion of the same date given by Mr. Purchase, M. Mavrommatis'
Counsel, which concludes thus: "We have tried every possible course, and now it
would appear that the only way by which we can solve this question is to appeal to
The Hague Tribunal under Articles 11 and 26 of the Mandate conferred upon
Palestine by right of international law [p40] and the Treaty of Lausanne. Such
appeal cannot be lodged by virtue of the treaties but only by the Government of
which M. Mavrommatis is a citizen. I therefore suggest that you should request the
Greek Minister to cite the Colonial Office before the Hague Tribunal so that the
matter can be adjudicated upon."

[105] All this shows clearly that there was not any dispute between the
Governments of Greece and Great Britain when the letter of May 12th, 1924, was
written, and the Requte introductive d'instance was lodged. A dispute between an
individual and Great Britain is one thing; a dispute between the Government of
that individual and Great Britain is quite another. There had been a long dispute
between M. Mavrommatis and the British Government; there had been no dispute
between the Greek Government and the British Government.

[106] It is only necessary to quote the first paragraph of the letter of May 12th,
1924, from the Greek Legation to the British Foreign Office /Ibid., p. 13/.

"With reference to your letter of April 1st, No. E. 2816/861/65, I have the honour
to inform you by order of my Government, that an amicable arrangement having
failed to be reached by His Britannic Majesty's Government giving adequate
satisfaction to their national, they have arrived at the decision, in conformity with
Article 26 of the prescriptions of the Mandate for Palestine of April 12th, 1922, to
submit the case to the judgment of the Permanent Court of International Justice at
The Hague."

[107] We now know that this step was taken on the suggestion of M.
Mavrommatis'solicitors merely to enable the Permanent Court to take cognisance
of the claim against the British Government.

[108] As I have said, there have been many cases in which a dispute between two
States has arisen from the fact that an alleged wrong has been done by one of them
to a citizen of the other. There was nothing of the kind here. There was no dispute
between the two Governments. The Greek Government filed the Requte merely
for the purpose of bringing M. Mavrommatis'claim within the jurisdiction of the
Permanent Court. There was no dispute between the two Powers before the
Requite was filed and it follows that the first condition required by Article 26 of
the Mandate had not been satisfied. [p41]
II.

[109] But even if it could be supposed that there was a dispute between the two
Governments, the dispute was not one which could not be settled by negotiation.
Efforts had been made by the agents of M. Mavrommatis to settle his dispute with
the British Government; no such efforts were made by the Greek Government. An
effort made by an individual to get settlement of his claim against a foreign
Government is one thing; an effort made by his Government, having taken up his
case, to effect a settlement of its dispute with the foreign government is another
thing altogether.

[110] It is said that it was of no use to try negotiations between the two
Governments. I cannot see any ground for this assertion. It is a matter of common
experience that governments frequently make a settlement of claims, the justice of
which they do not acknowledge, and innumerable claims of the nature of the
present have formed the subject of compromise. It is quite impossible to say that if
the Greek Government had taken up the claim and, as a government, had pressed
for a settlement, the negotiations might not have resulted in a settlement.

[111] Article 26 does not make it a condition to the jurisdiction of the Court that
there should have been negotiations with a view to settling the dispute between the
two Powers, but it does make it a condition that the dispute is one which cannot be
settled by negotiation. There may be some exceptional cases in which it can be
predicated that from special circumstances it is obvious that negotiations would be
a mere waste of time, but the present is not such a case. If the Government of
Greece had really taken up the Mavrommatis matter and made it a subject of
negotiation with Great Britain, who can say that a settlement would not have been
arrived at?

[112] The right to sue under Article 26 is carefully confined to nations. The Court
must not deal with the Mandate in such a way that in practice any individual, the
subject of a State Member of the League of Nations, who makes a claim against a
Mandatory, based on some alleged infraction of the terms of the Mandate, can
invoke the compulsory jurisdiction of the Permanent Court, merely by getting his
own Government to file a Requte; anything of this kind might lead to many
abuses. A State which has undertaken a Mandate [p43] under the League of
Nations has gratuitously taken upon itself a very arduous task and full effect must
be given to the provisions of the Mandate for the protection of the Mandatory
from litigation on any lines other than those laid down in the Mandate. The effect
of the judgment of the Court in the present case might be to fritter these
precautions away.

III.

[113] The jurisdiction of the Permanent Court rests upon consent, and without
consent there is no jurisdiction over any State. The consent may be by special
agreement (compromis) in a particular case, or general. In the present case the
British Government objects to the jurisdiction, but it is claimed that such a general
consent is to be found in the Mandate for Palestine, under Article 26 combined
with Article 11.

[114] I shall presently consider the effect of Article 11, but it is desirable in the
first instance to consider the meaning and effect of Article 26 in itself.

Article 26.
"The Mandatory agrees that, if any dispute whatever should arise between the
Mandatory and another Member of the League of Nations relating to the
interpretation or the application of the provisions of the Mandate, such dispute, if
it cannot be settled by negotiation, shall be submitted to the Permanent Court of
International Justice provided for by Article 14 of the Covenant of the League of
Nations."

[115] There can be no doubt as to the class of case which primarily, at all events,
this article was intended to meet. There are a number of provisions of the Mandate
under which it is highly probable that questions may arise between different
Members of the League of Nations. Article 5 forbids placing any Palestine
territory under the control of any foreign Power. Some Member of the League
might allege that this provision had been violated to its prejudice. Article 9
provides that the judicial system of Palestine shall assure to foreigners as well as
to natives a complete guarantee of their rights. Questions might arise at any time
with another Member of the League as to whether the judicial system is so
constituted as to afford this guarantee to its subjects. Article 18 forbids all [p43]
discrimination against the nationals of any State, Member of the League of
Nations, or against the goods originating in or destined for any such State, and
provides for freedom of transit across the mandated area. Questions may arise
between the Mandatory and another Member of the League as to the observance of
this article. The same observation applies to Article 19, which provides for
adherence on behalf of Palestine to international conventions on the slave traffic,
traffic in arms and ammunition, traffic in drugs, or relating to commercial
equality, freedom of transit and navigation, aerial navigation and postal,
telegraphic and wireless communication, or literary, artistic or industrial property;
and so under Article 20 providing for co-operation in a common policy adopted by
the League, for preventing and combating diseases of men, plants and animals. In
this connection Article 21 must be mentioned. It provides for the enactment and
execution of a law as to Antiquities. This law is to ensure equality of treatment of
the nationals of all States Members of the League of Nations and under head (7) it
is provided that in granting authorisations to excavate, the Administration of
Palestine shall not act in such a way as to excludes avants of any nation without
good grounds.

[116] Under all these heads there are endless possibilities of dispute between the
Mandatory and other Members of the League of Nations, and it was highly
necessary that a Tribunal should be provided for the settlement of such disputes.
Article 26 provides the Tribunal for this purpose.

[117] The dispute in the present case is as to the alleged failure by the British
Government as Mandatory to recognise the rights of M. Mavrommatis in respect
of certain concessions in Palestine. This can be brought within the compulsory
jurisdiction provided for in Article 26 only if it relates to the interpretation or the
application of the provisions of the Mandate. The dispute here has obviously
nothing to do with any of the provisions of the Mandate primarily contemplated in
Article 26, and to which I have already referred. It is, however, contended for the
claimant that Article 11 of the Mandate contains provisions which have been
infringed by the action of the Mandatory as regards these concessions and that for
this reason the case falls under Article 26. Article 11 is as follows: [p44]

Article 11.
"The Administration of Palestine shall take all necessary measures to safeguard
the interests of the community in connection with the development of the country,
and, subject to any international obligations accepted by the Mandatory, shall have
full power to provide for public ownership or control of any of the natural
resources of the country or of the public works, services and utilities established or
to be established therein. It shall introduce a land system appropriate to the needs
of the country, having regard, among other things, to the desirability of promoting
the close settlement and intensive cultivation of the land.
"The Administration may arrange with the Jewish Agency mentioned in Article 4
to construct or operate, upon fair and equitable terms, any public works, services
and utilities, and to develop any of the natural resources of the country, in so far as
these matters are not directly undertaken by the Administration. Any such
arrangements shall provide that no profits distributed by such agency, directly or
indirectly, shall exceed a reasonable rate of interest on the capital, and any further
profits shall be utilised by it for the benefit of the country in a manner approved by
the Administration."
[118] The French version agrees with the English and I refer to it only on one
point on which it is slightly clearer. The English words "or of the public works,
services and utilities established, or to be established therein" are rendered ou des
travaux et services d'utilit publique dj tablis ou y tablir. The words whether
in French or English denote works or services of public utility such as railways,
provision for supply of water, gas, electricity, etc.

[119] Protocol XII to the Treaty of Lausanne deals with Turkish Concessions such
as those of
M. Mavrommatis in Palestine. By Article 1 such concessions duly entered into
before October 29th, 1914, are maintained, but subject to certain conditions,
hereinafter referred to, contained in Articles 4, 5 and 6 and relating amongst other
things to adaptation of such concessions to the new economic conditions.

[120] The charge made against the British Government as Mandatory [p45] is that
it refused to give effect to the Mavrommatis Concessions and granted concessions
covering in part the same ground to one Rutenberg. The Greek Government says
that, if established, this would amount to a breach of the provisions of the
Mandate, and that this would give the Court compulsory jurisdiction under Article
26. Great Britain denies this. This put shortly is the question which has been raised
and discussed very fully on the Preliminary Objection.

[121] For the Greek Government it is contended that the case falls under Article
11 of the Mandate in virtue of the words in the first sentence "subject to any
international obligations accepted by the Mandatory". It is said that these words
incorporated into Article 11 the provisions of the Lausanne Protocol XII, so that
for the purposes of Article 26 that Protocol must be regarded as part of Article 11
of the Mandate, and that the grant of the Rutenberg Concession was an exercise of
the power conferred in the first sentence of Article 11 to provide for public
ownership or control and was in breach of the Protocol which recognises the
Mavrommatis Concessions subject to certain conditions. It was further alleged that
the granting of the Rutenberg Concession amounted to an arrangement made by
the Administration of Palestine with the Zionist Organisation within the terms of
paragraph 2 of Article 11 and that the words reserving international obligations in
the first sentence should be read into paragraph 2.

[122] This in broad outline is the case made against the British Government on the
question of jurisdiction. I proceed to examine it in detail.

[123] The words relied on as showing that there has been a breach of the
provisions of the Mandate within Article 26 are the following: "subject to any
international obligations accepted by the Mandatory". An examination of the
article shows conclusively that these words constitute merely a limitation which is
attached to one only of the powers conferred on the Mandatory by Article 11,
namely the power to provide for public ownership or control of any of the natural
resources of the country or of the public works, services and utilities established or
to be established therein. [p46]

[124] It will be observed that Article 11 begins with a general statement as to one
duty imposed on the Administration of Palestine. This is contained in the initial
words "The Administration of Palestine shall take all necessary measures to
safeguard the interests of the community in connection with the development of
the country". These words are a statement of principle and provide that in the
development of the country the interests of the community are not to be sacrificed
to those of individuals and that all measures necessary to safeguard the interests of
the community are to be taken by the Administration.

[125] Article 11 then proceeds to deal specifically with the work of the
Administration and its powers under three heads: (1) The public ownership or
control of natural resources or public works, etc. therein: this is closely connected
with the statement of principle which precedes it and is dealt with in the
concluding words of the same sentence. (2) The introduction of a Land System
(second sentence of the article). (3) Arrangements with the Zionist
Organisation for the construction or operation of public works, etc. or
development of natural resources (paragraph 2).

[126] I take these heads in their order. (1) The words which deal with the first
head are the following: "and subject to any international obligations accepted
by the Mandatory", the Administration "shall have full power to provide for public
ownership or control of any of the natural resources of the country, or of public
works, services and utilities established or to be established therein".

[127] We have been informed that in the draft of the Mandate the reservation at
the beginning of these words ran thus: "subject to the provisions of Article 311 of
the Treaty of Peace with Turkey", i.e. the Treaty of Sevres. It became, however,
obvious that the Treaty of Sevres would never be allowed to take effect and to
avoid delay in the completion of the Mandate for Palestine the reference to the
Treaty of Sevres was replaced by the words "subject to any international
obligations accepted by the Mandatory", words which would be applicable to the
provisions of the Treaty which was expected to replace that of Sevres.

[128] Article 311 of the Treaty of Sevres dealt with concessions in countries like
Palestine detached from Turkey to be placed under the authority or tutelage of one
of the Principal Allied Powers. It provided in substance that concessions granted
before October [p47] 29th, 1914, should be maintained subject, however, to power
to buy out any concession contrary to the public interest, compensation being paid
in the manner provided; there was further provision for adaptation of the contract
to the new economic conditions. Article 311 of the Treaty of Sevres is now
replaced by Protocol XII of the Treaty of Lausanne which deals with the same
subject. It is obvious that the "international obligations accepted by the
Mandatory" referred to in Article 11 are primarily, at all events, the provisions of
Protocol XII of the Treaty of Lausanne. It would also include any other relevant
international obligations but it does not appear that there are any others.

[129] It is quite impossible to apply these words, "international obligations

accepted", to international law either generally or in any particular respect. The
words obviously refer to conventional obligations by treaty or other agreement;
provisions of international law do not require acceptance to be binding but are
binding by the sanction on which all international law rests, the general consent of
nations. The words "accepted by the Mandatory" show that the "international
obligations" referred to are contractual, that is by treaty or convention, and
reference is clearly made to the provisions which were expected to replace the
Treaty of Sevres and in particular Article 311.

[130] It may be said, why make a particular reservation for these international
obligations? They are binding, it might be said, by force of the treaty or
convention which created them, and which has been accepted by the Mandatory.
The answer is clear. These words are introduced to show beyond doubt that the
grant of the power to "provide for public ownership or control" is not to be
exercised in a manner inconsistent with treaty obligations which the Mandatory
has accepted. If the words of reservation had been left out it might have been
plausibly argued that power was conferred on the Administration of Palestine to
override any such obligations. Without these words of reservation the clause have
run thus: the Administration "shall have full power to provide for public
ownership or control of any of the natural resources of the country or of the public
works, services and utilities established or to be established[p48] therein". It
would have been said, if the Mandate had been thus worded, that the
Administration might exercise this power to acquire as public property or to
assume public control, unfettered by international obligations even if they had
been accepted by the Mandatory. Nothing of the kind was intended, and, to make
this clear beyond doubt, these words were inserted to show that the power
conferred was subject to such obligations as had been accepted by the Mandatory.
These words impose a restriction upon the power of acquisition or control
conferred on the Administration by the first sentence of Article 11; it is to be
subject to treaty obligations which have been accepted by the Mandatory.

[131] These words of reservation apply only to the first head of the powers
conferred by Article 11, namely, the power of acquisition of public property or
control; they have no application to heads 2 and 3 which relate respectively to the
introduction of a Land System and to arrangements to be made with the Zionist
Organisation. With reference to both these last heads such words would be
surplusage. No one could suppose for a moment that the power to introduce a
Land System or to make arrangements with the Zionist Organisation could confer
any authority to disregard the terms of any international obligations; any existing
treaty might be enforced by the sanctions appropriate to treaties. But, as I have
pointed out, if "full power to provide for public ownership or control" had been
conferred simpliciter upon the Administration of Palestine, it might have been
supposed that this was meant to empower the Administration to "nationalise"
irrespective of treaty obligations. It was very proper under head (1) to make the
reservation; under heads (2) and (3) it was wholly superfluous.

[132] If the Administration of Palestine had provided for public ownership or

control of any of the natural resources of the country or of public works, etc., in a
manner which involved the disregard of international obligations accepted by the
Mandatory, there would have been an infraction of Article 11 which might have
been submitted to the Permanent Court at the instance of any Member of [p49] the
League of Nations under Article 26. The property would have been acquired or the
control assumed contrary to Article 11, because Article 11 confers the power to
acquire such property or control only in accordance with international obligations
accepted. Here nothing of the kind took place. The Administration of Palestine has
not made as to the subjects of the Mavrommatis concessions any provision for
public ownership or control within the meaning of the first sentence of Article 11.
The granting of concessions is not an exercise of the first power in Article 11 nor
is their annulment, unless it forms part of a process of nationalisation by making
the subject public property or putting it under public control. It has been
contended that Article 28 of the Rutenberg /Annex to Mmoire of Greek Gov., p.
35, p 48/ concessions for the supply of electricity within the Palestine area showed
an assumption of public control within the meaning of the first sentence of Article
11 of the Mandate. This suggestion does not bear examination. The article
provides that the undertaking of the Company shall be recognised as a Public
Utility Body under Government control and all the installations and property of
the undertaking shall receive protection as such. This provision does not vest the
management in the Government to any extent; it merely recognizes the right of the
Government to assume control if the public interest demands it. The management
remains in the Company until the power is exercised. The existence of the power
does not constitute an assumption of public control within the meaning of Article
11.

[133] In the judgment of the Court is this connection great stress is laid upon a
passage on page 5 of the Preliminary Counter-Case which runs as follows:

"The concessions granted to M. Rutenberg in September 1921, for the

development of electrical energy and water-power in Palestine (Annex to the
Greek Case, pp. 21 52) were obliged to conform to this Article 11, and it would
have been open to any Member of the League to question provisions in those
concessions which infringed the international obligations which His Britannic
Majesty as Mandatory for Palestine had accepted."

[134] It is perfectly true that any party to an international obligation accepted by

the Mandatory and therefore binding on Palestine [p50] might have complained if
that international obligation had been infringed by any concession. The right so to
complain would not have been confined to Members of the League, any party
to a treaty may take steps to prevent its violation or to obtain redress. I have called
attention to the provisions of Article n in detail and have shown that the
reservation in the first sentence only applies to cases in which provision is made
for public ownership or control and that no such provision is made in the
Rutenberg concessions. It follows that the right to object to any infringement of
international obligations in such concessions would rest not on the reservation in
the first sentence of Article n, but on the rights which every Party to a treaty has
by international law.

[135] It must be remembered that this passage in the argument cannot have been
written with reference to the distinction between mere international engagements
and international engagements which have been incorporated with and form part
of the Mandate. It was only at a later stage of the case that the controversy on this
point arose. It appears to me that language employed under such circumstances
cannot be treated as an admission on a point that was not then under consideration.
Article 11 must be construed according to its true meaning. The so-called
"declaration" is merely part of an argument and would, I doubt not, have been
differently expressed if the point now at issue had been then developed.

[136] The second head of Article 11 provides for the introduction by the
Administration of Palestine of a Land System. There is nothing said under this
head as to existing international obligations for the reason I have indicated. It must
not, however, for a moment be supposed that the Administration could proceed
with a Land System at variance with international obligations without laying itself
open to all the proceedings by which international obligations are enforced. Any
such action might lead to diplomatic representation and give ground for any steps
which the aggrieved Power might think proper to take. But it could not be brought
compulsorily before the Permanent Court under Article 26, because there would
be no violation of the provisions of the Mandate.

[137] And so of the third head of powers under Article 11, as to arrangements
[p51] with the Zionist Organisation. If any such arrangements amounted to an
infringement of an international obligation, any Power interested might proceed by
remonstrance and by all the steps which are taken to bring pressure to bear upon
an offending State. The difference might by consent, general or special, be
disposed of by the Permanent Court; it could not be brought compulsorily before
the Court under Article 26.

[138] I have already referred to the conditions with regard to the readaptation of
concessions which are contained in Protocol XII to the Treaty of Lausanne. Article
6 of that Protocol provides that beneficiaries under concessionary contracts "which
have not on the date to this Protocol" (July 24th, 1923) "begun to be put into
operation (or as it stands in the French version, qui n'auraient pas reu la date de
ce jour un commencement aapplication) cannot avail themselves of the provisions
of this Protocol relating to readaptation. It was on this point that the negotiations
between M. Mavrommatis and the British Government broke down. The
contention of M. Mavrommatis was that these words were satisfied by the deposit
of plans and of security, while the British Government maintained that they
require that the execution of the works should have been begun. In the judgment
of the Court (p. 29) it stated that this question was one as to the interpretation of
Article II of the Mandate and that Article 26 applied to it. The question depends
entirely on the construction of the Protocol and the view that it falls to be decided
under Article 26 must depend on the application of the doctrine of incorporation of
the Protocol into Article 11 of the Mandate. It seems to me that the proposal to
make any such application supplies a forcible illustration of the fallacy underlying
the whole doctrine of incorporation as applied to this case. The Protocole is no
part of the Mandate for any purpose; it is referred to in the first sentence of Article
11 merely by way of limiting the power of acquiring public property or control
there conferred. With this these conditions have nothing to do. I cannot accept the
view that Article 11 of the Mandate is to be read as if it contained in extenso the
provisions of the Protocol. The difference on this point was one which, if it had
existed between the two Governments, might have been submitted to the
Permanent Court by consent; it could not have been compulsorily referred under
Article 26. [p52]

[139] M. Politis in his argument for the Greek Government suggested that Great
Britain could be made liable on the ground that in making the concessions to M.
Rutenberg they were entering into an arrangement with the Jewish Agency under
paragraph 2 of Article 11 and that the arrangement was in violation of the
international obligations referred to in the first sentence of that article.

[140] This suggestion is not borne out by the terms of the Mandate. Paragraph 2 of
Article 11 relates to arrangements to be made by the Administration with the
Jewish Agency mentioned in Article 4 of the Mandate. By that article a Jewish
Agency is to be recognised as a public body for the purpose of advising and
cooperating with the Administration as to matters affecting the Jewish population
in Palestine "and subject always to the control of the Administration to assist and
take part in the development of the country." The Zionist Organisation, so long as
the Mandatory thinks its organisation and constitution appropriate, is to be
recognised as such agency. The arrangement mentioned in paragraph 2 is to be
with this public body. The arrangement is to be for the construction or operation of
public works, etc. or for the development of the natural resources of the country
"in so far as these matters are not directly undertaken by the Administration". The
fact that the memorandum and articles of the Rutenberg Concession for electricity,
etc. were to be approved by the High Commissioner in agreement with the Jewish
Agency (see Clause 2 of the Agreement of September 21st, 1921) cannot be
regarded as such an arrangement. /Annex, p. 36/. Any arrangement under
paragraph 2 of Article 11 was to be for construction or operation of public works,
etc. or for development of the country's resources, and was to be for an
undertaking in which profits might be made by the Jewish Agency, as is shown by
the last sentence of Article 11. There is nothing to show that any such arrangement
was ever entered into. In the first place, the concession to M. Rutenberg was not
an arrangement with the Zionist Agency. And, in the second place, it is quite
impossible, for the reasons I have already given, to read into the second paragraph
the reservation in the first sentence of Article 11. The judgment quotes a passage
from the speech of the British Agent as containing an admission that the
reservation in the first sentence is to be read into paragraph 2. What is said in this
passage is that the reservation is so natural that it ought to be implied in the second
paragraph [p53]. The stipulations of any treaties would of course apply to anything
done under paragraph 2. But they would apply simply as treaties, not in virtue of
the reservation which applies and can apply only to the power conferred in the first
sentence they could not be made the subject of proceedings under Article 26
but could be enforced like all treaties by representations with the possible exercise
of force in the background. The difference between these two things was
immaterial for the purpose of the point with which the British Agent was then
dealing it is vital for the purposes of the present controversy. I venture to refer
to what I have already said with reference to a quotation from the British
Preliminary Counter-case in a similar connection.

[141] The statement in the judgment, that the Parties appear to have agreed in
admitting that the reservation in the first sentence of Article 11 applies to the
second paragraph appears to me to be a mistaken inference from the passages
quoted from the British Counter-case and the British Agent's speech upon which I
have commented already.

[142] The whole question of Article 11 may be summed up in a very few words.

[143] Article 11 does not prescribe that the terms of the international obligations
referred to shall be observed; what it does prescribe is that public property or
control shall not be established in violation of the terms of such obligations. The
difference between these two things is vital and as soon as it is appreciated all
difficulty as to Article 11 disappears. The mere violation of an international
obligation does not constitute a breach of Article 11; it is only if the first power
conferred by Article 11 is exercised in violation of the international obligation that
there is an infraction of the terms of the Mandate.

[144] For these reasons, in my opinion, the Court has no jurisdiction to deal with
this case.

(Signed) Finlay. [p54]

Dissenting Opinion by Mr. Moore.

[145] I regret that I am obliged to dissent from the judgment of the Court in the
present case.

[146] By the present application (Requte), filed on May 13th, 1924, the Greek
Government, appearing as a plaintiff, has asked the Court in the exercise of
compulsory jurisdiction to require the British Government to appear and, as
defendant, answer on the merits a claim for damages preferred on behalf of M.
Mavrommatis, a Greek subject, in respect of certain concessions which he
obtained and of other which he had wished to obtain from the Turkish authorities
in Palestine. All these concessions, actual and proposed, relate to public works,
services, or "utilities". Two of them,respectively relating to the construction and
operation of electric tramways and the supply of electric light and power at
Jerusalem, and to the supply of drinking water to the same city, were definitively
concluded with the local Turkish authorities on January 27th, 1914. It is alleged
that M. Mavrommatis had begun to carry out these concessions by depositing in
bank a sum of money and by submitting detailed plans for the approval of the
authorities, when, on the Outbreak of war he availed himself, with the consent of
the authorities, of a provision in the concessions for the postponement of
construction in case of force majeure. A second group relates to the construction
and operation of electric tramways and the supply of electric light and power and
of drinking water in the city of Jaffa, and the irrigation of its gardens from the
waters of El-Hodja. It is alleged that M. Mavrommatis, under agreements signed
on January 27th, 1914, deposited a provisional security and made preliminary
surveys; that on January 28th, 1916, concessions were signed by the local
authorities, but that, under a new Turkish law, such concessions had to be
confirmed by Imperial firman; that the documents were sent to Constantinople,
and were returned to Jerusalem with a request for the change of a single and
immaterial descriptive word, and that the issue of the firman involved a mere
formality, when, in consequence of the outbreak of war between Greece and
Turkey, M. Mavrommatis was obliged to leave the Ottoman dominions and the
Imperial firman was not promulgated. The third concessionary group related to the
irrigation of the valley of the Jordan. Here, again, it is alleged that, [p55] under a
verbal agreement in 1911 with the competent authorities, surveys and reports were
made, that plans and the draft of a contract were submitted, and that a provisional
security was deposited; but it is further stated that, by the Turkish law, the contract
required the consent of the Imperial Government after approval by the Parliament,
and that this approval was not obtained because the outbreak of the war prevented
the Parliament from assembling. In conclusion, the application asks the Court to
give judgment that the Government of Palestine and consequently also the British
Government has since 1921 "wrongfully refused to recognise to their full extent
the rights acquired by M. Mavrommatis under the contracts and agreements
concluded by him with the Ottoman authorities in regard to the works specified
above", and that the British Government should make reparation for the
consequent loss, estimated at 234, 339, together with interest at six per cent from
July 20th, 1923, the date on which the estimate was made.

[147] In the Case (Mmoire) subsequently filed on behalf of the Greek

Government, the claim for damages in respect of the Jordan valley transactions is
abandoned, as a proof, so the Case states, that where the claimant feels some doubt
as to the international value of his rights, he is not disposed to press them. But the
Court is then asked to give judgment against the British Government for the sum
of 121,045 in respect of the Jerusalem concessions, and of 113,294 in respect of
the Jaffa group, together with interest in each case at the rate of six per cent from
July 20th, 1923, up to the date on which the judgment is given. The total of these
two sums is the same as the total amount claimed before the Jordan group was
withdrawn.

[148] By Article 36, paragraph 1, of the Statute, "the jurisdiction of the Court
comprises all cases which the Parties refer to it and all matters specially provided
for in treaties and conventions in force"; and, where the compulsory jurisdiction of
the Court is invoked, Article 40 requires a "written application" (Requte) to be
addressed to the Registrar, indicating "the subject of the dispute and the contesting
Parties". Article 35, paragraph 2, of the Rules of Court [p56] provides that the
application shall include, in addition to an indication of the subject of the dispute
and the names of the parties concerned, a succinct statement of facts", and "an
indication of the claim". The application accordingly specifies as the grounds on
which the compulsory jurisdiction of the Court is invoked, (1) Article 9 of
Protocol No. XII annexed to the Treaty of Peace of Lausanne of July 24th, 1923",
and (2) "Articles 11 and 26 of the conditions of the Mandate for Palestine
conferred upon His Britannic Majesty on July 24th, 1922". The application then
quotes, from Article 9 of the Lausanne Protocol, the provision that, "in territories
detached from Turkey under the Treaty", "the State which acquires the territory is
fully subrogated as regards the rights and obligations of Turkey towards the
nationals of the other Contracting Powers .... who are beneficiaries under
concessionary contracts entered into before October 29th, 1914, with the Ottoman
Government or any local Ottoman authority", and that "this subrogation will have
effect.... as from October 30th, 1918". The application further quotes from the first
paragraph of Article 11 of the Palestine Mandate, the following clause:

"The Administration of Palestine shall take all necessary measures to safeguard

the interests of the community in connection with the development of the country,
and, subject to any international obligations accepted by the Mandatory, shall have
full power to provide for public ownership or control of any of the natural
resources of the country or of the public works, services and utilities established or
to be established therein."

[149] On June 16th, 1924, on the assembling of the Court in ordinary session, the
British Government appeared and put in a plea to the jurisdiction, requesting the
Court to dismiss the application on the ground among others that the British
Government had not consented to the reference of the matter to the Court, that
Article 26 of the Palestine Mandate was inapplicable to the case, that the only
international instrument by which the British Government's obligations in regard
to the recognition of concessions in Palestine were or would be defined was the
Concessions Protocol of Lausanne, that this instrument, which formed part of the
peace settlement with Turkey, would not become operative until the Lausanne
Treaty was duly ratified, and that the Protocol did not provide for the submission
to the Court of disputes which might arise as to the interpretation and application
of its provisions. [p57]
[150] The jurisdictional objection based on the fact that the Concessions Protocol,
the provisions of which the application invoked, had not become, operative, was
obviously well-founded. Not only is the Protocol annexed to the Treaty as part of
the peace settlement, but, by the very terms of the Protocol, its coming into force
depended upon the ratification of the Treaty. In fixing the periods within which
concessions are to be dealt with, within which they may be re-adapted or
dissolved, within which options concerning them may be exercised, and within
which experts may be employed and arbitral proceedings taken, "the coming into
force of the Treaty of Peace" is, all through the Protocol, fixed as the starting
point. The treaty was at length ratified (August 6th, 1924); but, in the interval of
nearly two months that elapsed after the Court met, the application evidently was,
as it stood, subject to dismissal on the ground that the enforcement of unratified
treaties, whether by the award of damages for their alleged infraction or otherwise,
is beyond the Court's jurisdiction. On this point Article 36 of the Statute, in
limiting the compulsory jurisdiction of the Court to matters specially provided for
"in treaties and conventions in force", is definite and conclusive. The doctrine that
governments are bound to ratify whatever their plenipotentiaries, acting within the
limits of their instructions, may sign, and that treaties may therefore be regarded as
legally operative and enforceable before they have been ratified, is obsolete, and
lingers only as an echo from the past.

[151] With respect to the plea to the jurisdiction filed by the defendent
Government, it has been suggested in argument before the Court that such pleas
are especially common in Anglo-Saxon countries, where it is the usual practice to
neglect no means of defence to an action, and that Anglo-Saxon jurists have long
been in the habit of carrying this practice into the domain of international justice.
But, even if a majority of the five judges who dissent from the assumption of
jurisdiction in the present case were not from countries which do not derive either
their substantive or their procedural law from Anglo-Saxon jurisprudence, I should
be unable to admit that the suggestion is pertinent to the jurisdictional question
raised by the plea to the pending application.

[152] There are certain elementary conceptions common to all systems of

jurisprudence, and one of these is the principle that a court of [p58] justice is never
justified in hearing and adjudging the merits of a cause of which it has not
jurisdiction. Nowhere is this more clearly laid down than in the great French
repository of jurisprudence by Dalloz, where it is stated that, as jurisdiction is
essentially a question of public order, it being a matter of general interest that no
authority shall transgress the limits to which its action is confined, an exception to
the competence of a tribunal may be taken at any stage of the proceedings, so that,
even though the Parties be silent, the tribunal, if it finds that competence is
lacking, is bound of its own motion to dismiss the case (se dessaisir d'office); and
a judgment of the highest Court in France is cited to the effect that that court may
itself supply the exception, although the Parties had not raised the point before the
courts of first instance and of appeal. (Dalloz, Rpertoire, Comptence Art. 2, n
36.)
[153] Article 38, paragraph 4, of the Statute provides that the Court "shall apply",
not as having binding force, but as "subsidiary means for the determination of
rules of law", "judicial decisions and the teachings of the most highly qualified
publicists of the various nations". Having, in the performance of my duty under
the Statute, referred to the principles applied by at least some of the Courts of the
Continent, I beg leave to say that the decisions of the Courts of United States as to
the fundamental character of the question of jurisdiction are practically identical in
terms with those of the highest Court in France, and, no doubt, of the highest
Courts in at least some other countries. In a leading case the Supreme Court of the
United States has declared:

"It is true that the plaintiffs below, against whose objection the error was
committed, do not complain of being prejudiced by it; but the rule, springing from
the nature and limits of the judicial power of the United States, is inflexible and
without exception, which requires this Court, of its own motion, to deny its own
jurisdiction and, in the exercise of its appellate power, that of all other Courts of
the United States, in all cases where such jurisdiction does not affirmatively
appear in the record on which, in the exercise of that power, it is called to act....
This question the Court is bound to ask and answer for itself, even when not
otherwise suggested and without respect to the relation of the Parties to it."
(Mansfield v. Swan, 1884, III, U.S. 379)
[p59]

[154] In the United States not only is jurisdiction divided between the State
governments and the national government, but the jurisdiction of the federal courts
is for the most part statutory and limited. By reason of these fundamental facts,
pleas to the jurisdiction are necessarily frequent; and motions to dismiss a suit for
want of jurisdiction are made and entertained not only in respect of the complaint,
but whenever in the course of the proceeding it may appear that the essentials of
jurisdiction do not exist. Whether the plaintiff would be precluded from bringing
another suit would depend upon his ability later to meet the objection to his
original complaint. If he could not do this, he would, legally and justly, be
precluded from presenting his claim again ; but the dismissal does not in itself
necessarily have such an effect. It merely means that the Court will not commit the
flagrant illegality of entertaining a suit which, on the plaintiff's own statement, the
Court has at the time no legal power to hear and determine.

[155] The requirement of jurisdiction, which is universally recognised in the

national sphere, is not less fundamental and peremptory in the international. It will
suffice to quote on this elementary point only two publicists.

[156] M. Andr Weiss, in his work entitled Droit international priv, published at
Paris in 1913, says:

"The principle of res judicata can apply to foreign judgments only so far as they
are regular in form and so far as they proceed from judges competent according to
the lex fori. It is the duty of the tribunal before which they are invoked to examine
them from these different points of view, and to decline to give effect to them it
the result of the examination is unfavourable." (VI. 10.) [FN1]

---------------------------------------------------------------------------------------------------
------------------
[FN1] (L'autorit de la chose juge ne peut appartenir aux sentences trangres
qu'autant qu'elles sont rgulieres en la forme et qu'autant qu'elles manent de juges
comptents d'aprs'la lex fori. Le tribunal devant lequel on les invoque a le devoir
de les examiner a ces divers points de vue, et de les arrter au passage, si le
rsultat de l'examen est dfavorable.)
---------------------------------------------------------------------------------------------------
------------------

[157] M. N. Politis in his volume entitled La Justice internationale, published at

Paris during the present year, says: [p60]

"One conceives of the possibility of a refusal to execute a sentence, only if it is

tainted with nullity. It has this character in the case of a defective agreement, and
in that of an excess of power on the part of the arbitrator" (p. 91).[FN1]

---------------------------------------------------------------------------------------------------
------------------
[FN1] (On ne concoit la possibilit d'un refus d'excution que si la sentence est
entache de nullite. Elle a ce caractre dans l'hypothse d'un ccLnpromis irr-
gulier et dans celle d'un excs de pouvoir de la part de l'arbitre.)
---------------------------------------------------------------------------------------------------
------------------

[158] Ever mindful of the fact that their judgments, if rendered in excess of power,
may be treated as null, international tribunals have universally regarded the
question of jurisdiction as fundamental. It would be superfluous to cite from the
records of international tribunals particular decisions to this effect. An
international tribunal with general jurisdiction, compulsory or non-compulsory,
over independent States does not as yet exist. The international judicial tribunals
so far created have been tribunals of limited powers. Therefore no presumption in
favor of their jurisdiction may be indulged. Their jurisdiction must always
affirmatively appear on the face of the record.

[159] This principle is peculiarly applicable to the Permanent Court of

International Justice. By Article 36 of the Statute, the limited compulsory
jurisdiction, which it was originally proposed to apply to all adhering States, now
extends only to States which expressly declare that they accept it; and for this
purpose there is attached to the Statute a special protocol, the nature of which is
indicated by the title "optional clause" (disposition facultative). This "optional
clause" has not been signed either by Great Britain or by Greece, so that, for the
exercise of compulsory jurisdiction in the present case, grounds must be found
elsewhere.

[160] The Greek Government having assigned as grounds for the present
compulsory claim Articles 26 and 11 of the Palestine Mandate, I will now
consider the terms and effect of these articles.

[161] Article 26 reads as follows:

"The Mandatory agrees that, if any dispute whatever should arise between the
Mandatory and another Member of the League of Nations relating to the
interpretation or the application of the provisions of the Mandate, such dispute, if
it cannot be settled by negotiation, shall be submitted to the Permanent Court of
International Justice provided for by Article 14 of the Covenant of the League of
Nations." [p61]

[162] This clause is found in identical form in all the mandates with one
exception. In the Mandate which Great Britain holds for East Africa there is an
additional clause, reading as follows: "States Members of the League of Nations
may likewise bring any claims on behalf of their nationals for infractions of their
rights under this Mandate before the said Court for decision." But, while I mention
the existence of this clause, I draw no inference from the fact that a similar clause
is not found in the rest of the mandates. My dissent from the judgment on the
present case rests upon other grounds.

[163] To the jurisdiction of the Court under Article 26 the concurrence of three
conditions is indispensable. These conditions are: First, there must be a "dispute"
between the Mandatory and another Member of the League of Nations; secondly,
the dispute must relate to "the interpretation or the application of the provisions of
the Mandate"; thirdly, it must appear that the dispute "cannot be settled by
negotiation". Taking as a whole all that is set forth in the present application
(Requte) and the supporting documents, I am of opinion that none of these
conditions is fulfilled. I will discuss the first and third together.

[164] The first condition -the existence of a dispute between the Mandatory and
another Member of the League -is not met merely by the filing of a suit by the one
government against the other in this . Court. There must be a pre-existent
difference, certainly in the sense and to the extent that the government which
professes to have been aggrieved should have stated its claims and the grounds on
which they rest, and that the other government should have had an opportunity to
reply, and if it rejects the demands, to give its reasons for so doing. Moreover, if it
rejects some of the demands, but admits others, it is entitled to know why the
compromise thus offered is not acceptable. These propositions, tested by the
ordinary conceptions of fair dealing as between man and man, should seem to be
self-evident; nor would it be difficult to cite cases in which governments have
abandoned their claims on considering the arguments adduced on the other side.
[p62]

[165] But it must also appear -and this is the third condition -that the dispute, if
any is shown to exist, "cannot be settled by negotiation". This condition did not
originate with the mandates. On the contrary, long before mandates were heard of,
a similar clause was inserted in scores of general arbitration treaties, as a vital
condition of their acceptance and operation. These treaties for the most part still
exist. The condition in question does not mean that the difference must be of such
a nature that it is not susceptible of settlement by negotiation; nor does it mean
that resort to the Court is precluded so long as the alleged wrong-doer may profess
a willingness to negotiate. The clause must receive a reasonable interpretation; but
an interpretation cannot be reasonable which in effect nullifies the condition.

[166] An international "dispute which cannot be settled by negotiation", cannot,

upon the pending application (requte) and supporting proof, be said now to exist,
either in law or in fact.

[167] When Article 26 of the Mandate provides for the submission to the
Permanent Court of International Justice of disputes which "cannot be settled by
negotiation", it necessarily means disputes between governments. The article, by
its very terms, includes only disputes which may arise "between the Mandatory
and another Member of the League of Nations". This obviously does not include a
dispute between the Mandatory and M. Mavrommatis. Had M. Mavrommatis been
a Member of the League of Nations, it would have been unneccesary for his
government to appear here ; but, under Article 26, it is only of disputes between
governments that the Court has jurisdiction, and, when the article speaks of the
settlement of such disputes by negotiation, it also necessarily means negotiation
between governments.

[168] Moreover, in deciding whether such negotiation has taken place, the Court is
not at liberty to interpret the word "negotiation" as a process by which
governments are enabled to evade their obligations. Although this superficial view
may to some extent popularly prevail, yet, in the international sphere and in the
sense of international law, negotiation is the legal and orderly administrative
process by which governments, in the exercise of their [p63] unquestionable
powers, conduct their relations one with another and discuss, adjust and settle,
their differences. Many celebrated judicial decisions might be cited to show the
respect paid to this principle by national courts, and it is equally binding on
international courts, which exercise their powers only with the consent of nations.

[169] The theory that the Greek Government, at any moment when it might see fit
to intervene, might be considered as having been a party to the discussions which
M. Mavrommatis and his attorneys carried on directly with the British Colonial
Office from 1921 to 1923, cannot be accepted. It is a common thing for aliens to
negotiate with a government both concerning contracts or concessions which they
desire to obtain and concerning contracts or concessions which the government is
alleged to have failed to keep. Often the negotiations are thus directly carried on
because it is perfectly understood that the subject matter is not a proper one for
diplomatic intervention; and it can never be argued that the government, because it
negotiated with the claimant, admitted the right of his government to espouse his
cause. On the other hand, in the treatment of the points at issue, and in the making
of proposals and counter-proposals, the alien claimant is not hampered by the
international obligations which might limit or even preclude the interposition of
his government, if he should ask it to make his claim the subject of an
international demand.

[170] It is an elementary principle that, when a government officially intervenes

on behalf of its citizen, it makes his claim its own, and may settle the claim on
such terms as it may conceive to be proper. From this it necessarily results that the
government, in taking up the claim, is subject to all the limitations resulting from
any obligations which it may have contracted towards the government against
which the claim is made; and it cannot pretend to be freed from those limitations
by reason of the fact that they were not observed in the negotiations which its
citizen previously carried on with the other government. On the other hand, the
private citizen, in placing his claim in his government's hands, must be held to
have accepted the necessary legal consequences of his action. [p64]

[171] These observations are peculiarly applicable to what are called the
negotiations in the present case, which embraced all the matters to which reference
has been made, including the claims which the applicant's memoir has
withdrawn. The exchange of views covered not only existing concessions but also
proposals for new ones. In this there is no ground whatever for criticism. In
treating directly either with the Colonial Office or with the local authorities in
Palestine, M. Mavrommatis was justified in considering his own interests and in
making such proposals as he might conceive to be for his advantage. But the
situation of his government, especially during and after the negotiations which, in
common with the British Government, it carried on with Turkey at Lausanne, was
altogether different. For example, the Treaty of Lausanne, like the previous Treaty
of Svres, protects only concessions granted before October 29th, 1914. The
judgment of the Court discusses somewhat extensively, but with much reserve, the
possible effects of this stipulation. But, in reality, the only question with which the
Court is now concerned is whether the stipulation does not imply that the
contracting Parties are not to make diplomatic claims, or bring suits for damages,
against one another in respect of concessions granted after that date or not granted
at all; and I feel compelled to say that, in my opinion, the stipulation necessarily
has that effect.

[172] Prior to the note of the Greek Legation in London to the Foreign Office of
May 12th, 1924, announcing the intention of the Greek Government to bring a suit
in the Permanent Court of International Justice, I find nothing whatever to indicate
the existence of an international dispute. The Court is referred to the letter
addressed by the Greek Legation to the Foreign Office in London on January 26th,
1924 but in that letter there is nothing that goes beyond the domain of "good
offices". It is an elementary and familiar principle that the use of good offices does
not imply the existence of a right to intervene or, in other words, to make an
official demand or raise an international dispute ; and, taking the character, the
scope and the contents of the correspondance, the absence of such an implication
in the present case is apparent. In so saying, I do not overlook the suggestion that
some of the letters bear file numbers; but the indexing [p65] of papers does not
denote the nature of their contents, much less the existence of a dispute. Even the
peaceful correspondence of the Court is indexed.

[173] Particular reference is also made to a letter, dated January 27th, 1923,
addressed by M. Melas, secretary of the Greek Legation in London, to Mr.
Robartes, a subordinate official of the Foreign Office. In this letter, which is
personal in form, M. Melas stated that M. Mavrommatis, after fruitless
negotiations with the Colonial Office, for a fair and equitable arrangement as to
his rights in Palestine, was compelled to appeal to the Legation "for advice and
support". It is not intimated that the Greek Government had taken up the case or
that the Legation had been mstructed to intervene in the matter. The entire subject
of concessions was in fact then under negotiation with Turkey at Lausanne.
Moreover, when, on February 2nd, 1923, Mr. Robartes answered, in the same
informal way, M, Mlas's letter of January 27th, he intimated that the attempt to
treat the question "through diplomatic channels" would only introduce
complications and delays, and that the matter could be more expeditiously dealt
with by M. Mavrommatis's solicitor and the Colonial Office "than by complicating
the negotiations with the introduction of further intermediaries in the shape of
yourself (M. Mlas) and this department" (the Foreign Office). This suggestion
evidently was accepted.

[174] We next come to the note of the Greek Legation to the Foreign Office of
January 26th, 1924, a year later. This note, after referring to the letter from Mr.
Robartes of February 2nd, 1923, states that, from a letter addressed to the Legation
"by M. Mavrommatis's solicitors", it appeared that after long negotiations
"between him and the Colonial Office", no satisfactory solution had been reached.
In these circumstances the writer of the note said that he should be grateful if the
Foreign Office could see its way to "letting me know the views of His Majesty's
Government on the matter, and whether, in their opinion, M. Mavrommatis's claim
could not be satisfactorily met". The note then adds that M. Mavrommatis's
solicitors had "suggested" that he would "be prepared to submit -should such a
course be agreeable to His Majesty's Government -the examination of the matter
to a Court of arbitration; this Court to be composed either of a judge of the [p66]
High Court of Justice or by two members nominated one by either of the
interested Parties, under an umpire who would be appointed either by a common
accord of the two Parties, or by His Majesty's Government alone". Here, again,
there is clearly nothing that goes beyond the domain of good offices. No
intimation is made that the Greek Government was then to be considered as a
Party to the case, much less as a Party to an existing international dispute. It was
M. Mavrommatis and the British Government who were represented as being the
interested Parties; it Was by them that the two arbitrators were to be appointed,
and it was by agreement between them, or even by the British Government alone,
that the umpire was to be appointed.

[175] To this note the Foreign Office replied on April 1st, 1924, saying that the
concessions in question appeared to fall "into three categories governed by
different conditions", which might be conveniently referred to as "(a) the
Jerusalem, (b) the Jaffa, and (c) the Jordan groups". The reply then states that the
Jerusalem concessions, since they alone arose out of an agreement entered into
with the Ottoman Government before October 29th, 1914, were the only ones
which His Majesty's Government were prepared to recognise, "subject to the
production of the original signed copies of the documents and to their being found
in order"; but that, as these concessions "were never put into operation", they
could not be readapted under Article 4 of the Lausanne Protocol, but fell under
Article 6 of that instrument, "to which Greece is a party"; that His Majesty's
Government were "unable to agree to their being treated otherwise than in the
manner laid down in this article"; and that they did not constitute a question
suitable for arbitration except in so far as Article 6 provided for the assessment by
experts of an indemnity in respect of a concession dissolved by the
concessionary's request. The reply observed, however, that it was not then clear
whether M. Mavrommatis desired the Jerusalem concessions "to be dissolved
under Article 6 or maintained without readaptation, under the terms of Article 1".
The reply then concludes with the statement that, as the Jaffa concessions were
signed subsequently to October, 1914, and as, in the case of the Jordan
concessions, no concessionary contract was actually completed or signed, the
terms of the Lausanne Protocol made it clear that [p67] M. Mavrommatis had no
rights under them, and that they were not capable of submission to arbitration.

[176] The only answer of the Greek Legation is to be found in its note of May
12th, 1924, announcing that the Greek Government had decided to submit the case
to the Permanent Court of International Justice. It will be observed that, in this
note, the Legation for the first time speaks of acting by order of the Greek
Government; but no response whatever is made to the statements and inquiries
contained in the communication of the Foreign Office of April 9th, 1924. On the
contrary, instead of making a statement, no matter how meagre it may have been,
of what the Greek Government conceived to be the respective grounds of M.
Mavrommatis's various claims, and particularly of its own right, in view of the
terms of the Lausanne Treaty, then to take them up diplomatically and prosecute
them, the note merely declares that the Greek Government had "deemed" that the
"best means of ascertaining the basis" of his claims was "to have recourse to the
high international jurisdiction which has already given us so many proofs of
wisdom and impartiality" -meaning the Permanent Court of International Justice.
Thus, by the very terms of the note, the jurisdiction of the Court was to be
invoked, not in order to obtain the adjudication of a dispute between the two
governments which they had been unable to settle by negotiation, but to ascertain
without negotiation whether there was any basis for a dispute.

[177] Such being the state of the case upon the petition and proofs presented by
the applicant, the claim of. jurisdiction appears to proceed upon an interpretation
of Article 26 of the Mandate as if it read substantially as follows:

"The Mandatory agrees that, if another Member of the League of Nations should
think that there may be grounds on which it might be found to be justified in
presenting, on behalf of one of its citizens, a claim against the Mandatory, such
Member may forthwith submit the claim to the Permanent Court of International
Justice, which shall then proceed to adjudicate the claim and to avoid such
damages, if any, as it may find to be due."

[178] The first and third jurisdictional conditions under Article 26 having thus
been held to have been satisfied, it yet remains to meet the third condition,
namely, that the dispute must relate to "the [p68] interpretation or the application
of the provisions of the Mandate"; and for this purpose there is invoked the
provision, in the first paragraph of Article 11 of the Mandate, that the
Administration shall take all necessary measures to safeguard the interests of the
community in connection with the development of the country, "and, subject to
any international obligations accepted by the Mandatory, shall have full power to
provide for public ownership or control of any ... of the public works, services and
utilities established or to be established therein". But, in applying this clause to the
present case, the Court gives not only to the clause itself but to the word
"jurisdiction" an interpretation from which, with much regret, I am compelled to
dissent.

[179] I will not enlarge upon the question whether the phrase "subject to any
international obligations accepted by the Mandatory" may include all the
obligations to which the British Government may be subject either under
international law or under international agreements; but I am clearly of the opinion
that the clause has no such sweeping effect. Who are the Mandatory Powers ? As
described in Article 22 of the Covenant they are "advanced nations", which, by
reason of that character, are peculiarly fitted to undertake the "tutelage" of peoples
"not yet able to stand by themselves". They are indeed the constituents of the
community of nations in which the recognition by its members of the obligations
of international law is necessarily and tacitly assumed. It is therefore not to be
supposed that the Mandate was intended to announce in 1923 that the Mandatories
had "accepted" the obligations of international law. In my opinion the word
"accepted" applies only to obligations specially assumed and, in determining what
international obligations are included, we must, in conformity with an elementary
rule of interpretation, examine the context.

[180] By Article 11 the power the exercise of which is to be "subject to any

international obligations accepted by the Mandatory" is the "full power to provide
for public ownership or control" of public works, services and utilities. The
plaintiff government nowhere alleges an attempt on the part of the Mandatory to
exercise that power, unless such an allegation is to be inferred from references to a
concession granted to a Mr. Rutenberg, which is said to infringe some of the rights
claimed by M. Mavrommatis. But the judgment [p69] of the Court, as I understand
it, directly holds that the granting of the concession to M. Rutenberg was an
exercise of the power to provide for "public ownership or control" of public
utilities. In this interpretation I am wholly unable to concur. The precise method of
providing for the private control of public utilities as distinguished from public
control is the granting of concessions to individuals or companies. The declaration
in paragraph 28 of the Rutenberg concession that the company which was to be
organized should be recognized "as a public utility body under government
control", far from making the concession itself an act of public control, was
merely a reservation of the right of public control, whenever the government
should see fit to exercise that right. The recognition of the distinction between
public control and private control, as here stated, is by no means confined to
English-speaking countries. The contest between the two systems may be said to
run through the world.

[181] The precise meaning of the phrase "public ownership or control" in Article
is indeed clearly shown by the second paragraph of the article, which authorizes
the Administration to arrange with the Jewish agency, mentioned in Article 4 of
the Mandate, to construct and operate public works, services and utilities, "in so
far as these matters are not directly undertaken by the Administration". This is
undoubtedly what the words mean in the English text; and, expressing my
individual impression, derived from a studious comparison of the two texts, I
strongly incline to the believe that the French text, in the present instance, is a so-
called "literal" translation of the English text, and was intended to mean the same
thing. A "literal" translation, however, is often only a verbal imitation, which, if
taken alone, may be so interpreted as to pervert or even destroy the meaning of the
other text. But I take the two texts as they stand, discarding neither in favour of the
other; and, without discussing the question whether a mandate, which is in a sense
a legislative act of the Council, is on the same legal footing as a treaty, I accept for
the present case the rules laid down by authorities on international law for the
interpretation of treaties.

[182] Bonfils, in discussing the interpretation of treaties, lays down the [p70] rule
that each clause should be interpreted in the sense which best reconciles the rights
and duties of the contracting Parties {d'interprter chaque clause dans le sens qui
concilie le mieux les droits et les devoirs antrieurs des deux contractants).
(Bonfils, Manuel de Droit int. public, 7th edition, by Fauchille, Paris, 1914, p.
571). Rivier likewise declares that it is necessary before all to ascertain the
common intention of the Parties -"id quod actum est". (1l faut avant tout constater
la commune intention des Parties, etc.) (Rivier, Principes du Droit des Gens, Paris,
1896, vol. 2,
p. 122). But Rivier also points out another rule, to the effect that, if there is a
difference as to the sense which usage gives to the text, preference is given to that
of the country which is bound. (S'il dsaccord quant I'usage, on s'en tiendra
plutt a celui du pays qui s'oblige.) As an example of the application of this rule,
Rivier cites the case of Article 14 of the Austro-Italian Treaty of peace of October
3rd, 1866, which mentioned the inhabitants (habitants) of the ceded territory. This
word had a different official technical sense in Austria and in Italy. In Austria an
inhabitant (habitant) meant a person having a legal domicile; in Italy, a simple
resident. As Austria was ceding a territory which belonged to her when the treaty
was made, the word was taken in the Austrian sense (Id., pp. 123125). This
example is directly applicable to the situation of Great Britain in Palestine.

[183] Among those who concur in the judgment of the Court, an impression seems
to prevail that the rules here laid down have been observed; but I am unable to
share that impression. On the contrary, in the emergency, there has suddenly been
discovered in the English text an unnatural and previously unheard of elasticity,
which had made it unnecessary to try the suggested possibilities of the French
text.

[184] I will deal very briefly with the passage quoted in the judgment of the Court
from the preliminary Counter-case filed by the Agent of the British Government
and the passage quoted from his oral argument ; and I will not discuss the latter
passage separately, as it adds nothing substantial to the former. In the passage
quoted from the preliminary Counter-case it is stated that the Mandatory, when
providing for public ownership or control, is subject to any international
obligations which he has accepted. This in effect merely repeats the language of
Article 11, as to the existence of which there can be no dispute. But, as an
explanation of what he [p71] means, the Agent of the British Government states
that the League of Nations is pledged "to the maintenance of various beneficent
principles, such as freedom of transit and communication, equality of commercial
opportunity for all Members of the League, suppression of the arms traffic, and so
forth", and that "this is the type of international obligation which the Mandatory
has accepted and to which any concessions granted under Article 11 of the
Mandate must conform". The judgment of the Court then textually quotes from the
preliminary Counter-case a passage immediately following, in which the Agent
observed that the Rutenberg concessions "were obliged to conform to this Article
11", and that it would have been open to any Member of the League to question
any provisions which infringed the international obligations which the Mandatory
had accepted. Here the quotation ends. But immediately after the quoted passage,
the Agent goes on to declare that "there is nothing in this article which affects the
Mavrommatis case"; and he further states that the questions raised by the
application relate only to the extent to which the concessions granted to M.
Mavrommatis are valid and binding on the Mandatory, and that this does not fall
within the Mandate. This contention is consistent with the position taken in the
plea to the jurisdiction, that the subject of "the recognition of concessions in
Palestine" is exclusively governed by the Lausanne Protocol and that, as this
instrument does not provide for the submission to the Court of disputes relating to
its interpretation and application, the Court cannot take cognizance of such
disputes.

[185] It is admitted that the phrase "subject to any international obligations

accepted by the Mandatory , no matter what its ultimate potentialities may be,
actually refers to the Concessions Protocol of Lausanne, which the applicant has in
fact invoked. The original draft of the Mandate mentioned the concessions
stipulations of the Treaty of Svres and nothing else ; but, after the Treaty of
Svres was abandoned, the phrase was put in the form in which it now stands.
Although, by reason of certain political incidents, the Mandate did not actually
come into force until September 29th, 1923, its terms were definitively settled and
approved by the Council on July 24th, 1922 (Official Journal, 1922, p. 825) ; and,
as the Lausanne Treaty was signed on July 24th, 1923, a year later, the Mandate
naturally did not mention it. Both at Svres and at Lausanne, [p72] the subject of
concessions was, from first to last, specially and separately dealt with. The
Powers, including Great Britain and Greece, in their negotiations with Turkey,
adopted this plan. Concessions often involve considerations of public and political
interest. Articles 73 and 77 of the Lausanne Treaty, dealing generally with
contracts between governments and individuals and with contracts between
individuals, expressly declare that their provisions do not apply to concessions.

[186] The Parties to the Lausanne Protocol No. XII, dealing specially with the
subject of concessions, are the British Empire, France, Italy, Greece and Turkey.
The Protocol is divided into two sections. The first section, embracing Articles 1
to 8, relates to concessions in territory remaining to Turkey; the second, embracing
Articles 9 to 13, related to concessions in territory detached from Turkey. The
provisions of the first section are, however, with certain exceptions, made
applicable by Article 10 to concessions in detached territory. Among the articles
thus made applicable to detached territory are Articles 4,5 and 6, which contain
provisions relating to the readaptation of concessions to "the new economic
conditions", the settlement of accounts, and the dissolution, on the request of the
concessionnaire, of concessions for which the right of readaptation cannot be
claimed. Periods ranging from six months to a year are allowed for such
transactions; and, if the Parties cannot agree upon the terms of readaptation, or
upon the indemnity, if any, to be paid in case of dissolution, or upon the settlement
of accounts, provision is made for the appointment of two experts and, if they
should disagree, for the selection of a third to decide. The Protocol, having at
length come into force, now constitutes a legal obligation between the Parties to
the present suit; and, if its terms are less favourable to individuals holding or
claiming concessions than might have been desired, this Court has no power to
correct its defects.

[187] There can be no doubt that the Protocol was understood by the contracting
Parties to cover the entire subject of concessions. This is shown by its elaboration
of principles and the provision of machinery for their application. If anything is
lacking, only the voluntary action of the contracting Parties can now supply it. The
judgment of the Court admits as much, when it states that the Court [p73] has no
compulsory power to interpret and apply the Protocol as such, since the Protocol
itself confers no such power. The judgment however, further states that the Court
is competent to apply the Protocol in the measure which Article 11 of the Mandate
requires. This is indeed self-evident ; but, when we search for particulars, we are
brought back to the laboured conjecture that the granting of the Rutenberg
concession was or may have been an exercise of the power "to provide for public
ownership or control", and to the supposition that the question whether the
Jerusalem concessions are entitled to readaptation under the Protocol falls under
Article 11. The former I have already discussed. The latter is, in my opinion,
solely a question under the Protocol as such, and therefore not within the
compulsory power of the Court. Article 11 could apply to concessions covered by
the Lausanne Protocol only in the case the Mandatory should, in the exercise of
the power to provide for public ownership or control, disregard an existing
concession which the Protocol protects.

[188] But, no matter what the jurisdictional possibilities in respect of the Protocol
might be, I think that, as between the contracting Parties, governments ruling over
territories detached from Turkey are clearly entitled, now that the Protocol has
come into force, to full opportunity to consider, discuss and apply its provisions as
a whole, and that its regular and orderly application should not be frustrated or
interrupted by a suit based on a previous expression of opinion on a single point,
concerning which there have been no negotiations between the governments. This
objection to the pending application has not passed unperceived; but, in the
judgment of the Court, it is met with a conception of jurisdiction which has, I
believe, materially contributed to the difference of opinion which has taken place.
The judgment states that, while the "special jurisdiction" which the Protocol
creates, for the assessment of indemnities and other matters, excludes as regards
those matters the "general jurisdiction given to the Court in disputes concerning
the interpretation and application of the Mandate" ; yet, "on the other hand, the
provisions regarding administrative negotiations and time limits in no way exclude
the jurisdiction of the Court", since "their effect is merely to suspend [p74] the
exercise of this jurisdiction until negotiations have proved fruitless and the times
have expired". But, under this theory of suspended jurisdiction, what becomes of
the provision, in Article 26 of the Mandate, by which the jurisdiction of the Court
is in every event limited to "disputes" which "cannot be settled by negotiation" ?
How can this jurisdictional condition be said to be fulfilled, when periods of time,
yet to run, are fixed for "administrative negotiations" ? Who can say how such
negotiations would result ? On what principle can it be assumed that they will
result in a disagreement ? It is evident that, if the Court may assert jurisdiction of a
conjectural future dispute in an abstract sense, and hold jurisdiction of the matter
pending the happening of an event which will show whether a dispute, in an
actual, concrete sense, will ever exist, the Court might become a mere makeweight
in negotiations. Nor is this the only reason for rejecting the theory of suspended
jurisdiction. It is a well-settled principle of public law that it is inadmissible for
courts to assert jurisdiction where, even though there should exist some present
ground for complaint, it appears that, for the time being, the power to deal with the
subject matter rests with governments, in the exercise of their political and
administrative functions. Not only is this principle recognized in the Statute and in
the Mandate, but many judicial decisions, national and international, of the highest
authority might readily be cited to show the respect which has been paid to it as a
principle essential to the regular legal administration of public authority and the
maintenance of the public order.

[189] The plea presented by the defendant Government in the present case is what
is commonly and technically known as a "plea to the jurisdiction". The word
"jurisdiction" signifies "the authority by which judicial officers take cognizance of
and decide cases", "the power to hear and determine a cause". (Bouvier, Law
Dictionary, "Jurisdiction".) This definition inplies that a court cannot assert
jurisdiction of a case which it has not at the same time the power to hear and
decide. The plea to the "jurisdiction " was in effect a motion to dismiss the
application because the allegations which the applicant had made showed that the
court could not law-fully proceed to try the merits of the claim and render
judgment [p75] upon it. The plea did not raise any question as to the truth of the
allegations; for the purposes of the case, the plea admitted them to be true. Nor did
the plea mean that the Court lacked the power to consider the allegations. On the
contrary, it meant that the Court not only had the power to consider them, but was
legally bound to do so ; and that, taking them as a whole, and accepting them just
as they stood, the Court could not legally proceed to hear and determine the merits
of the cause, and therefore could not legally assert jurisdiction of it for that
purpose.

[190] In disposing of this plea, I think that the Court would, on the facts before it,
have adopted an obviously appropriate and legal course, if it had dismissed the
present application.
The Hague, August 30th, 1924.

(Signed) John Bassett Moore. [p76]

Dissenting Opinion by M. De Bustamante.

[191] I, THE UNDERSIGNED, cannot, for reasons of which the principal are set
out below, concur in the judgment rendered by the Court with respect to its
jurisdiction in the Mavrommatis Case.

[192] In order to arrive at a decision regarding the preliminary plea to the

jurisdiction made by His Britannic Majesty's Government in reply to the
Application and Case of the Government of the Greek Republic concerning the
Mavrommatis Palestine Concessions, the nature of the question, submitted to the
Court by the latter Government must, above all, be taken into consideration.

[193] The Greek Government in its Case dated May 22nd, 1924, requests the
Court to give judgment as follows:

(a) With respect to the Jerusalem Concessions for the construction and working of
a system of electric tramways and supply of electric light and power and of
drinking water in that city according to the definitive contracts signed with the
Ottoman authorities on January 27th, 1914:

(1) That these concessions having been begun to be put into operation, the British
Government, in its capacity of Mandatory for Palestine, is bound to maintain them
and to agree to their readaptation to the new economic conditions of the country or
to redeem them by paying the claimant reasonable compensation;
(2) That having in fact already made its choice by rendering impossible, directly or
indirectly, the carrying out of the works for which the claimant holds a concession,
it must pay him compensation;
(3) That taking into account all the various elements of the loss occasioned to the
claimant, he shall receive fair and reasonable compensation by means of the
payment to him of the sum of 121,045 together with interest at 6 % from July
20th, 1923, until the date on which judgment is given. [p77]

(b) With respect to the Jaffa concessions:

(1) That the fact that these were granted after October29th, 1914, does not justify
the British Government in refusing to recognise them;
(2) That the fact that they were not confirmed by Imperial Irad, which is a simple
formality not to be withheld at discretion, does not deprive them of their
international value;
(3) That though the British Government in its capacity as Mandatory for Palestine
is at liberty not to maintain them, it is nevertheless under an international
obligation to compensate their holder for the loss it has inflicted upon him by
deciding -as it has done -not to allow him to proceed with them;
(4) That taking into account all the elements of the loss thus sustained by the
claimant, he shall receive fair and reasonable compensation by means of the
payment to him of the sum of 113,294 together with interest at 6% from July
20th, 1923, until the date on which judgment is given.

[194] On page 8 of the Greek Government's Case it is stated that, from the end of
October 1922, M. Mavrommatis'negotiations with the British Government entered
upon a new phrase owing to the very intransigent attitude adopted by the Colonial
Office.

[195] It is very important to note that the Greek Case recognizes the British
Government's right not to recognize or put in execution the concessions in
question, and that it confines itself to a claim for an indemnity on the ground of
that Government's refusal to recognize them and to readapt them to the new
economic conditions of the country.
[196] It should also be noted that the Greek Government asks for nothing for itself
and that in the Case reference is always made to an indemnity to be paid, not to the
Greek Government, but to the beneficiary under the concessions.

[197] The jurisdiction of the Court to entertain this Case has been based on the
Mandate for Palestine conferred on the British Government by the Council of the
League of Nations on July 24th, 1922, but which did not come into force until
September 29th, 1923. [p78]

[198] The Mandate is not mentioned in the Case of the Greek Government, which
only considers the provisions of Protocol XII of the Treaty of Peace with Turkey
signed at Lausanne on July 24th, 1923. In the application instituting proceedings
however, the Greek Government expressly mentions Articles 26 and 11 of the
Mandate for Palestine which run as follows:

Article 26.
The Mandatory agrees that, if any dispute whatever should arise between the
Mandatory and another Member of the League of Nations relating to the
interpretation or the application of the provisions of the Mandate, such dispute, if
it cannot be settled by negotiation, shall be submitted to the Permanent Court of
International Justice provided for by Article 14 of the Covenant of the League of
Nations.

Article 11.
The Administration of Palestine shall take all necessary measures to safeguard the
interests of the community in connection with the development of the country,
and, subject to any international obligations accepted by the Mandatory, shall have
full power to provide for public ownership or control of any of the natural
resources of the country or of the public works, services and utilities established or
to be established therein. It shall introduce a land system appropriate to the needs
of the country, having regard, among other things, to the desirability of promoting
the close settlement and intensive cultivation of the land.

[199] The Administration may arrange with the Jewish agency mentioned in
Article 4 to construct or operate, upon fair and equitable terms, any public works,
services and utilities, and to develop any of the natural resources of the country, in
so far as these matters are not directly undertaken by the Administration. Any such
arrangements shall provide that no profits distributed by such agency, directly or
indirectly, shall exceed a reasonable rate of interest on the capital, and any further
profits shall be utilised by it for the benefit of the country in a manner approved by
the Administration. [p79]

[200] By a careful perusal of Article 26 of the Mandate it will be noted that the
Court's jurisdiction is subordinate to several conditions, of three of which special
mention must be made. The dispute must relate to the interpretation or application
of the terms of the Mandate. The dispute must not be a dispute which has already
arisen, but a dispute which may arise. Further, this dispute must be between the
Mandatory and another Member of the League of Nations.

[201] It will readily be seen that Article 11 of the Mandate imposes upon the
Mandatory no obligation to pay compensation and that it contains no express or
implicit reference to concessions granted by Turkey. This is perfectly reasonable.
Turkey is not a Member of the League of Nations and the fate of concessions
granted before the military occupation of Palestine by the British Army during the
Great War could not be settled except in agreement with Turkey. This is the
reason why the concessions are not mentioned in the Mandate and why, on the
other hand, they have been made the subject of special provisions in the discarded
Treaty of Svres of August 10th, 1920, and in the Treaty of Lausanne, the
ratifications of which were deposited on August 6th, 1924. I will not dwell on the
untenability of the argument that the question relates to the interpretation or
application of Article 11 of the Palestine Mandate, even with respect to the nature
of the international obligations accepted by the Mandatory ; and this, not only
because the point has been completely established by certain of my colleagues but
also because the two other objections, which I will now proceed to consider,
render such insistence somewhat superfluous.

[202] I must however observe that if the Application and Case of the Greek
Government are to be read as meaning that the dispute relates to preliminary
points in connection with the application of certain provisions of Protocol XII, it is
clear that the question is not one of interpreting or applying the Mandate but of
interpreting the Protocol. Now the interpretation of the Protocol is not within the
jurisdiction of the Court, for there is no clause of the Protocol or the Treaty of
Lausanne establishing that jurisdiction.

[203] It will have been observed that the Mavrommatis Concessions were obtained
from the Ottoman authorities and it is stated in the Greek Government's Case that
M. Mavrommatis approached the representatives of the British Government in
Palestine and London [p80] as early as April 16th, 1921 ; but from the month of
October, 1922, he is stated to have been faced by an intransigent attitude on the
part of the Colonial Office. Moreover, as the Mandate did not come into force
until September 29th, 1923, it is clear that the facts on which the Case is based
date from before the Mandate and from before the time when the British
Government acquired the legal position of Mandatory, which it did only as from
September 29th, 1923. In other words, retrospective effect must be attributed to
the Mandate in order to maintain that the terms of Article 26 are applicable.

[204] Before the coming into force of the Mandate, Great Britain had no other title
to the exercise of public power in Palestine than that afforded by its military
occupation. Whatever responsibility might devolve upon it in consequence of its
acts whilst in military occupation, a dispute concerning such responsibility cannot
be entertained by the Court under Article 26 of the Mandate. That article
contemplates the future, not the past. The Mandatory agrees that if any dispute
whatever should arise (not a dispute which has arisen) between the Mandatory and
another Member of the League of Nations, such dispute shall be submitted to the
Permanent Court. If language has any value in legislation and in treaties, it is
impossible to interpret a verb used in the future as referring to acts which have
already taken place. Moreover the League of Nations has not given any
retrospective effect to the position of the Mandatory. In conformity with Article 22
of the Covenant, the Mandatory must send the Council an annual report
concerning the territories which it administers, and a permanent Commission has
been appointed to receive and examine these annual reports and to give the
Council its opinion on any question regarding the execution of the Mandate. This
Commission completed its task when, in connection with its Fourth Session held
only a few weeks ago, it submitted to the Council on July 16th, a report of which
the part devoted to Palestine contained the following words: "The Commission,
although it was not called upon to examine any report concerning the
administration of Palestine because of the recent coming into force of the
Mandate", etc.

[205] If the League of Nations, which fixed the terms of the Mandate for Palestine,
and of which Greece is a Member, appears to recognize that the British
Government was only in the position of Mandatory as from the coming into force
of the Mandate, and if the facts alleged [p81] in the Greek Government's Case
occurred before that date, the logical conclusion is that the dispute is not one
between the Mandatory and a Member of the League of Nations but rather
between the British Government, being in military occupation of Palestine, and M.
Mavrommatis, represented before the Court by the Greek Government.

[206] It has been alleged that the Rutenberg Concessions fall within the scope of
Article 11 of the Mandate and that they afford justification for the application of
Greece because they render the carrying out of the Mavrommatis Concessions
impossible. It appears that of the two Jerusalem concessions granted to M.
Mavrommatis, one only, that for electric power is affected by those of Mr.
Rutenberg; the latter however were granted to Mr. Rutenberg on the 12th and 21st
September, 1921. This being so, and since the Mandate did not come into force
until September 29th, 1923, two years after these concessions, the fact that the
Mandate has no retrospective application is also opposed to the argument in
question and to this method of establishing the Court's jurisdiction.

[207] There is a further circumstance which proves that the Court has no
jurisdiction. Great Britain is not the sovereign of Palestine but simply the
Mandatory of the League of Nations and she has accepted the Permanent Court's
jurisdiction for any dispute arising between her, as Mandatory, and any Member
of the League from which she holds the Mandate. As the latter could not appear as
a party to a dispute concerning the application or interpretation of the Mandate,
having regard to the restrictive terms of Article 34 of the Court's Statute, it is the
Member of the League who have been authorized, in their capacity as Members, to
bring before the Court questions regarding the interpretation or application of the
Mandate.

[208] Whenever Great Britain as Mandatory performs in Palestine under the

Mandate acts of a general nature affecting the public interest, the Members of the
League -from which she holds the Mandate -are entitled, provided that all other
conditions are fulfilled, to have recourse to the Permanent Court. On the other
hand, when Great Britain takes action affecting private interests and in respect of
individuals and private companies in her capacity as the Administration of
Palestine, there is no question of juridical relations between the Mandatory and the
Members of the League from which she holds the Mandate, but of legal relations
[p82] between third Parties who have nothing to do with the Mandate itself from
the standpoint of public law.
[209] The mere fact that a Member of the League of Nations represents third
Parties does not alter the nature of the problem, because in so doing the State is
not acting as a Member of the League which issues the Mandate, but as a third
Party, its intervention as such being consequent upon the acts of the Mandatory
with respect to the actual third Party. Acts performed in such circumstances are
not subject to the jurisdiction of the Permanent Court under Article 26 of the
Mandate.

[210] If the claims of third Parties, put forward on their behalf by a Member of the
League of Nations, were subject to the jurisdiction of the Court under the
Mandate, an express statement to that effect would have been necessary, since it is
a thing entirely different from that which is now clearly expressed in Article 26.

[211] Four days before the signing of the Palestine Mandate a provision of this
sort was inserted in Article 13 of the Mandate for East Africa signed at London on
July 20th, 1922. This Mandate contains an Article 13 which runs as follows:

Article 13.
The Mandatory agrees that if any dispute whatever should arise between the
Mandatory and another Member of the League of Nations relating to the
interpretation or the application of the provisions of the Mandate, such dispute, if
it cannot be settled by negotiation, shall be submitted to the Permanent Court of
International Justice provided for by Article 14 of the Covenant of the League of
Nations.

[212] After this passage, which is reproduced word for word in the Palestine
Mandate, is to be found in this same Article 13 of the East African Mandate, a
second paragraph which runs as follows:

States Members of the League of Nations may likewise bring any claims on behalf
of their nationals for infractions of their rights under this Mandate before the said
Court for decision.

[213] After reading this Article 13 of the Mandate for East Africa, it will at once
be observed that claims on behalf of the nationals of States Members of the
League of Nations, for infractions of their [p83] rights under that Mandate, are not
included among the disputes mentioned in the first paragraph of the article, the
only one which has been reproduced in the Mandate for Palestine. It will also be
observed that the Mandate for Palestine signed four days afterwards, in which this
second paragraph does not appear, must exclude from the jurisdiction of the
Permanent Court the claims of M. Mavrommatis which are supposed to be based
on an infraction of his rights under the Mandate.

[214] It cannot be said that this second paragraph of Article 13 of the East African
Mandate contemplates disputes between private interests concerning neither the
interpretation nor the application of the Mandate. Quite the contrary; it expressly
lays down that there must have been an infraction of rights under the Mandate.

[215] The Treaty of Lausanne and Protocol XII annexed thereto are of the greatest
importance in this discussion. They are an instrument signed by the interested
Parties which fixes their interpretation of Article 26 of the Mandate and also of
Article 11. The Parties desired to effect a separate settlement of the whole question
of Ottoman concessions, and they have done so in this Protocol of Lausanne
without giving the Permanent Court jurisdiction over the matter. This is yet
another method of fixing the interpretation of Article 26 which does not give the
Court jurisdiction in the Mavrommatis case.

[216] The sole object of Protocol XII is to regulate the treatment of Ottoman
concessions, and it contemplates all the hypotheses under which those of M.
Mavrommatis may be included. As regards the indemnities which the Court is
asked to award, Article 5 of the Protocol lays down a procedure by experts and
makes no provision for the jurisdiction of the Permanent Court. Since the
contracting Powers have specifically referred to all Ottoman concessions previous
to its coming into force, the Protocol undoubtedly has a retrospective effect.
Moreover, as it constitutes an agreement between the litigant Parties, which has
come into force during the course of the proceedings, with regard to the question
in dispute, it suffices to terminate them.

[217] Any one of these reasons would be enough to show that there was no
jurisdiction, and taken together they have an irresistible effect. The present case
relates neither to the interpretation nor the application of the Palestine Mandate.
The facts leading up to the present suit took place long before the existence and
entry into force of the Mandate, which has no retrospective effect. There is [p84]
no dispute between the Mandatory and a Member of the League of Nations which
issued the Mandate, but rather between the Power in military occupation of
Palestine and a third Party which is a private person who claims an indemnity. The
whole question of the Ottoman concessions, and also therefore the Mavrommatis
concessions, has been dealt with by the Parties in the Protocol, which is now in
force and which does not give the Court jurisdiction over the matter. The Court
therefore has no jurisdiction and cannot now entertain the proceedings on the
merits of the dispute.

The Hague, August 30th, 1924.

(Signed) Antonio S. De Bustamante. [p85]

Dissenting Opinion by M. Oda.

[Translation.]

[218] Since the compulsory jurisdiction of the Court is not the rule and since
Article 26 of the Palestine Mandate constitutes an exceptional clause creating such
jurisdiction, that article cannot be interpreted extensively.

[219] According to Article 26, in order that a dispute may be submitted to the
Court, the following conditions must be fulfilled: (1) it must be a dispute between
a Member of the League of Nations and the Mandatory; (2) it must be incapable of
settlement by negotiation; and (3) it must relate to the interpretation or the
application of the terms of the Mandate.

[220] Of these three conditions, the two first are matters of form and the last of
substance.

[221] On the facts as set out by the Parties, it is very difficult definitely to state
that the formal conditions have been fulfilled. The dispute, in the first place, was
only between the Colonial Office and a private person, and after the intervention
of the Greek Government to protect this person, there was only a single exchange
of views between the Foreign Office and the Greek Legation in London. Even
assuming the formal conditions to be fulfilled, the condition of substance is
entirely lacking. The dispute, which relates to the validity of certain concessions
and to the vindication of certain rights which, in the contention of the
concessionnaire, have been prejudiced, has nothing whatever to do with either the
interpretation or the application of the terms of the Mandate.

[222] The history of the preparation of Article 11 of the Mandate shows that for
unavoidable reasons the present reservation was substituted for that contained in
the original draft which ran "subject to Article 311 of the Treaty of Peace with
Turkey"; it is therefore perfectly reasonable to regard the present version as
possessing the same scope -neither more not less -as the original one. Assuming
this to be correct, there is no doubt that the international obligations accepted by
Great Britain, referred to in the present version, are those arising out of the special
provisions of a convention -such as the Protocol of Lausanne in the present case -
and that they are entirely unconnected with the legal relationship created by the
Mandate. [p86]

[223] The position as Mandatory has no bearing on the conclusions to be drawn

from the Protocol, since the relations created by the Mandate, which exist as
between the League of Nations and Great Britain only, are not if so facto
applicable as between the Powers signatory to the Protocol. The word
"Mandatory" in the reservation made in Article n is merely used for the sake of
convenience in order to keep to the terminology used in other articles of the
Mandate. The legal relationship resulting from the Mandate, which only exists as
between Members of the League of Nations, must be distinguished from the
obligations arising out of the principle of State succession, which may be binding
on all States throughout the world, including Members of the League of Nations,
quite apart from the obligations arising under the Mandate. It must also be
remembered that the Mandatory has to assume certain special and burdensome
obligations over and above those arising out of his position as successor State, and
that consequently these obligations of the Mandatory do not in any respect extend
beyond the limits fixed by the Mandate.

[224] Considered in this light the Protocol of Lausanne is neither a special statute
nor a set of rules to be regarded as the complement of the Mandate. Its provisions
are entirely distinct and cannot in any sense form part of the terms of the Mandate.
It follows therefore that the dispute regarding the concessions granted under the
Ottoman Empire has nothing to do either with the interpretation or the application
of the terms of the Mandate and is not by its nature within the Court's jurisdiction.

[225] Since the Mandate establishes a special legal relationship, it is natural that
the League of Nations, which issued the Mandate, should have rights of
supervision as regards the Mandatory. Under the Mandate, in addition to the direct
supervision of the Council of the League of Nations (Articles 24 and 25) provision
is made for indirect supervision by the Court; but the latter may only be exercised
at the request of a Member of the League of Nations (Article 26). It is therefore to
be supposed that an application by such a Member must be made exclusively with
a view to the protection of general interests and that it is not admissible for a State
simply to substitute itself for a private person in order to assert his private claims.
That this is the case is clearly shown by a reference to Article 13 of the Mandate
for East Africa, in which Members of the League of Nations are specially
authorized to bring [p87] claims on behalf of their nationals. It is impossible to
ascertain why this special provision was only inserted in the East African Mandate
; but, as it appears that in all the drafts of "B" Mandates the same provision was
inserted, but deleted in the final documents, except in the case of the Mandate for
East Africa, it is at all events clear that it was intended to establish a difference
between "B" and "A" Mandates to which latter category the Palestine Mandate
belongs. The logical conclusion is that an action in support of private interests is
excluded under Article 26 of the Mandate now in question, and that, precisely
from this standpoint, the Court has no jurisdiction in the case of the Mavrommatis
concessions.

(Signed) Y. Oda. [p88]

Dissenting Opinion by M. Pessa.

[Translation.]

[226] I have expressed my vote to the effect that the Court has no jurisdiction in
this suit.

[227] Article 26 of the Mandate for Palestine runs as follows:

"The Mandatory agrees that, if any dispute whatever should arise between the
Mandatory and another Member of the League of Nations relating to the
interpretation or the application of the provisions of the Mandate, such dispute, if
it cannot be settled by negotiation, shall be submitted to the Permanent Court of
International Justice provided for by Article 14 of the Covenant of the League of
Nations."

[228] The Greek Government maintains that the Mavrommatis claim is a dispute
relating to the interpretation and the application of Article 11 of the Mandate, and
therefore falls within the jurisdiction of the Court.

[229] But, in order that it shall be legitimate for the Court to deal with a question,
it is not sufficient that it be one relating to the actual interpretation and the
application of the Mandate; it is further necessary, as follows from Article 26, that
the dispute shall have arisen between two States and that it cannot be settled by
diplomatic negotiations. Such diplomatic settlement may be shown to be
impossible either by the nature of the dispute itself or by the failure of the
negotiations.

[230] These two conditions are also substantial. The first is closely related to the
nature of the Court, to its particular duties and to its international mission. The
Parties which may appear before the Court being States, it cannot be called upon
to protect the rights of individuals, but only those of States. The other condition
gives expression to the respect due to the sovereignty of nations. As being
sovereign they have the fundamental right to settle their disputes between
themselves, and the interposition of an outside authority is only understandable
when the former solution cannot be arrived at.

[231] Neither of these two conditions is fulfilled by the suit submitted to the
Court.

[232] Mavrommatis obtained from the Ottoman Government, between [p89] 1911
and 1914, certain concessions, and he maintains that, in 1921, the British
Government as Mandatory in Palestine violated these. Mavrommatis protested,
and from that moment onwards he discussed the question of his rights personally
and directly with the British Government.
[233] It was only on December 22nd, 1922, that the Greek Government
intervened. But for what purpose did it intervene ? To espouse the Mavrommatis
claim and to negotiate for its settlement ? By no means ; it merely intervened for
the purpose of forwarding to the Foreign Office a letter of Mavrommatis in which
the latter, after giving the Greek Government a detailed statement of his claim,
declared that he was inclined to appeal to the League of Nations.

[234] Here is the proof of this:

I am therefore obliged to appeal to the Tribunal of the League of Nations

provided for by Article 311 and 312 of the Treaty together with the first paragraph
of Article 287, and to pray to take the necessary steps to bring my case before the
Competent Authority, so that, as soon as possible, consideration may be given to
my request.
(Letter from the Greek Agent to the Registrar of the Court, dated May 26th.)

[235] The Foreign Office replied that as the matter was in the hands of the
Colonial Office, it would be much simpler and more speedy to deal direct with
that Office:

"I understand that the Colonial Office are still in correspondence with this
gentleman's solicitors in this matter.
"In the circumstances it appears to me quite unnecessary for this Department to
intervene, as matters can be settled much more expeditiously and satisfactorily by
means of direct discussion between the Colonial Office and M. Mavrommatis'
solicitors, who are parties principally concerned and who possess first-hand
knowledge of the points at issue." (Ib., page 8.)

[236] And that is all.

[237] Up to this point then there had been no negotiations between the two States.

[238] After this date two further steps were taken by the Greek Government.

[239] The first was the letter of January 27th, 1923. But in this letter [p90] Greece
does not yet put forward its claim; nor yet does it discuss the reasons alleged
against this claims on behalf of Great Britain; it merely asks the British
Government what is its opinion with regard to the Mavrommatis claims:

"After these explanations I hope you will be able to kindly see your way to inform
me what is the view of His Majesty's Government on the matter, and venture to
hope that a settlement will be possible in the near future." (Ib., page 8.)

[240] The other step is constituted by the letter of January 26th, 1924. This time it
might be expected that the Greek Government was going to state that it undertook
the defence of its national, to set out his titles and to prove his rights ; to discuss
the reasons put forward by the Colonial Office. Not so ; Greece still persists in
asking the opinion of the British Government and informs it that
Mavrommatis'solicitors (Mavrommatis'solicitors and not the Greek Government)
suggest recourse to a Court of Arbitration:

"In these circumstances, I should be grateful to you if you could see your way to
letting me know the views of His Majesty's Government on the matter and
whether, in their opinion, M. Mavrommatis' claim could not be satisfactorily met.
"I have the honour to add that M. Mavrommatis' solicitors suggested that he would
be prepared to submit -should such a course be agreeable to His Majesty's
Government -the examination of the matter to a Court of Arbitration." (Ib., page
10.)

[241] Thus we have so far no dispute and no negotiations between States.

[242] Let us go further.

[243] Great Britain, on April 1st replied that its intention was to recognize M.
Mavrommatis' rights as far as concerned the Jerusalem contract, but not the Jaffa
or the Jordan concessions; and it stated its reasons. It might be expected that once
the Greek Government's curiosity was satisfied, the British Government's intention
having been made known, Greece would also at length decide to state what she
thought of the matter, to set forth her arguments in law and in equity and to refute
those of her opponent. It is possible that in the face of these arguments the British
Government would have decided either to abandon its own Case or at any rate to
modify it. [p91] How many times has it happened that for reasons of courtesy or
other considerations one nation has made to another concessions which it would
not make to a national of such other State!

[244] Well, once again Greece said nothing as to her view of the Mavrommatis
concessions ; nor did she formulate any claim on the subject ; she simply wrote a
letter to the British Government announcing that she intended to sue that
Government before the International Court of Justice !

[245] Such are the facts. Having regard to them, can it be asserted that there was a
dispute between Greece and Great Britain in regard to the Mavrommatis
concessions, and that, for the purpose of settling it, negotiations took place
between the two Governments?

[246] Negotiation consists of debate or discussion between the representatives of

rival interests, discussion during which each puts forward his arguments and
contests those of his opponent. Now, I ask to be shown a single document in
which Greece stated its claim and put forward its arguments in support. There is
not one. I ask to be told at least what these claims and what these reasons are.
Nobody knows.
[247] There is no doubt that International Law lays down no protocol or formulae
for negotiations; but in order that the existence of negotiations may be recognized,
it naturally requires that they shall have taken place'in some form or other. In the
present case we have not before us any negotiations that have taken place in any
form whatever. There is a complete absence of negotiations.

[248] It must further be remarked that under Article 26 of the Mandate, the mere
fact that negotiations have taken place between the two Governments does not
suffice to bring a question within the jurisdiction of the Court; it is further
indispensable that either the conflict from its very nature cannot be settled by
negotiation or else that negotiations shall have failed. The fact of requiring such
negotiations is, as I have already stated, a tribute to the sovereignty of nations ; the
principle is that all disputes shall be settled between the nations concerned
themselves. The Court can only interpose its authority when such solution is
recognized as impossible.

[249] Now the dispute is clearly not one which cannot be settled through
diplomatic channels; and even if it be admitted that negotiations have taken place,
where is to be found the proof that such a settlement has been found impossible?
[p92]

[250] It is said that Great Britain, in her reply to the Greek Government, at once
declared that her views on the matter were capable of no modification.

[251] I beg to be excused if I state that this is not correct. Great Britain said that
she recognized Mavrommatis'rights as far as concerned Jerusalem ; that she was
not prepared to recognize the Jaffa concession and that she denied the existence of
the Jordan concession. The only claim which she definitely rejected was therefore
the Jordan one ; and even in this case she relied on the absence of a document ; she
would perhaps change her opinion if this document was presented to her:

"The Jerusalem concessions, as M. Mavrommatis'solicitors have been informed,

are the only ones which His Majesty's Government are prepared to recognize,
subject to the production of the original signed copies of the document and to their
being found in order, since they alone arose out of an agreement entered into with
the Ottoman Government before October 29th, 1914
"The Jaffa concessions were signed at a date subsequent to October 29th, 1914,
and, as
M. Mavrommatis has already been informed, His Majesty's Government are not
prepared to recognize that he possesses any right in respect of them ....
"In regard to the third group, the Jordan concessions, no concessionary contract
was actually completed or signed and M. Mavrommatis has already been informed
that His Majesty's Government do not recognise that he has any rights in this area
whatsoever." (Ib., pp. 12 -13.)

[252] Where is the insurmountable opposition of Great Britain to be found ?

[253] In view of the facts which I have stated, it seems clear to me that the
Mavrommatis affair is in no way a dispute between two States.

[254] Greece is entitled to bring claims on behalf of its nationals, and that is in my
opinion sufficient to give to the Mavrommatis claim an international character ;
but the truth is that Greece, up to the time when it applied to the Court, had not
said what it thought or what it wanted as regards the Mavrommatis concessions; it
had neither explained the nature of these concessions nor stated what were, in its
opinion, their importance or their extent; it had further put forward no arguments
in law to uphold them nor had it shown the weakness of the British opposition.
[p93]

[255] It follows, in the second place, from the facts stated that no negotiation took
place between the two Governments in regard to these claims; the Greek
Government asked the British Government what were its views with regard to the
Mavrommatis contracts; the British Government stated how it envisaged each of
the contracts; the Greek Government made no reply.

[256] The conclusion to be finally drawn from the facts stated is that the
impossibility of settling the dispute through diplomatic channels has in no way
been proved.

[257] Under Article 26 of the Mandate, however, the Court has jurisdiction only
when these conditions have simultaneously been fulfilled: if the dispute arises
between States and if it cannot be settled by negotiation.

[258] But these conditions are not fulfilled in the suit submitted to the Court by the
Greek Government.

[259] The Court has therefore no jurisdiction to hear and determine it.