6 July 1957

 

General List No. 29

 
     

international Court of Justice

     
 

Certain Norwegian Loans

 
     

France

 

v. 

Norway

     
     
 

Judgment

 
     
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BEFORE: President: Hackworth;
Vice-President: Badawi;
Judges: Guerrero, Basdevant, Winiarski, Zoricic, Klaestad, Read, Armand-Ugon, Kojevnikov, Sir Muhammad Zafrulla Khan, Sir Hersch Lauterpacht, Moreno Quintana, Cordova, Wellington Koo
   
PermaLink: http://www.worldcourts.com/icj/eng/decisions/1957.07.06_norwegian_loans.htm
   
Citation: Certain Norwegian Loans, France v. Norway, Judgment, 1957 I.C.J. 9 (July 6)
   
Represented By: France: M. André Gros, Professor of the Faculties of Law, Legal Adviser
to the Ministry for Foreign Affairs, as Agent;
assisted by
M. Paul Reuter, Professor of the Faculty of Law of Paris, Assistant Legal Adviser to the Ministry for Foreign Affairs, as Counsel;
Me. Marcel Poignard, of the Paris Bar, former Bâtonnier, as Advocate;
M. Claude Chayet, Legal Adviser in the Ministry for Foreign Affairs,
M. Robert Monod, Administrateur civil in the Ministry of Finance;
M. J. J. de Bresson, Procureur de la République, detached to the Ministry for Foreign Affairs, Me. Henri Monneray, of the Bar of the Paris Court of Appeal, as Expert Advisers;

Norway: M. Sven Arntzen, Advocate at the Supreme Court of Norway, as Agent and Advocate;
M. Lars J. Jorstad, Ambassador of Norway at The Hague, as Agent;
assisted by
M. Maurice Bourquin, Professor at the University of Geneva and at the Graduate Institute of International Studies, M. Jens Evensen, Advocate at the Supreme Court of Norway, as Advocates;
M. Frede Castberg, Rector of the University of Oslo;
M. Johannes Andenaes, Professor at the University of Oslo;
M. Bredo Stabell, Director at the Ministry for Foreign Affairs;
M. Pierre Lalive, Professor at the University of Geneva, as Expert Advisers;
M. Einar Lochen, Chief of Division in the Ministry for Foreign Affairs,
as Secretary.

 
     
 
 
     
 


[p.9]

The Court,

composed as above,

delivers the following Judgment:

In a letter of July 6th, 1955, filed in the Registry on the same day, the Ambassador of France to the Netherlands forwarded a letter from the Agent of the Government of the French Republic dated July 5th, 1955, transmitting an Application instituting Proceedings in a dispute with the Government of the Kingdom of Norway concerning the payment of various Norwegian Loans issued in France. At the same time, the Ambassador of France notified to the Registry the appointment of Professor Gros as Agent of the French Government in the case.

The Application thus filed in the Registry on July 6th, 1955, expressly refers to Article 36, paragraph 2, of the Statute of the Court and to the acceptance of the compulsory jurisdiction of the International Court of Justice by the Kingdom of Norway on November 16th, 1946, and by the French Republic on March 1st, 1949. It refers to and enumerates certain loans floated by the Kingdom of Norway, by the Mortgage Bank of the Kingdom of Norway and by the Small Holding and Workers' Housing Bank; it relies upon the fact that bonds of these loans are in the hands of French holders; it alleges that the said loans contain a gold clause; and it is designed to request the Court to determine the manner in which the borrower should discharge the substance of his debt.

Pursuant to Article 40, paragraph 2, of the Statute, the Application was communicated to the Government of the Kingdom of Norway and, pursuant to paragraph 3 of the same Article, other Members of the United Nations as well as non-member States entitled to appear before the Court were notified of it.

By Order of September 19th, 1955, the President, taking account of an agreement between the Parties, fixed the time-limits for the filing of the Memorial and Counter-Memorial. On the date of the expiry of the second of these time-limits, the Government of the Kingdom of Norway filed a document setting out certain preliminary objections designed, on various grounds stated therein, to obtain a finding from the Court that the Application was inadmissible.

By Order of April 24th, 1956, the Court, noting that the proceedings on the merits were suspended by virtue of the provisions of Article 62, paragraph 3, of the Rules of Court, fixed June 4th, 1956, as the time-limit for the presentation by the Government of the French [p 12] Republic of a written statement of its Observations and Submissions in regard to the Preliminary Objections. In notifying the Agents of this decision, the Registrar informed them that it was the Court's intention to open the oral hearings on June 25th, 1956.

On May 15th, 1956, the Agent of the Government of the Kingdom of Norway acquainted the Court with the desire of his Government that, because of unforeseen circumstances, the oral proceedings should be postponed until the autumn. Consequently the Court, after ascertaining the views of the Parties and having decided to postpone the opening of the oral proceedings, by Order of May 29th, 1956, extended to August 31st, 1956, the time-limit for the filing, by the French Government, of its Observations and Submissions on the Preliminary Objections raised by the Norwegian Government.

Within this time-limit, the French Government presented its Observations and Submissions on the Preliminary Objections. Whilst stating the grounds on which it requested the Court net to uphold the Objections, it asked the Court to join the Preliminary Objections to the Merits.

The Court decided, on September 21st, 1956, to open the oral hearings on the Preliminary Objections on October 15th, 1956, and the Agents of the Parties were advised of this decision on the same date. In a letter of the same date, which was handed to the Registrar on September 22nd, the Agent of the Government of the Kingdom of Norway, noting that, in its Observations on the Preliminary Objections, the Government of the French Republic had asked that it might please the Court to join the Objections to the merits, stated that his Government, whilst maintaining in their entirety the Objections which it had raised, did not consider that it should object to the joinder of these Objections to the merits.

By Order of September 28th, 1956, the Court, considering that there was no objection to taking into account the understanding thus reached, joined the Objections to the merits and, after ascer-taining the views of the Parties, fixed time-limits for the filing of the further pleadings, the last of these time-limits expiring on April 25th, 1957. The Parties having respectively filed their Counter-Memorial, Reply and Rejoinder within the time-limits so fixed, the case was ready for hearing on the last-named date.

In the course of hearings held on May 13th, 14th, 15th, 17th, 20th, 21st, 22nd, 23rd, 24th, 25th and 28th, 1957, the Court heard the oral arguments and replies of M. Andre Gros and Me. Marcel Poignard, on behalf of the Government of the French Republic, and of M. Sven Arntzen, M. Maurice Bourquin and M. Jens Evensen, on behalf of the Government of the Kingdom of Norway.

During the written and oral proceedings, the following Submissions were presented by the Parties: [p 13]

On behalf of the French Government, in the Application:

"May it please the Court:

To take note that for the purpose of all notifications and communications relating to the present case, the Agent of the Government of the French Republic selects for his address for service the French Embassy at The Hague;

To notify the present Application, in accordance with Article 40, paragraph 2, of the Statute of the Court, to the Government of the Kingdom of Norway;

To adjudge and declare, whether the Government of the Kingdom of Norway appears or not, and after such time-limits as the Court may fix in the absence of an agreement between the Parties:

That the international loans issued by the Kingdom of Norway in 1896 (3% gold), 1900 (3£% gold), 1902 (3|% gold), 1903 (3% gold), 1904 (3|% gold), 1905 (3|% gold), the international loans issued by the Mortgage Bank of the Kingdom of Norway, 3|% gold 1885-189S, 1902, 1905, 1907, 1909 and 4% gold 1900, the international loan issued by the Small Holding and Workers' Housing Bank 3|% gold in 1904, stipulate in gold the amount of the borrower's obligation for the service of coupons and the redemption of bonds;

And that the borrower can only discharge the substance of his debt by the payment of the gold value of the coupons on the date of payment and of the gold value of the redeemed bonds on the date of repayment."

On behalf of the French Government, in the Memorial:

"The Government of the French Republic therefore maintains the submissions filed in its Application of July 6th, 1955, and requests the Court to adjudge and declare:

That the international loans issued by the Kingdom of Norway in 1896 (3% gold), 1900 (3½% gold), 1902 (3½% gold), 1903(3% gold), 1904 (3½% gold), 1905 (3½% gold), the international loans issued by the Mortgage Bank of the Kingdom of Norway, 3½% gold 1885-1898, 1902, 1905, 1907, 1909 and 4% gold 1900, the international loan issued by the Small Holding and Workers' Housing Bank 3½% gold in 1904, stipulate in gold the amount of the borrower's obligation for the service of coupons and the redemption of bonds;

And that the borrower must discharge the substance of his debt by the payment of the gold value of the coupons on the date of payment and of the gold value of the redeemed bonds on the date of repayment."

On behalf of the Norwegian Government, in the Preliminary Objections:

"Whereas:

1. The subject of the dispute, as defined in the Application of the French Government of July 6th, 1955, is within the domain of municipal law and not of international law, whereas the compulsory jurisdiction of the Court in relation to the Parties involved is restricted, by their Declarations of November 16th, 1946, and March 1st, 1949 to disputes concerning international law; [p 14]

2. The 'facts' or 'situations' in respect of which the dispute has arisen are prior to the Declaration by which the French Government accepted the compulsory jurisdiction of the Court, this dispute is therefore excluded from the undertaking given by France and, by virtue of reciprocity, from the undertaking given by Norway vis-à-vis France;

3. As regards that part of the claim which relates to the bond certificates issued by the Mortgage Bank of Norway and by the Norwegian Small Holding and Workers' Housing Bank, these two Banks have a legal personality distinct from that of the Norwegian State; proceedings can therefore not be instituted against the latter in its capacity as the borrower; whereas, moreover, the jurisdiction of the Court is limited to disputes between States;

4. The holders of bond certificates on whose behalf the French Government considers itself entitled to institute international proceedings have not previously exhausted the local remedies,
May it please the Court to adjudge and declare that the claim put forward by the Applica-tion of the French Government of July 6th, 1955, is not admissible."

On behalf of the French Government, in the Observations and Submissions on the Preliminary Objections:

"For these reasons, and subject to the subsequent presentation of any evidence or argument,

May it please the Court

to join to the merits the 'Preliminary Objections' raised by the Royal Norwegian Government."

On behalf of the Norwegian Government, in the Counter-Memorial:

"On the Preliminary Objections:

Having regard to the fact that the Norwegian Government maintains Preliminary Objections Nos. r, 3 and 4 raised in the document submitted to the Court on April 20th, 1956,
May it please the Court

to adjudge and declare that the claim submitted by the Application of the French Government of July 6th, 1955, is not admissible.

On the Merits:

Having regard to the fact that the claim of the French Government is unfounded,

May it please the Court

to dismiss the claim of the French Government."

On behalf of the French Government, in the Reply:

"On the question of admissibility:

May it please the Court

to place on record the abandonment by the Royal Government of Norway of its second Preliminary Objection, [p 15]

to dismiss the Preliminary Objections of the Royal Government of Norway Nos. I, 3 and 4,

to adjudge and declare that the claim put forward in the Application of the French Government of July 6th, 1955, is admissible.

On the Merits:

May it please the Court

to uphold the submissions of the Government of the French Republic set out in its Application of July 6th, 1955."

On behalf of the Norwegian Government, in the Rejoinder:

"The Norwegian Government maintains the Submissions of its Counter-Memorial of December 20th, 1956."

On behalf of the French Government, Submissions stated at the hearing of May 15th, 1957, and filed on the same day:

"The Government of the French Republic requests the Court to adjudge and declare:

On Jurisdiction:

That the claim of the Government of the French Republic, which has adopted the cause of its nationals who are holders of bond certificates of the Norwegian loans in question, constitutes a case of the recovery of contract debts within the meaning of Article 1 of the Second Hague Convention of October 18th, 1907; that this claim, not having been settled by diplomatic means, has given rise to a legal dispute of an international character between the two States;

That the two States, by their acceptance of the compulsory jurisdiction of the International Court of Justice, have recognized the competence of the Court in all legal disputes concerning the interpretation of a treaty, any question of international law, the existence of any fact which, if established, would constitute a breach of an international obligation;

That the recovery of a debt due under an international loan, claimed from the Government of the debtor State by the Government which has adopted the cause of its nationals who are holders of bond certificates, raises an issue which, within the meaning of Article 36, paragraph 2, sub-paragraphs (b) and (c), falls within the competence of the Court by virtue of the acceptance of both Parties;

That the dispute may be brought before the Court without the need for the exhaustion of local remedies since it has not been shown that such remedies could be effectual.

On the Merits:

That the loans which constitute the subject-matter of the Application of the Government of the French Republic are international loans and that it follows from the nature of the bearer bonds that in respect of all foreign holders the substance of the debt is the same and that payments to foreign holders of an identical certificate must be made without any discrimination; [p 16]

That the said loans contain an undertaking to pay in gold value interest and amounts due on redemption of the bonds;

That undertakings as to the amount of a debt contracted by a State with foreign nationals, containing express conditions as to performance, cannot be unilaterally modified by that State without negotiation with the holders, with the State which has adopted the cause of its nationals, or without arbitration as to the financial capacity of the debtor State to fulfil its obligations;

That in these circumstances, and without passing upon the financial adjustment of payments which the Government of the French Republic has declared itself ready to study with the Government of the Kingdom of Norway, the claim of the Government of the French Republic should be held to be well-founded;

That the Kingdom of Norway having expressly promised and guaranteed payment in gold value of the sums due in performance of its obligations under the various loans in issue, the debtor cannot validly discharge this obligation except by payments as they fall due in gold value."

On behalf of the Norwegian Government, Submissions stated at the hearing of May 23rd, 1957, and filed on the same day:

"On the Preliminary Objections:

Whereas:

1. The subject of the dispute, as defined in the Application, is within the domain of municipal law and not of international law, whereas the compulsory jurisdiction of the Court in relation to the Parties involved is restricted, by their Declarations of November 16th, 1946, and March 1st, 1949, to disputes concerning international law;

2. As regards that part of the claim which relates to the bond certificates issued by the Mortgage Bank of Norway and the Norwegian Small Holding and Workers' Housing Bank, these two Banks have a legal personality distinct from that of the Norwegian State; proceedings can therefore not be institued against the latter in its capacity as the borrower; whereas moreover the jurisdiction of the Court is limited to disputes between States;

3. The holders of bond certificates for whose protection the French Government considers itself entitled to institute international proceedings have not previously exhausted the local remedies,

May it please the Court,

rejecting all submissions to the contrary,

to adjudge and declare that the claim put forward by the Application of the French Government of July 6th, 1955, is not admissible.

On the Merits:

Whereas the claim of the French Government is unfounded, [p 17]

May it please the Court,

rejecting all submissions to the contrary,

to dismiss the claim of the French Government."

Certain objections having been raised by the Agent of the Norwegian Government to the tenor and admissibility of the Submissions filed by the Agent of the French Government on May 15th, 1957, the Agent of the French Government made certain alterations in them at the hearing of May 25th, 1957, and filed them on the same day in the following form:

"The Government of the French Republic requests the Court to adjudge and declare:

On Jurisdiction:

1. That the claim of the Government of the French Republic, which has adopted the cause of its nationals who are holders of bond certificates of the Norwegian loans in question, constitutes a case of the recovery of contract debts within the meaning of Article 1 of the Second Hague Convention of October 18th, 1907; that this claim, not having been settled by diplomatic means, has given rise to a legal dispute of an international character between the two States;

2. That the two States, by their acceptance of the compulsory jurisdiction of the International Court of Justice, have recognized the competence of the Court in all legal disputes concerning the interpretation of a treaty, any question of international law, the existence of any fact which, if established, would constitute a breach of an international obligation;

3. That the recovery of the debts due under the loans in question, claimed from the Government of the Norwegian State by the French Government which has adopted the cause of its nationals who are holders of bond certificates, raises an issue which, within the meaning of Article 36, paragraph 2, sub-paragraphs (b) and(c), falls within the competence of the Court by virtue of the acceptance of both Parties;

4. That the dispute may be brought before the Court without the need for the exhaustion of local remedies since it has not been shown that such remedies could be effectual.

On the Merits:

1. That the loans which constitute the subject-matter of the Application of the Government of the French Republic are international loans and that it follows from the nature of the bearer bonds that in respect of all foreign holders the substance of the debt is the same and that payments to foreign holders of an identical certificate must be made without any discrimination;

2. That the said loans contain an undertaking to pay in gold value interest and amounts due on redemption of the bonds;

3. That undertakings as to the amount of the debts contracted under the said loans by the Norwegian State with French nationals, [p 18] containing express conditions as to performance, cannot be unilaterally modified by that State without negotiation with the holders, with the French State which has adopted the cause of its nationals, or without arbitration as to the financial capacity of the debtor State to fulfil its obligations;

4. That in these circumstances, and without passing upon the financial adjustment of payments which the Government of the French Republic has declared itself ready to study with the Government of the Kingdom of Norway, the claim of the Government of the French Republic should be held to be well-founded;

5. That the Kingdom of Norway having expressly promised and guaranteed payment in gold value of the sums due in performance of its obligations under the various loans in issue, the debtor cannot validly discharge this obligation except by payments as they fall due in gold value."

On behalf of the Norwegian Government, the Agent of that Government declared at the hearing of May 28th, 1957, that he maintained in their entirety his Submissions as formulated on May 23rd, 1957.

The Submissions of the Parties, in the form in which they were given or confirmed at the hearings of May 25th and May 28th, 1957, respectively, constitute their Final Submissions.

***

The facts which led the French Government to institute the present proceedings before the Court are as follows:

Between 1896 and 1905, the Norwegian Government floated six public loans on the French market and on other foreign markets. From 1885 to 1909, various loans were floated on foreign markets, including the French market, by the Mortgage Bank of the Kingdom of Norway, an establishment created by the State and whose capital belongs to the State. Finally, in 1904, the Norwegian Small Holding and Workers' Housing Bank floated a loan on the French market and on other foreign markets. The French Government contends that the bonds contain a gold clause which varies in form from bond to bond, but which that Government regards as sufficient in the case of each bond, this being disputed by the Norwegian Government.

Following upon the opening of hostilities in Europe, the convertibility of notes of the Bank of Norway was suspended on August 5th, 1914, this measure being later confirmed by Royal Decree of August 18th, 1914. During the ensuing period, the Bank of Norway was authorized to resume the convertibility of notes into gold (1916) and to suspend it anew (1920). This latter measure was in turn abrogated (1928) and notes of the Bank of Norway again became convertible. However, in 1931 the obligation of the Bank to convert notes was once more suspended; this measure is still in force.[p19]

During these years of instability, a law concerning pecuniary obligations whose payment was expressed in gold was promulgated on December 15th, 1923. This law which, in accordance with its second Article, came into force at once, provides in Article 1:

"Where a debtor has lawfully agreed to pay in gold a pecuniary debt in kroner and where the creditor refuses to accept payment in Bank of Norway notes on the basis of their nominal gold value, the debtor may request a postponement of payment for such period as the Bank is exempted from its obligation to redeem its notes in accordance with their nominal value. Where a creditor withdraws his refusal he shall be entitled to require such payment only after the giving of three months' notice. During the period of postponement interest shall be paid at the rate of four per cent per annum. Interest shall be paid in banknotes in accordance with their nominal value.

Prior notice of waiver of the right to request postponement may be given only by the State, municipalities, the Bank of Norway and the Banks which are fully guaranteed by the State (the Mortgage Bank, the Small Holding and Workers' Housing Bank and the Fishery Bank)."

The first representations made by the French Government to the Government of Norway were in the form of a Note dated June 16th, 1925, from the French Legation at Oslo to the Ministry of Foreign Affairs of Norway. This Note referred to the loans floated by the Mortgage Bank of the Kingdom of Norway, which the French Government regarded as subject to a gold clause, and to the above-mentioned Norwegian law of December 15th, 1923. It contained a brief reference to the contradiction which it believed to exist between that law and the obligations which had been assumed, contended "that it would not seem that a unilateral decision can be relied upon as against foreign creditors", and requested that the "Royal Ministry for Foreign Affairs should give its consideration and assistance for the purpose of securing prompt recognition by the Norwegian Government and by the Mortgage Bank of Norway of the rights claimed by the French holders of bonds of the Mortgage Bank of the Kingdom of Norway, the bondholders' claims appearing to the Government of the Republic to be fully justified".

On December 9th, 1925, the Ministry of Foreign Affairs of Norway transmitted to the French Legation a copy of a letter from the Board of Directors of the Mortgage Bank to the Ministry of Finance and declared that the Ministry of Finance shared the view of the Board of Directors of the Mortgage Bank. In this letter the Board disputed the assertions concerning the gold clause and added that "the question has in any case been settled by the law of December 15th, 1923".

Protracted diplomatic correspondence ensued in which the two Governments maintained their points of view. The representations [p 20] of the French Government now related to all the Norwegian loans, both the State loans and the loans of the two Banks. Various proposals were put forward, designed to submit the problem to a mixed Commission of Economic and Financial Experts, to arbitration, or to the International Court of Justice; the matter was also brought to the attention of the International Bank for Reconstruction and Development. The Norwegian Government was not prepared to agree to these proposals. It maintained throughout that the claims of the bondholders were within the jurisdiction of the Norwegian courts, that the latter were competent to deal with them, and that these claims involved solely the interpretation and application of Norwegian law. The French bondholders, for their part, refrained from submitting their cases to the Norwegian courts. The French Government did not accept the views of the Norwegian Government. By a Note of January 27th, 1955, it proposed to the Norwegian Government that the dispute should be referred to an international tribunal in order to determine, on the basis of the general principles of international law, whether the clause which, it contended, was contained in the bonds in question (the gold clause) had to be respected. On February 2nd, 1955, the Norwegian Government declined this proposal, maintaining that the normal and proper procedure would be for the bondholders to start proceedings against the respective Norwegian debtors in the Norwegian courts. It added that it could see no reason for making an exception in the present case to the rule of international law under which international proceedings can only be instituted after the exhaustion of local remedies. It was as a result of this refusal that the French Government referred the matter to the Court by an Application on July 6th, 1955.

***

In its Application, the French Government requests the Court to adjudge and declare that the international loans issued by the Kingdom of Norway, by the Mortgage Bank of the Kingdom of Norway and by the Small Holding and Workers' Housing Bank, which are listed in the Application, stipulate in gold the amount of the borrower's obligation for the service of coupons and the redemption of bonds; and that the borrower can only discharge the substance of his debt by the payment of the gold value of the coupons on the date of payment and of the gold value of the redeemed bonds on the date of repayment.

The claim in the Application has been maintained in the Memorial and in the Reply which, with regard to the merits, requests the Court to "uphold the Submissions of the Government of the French Republic set out in its Application of July 6th, 1955".

The Application expressly refers to Article 36, paragraph 2, of the Statute of the Court and to the acceptance of the compulsory [p 21] jurisdiction of the Court by Norway on November 16th, 1946, and by France on March 1st, 1949. The Norwegian Declaration reads:

"I declare on behalf of the Norwegian Government that Norway recognizes as compulsory ipso facto and without special agreement, in relation to any other State accepting the same obligation, that is to say, on condition of reciprocity, the jurisdiction of the International Court of Justice in conformity with Article 36, paragraph 2, of the Statute of the Court, for a period of ten years as from 3rd October 1946."

The French Declaration reads:

"On behalf of the Government of the French Republic, and subject to ratification, I declare that I recognize as compulsory ipso facto and without special agreement, in relation to any other State accepting the same obligation, that is on condition of reciprocity, the jurisdiction of the International Court of Justice, in conformity with Article 36, paragraph 2, of the Statute of the said Court, for all disputes which may arise in respect of facts or situations subsequent to the ratification of the present declaration, with the exception of those with regard to which the parties may have agreed or may agree to have recourse to another method of peaceful settlement.

This declaration does not apply to differences relating to matters which are essentially within the national jurisdiction as understood by the Government of the French Republic.

The present declaration has been made for five years from the date of the deposit of the instrument of ratification. It shall continue in force thereafter until notice to the contrary is given by the French Government."

On April 20th, 1956, the Norwegian Government filed four Preliminary Objections. The first Objection consisted of two parts. In the first part the Norwegian Government maintained that the subject of the dispute was within the exclusive domain of the municipal law of Norway, and that it did not fall within any of the categories of disputes enumerated in Article 36, paragraph 2, of the Statute, by reference to which both Parties had by their Declarations accepted the compulsory jurisdiction of the Court. In the second part of that Objection the Norwegian Government relied upon the reservation in the French Declaration with regard to differences relating to matters which are essentially within the national jurisdiction as understood by the French Government. It challenged the jurisdiction of the Court on both grounds.

The second Objection was based on the fact that the French Declaration limited its acceptance of the compulsory jurisdiction of the Court to "all disputes which may arise in respect of facts or situations subsequent to the ratification" of the Declaration. It was contended that the dispute before the Court arose in respect of facts or situations prior to March 1st, 1949, and that, by virtue [p 22] of the condition of reciprocity, it was excluded from the undertaking subscribed to by the Parties.

The third Objection was designed to obtain a finding that the Application was inadmissible as regards that part of the claim which relates to the bonds of the two Norwegian Banks on the ground that they possess a legal personality distinct from that of the Norwegian State.

Lastly, the fourth Objection sought a finding of the Court that the Application of the French Government was inadmissible on the ground that the French holders of the Norwegian bonds had not previously exhausted the local remedies.

The French Government in its Observations and Submissions requested the Court to join the Preliminary Objections raised by the Norwegian Government to the merits. The latter Government did not oppose this request. Accordingly, the Court, taking into account this understanding between the Parties, by Order of September 28th, 1956, joined the Objections to the merits "in order that it may adjudicate in one and the same judgment upon these Objections and, if need be, on the merits".

In the Counter-Memorial, the Norwegian Government declared its "immediate and unconditional abandonment of its second Objection". Accordingly, in the Counter-Memorial, the Reply, and the Rejoinder, as well as in the oral proceedings, both Parties discussed Objections i, 3 and 4, and the merits.

***

The Court will at the outset direct its attention to the Preliminary Objections of the Norwegian Government. The first of these Objections relates directly to the jurisdiction of the Court to adjudi-cate upon the dispute submitted to it by the French Application. It is this Objection that the Court will examine first.

As previously stated, this Objection, as presented by the Norwegian Government, has two aspects. In the first place, it is contended that the Court, whose function is to decide in accordance with international law such disputes as are submitted to it, can be seised, by means of a unilateral Application, only of legal disputes falling within one of the four categories enumerated in paragraph 2 of Article 36 of the Statute and relating to international law. It is urged that the Application of the French Government asks the Court to interpret loan contracts which, in the view of the Norwegian Government, are governed by municipal law and not by international law.

After presenting the first ground of its first Preliminary Objection on the basis that the loan contracts are governed by municipal law, the Norwegian Government continues in its Preliminary Objections: [p 23]

"There can be no possible doubt on this point. If, however, there should still be some doubt, the Norwegian Government would rely upon the reservations made by the French Government in its Declaration of March Ist, 1949. By virtue of the principle of reciprocity, which is embodied in Article 36, paragraph 2, of the Statute of the Court and which has been clearly expressed in the Norwegian Declaration of November 16th, 1946, the Norwegian Government cannot be bound, vis-à-vis the French Government, by undertakings which are either broader or stricter than those given by the latter Government."

It is this second ground of the first Preliminary Objection which the Court will proceed to consider.

It will be recalled that the French Declaration accepting the compulsory jurisdiction of the Court contains the following reservation:

"This declaration does not apply to differences relating to matters which are essentially within the national jurisdiction as understood by the Government of the French Republic."

In the Preliminary Objections filed by the Norwegian Government it is stated:

"The Norwegian Government did not insert any such reservation in its own Declaration. But it has the right to rely upon the restrictions placed by France upon her own undertakings.

Convinced that the dispute which has been brought before the Court by the Application of July 6th, 1955, is within the domestic jurisdiction, the Norwegian Government considers itself fully entitled to rely on this right. Accordingly, it requests the Court to decline, on grounds that it lacks jurisdiction, the function which the French Government would have it assume."

In considering this ground of the Objection the Court notes in the first place that the present case has been brought before it on the basis of Article 36, paragraph 2, of the Statute and of the corresponding Declarations of acceptance of compulsory jurisdiction; that in the present case the jurisdiction of the Court depends upon the Declarations made by the Parties in accordance with Article 36, paragraph 2, of the Statute on condition of reciprocity; and that, since two unilateral declarations are involved, such jurisdiction is conferred upon the Court only to the extent to which the Declarations coincide in conferring it. A comparison between the two Declarations shows that the French Declaration accepts the Court's jurisdiction within narrower limits than the Norwegian Declaration; consequently, the common will of the Parties, which is the basis of the Court's jurisdiction, exists within these narrower limits indicated by the French reservation. Following in this connection the jurisprudence of the Permanent Court of International Justice (Phosphates in Morocco case, Judgment of June 14th, [p 24] 1938, P.C.I.J., Series A/B, No, 74, p. 22; Electricity Company of Sofia and Bulgaria case, Judgment of April 4th, 1939, P.C.I.J., Series A/B, No. 77, p. 81) the Court has reaffirmed this method of defining the limits of its jurisdiction. Thus the judgment of the Court in the Anglo-Iranian Oil Company case states:

"As the Iranian Declaration is more limited in scope than the United Kingdom Declaration, it is the Iranian Declaration on which the Court must base itself." (I.C.J. Reports 1952, p. 103.)

France has limited her acceptance of the compulsory jurisdiction of the Court by excluding beforehand disputes "relating to matters which are essentially within the national jurisdiction as understood by the Government of the French Republic". In accordance with the condition of reciprocity to which acceptance of the compulsory' jurisdiction is made subject in both Declarations and which is provided for in Article 36, paragraph 3, of the Statute, Norway, equally with France, is entitled to except from the compulsory jurisdiction of the Court disputes understood by Norway to be essentially within its national jurisdiction.

In its Observations and Submissions on the Preliminary Objections raised by the Norwegian Government, the French Government points to what it regards as a contradiction in the attitude of Norway:

"Between France and Norway, there exists a treaty which makes the payment of any contractual debt a question of international law. In this connection the two States cannot therefore speak of domestic jurisdiction."

The treaty here referred to is the Second Hague Convention of 1907 respecting the limitation of the employment of force for the recovery of contract debts. The French Government invokes it principally against the first ground of the first Objection and as such it does not fall for consideration here; but the passage quoted from the Observations and Submissions purports to show also that the second ground of the first Objection is not valid since both Parties are signatories of the Second Hague Convention of 1907. This calls for but brief observations by the Court.

The purpose of the Convention in question is that indicated in its title, that is to say "the Limitation of the Employment of Force for the Recovery of Contract Debts". The aim of this Convention is not to introduce compulsory arbitration in the limited field to which it relates. The only obligation imposed by the Convention is that an intervening Power must not have recourse to force before it has tried arbitration. The Court can find no reason why the fact that the two Parties are signatories of the Second Hague Convention of 1907 should deprive Norway of the right to invoke the reservation in the French Declaration.

The French Government also referred to the Franco-Norwegian Arbitration Convention of 1904 and to the General Act of Geneva [p 25] of September 26th, 1928, to which both France and Norway are parties, as showing that the two Governments have agreed to submit their disputes to arbitration or judicial settlement in certain circumstances which it is unnecessary here to relate.

These engagements were referred to in the Observations and Submissions of the French Government on the Preliminary Objections and subsequently and more explicitly in the oral presentations of the French Agent. Neither of these references, however, can be regarded as sufficient to justify the view that the Application of the French Government was, so far as the question of jurisdiction is concerned, based upon the Convention or the General Act. If the French Government had intended to proceed upon that basis it would expressly have so stated.

As already shown, the Application of the French Government is based clearly and precisely on the Norwegian and French Declarations under Article 36, paragraph 2, of the Statute. In these circumstances the Court would not be justified in seeking a basis for its jurisdiction different from that which the French Government itself set out in its Application and by reference to which the case has been presented by both Parties to the Court.

From one point of view it might be said that the second ground of the first Objection, namely the ground based on the reservation in the French Declaration, is merely subsidiary in character. It is true that the first ground of the first Preliminary Objection relies upon the proposition that the Court lacks jurisdiction because the dispute falls to be dealt with under the municipal law of Norway. But Norway has also relied upon the second ground of its first Preliminary Objection. Norway requests the Court "to decline, on grounds that it lacks jurisdiction, the function which the French Government would have it assume". It is clear that this request is based on both grounds, the character of the dispute and the French reservation. In the opinion of the Court, the second ground cannot be regarded as subsidiary, in the sense that Norway would invoke the French reservation only in the event of the first ground of its Objection being held to be legally unfounded. The Court's competence is challenged on both grounds and the Court is free to base its decision on the ground which in its judgment is more direct and conclusive.

Not only did the Norwegian Government invoke the French reservation, but it maintained this second ground of its first Objection throughout and at no time did it abandon it.

The Submissions in the Counter-Memorial, maintained in the Rejoinder, are formulated as follows:

"Having regard to the fact that the Norwegian Government maintains Preliminary Objections Nos. I, 3 and 4 raised in the document submitted to the Court on April 20th, 1956, May it please [p 26] the Court to adjudge and declare that the claim submitted by the Application of the French Government of July 6th, 1955, is not admissible."

Since the Preliminary Objections under the head "First Objection" relied upon both grounds—the character of the dispute and the French reservation—it was not necessary, in order to maintain the two grounds, to specify that both were involved. What has just been said also applies to the Final Submissions of the Norwegian Government.

In the course of his oral presentations Counsel for the Norwegian Government stated:

"... the Court has jurisdiction only in so far as undertakings prior to the origin of disputes have conferred upon it the power of adjudicating on such disputes as might arise between France and Norway.

What are these undertakings?

They are the undertakings resulting from the Declarations made by the two Governments on the basis of Article 36, paragraph 2, of the Statute of the Court.
………………………………………………………………………………………………

That is the only basis on which the other Party can rely to show that its Application falls within the limits of the jurisdictional competence of the Court. In so far as the undertakings given by the two Parties are in concordance—to the extent of their reciprocity— it is clear that Norway is bound in relation to France. But she has no other obligation toward France. The Court may therefore adjudicate in this dispute only if it is included within these limits."

From the reply of the French Agent to this argument it appears that in his view the second ground of the first Objection was fully maintained by Norway. Later, in his oral rejoinder, the Agent for the Norwegian Government declared:

"We maintain our positions in their entirety both as regards the merits and as regards the Preliminary Objections."

The Court cannot infer from the attitude of the Parties that the second ground of the first Objection was regarded by them as unimportant and still less that it was abandoned by the Norwegian Government. Abandonment cannot be presumed or inferred; it must be declared expressly, as was done when Norway declared its abandonment of its second Preliminary Objection.

***
The Court does not consider that it should examine whether the French reservation is consistent with the undertaking of a legal obligation and is compatible with Article 36, paragraph 6, of the Statute which provides: [p 27]

"In the event of a dispute as to whether the Court has jurisdiction, the matter shall be settled by the decision of the Court."

The validity of the reservation has not been questioned by the Parties. It is clear that France fully maintains its Declaration, including the reservation, and that Norway relies upon the reservation.

In consequence the Court has before it a provision which both Parties to the dispute regard as constituting an expression of their common will relating to the competence of the Court. The Court does not therefore consider that it is called upon to enter into an examination of the reservation in the light of considerations which are not presented by the issues in the proceedings. The Court, without prejudging the question, gives effect to the reservation as it stands and as the Parties recognize it.

***

The Court considers that the Norwegian Government is entitled, by virtue of the condition of reciprocity, to invoke the reservation contained in the French Declaration of March Ist, 1949; that this reservation excludes from the jurisdiction of the Court the dispute which has been referred to it by the Application of the French Government; that consequently the Court is without jurisdiction to entertain the Application.

In view of the foregoing it is not necessary for the Court to examine the first ground of the first Objection, or to deal with Objections 3 and 4 presented by the Norwegian Government, or with the Submissions of the Parties other than those upon which it is adjudicating in accordance with the reasons stated above.

For these reasons,

The Court,

by twelve votes to three,

finds that it is without jurisdiction to adjudicate upon the dispute which has been brought before it by the Application of the Government of the French Republic of July 6th, 1955. [p 28]

Done in French and English, the French text being authoritative, at the Peace Palace, The Hague, this sixth day of July, one thousand nine hundred and fifty-seven, in three copies, one of which will be placed in the archives of the Court and the others will be transmitted to the Government of the French Republic and to the Government of the Kingdom of Norway, respectively.

(Signed) Green H. Hackworth,
President:

(Signed) J. Lopez Olivan,
Registrar.

Judge Moreno Quintana, after voting for the Judgment, made the following declaration:

The reason why I consider that the Court is without jurisdiction in this case is different from that given in the Judgment. I base myself, not on the second ground of the first Objection put forward by the Government of the Kingdom of Norway but on the first ground of that Objection. State loans, as being acts of sovereignty, are governed by municipal law.

Vice-President Badawi and Judge Sir Hersch Lauterpacht, 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.

Judges Guerrero, Basdevant and Read, availing themselves of the right conferred on them by Article 57 of the Statute, append to the Judgment of the Court statements of their dissenting opinions.

(Initialled) G. H. H.

(Initialled) J. L. 0.

[p 29]
SEPARATE OPINION OF M. BADAWI, VICE-PRESIDENT OF THE COURT

[Translation ]

The Court has found that it is without jurisdiction on the ground of the reservation attached by the French Government to its Declaration of March Ist, 1949, on which the Norwegian Government relied by virtue of the reciprocity provided for in its own Declaration of November 16th, 1946.

By its nature, the first Objection, in the form of the reservation concerning national jurisdiction, is conclusive when invoked by the Respondent against an Applicant which has made its declaration subject thereto. It has a formal and direct character which precludes any argument.

The reservation constitutes, however, a subsidiary formulation of the first Objection which, as conceived and presented by the Norwegian Government throughout the proceedings, was that the dispute falls within the domain of municipal law. The reservation is relied on by the Norwegian Government only in the event of any doubt remaining as to the character of the dispute being that of a dispute within the domain of municipal law. In that event, it would be considered that this character had not been established and the Objection would consequently be rejected. It was in order to obviate this consequence that the reservation was invoked by the Norwegian Government which considered it more conclusive than the Objection relating to municipal law.

Now, the characteristic feature of a subsidiary request is indeed that it denotes a degree of certainty that the main request does not evoke.

Further, notwithstanding certain elements that are common to the Objection relating to municipal law and the reservation, the latter is subjective in character, whereas the Objection is, by its very nature, objective. They are therefore different in nature.

In point of fact, the reservation was not taken up again by the Norwegian Government either in the pleadings or in the oral prodeecings.

I am therefore of opinion that the Court should not base its judgment on the reservation unless it considers that the objection relating to municipal law is not an adequate ground for finding that the Court has no jurisdiction—unless, that is, doubts remain as to the validity of that objection.

In its Judgment, however, the Court did not think it necessary to undertake an examination of the municipal law character of the dispute. As I consider that the dispute does possess that character, I feel it necessary to give my reasons for this conclusion. [p 30]

The subject of the proceedings, as defined by the Application of the French Government and maintained by that Government in the pleadings and in the subsequent hearings—apart from the additional Submissions which are concerned with the rejection of the Objections put forward by the Norwegian Government—relates to the construction to be placed on the loan contracts and the determination of the substance of the debt. Now, according to the generally recognized rules of private international law, these questions are governed by the law of the debtor (in this case, Norwegian law).

The Permanent Court of International Justice has already so stated in the Serbian and Brazilian Loans cases. It found beyond any possible doubt that these questions fall within the domain of municipal law.

Quite apart from the considerations upon which the Permanent Court relied in finding that it had jurisdiction and in applying French law as interpreted by French jurisprudence, it is thus obvious that, for the Court to have jurisdiction, it must be seised of a claim relating to international law. The French Government itself has recognized this requirement. Not only does it not dispute it, but it seeks to prove that the claim falls within the provisions of Article 36 of the Statute on two grounds, namely, that it comes within categories (b) and (c) of that Article, i.e. (b) any question of international law and (c) the existence of any fact which, if established, would constitute a breach of an international obligation.

In order to show that the case brought before the Court constitutes a dispute under international law, the French Government claims that it possesses that character by virtue of the Second Hague Convention, of October 18th, 1907, relating to arbitration. But it is difficult to follow its reasoning in this connection. At times, the argument based on the Convention is directed towards showing that the action of Norway constitutes a breach of the obligation that country accepted in respect of compulsory arbitration. At other times, it is the very matter of the recovery of contractual debts by a State taking up the case of its nationals which is claimed to be, by its nature, a matter falling within the domain of international law.

"The refusal of arbitration is an act contrary to law. It relates to the payment of the international loans of Norway, that is to say, to the question which the Second Convention brought within the sphere of international questions and within those matters which, by their nature, fall under international jurisdiction."

"The French Government holds that the policy adopted by the Norwegian Government in regard to the payment of these international loans raises a problem of international law, namely, the recovery of contractual debts, which is governed by the Second Convention of 1907." (Oral argument of May 14th, 1957.)

It may at once be noted that the contention that the question of the recovery of the debts constitutes, by its nature, an inter-[p 31]national dispute is a gratuitous assertion. There remains to be considered whether the 1907 Convention established compulsory arbitration in the matter of debts, and whether the refusal to arbitrate in the dispute between France and Norway constitutes a violation of an international undertaking such as would authorize the French Government to bring the question of the debts before the Court by means of an Application.

In the first place, is there compulsory arbitration in respect of the recovery of debts?

The second paragraph of Article 1 of the 1907 Convention does indeed refer to arbitration, but not for the purpose of imposing upon the State charged as a debtor an obligation to arbitrate; its purpose is merely to limit the undertaking not to resort to force.

Even if it be conceded that the 1907 Convention gives rise to compulsory arbitration for the recovery of debts, the obligation thereby established cannot have by way of sanction, in the event of a refusal to arbitrate, the effect of changing the nature of the original dispute itself by transforming it from a dispute subject to settlement by arbitration to a dispute subject to judicial settlement. Were such a transformation possible, all disputes in respect of which arbitration is compulsory would, merely by reason of a refusal to arbitrate, fall ipso facto within the compulsory jurisdiction of the Court.

In fact, if the international dispute is constituted by Norway's refusal to comply with an obligation to accept arbitration on the question of the construction to be placed on the loan contracts, the breach of that international obligation, .not the question to be arbitrated, would be the only subject-matter of the international dispute. The proceedings to be instituted before the Court by means of an Application could be designed only to obtain from the Court a decision to the effect that Norway was under an obligation to accept arbitration and to proceed to the drafting of the special agreement and to the appointment of arbitrators. Reference is made in this connection to the Ambatielos case.

But the French Government, in order to establish the jurisdiction of the Court, does not rely only on sub-paragraph (b) of Article 36. It relies also on sub-paragraph (c) which relates to the existence of any fact which, if established, would constitute a breach of an international obligation. It does not, however, explain its meaning on this point. It has raised it in its Reply and repeated it in its final Submissions without, at any time, making it clear what was the fact involved.

But since the present case has been presented by the French Government as a reproduction of the two cases on the Serbian and Brazilian Loans, it is necessary to note that the Permanent Court upheld its jurisdiction in those cases by assimilating to disputes of pure fact, disputes which had to be decided by the application of national law. [p 32]

The Permanent Court had already held in its Judgment No. 7 that from the standpoint of international law and of the Court which is its organ, municipal laws are merely facts which express the will and constitute the activities of States. It regarded them as such in the cases under reference, itself applying those laws.

Sub-paragraph (c) of Article 36 of the Statute relates to the special case where the Parties are in agreement as to the rule of international law or, more precisely, as to the international obligation, but are in disagreement as to the facts constituting a breach thereof. For, if they are in disagreement as to the international obligation itself, the case would fall within sub-paragraph (b), and sub-paragraph (c) would merely be an unnecessary repetition.

Thus, if the application of a system of law were to be regarded as a fact, as would seem to be envisaged in the present case, the Parties would be deemed to be in agreement that international law contains a rule to the effect that the cancellation of the gold clause is not applicable to international payments, but not to be in agreement as to the interpretation of Norwegian law. France, basing herself on subparagraph (c), would then have instituted these proceedings to obtain from the Court an interpretation of Norwegian law to this effect.

However, Norway disputes the alleged rule of international law. This is the very basis of the present case. This is therefore not the case covered by sub-paragraph (c).

Obviously, it is still possible for France to hold that, if the Norwegian law does not adopt this rule of international law, then Norwegian law would itself constitute a case of denial of justice. In that event, however, it would not be sub-paragraph (c) that could be the ground for the Court's jurisdiction, but sub-paragraph (d) of Article 36.

Now, whilst postulating the denial of justice, the French Government did not take that as its basis. According to its final Submissions the international character of the dispute would, by virtue of sub-paragraphs (b) and(c) of paragraph 2 of Article 36 of the Statute, derive from the Second Hague Convention of 1907. But neither of these sub-paragraphs, taken in conjunction with the Convention of 1907, justifies this classification.

***

It was asserted, however, that the case falls within the domain of international law because the French Government has adopted the cause of its nationals and is exercising diplomatic protection on their behalf, thereby conferring an international character on the case. It is hardly necessary to point out that this begs the question, since the contention put forward in this Objection is, in fact, that there were no grounds for the exercise of this protection.

It has also been asserted that the case comes both within the domain of national law and within the domain of international law, or that the question is doubtful. [p 33]

Questions concerning inter alia equality of treatment as between aliens and nationals, the distinction between resident aliens and non-resident aliens, discrimination as between different categories of foreign creditors FN1 —these questions are said to be raised by this case and they are all said to be questions of international law.
---------------------------------------------------------------------------------------------------------------------
FN1 The question of discrimination between Swedish and Danish creditors, on the one hand, and other foreign creditors, on the other hand, was introduced by the French Government in the concluding phases of the proceedings and was invoked at one time as giving the dispute an international character on the ground that it constitutes a breach of international obligations, and at another time, in the final Submissions, as a substantive claim.

It is clear, however, that, so far as the merits are concerned, this discrimination in no w-ay effects the construction to be placed on the gold clause and that, further, the French Government does not deduce the proper consequences from it since it does not claim that the French creditors should be paid in Swedish crowns or Danish crowns.
If this discrimination, which is alleged to be a breach of international obligations, were to be regarded as giving the dispute an international character, this would conflict with the claim that there has been a breach of the obligation imposed by the Second Convention of 1907. As the determination of the obligation the breach of which gives rise to an international dispute is the very basis for international proceedings, it would be impossible to admit for the same proceedings two bases that are essentially incompatible.
---------------------------------------------------------------------------------------------------------------------

But if these questions, apart from that of discrimination, were raised, this was not done originally by the French Government, whose Application and Memorial go no farther than to ask the Court to interpret the loan contracts in the sense set forth in its Submissions, relying on the doctrine of international payments and on the gold clause.

In point of fact, they were raised as a means of defence by the Norwegian Government. After seeking to establish the national character of the law governing the loan contracts, it led the way in showing that its own interpretation does not constitute a denial of justice—and, in this particular case, that would be the only ground for claiming that there was a breach of an international obligation justifying proceedings before the Court. In the subsequent proceedings, the French Government felt it had to follow the Norwegian Government in this line of argument in order to controvert its contentions. But it would be very strange, and even paradoxical, to consider that the denial of the international character of a question of municipal law and the discussion entered into in that connection confer on that very question an international character.

The question of which the Court is seised is thus one which, by its very nature, comes within the domain of municipal law. For my part, I consider that, quite apart from the reservation, the Court could and should have upheld the first Objection.

(Signed) A. Badawi.


 

[p34] SEPARATE OPINION OF JUDGE SIR HERSCH LAUTERPACHT

While I concur in the operative part of the Judgment inasmuch as the Court has declared itself incompetent to decide on the merits of the case submitted to it, I much regret that 1 do not find myself in agreement with the grounds of the Judgment. As the issues involved are intimately connected with the nature of the decisions of the Court in the matter of its competence, as well as with some basic questions of its obligatory jurisdiction, I consider it my duty to indicate in some detail my own position on the subject.

The Judgment of the Court is based exclusively on the finding that the Court is bound to decline jurisdiction for the reason that Norway has invoked the reservation, operating by virtue of reciprocity, of the French Declaration of Acceptance in which the French Government excluded from the jurisdiction of the Court "matters which are essentially within the national jurisdiction, as understood by the Government of the French Republic". There are two reasons for which I find myself compelled to dissent from the grounds of the Judgment thus expressed. In the first instance, assuming-an assumption which 1 must reject-that the French Declaration of Acceptance is a text which is valid in law, the question of jurisdiction must, in my view, be decided by reference to substantive Preliminary Objections advanced by the defendant Government rather than by reference to the subsidiary Objection referred to above. Secondly, and principally, I consider that as, in consequence of the latter reservation, the French Declaration of Acceptance is invalid, there is before the Court no text the reservations of which it can apply. This fact, and not the Norwegian reliance upon the French reservation of matters of national jurisdiction, is in my view the true reason why the Court has no jurisdiction in the present case.

In this Separate Opinion I propose, for the sake of abbreviation, to use the term "automatic reservation" to indicate the French reservation of "matters which are essentially within the national jurisdiction, as understood by the Government of the French Republic". That description expresses the automatic operation of that reservation in the sense that, by virtue of it, the function of the Court is confined to registering the decision made by the defendant Government and not subject to review by the Court.
 

[p35]


I

The Preliminary Objections of Norway

In the present case the Government of Norway has challenged the jurisdiction of the Court in reliance upon the following Preliminary Objections:

(1) It has maintained that, as the French application refers to a dispute which is concerned exclusively with Norwegian national law, it is not a dispute falling within the terms of Article 36
(2) of the Statute which, it is alleged, covers only disputes relating to questions of international law.

(2) Secondly, the Government of Norway has maintained that the holders of the loan certificates on whose behalf the French Government considered itself entitled to seise the Court did not previously exhaust the local remedies as required by international law. That Objection is closely related to that referred to above, in the sense that, as repeatedly emphasized by the Norwegian Government in the written and oral proceedings, it is the failure to exhaust local remedies which has prevented the dispute from acquiring the complexion of a dispute concerning international law.

(3) Thirdly, in case "there is still doubt" as to the contention that the dispute is concerned solely with a question of Norwegian law, the Norwegian Government invoked, in reliance upon the provision of reciprocity, the "automatic reservation" incorporated in the French Declaration of Acceptance. As already stated, the Judgment of the Court is based exclusively on that latter Prelim-inary Objection.

It seems a sound principle of judicial procedure that, unless the provisions of its Statute or other cogent legal considerations make that impossible, the Judgment of the Court should attach to the submissions of the Parties a purpose, though not necessarily an effect, which the Parties attached to them. Applied to objections to the jurisdiction of the Court, that principle means that, when a Party has advanced objections to the jurisdiction of the Court, the decision on the question of jurisdiction must be reached by reference to objections which, in the intention of the Party advancing them, are principal rather than subsidiary and which are substantive rather than formal. This is so in particular in the international sphere where a Government may rightly consider that it should not be treated as having successfully challenged the jurisdiction of the Court on the basis of objections which are ancillary and automatic—at a time when its main effort was directed to jurisdictional objections of substance. It is clear from the written and oral proceedings that Norway, far from putting forward the "automatic reservation" as the main objection, intended to rely upon it only in a subsidiary manner and in the last resort—only if "there is still [p 36] doubt" as to the principal preliminary objection. This explains why, after having invoked the "automatic reservation" in a subsidiary manner in the original document entitled "Preliminary Objections of Norway", the Norwegian Government did not subsequently on a single occasion refer to it, except generally and indirectly. That Objection, though not formally withdrawn, was kept in the background throughout the proceedings—a reticence explained by the disinclination of a Government to rely primarily upon an objection the success of which depends on the bare assertion of the will of that Government. 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.

Accordingly, although I am of the opinion that there is before the Court no valid Declaration of Acceptance by reference to which it can assume jurisdiction, I consider it my duty to state my opinion as to the principal Preliminary Objections of Norway. Apart from a partial objection referred to below, these were the only two jurisdictional objections which were argued before the Court.

There are two other Preliminary Objections which figure in the written and oral proceedings and to which only passing reference need be made. In one, subsequently withdrawn, Norway asserted that the subject-matter of the dispute did not fall within the terms of the French Declaration of Acceptance which limited the Acceptance to "disputes which may arise in respect of facts or situations subsequent to the ratification" of the Declaration of Acceptance. Another Objection had reference to one portion of the claim only. In it Norway contended that, as some of the loans in question were contracted not by the Norwegian State but by certain Banks not identical with it, Norway could not properly be made a respondent in respect of that part of the claim. It is not necessary to examine here that particular Objection—which I do not consider to be well founded.

***
With regard to the first Preliminary Objection referred to above I am unable to accept the view that the subject-matter of the [p 37] present dispute is not related to international law but exclusively to the national law of Norway. Undoubtedly, the question of the interpretation of the contracts between the Norwegian State and the bondholders is primarily a question of Norwegian law. It is not disputed that the Norwegian law is the proper law of the contract and that it is for the Norwegian courts to decide what Norway had actually promised to pay. However, the complaint of the French Government is that, having regard to the currency legislation suspending the operation of the gold clause, the Norwegian law which the Norwegian courts are bound to apply in this case is contrary to international law. The Norwegian courts may hold that the gold clause in the bonds is a gold coin clause (as distinguished from a gold value clause), that that gold coin clause has been rendered inoperative as the result of the legislation in question, and that the existing currency is, therefore, a lawful means of payment. In the view of the Norwegian Government this is the proper interpretation of what it has in law promised to pay. However, it is that very legislation, in so far as it affects French bondholders, which may be the cause of violation of international law of which France complains.

It may be admitted, in order to simplify a problem which is not at all simple, that an "international" contract must be subject to some national law; this was the view of the Permanent Court of International Justice in the case of the Serbian and Brazilian Loans. However, this does not mean that that national law is a matter which is wholly outside the orbit of international law. National legislation—including currency legislation—may be contrary, in its intention or effects, to the international obligations of the State. The question of conformity of national legislation with international law is a matter of international law. The notion that if a matter is governed by national law it is for that reason at the same time outside the sphere of international law is both novel and, if accepted, subversive of international law. It is not enough for a State to bring a matter under the protective umbrella of its legislation, possibly of a predatory character, in order to shelter it effectively from any control by international law. There may be little difference between a Government breaking unlawfully a contract with an alien and a Government causing legislation to be enacted which makes it impossible for it to comply with the contract. For these reasons it is difficult to accept the argument of Norway to the effect that as this Court can decide only on the basis of international law and that as the main substantive question in the dispute is the interpretation of Norwegian law, this is not a dispute which is covered by Article 36 (2) of the Statute. The dispute now before the Court, although it is connected with the application of Norwegian law, is also a dispute involving international law. It is possible that if the Court had jurisdiction on the merits it would find that Norway has not violated any rule of international [p 38] law by declining to repay the bonds in gold. However, in finding that, the Court would apply international law.

The greater part of the written and oral argument of Norway—as well as that of the applicant State—has been devoted to a consideration of the relevant questions of international law. The question of the treatment by a State of property rights of aliens—including property rights arising out of international loans—is a question of international law. So is the question whether, in this respect, equality of treatment of nationals and aliens relieves a State of its international responsibility. So is, further, the question whether there is in this respect a difference between resident aliens and aliens resident abroad. It may be also difficult to deny that the allegation of discriminatory treatment as between French and non-Norwegian bondholders raises an issue of international law. The very question whether local remedies have been exhausted—a question on which Norway has made dependent the international character of the dispute—is a question of international law. Finally, although there seems to be little substance in the contentions advanced by the French Government on the subject of The Hague Convention of 1907 relating to Contract Debts in so far as it is alleged to impose an obligation to arbitrate, it is relevant to state that that Convention indirectly recognizes that controversies of that character are suitable for settlement by reference to public international law. It is of interest, in this connection, to note the wording of Article 53 of The Hague Convention of 1907 for the Pacific Settlement of International Disputes which refers expressly, as suitable for arbitration before the Permanent Court of Arbitration, to disputes "arising from contract debts claimed from one Power by another Power as due to its nationals".

The relevance of these questions of international law cannot properly be denied by reference to the fact that unless and until Norwegian courts have spoken it is not certain that there has been a violation of international law by Norway. The crucial point is that, assuming that Norwegian law operates in a manner injurious to French bondholders, there are various questions of international law involved. To introduce in this context the question of exhaustion of local remedies is to make the issue revolve in a circle. The exhaustion of local remedies cannot in itself bring within the province of international law a dispute which is otherwise outside its sphere. The failure to exhaust legal remedies may constitute a bar to the jurisdiction of the Court; it does not affect the intrin-sically international character of a dispute.

This being so, my view is that, in principle, the present dispute is also one of international law and that it comes within the orbit' of controversies enumerated in Article 36 (2) of the Statute of the Court. [p 39]

***

In my opinion, the Preliminary Objection of Norway relating to exhaustion of local remedies is well founded. This does not mean that the position of the French Government on the subject is altogether without merit. For the requirement of exhaustion of local remedies is not a purely technical or rigid rule. It is a rule which international tribunals have applied with a considerable degree of elasticity. In particular, they have refused to act upon it in cases in which there are, in fact, no effective remedies available owing to the law of the State concerned or the conditions prevailing in it. In the present case, while, as will be suggested presently, the Court cannot regard it as conclusively proven that the Norwegian courts would refuse a remedy, it is clear that in general their decision must be based on Norwegian law, including the legislation of 1923 which is alleged to result in an injury to the legitimate rights of French bondholders. From that point of view I can appreciate the contention of the French Government that there are no effective remedies to be exhausted—even if I must hold that, however contingent and theoretical these remedies may be, an attempt ought to have been made to exhaust them.

Also, inasmuch as the case of the French Government is based on the allegation of discriminatory treatment as between French bondholders on the one side and Swedish and Danish bondholders on the other, it is not easy to see what remedy the Norwegian courts could provide against governmental acts which, as such, cause no injury to French bondholders.

However, these doubts do not seem strong enough to render inoperative the requirement of previous exhaustion of local remedies. The legal position on the subject cannot be regarded as so abundantly clear as to rule out, as a matter of reasonable possibility, any effective remedy before Norwegian courts.

The Norwegian Government has contended that the burden of proving the inefficacy of local remedies rests upon France. There is, in general, a degree of unhelpfulness in the argument concerning the burden of proof. However, some prima facie distribution of the burden of proof there must be. This being so, the following seems to be the accurate principle on the subject: (1) As a rule, it is for the plaintiff State to prove that there are no effective remedies to which recourse can be had; (2) no such proof is required if there exists legislation which on the face of it deprives the private claimants of a remedy; (3) in that case it is for the defendant State to show that, notwithstanding the apparent absence of a remedy, its existence can nevertheless reasonably be assumed; (4) the degree of burden of proof thus to be adduced ought not to be so stringent as to render the proof unduly exacting. Both in the written and the oral proceedings the Government of Norway has attempted to adduce such proof. Whatever may be its cogency, it must be [p 40]
regarded as sufficient for the purpose.
In the first instance, in matters of currency and international loans the decisions of courts of various countries—including those of Norway—have not been characterized by such a pronounced degree of uniformity and certainty as to permit a forecast, with full assurance, of the result of an action in Norwegian courts. The decision of the Permanent Court of International Justice in the Brazilian and Serbian Gold Clause cases has been followed by courts of some countries but not by those of others. While the courts of most States have interpreted the gold coin clause as importing necessarily a gold value clause, this has not been the practice in all countries. Moreover, the courts of the same State have often shown considerable divergencies and hesitation on the subject. Thus, in England, in the two important cases relating to the gold clause—The King v. International Trustee for the Protection of Bondholders [1937] A.C. 500, and Feist v. Société Intercommunale Belge d'Électricité [1934] A.C. 161—it was left to the House of Lords to reverse the decisions of the Court of First Instance and of the Court of Appeal. While French courts have, with some uniformity, refused to recognize the cours forcé in international contracts, it appears that they have done so on different and diverging grounds. In some cases they have acted on the principle according to which a foreign public law can only operate within the territory of the State in question; in other cases they have applied the principle of the autonomy of the will, which makes it possible for the parties to exclude the operation of any national legal system whatsoever; in other cases still they have acted on the view that while the operation of the gold clause is subject to the law of the State concerned, it is so only within the limits of public policy. This being so, there may be no sufficient reason for drawing final conclusions from the alleged previous practice of Norwegian courts and for asserting that it has been conclusively proven that there is in this case no remedy available under Norwegian law. It is possible—however unlikely, in the view of the French Government, that possibility may be— that the Norwegian courts may hold that the bonds embodied a true gold clause and that, having regard to international law or the constitutional law of Norway, the law of 1923 cannot be applied or that it must be applied so as not to injure the French bondholders.

I cannot consider it as a certainty that, assuming that the Norwegian legislation on the subject is contrary to international law in so far as it affects aliens, no remedy at all is possible under Norwegian law. There has been a tendency in the practice of courts of many States to regard international law, in some way, as forming part of national law or as entering legitimately into the national conception of ordre public. Although the Norwegian Government [p 41] has admitted that in no case can a Norwegian court overrule Norwegian legislation on the ground that it is contrary to international law, it has asserted that it is possible that a Norwegian court may consider international law to form part of the law of the Kingdom to the extent that it ought, if possible, to interpret the Norwegian legislation in question so as not to impute to it the intention or the effect of violating international law. Also, it seems a fact that in certain matters Norwegian courts have the power to review the acts of the legislature, in particular from the point of view of their conformity with the constitution. This, it has been asserted, may mean that Norwegian courts might refuse to give retro-active effect to the legislation in question. These possibilities may be remote. They are not so absolutely remote as to deserve to be ruled out altogether.

Secondly, it is difficult to admit, having regard to the long history of the present dispute and the negotiations relating thereto, that the French Government has given a sufficient explanation of the failure of the French creditors to seek a remedy before Norwegian courts. No persuasive reason has been adduced why the French Government, by encouraging an attempt to exhaust local remedies, has not assisted in eliminating the possibility of that Preliminary Objection. The delay resulting from any such attempt would have been relatively small in comparison with the long period of years consumed by the protracted negotiations on the subject. There seems to run through the submissions of the French Government the apprehension that after Norwegian courts have finally dismissed the claim of the French creditors the only claim internationally available to the French Government would be that on account of denial of justice. This is probably not so. A final adverse decision of Norwegian courts would still leave it possible to the French Government to contend that Norwegian legislation, as finally upheld by Norwegian courts, is contrary to international law. No decisive importance can be attached to the view that, seeing that the Norwegian Government repeatedly reiterated that it was prevented by the Norwegian Law to effect payment in gold, the French bondholders were entitled to assume that they have no remedy under Norwegian law. The Norwegian Government, being an interested party, was not for this purpose an authorised inter-preter of Norwegian law. It was for the bondholders, by bringing an action before Norwegian courts, to attempt to show that the Norwegian Government was mistaken in its interpretation of Norwegian law. If the courts held that that interpretation was correct, then the road to international proceedings would no longer be blocked by the objection based on the failure to exhaust local remedies. I must, therefore, although with some hesitation, consider that objection as well founded. [p 42]

***

In invoking the "automatic reservation" the Government of Norway apparently was of the opinion that what it did was no more than to invoke it in aid—in decisive aid, if need be—of the contention, previously advanced, that the dispute is not concerned with international law and that it does not therefore fall within the orbit of Article 36 (2) of the Statute by reference to which Norway accepted the obligatory jurisdiction of the Court. Actually these two questions are not identical. A dispute may be essentially within the national jurisdiction of a State (i.e. covered by the terms of the "automatic reservation") while being at the same time a dispute concerning a question of international law.

If the Court were called upon to determine itself whether the subject-matter of the present dispute is essentially within the domestic jurisdiction of Norway it would be confronted with a difficult task. It is possible to hold that, although—contrary to the view expressed by the Norwegian Government—the dispute is also one of international law, it nevertheless arises out of a matter essentially within the jurisdiction of the State seeing that questions of currency are essentially within the national jurisdiction. In that case the Preliminary Objection based on the French reservation would be valid in its own right—quite apart from the right of unilateral determination. There is the alternative view that if a dispute is also concerned with international law then it is no longer exclusively within the national jurisdiction; that the terms "exclusively" and "essentially" are substantially identical; and that, therefore, the subject-matter of the present dispute is not essentially within the national jurisdiction of Norway. However, the Norwegian Government has attached no importance to elaborating that distinction. It not only stated, in the minimum of words, that the matter is essentially within the national jurisdiction of Norway; it stated that it said so and that it said so with finality.
The determination thus made was advanced in a subsidiary manner at the initial stage of the proceedings. It was subsequently kept in the background and invoked only by studious indirection. It was never formally withdrawn. It provided the exclusive basis for the Judgment of the Court which, on this question, says in effect as follows: According to the Norwegian Government the issue is one essentially within the domestic jurisdiction of Norway. That view may be ill-founded. However, it is the view of the Norwegian Government. As such it is decisive for the purpose of jurisdiction of the Court—just as if the French Government were the defendant State its view to that effect would be decisive by virtue of the reservation as formulated by it. The Court must accept that view not because it agrees with it, but because it is [p 43] the view of the Norwegian Government. Its accuracy is irrelevant. This is the inescapable result of the condition under which France —and consequently Norway—accepted the jurisdiction of the Court. That preliminary Objection of Norway is quite peremptory, fully effective to the point of being automatic, and is not subject to review by the Court.

I have given reasons why, in my view, the "automatic reservation", being of a subsidiary character, was not in any case calculated to provide an exclusive basis of the Judgment of the Court. However, apart from that aspect of the question and whatever may be the position with regard to the validity of the French Acceptance as a whole, it is my view that it was not open to the Court to act on that particular reservation. This is so for the reason that I consider it legally impossible for the Court to act in disregard of its Statute which imposes upon it the duty and confers upon it the right to determine its jurisdiction. That right cannot be exercised by a party to the dispute. The Court cannot, in any circumstances, treat as admissible the claim that the parties have accepted its jurisdiction subject to the condition that they, and not the Court, will decide on its jurisdiction. To do so is in my view contrary to Article 36 (6) of the Statute which, without any qualification, confers upon the Court the right and imposes upon it the duty to determine its jurisdiction. Moreover, it is also contralto Article 1 of the Statute of the Court and Article 92 of the Charter of the United Nations which lay down that the Court shall function in accordance with the provisions of its Statute. It is that question which I now propose to consider in connection with the examination of the validity of the French Acceptance.

II

The Validity of the French Declaration of Acceptance

1. Is the "automatic reservation" consistent with the Statute?

I have stated the reasons for which, if I felt free to do so, I would reject all Preliminary Objections of Norway with the exception of that relating to the exhaustion of local remedies. However, I do not feel free to decide the question of jurisdiction on these grounds. To do so would be to admit that the Court is confronted with a valid instrument of acceptance of its jurisdiction on the part of France. In my view it is impossible to admit that. I consider that as the French Declaration of Acceptance excludes from the jurisdiction of the Court "matters which are essentially within the national jurisdiction as understood by the Government of the French Republic"—the emphasis being here on the words "as understood by the Government of the French Republic"—it is for the reason [p 44] of that latter qualification an instrument incapable of producing legal effects before this Court and of establishing its jurisdiction. This is so for the double reason that: (a) it is contrary to the Statute of the Court; (b) the existence of the obligation being dependent upon the determination by the Government accepting the Optional Clause, the Acceptance does not constitute a legal obligation. That Declaration of Acceptance cannot, accordingly, provide a basis for the jurisdiction of the Court. Norway has not accepted the jurisdiction of the Court on any other basis. The Court therefore has no jurisdiction.

As stated, the first reason for that view is that that particular part of the acceptance of the Optional Clause on the part of the French Republic is contrary to the Statute of the Court. In the reservation in question the Government of France says in effect: If a Government brings an application before the Court in reliance on the French acceptance of the jurisdiction of the Court and if the Government of France maintains that the Court has no jurisdiction on the ground that the subject-matter of the dispute is essentially within the domestic jurisdiction of France, then the Court has no power to decide upon that particular allegation; it must accept as binding the French understanding of the legal position on the subject.

If that type of reservation is valid, then the Court is not in the position to exercise the power conferred upon it—in fact, the duty imposed upon it—under paragraph 6 of Article 36 of its Statute. That paragraph provides that "in the event of a dispute as to whether the Court has jurisdiction, the matter shall be settled by a decision of the Court". The French reservation lays down that if, with regard to that particular question, there is a dispute between the Parties as to whether the Court has jurisdiction, the matter shall be settled by a decision of the French Government. The French reservation is thus not only contrary to one of the most fundamental principles of international—and national—jurisprudence according to which it is within the inherent power of a tribunal to interpret the text establishing its jurisdiction. It is also contrary to a clear specific provision of the Statute of the Court as well as to the general Articles 1 and 92 of the Statute and of the Charter, respectively, which require the Court to function in accordance with its Statute.

Now what is the result of the fact that a reservation or part of it are contrary to the provisions of the Statute of the Court? The result is that that reservation or that part of it is invalid. Some examples may usefully illustrate that aspect of the question: What would be the position if in accepting—or purporting to accept—the obligations of Article 36 of the Statute, a State were to exclude the operation of paragraph 6 of that Article not only with regard to one reservation but with regard to all reservations or, generally, with regard to any disputed question of the jurisdiction of the Court? [p 45]

What would be the position if the Declaration were to make it a condition that the oral proceedings of the Court shall be secret; or that its Judgment shall not be binding unless given by unanimity; or that it should contain no reasons; or that no Dissenting Opinion shall be attached; or that Judges of certain nationality or nationalities shall be excluded; or that, contrary to what is said in Article 38 of its Statute, the Court shall apply only treaties and custom in the sense that it shall not be authorized to apply general principles of law as recognized by civilized States and that if it is unable to base its decison on treaty or custom it shall pronounce a non liquet? What would be the position in the case of any such reservation?

It might be said that some of these examples are hypothetical and farfetched. In fact they are less farfetched than the particular instance here discussed—the instance of a reservation according to which a Government claims, after it has submitted to the compulsory jurisdiction of the Court, the right to determine for itself, after the dispute has arisen and been brought before the Court, whether the Court has jurisdiction. Neither is it accurate to say that these examples are irrelevant seeing that while the Statute as interpreted in practice permits reservations to its jurisdiction it does not permit reservations as to the functioning and the organization of the Court. For, assuming that distinction to be valid, the reservation here discussed pertains to the functioning of the Court in the matter of its jurisdiction.

Clearly the Court cannot act otherwise than in accordance with its Statute. By way of illustration reference may be made here to the case of the Free Zones in which the Court stated that it "cannot, on the proposal of the Parties, depart from the terms of the Statute" —a statement made in response to a request of the parties that the Court should communicate to them unofficially the result of its deliberations (Series A, No. 22, p. 12). The Court acted in that way although at that time it was not bound by the express provisions of the Charter and the Statute requiring it to act in accordance with its Statute. In a different sphere, in its Advisory Opinion of 7 June 1955 concerning the Voting Procedure of the General Assembly in the Matter of Petitions from South West Africa, the Court was of the view that it was legally impossible for the General Assembly to reach decisions on these questions in accordance with a voting system "entirely alien to that prescribed by the Charter" (I.C.J. Reports 1955, p. 76). There was in that case room for the argument that voting being to some extent a matter of procedure the General Assembly enjoyed some latitude in the matter. This was not the view of the Court. It based its Opinion on the principle that an organ cannot act except in accordance with its constituent instrument. In the present case the acceptance of the jurisdiction of the Court is made dependent on a condition which radically departs from the Statute—which is in clear contradiction with the Statute—[p 46] with regard to a fundamental aspect of the functioning of the Court. It would seem that, for that reason, the French Declaration of Acceptance would be invalid even if the particular issue which is connected with its invalidity did not arise in the case now before the Court. But that particular issue does arise. The Norwegian Government invoked that particular reservation and, although it has kept it in the background, it has not withdrawn it.

In accepting the jurisdiction of the Court Governments are free to limit its jurisdiction in a drastic manner. As a result there may be little left in the Acceptance which is subject to the jurisdiction of the Court. This the Governments, as trustees of the interests entrusted to them, are fully entitled to do. Their right to append reservations which are not inconsistent with the Statute is no longer in question. But the question whether that little that is left is or is not subject to the jurisdiction of the Court must be determined by the Court itself. Any conditions or reservations which purport to deprive the Court of that power are contrary to an express provision of the Statute and to the very notion, embodied in Article 36 (6), of conferment of obligatory jurisdiction upon the Court. As such they are invalid. It has been said that as Governments are free to accept or not to accept the Optional Clause, they are free to accept the very minimum of it. Obviously. But that very minimum must not be in violation of the Statute.

If the Court cannot function except in conformity with its Statute then, when confronted with an Acceptance containing a reservation which is contrary to a provision of the Statute, it must consider that reservation as invalid. This is not a conclusion of juridical refinement. It is the result of the fact that the Statute of the Court is the basis and the very source of the Declaration of Acceptance. The Declaration does not exist except by virtue of the Statute. It does not legally exist unless it is in accordance with it. In this connection mention may be made of the legal principle generally recognized in municipal law according to which a condition, in a contract or in any other legal instrument, that is contrary to a fundamental principle of judicial organization is invalid. That principle is recognized with some precision in French law.

How does it come to pass that, in formulating their acceptance of the jurisdiction of the Court, Governments — for this form of Acceptance has not been confined to the Government of France—deem themselves free to disregard the Statute of the Court to which they are parties? It would be inaccurate to explain that attitude by reference to any absence of familiarity with the terms of the Statute. The relevant provisions of the Statute were clearly before the authors of the Declaration and they were considered by them with reference to the very question here discussed. This is not a question whether the Court ought to give encouragement, direct or indirect, to any such attitude of indifference to its Statute. The Court is not [p 47] concerned with safeguarding the dignity of its Statute—though it is concerned with safeguarding its authority. However that may be, the deliberate character of the disregard of the Statute of the Court by the authors of the Declaration has a bearing upon the effects, in the sphere of nullity, of the Declaration thus made. For it rules out the admissibility of any attempt to bring it somehow, by way of interpretation, within the four corners of conformity with the Statute and thus to salvage it as a valid legal declaration.

Moreover, the particular reservation now at issue is not one that is contrary to some merely procedural aspect of the Statute. It is contrary to one of its basic features. It is at variance with the principal safeguard of the system of the compulsory jurisdiction of the Court. Without it, the compulsory jurisdiction of the Court being dependent upon the will of the defendant party, expressed subsequent to the dispute having been brought before the Court, has no meaning. Article 36 (6) is thus an essential condition of the system of obligatory judicial settlement as established in the Statute. That provision was inserted in the Statute with the deliberate intention of providing an indispensable safeguard of the operation of the system. Article 36 (2) speaks of the recognition by the parties to the Statute of the "compulsory" jurisdiction of the Court. But there is no question of compulsory jurisdiction if, after the dispute has arisen and after it has been brought before the Court, the defendant State is entitled to decide whether the Court has jurisdiction.

***

Reference may be made to two arguments adduced with the object of bringing the "automatic reservation" within the orbit of conformity with Article 36 (6) of the Statute: In the first instance, it has been said that if the Court declines jurisdiction by reference to the "automatic reservation" it is actually, in full conformity with Article 36 (6), making a decision on the question of its jurisdiction. This argument is of a verbal character. For in that case it is not the Court which makes the actual decision on the question of its jurisdiction. The decision is made by the defendant Government of Norway. The Court merely registers it. Moreover, the Court says so in its Judgment. It states in effect that its task is confined to registering the decision of the defendant State—a decision which it is entitled to make by virtue of the operation of reciprocity.

The second argument intended to show that the French reservation is not contrary to Article 36 (6) of the Statute is as follows: If a Government, in conformity with its reservation, has made the determination that a matter is essentially within its national jurisdiction, then there is no dispute as to the question of jurisdiction. For the fact that the Government concerned has made that determination is not in dispute and, therefore, it would seem that [p 48] the question of Article 36 (6) has no relevance in this connection; at most, the application of Article 36 (6) is confined to registering the fact that the determination has been made by the defendant State. This argument is, once more, of a dialectical character. For what is actually the position? A Government brings a case before the Court and maintains in its Memorial that the subject of the dispute is one of international law. The défendent State asserts in its Preliminary Objections that in its opinion that matter is essentially within its domestic jurisdiction. There is thus a dispute between the Parties on the question of the jurisdiction of the Court. However, having regard to the "automatic reservation", that dispute cannot be determined by the Court. It is determined by the Government concerned. This is exactly the position in the present case. If we look at the substance of the matter, there is little doubt that the reservation is based on the intention—and has the effect of—divesting the Court of the power conferred upon it by Article 36 (6).

2. Is the "automatic reservation" consistent with the requirements of a legal obligation to submit to the jurisdiction of the Court?

I have given reasons why I consider that the "automatic reservation", inasmuch as it embodies the claim of one party to make a decision, binding upon the Court, with regard to the contested question of its jurisdiction is invalid as being contrary to the Statute of the Court.

I arrive at the same conclusion on the second—and different— ground, namely, that having regard to the formulation of the reservation of national jurisdiction on the part of the French Government the Acceptance embodying the "automatic reservation" is invalid as lacking in an essential condition of validity of a legal instrument. This is so for the reason that it leaves to the party making the Declaration the right to determine the extent and the very existence of its obligation. The effect of the French reservation relating to domestic jurisdiction is that the French Government has, in this respect, undertaken an obligation to the extent to which it, and it alone, considers that it has done so. This means that it has undertaken no obligation. An instrument in which a party is entitled to determine the existence of its obligation is not a valid and enforceable legal instrument of which a court of law can take cognizance. It is not a legal instrument. It is a declaration of a political principle and purpose.

It is irrelevant for the purpose of the view here outlined whether the instrument of acceptance of the obligation of the Optional Clause is a treaty or some other mode of creating obligations. In the Anglo-Iranian Oil Company case the Court observed that "the text of the Iranian Declaration is not a treaty text resulting from negotiations between two or more States" but that "it is the result of unilateral drafting by the Government of Iran" (I.C.J. Reports [p 49] 1952, p. 105). The statement means no more than that the declaration is the result not of negotiations but of unilateral drafting. Whether it is a treaty or a unilateral declaration, it is—if it is to be treated as a legal text providing a basis for the jurisdiction of the Court—a manifestation of intention to create reciprocal rights and obligations. It will be noted that Article 36 (2) refers to the acceptance of the jurisdiction of the Court in relation "to any other State accepting the same obligation". In fact there is no difficulty in visualizing the Declaration of Acceptance as an accession to a multilateral treaty in the same way as, in the case of various conventions concluded under the auspices of the United Nations, Governments accede to a text established by the General Assembly. However that may be, the acceptance of the Optional Clause is an instrument purporting to bring about, as between the accepting State and any other State which has accepted or may accept that text, reciprocal rights and obligations. If the acceptance does not, in law, amount to an assumption of an obligation effectively binding upon the Government concerned, it is not a valid instrument upon which the accepting State can rely and of which the Court can take cognizance. If a Government declares that it accepts the compulsory jurisdiction of the Court unless, in cases which cover potentially the entire field of possible disputes, it determines, after the dispute has come before the Court, that the Court has no jurisdiction, then the declaration thus made constitutes no legal undertaking and cannot be treated as a legal instrument constituting an undertaking.

The proposition here advanced—namely, that an undertaking in which the applicant party reserves for itself the exclusive right to determine the extent or the very existence of its obligation is not a legal undertaking—is so self-evident as a matter of juridical principle that it is not necessary to elaborate this point by showing it to be a generally recognized principle of law which the Court is authorized to apply by virtue of Article 38 of its Statutes. It is a general principle of law as it results from the legislation and practice of courts in various countries in the matter of contracts and other legal instruments. These are treated as invalid whenever the object of the obligation is reserved for the exclusive determination of the party said to be bound by the obligation in question. (Reference may be made here to the position in French law as summarized in the leading treatise by Planiol and Ripert. They state, when dealing with the general conditions of the validity of the contract, that the freedom of the party to determine the object of its obligation negatives the legal nature of the agreement (Traite pratique de droit civil frangais, vol. vi, 2nd ed., 1952, Section 220: "Deter-mination de l'objet"). In dealing with so-called potestative conditions, they refer to purely potestative conditions dependent upon the will of the debtor and covered by Article 1174 of the Civil [p 50] Code which provides that "an obligation is null if contracted under a potestative condition on the part of the obligor" (ibid., vol. vii, Section 1028). It is not desirable to prolong this Opinion by an examination of English law and of the law of the United States of America on the question. With regard to the latter, reference may be made to the leading treatise on the subject, namely, Williston's "On Contracts" (revised edition, vol. I (1936), § 43) where, in the light of numerous judicial decisions, the freedom of a party to determine the object of its obligation is represented as negativing the legal nature of the agreement. The importance attached to the necessity of a clear determination of the subject-matter of the obligation may be seen from the fact that French courts have held that a contract providing that a party shall be entitled to purchase goods in accordance with a price to be agreed separately is ineffective and unenforceable. In some other countries the courts have held that in such cases reasonable terms are to be fixed by the courts—a solution which, in a different sphere, is in the present case excluded by the terms of the automatic French reservation.)
That general principle of law is, in turn, no more than a principle of common sense. Applied to the present case, that principle signifies that if the element of legal obligation is non-existent or negligible it must follow that the instrument is not a legal instrument upon which a State can rely as a matter of right for the purpose of invoking the jurisdiction of the Court. Instruments—whether by way of treaties, unilateral declarations, and other texts — cognisable before a court of law and relied upon for obtaining redress must be instruments creating legal obligations. It is irrelevant for this purpose that, having regard to public opinion, an enlightened State is not likely to invoke any such reservation capriciously, unjustifiably, and in bad faith. These are expectations which may or may not materialize. The decisive factor is that the State concerned is not willing to leave a decision on the question to the impartial judgment of the Court but that it insists on its own determination of the issue. Neither is it feasible to try to inject a legal element into the Declaration thus formulated by using phraseology such as that the undertaking in question is binding subject to a resolutive condition dependent upon the promising party. Upon analysis that phrase means no more than that the undertaking is binding so long as the dispute has not been brought before the Court but that its binding force becomes a matter of discretion of the defendant State once the Court has been seised of the dispute.

It may be argued that, after all, the interpretation of disputed provisions of treaties is not, in the absence of agreement, subject to the compulsory jurisdiction of international courts and that never-theless that fact does not deprive the treaties in question of their character as binding legal instruments. The answer is that in these [p 51] treaties the object of the obligation is determined and that neither party is accorded the right of unilateral determination which the other party is bound to accept. Moreover, in the present case the absence—the deliberate exclusion—of the jurisdiction of the Court refers to the very ascertainment of the jurisdiction ostensibly conferred upon it in what purports to be a legal text.

***

I have given reasons why, inasmuch as the French Declaration of Acceptance leaves it to the declaring Government to determine both the existence and the extent of the obligation undertaken by France, it does not constitute a legal obligation essential to the validity of a legal text. I will now consider whether there are any factors which may legitimately mitigate the apparent rigour of these consequences.

It might be said that matters which are essentially within national jurisdiction constitute only one part of the potential number of controversies which may come before the Court; that with regard to others the element of legal obligation fully subsists; and that therefore the Acceptance as a whole may still be capable of being regarded as a valid legal instrument. There is little persuasive force in any such argument. The reservation of matters essentially within the domestic jurisdiction of a State as understood by that State is so wide as to cover, at the option of the State concerned, practically all disputes in which it may be involved.

For, in the first instance, it will be noted that the French reservation in issue refers not to matters which are according to international law exclusively within the domestic jurisdiction of the State, but to matters which are essentially within the domestic jurisdiction. There are matters which have often been considered as being essentially within the domestic jurisdiction of States but which, having become regulated by treaty or custom, have ceased to be so—an aspect of the question for which the Advisory Opinion of the Permanent Court of International Justice in the case of Tunis and Morocco Nationality Decrees provides an instructive and authoritative illustration. Tariffs, immigration, treatment of aliens and citizens in national territory, internal legislation generally—all those matters have been claimed to be essentially within the domestic jurisdiction of States. It is not necessary for me to express an opinion on the subject. However, even if that claim is admitted, those are not necessarily matters which according to international law are exclusively within the domestic jurisdiction of the State— though, as stated, they have often been described as being matters of domestic jurisdiction or essentially of domestic jurisdiction. Practically every aspect of the conduct of the State may be, prima [p 52] facie, within that category for the reason that normally the State exercises its activity within its national territory, or, on the high seas, in relation to its ships which for some purposes are considered by States to form part of its territory. In the Lotus case the Court was prepared to base its decision, to some extent, on the view that the ship affected was Turkish territory and that the offence was therefore committed in Turkey. For these reasons it is possible for a State to maintain, without necessarily laying itself open to an irresistible charge of bad faith, that practically every dispute concerns a matter essentially within its domestic jurisdiction. Most Judgments given by this Court and its predecessor—with the exception of those concerned with territorial disputes—have been given in relation to matters bearing on the activity of the State within its jurisdiction and related to its national legislation and administration. These are the typical occasions giving rise to State responsibility. This aspect of the question is elaborated in more detail in the examination, which follows, of the power of the Court to review the determination made by a Government in pursuance of the "automatic reservation".

If thus practically every matter can be plausibly, though not necessarily accurately, described as a matter essentially within the domestic jurisdiction of the State concerned and if that State is the sole judge of the question, it is clear that, as the result, the element of legal obligation is reduced to a vanishing point.

***

I will now examine the view that, although a State reserves for itself the right to determine whether a matter is essentially within its domestic jurisdiction, such determination must be effected in accordance with the legal obligation to act in good faith and that to that extent there is in existence a valid legal obligation and a valid legal instrument. I myself expressed a view to that effect in my Report on the Law of Treaties which I submitted in 1953 as member of the International Law Commission. In the light of further study of this question in connection with the present case, I do not feel it possible to adhere to that view. The legal obligation of a Government to avail itself of its freedom of action in a manner consistent with good faith has a meaning, in terms of legal obligation, only when room is left for an impartial finding whether the duty to act in accordance with good faith has been complied with. But in the case now before the Court any such possibility has been expressly excluded. The Court has no power to give a decision on the question whether a State has acted in good faith in claiming that a dispute covers a matter which is essentially within its domestic, jurisdiction. If the Court were to do so, it would [p 53] be arrogating to itself a power which has been expressly denied to it. Unquestionably, the obligation to act in accordance with good faith, being a general principle of law, is also part of international law. The Governments which have appended the "automatic reservation" have not questioned their legal obligation to invoke it in good faith, that is to say, not capriciously and arbitrarily. But it is abundantly clear from the evidence which is generally available that the authors of the "automatic reservation" have reserved for the Governments concerned the right to judge whether in invoking it in a particular case they have complied with the obligation to act in good faith. They have repeatedly declared that their own sense of international duty and propriety, public opinion within and outside their countries, and their reputation and prestige in the world would constitute a restraining factor of great potency in shaping their decision. But they have denied to the Court the power to determine the legality of that decision from the point of view of the obligation to act in good faith or otherwise. They have reserved that power to themselves.

For this reason I cannot accept as accurate the view expressed in the following terms in paragraph 26 of the Norwegian "Preliminary Objections": "Of course, such a reservation must be interpreted in good faith and should a government seek to rely upon it with a view to denying the jurisdiction of the Court in a case which manifestly did not involve a 'matter which is essentially within the national jurisdiction' it would be committing an amis de droit which would not prevent the Court from acting." The Court has no such power. It cannot arrogate to itself the competence—which has been expressly denied to it—to find that the assertion of the defendant State that a matter is essentially within its domestic jurisdiction is so extravagant and so arbitrary as to amount to an action in bad faith and to an abuse of right, with the result that the Court is entitled to ignore or to override the determination thus made. As already stated, in view of the comprehensiveness of the term "matters essentially within domestic jurisdiction", it is not easy to conceive situations of any such obviousness. It is not certain that a State would be acting flagrantly and irrefutably in disregard of the canons of good faith if it were to determine most disputes as coming within its domestic jurisdiction.

The question of the obligation to act in good faith arises only in relation to legitimate expectations of the other party. But there is only a nominal degree of legitimate expectation in relation to an obligation, in regard to a potentially most comprehensive category of disputes, as to which the party undertaking it expressly declares in advance that it is free to determine both the existence and the degree of its obligation. As already stated, the attitude of a Government in most disputes is as a rule adopted in pursuance of its internal legislation or other form of authorization determined by its national law. To that extent it is arguable—perhaps inaccurately but not [p 54] necessarily extravagantly so—that any dispute arising in this connection is essentially a matter of domestic jurisdiction. Also, practically all disputes involving an allegation of a breach of an international duty, whether under a treaty or under customary international law, arise out of events occurring within the territory of that State. In that sense it may be claimed, with or without good reason, that they are matters essentially within the national jurisdiction of the State. A dispute relating to the jurisdictional immunities of foreign States or their diplomatic agents may be asserted to fall within that category—especially if its subject-matter is covered by national legislation or the jurisprudence of national courts. A defendant State may allege that, for the latter reason, a dispute concerning its domestic legislation affecting the continental shelf or parts of the high seas relates to a matter within its national jurisdiction. The only disputes which, it might appear, are outside that category are territorial disputes. But even that is not certain. In fact it has been suggested that territorial disputes pertain to matters of domestic jurisdiction. In the communication addressed on May 4th, 1955, by the Government of Argentina to the United Kingdom in the matter of disputed sovereignty over certain Antarctic territories one of the reasons adduced in support of the refusal of the former Government to submit the issue to this Court was that the Government of the United Kingdom had, in its acceptance of the Optional Clause, itself excluded from the competence of the Court questions within its exclusive jurisdiction. The contention that a territorial dispute involves a matter within the domestic jurisdiction of a State may be farfetched, but has the Court been given the power to say that any such assertion is obviously in bad faith, that it constitutes an abuse of a right, that it must be ignored or overridden, and that the Court has jurisdiction notwithstanding the determination to the contrary by the State in question?

Any attempt to embark upon the examination of the question whether a Government has acted in bad faith in determining that a matter is essentially within its domestic jurisdiction may involve an exacting enquiry into the merits of the dispute—an enquiry so exacting that it could claim to determine, with full assurance, that the juridical view advanced by a Government is so demonstrably and palpably wrong and so arbitrary as to amount to an assertion made in bad faith. Only an enquiry into the merits can determine that although an assertion made by the defendant Government is not legally well-founded it is nevertheless reasonable; or that although it is not reasonable, it is not wholly arbitrary. The Court has no power to make such determination.

The "automatic reservation" is couched in terms so comprehensive as to preclude the Court from reviewing it or interpreting it [p 55] away not only by reference to any assertion of abuse of a right by the defendant State but also in any other way. Thus, for instance, it is not open to the Court to disregard that reservation by reference to some such argument as that the right of exclusive determination pertains only to matters which are "essentially within domestic jurisdiction"; that a matter which is clearly governed by international law, because of international custom or treaty, is not essentially within the domestic jurisdiction of a State; and that, therefore, such matters are neither within the scope of the reservation nor within the power of the accepting State to determine unilaterally whether the dispute is within the domestic jurisdiction. It is not easy to find a legal limit to the right of the accepting State which has appended a reservation of this kind to decline the jurisdiction of the Court. That right seems to be unqualified. So is the inability of the Court to review the attitude of the Government in question. That very absence of qualification is expressive of the absence of any element of legal obligation implicit in a reservation thus formulated.

Having regard to the preceding observations I am of the view that the right of the accepting State to determine whether a matter is essentially within its domestic jurisdiction makes the extent and the very existence of its obligation dependent upon its will; that the subject-matter of such determination may cover practically all disputes; that the Court has no power to disregard a determination thus made on the ground that it has not been made in good faith or an any other ground; and that the reservation of domestic jurisdiction thus formulated is therefore invalid inasmuch as it deprives the Acceptance of the essential element of legal obligation.

3. Can the "automatic reservation" be separated from the Acceptance as such?
I have come to the conclusion that the "automatic reservation" relating to matters deemed by the Government of France to be essentially within her national jurisdiction is invalid for the double reason that it is contrary to the Statute of the Court and that it deprives the Acceptance of the indispensable element of legal obligation.

If the clause of the Acceptance reserving to the declaring Government the right of unilateral determination is invalid, then there are only two alternatives open to the Court: it may either treat as invalid that particular part of the reservation or it may consider the entire Acceptance to be tainted with invalidity. (There is a third possibility—which has only to be mentioned in order to be dismissed—namely, that the clause in question invalidates not the Acceptance as a whole but the particular reservation. This would mean that the entire reservation of matters of national jurisdiction [p 56] would be treated as invalid while the Declaration of Acceptance as such would be treated as fully in force.)

As stated, the first possibility is that the particular condition attached to the reservation—namely, the words "as understood by the French Government"—should be treated as non-existent and ignored while the remainder of the reservation and of the Acceptance as a whole be treated as fully valid and subsistent. Legal practice and doctrine within the State are familiar with situations in which a contract or any other legal instrument contains a clause which the law treats as invalid or unenforceable without necessarily bringing about the nullity of the contract or instrument as a whole. In those cases the provision in question is severed— is treated separately—from the rest of the text. This is not always possible. Much depends on whether that provision is an essential part of the instrument in question. In the international sphere the problem of severance of provisions of treaties and other international instruments has been frequently discussed by writers and occasionally in judicial decisions—in particular in connection with the question of termination of treaties on the ground of nonperformance by one of the parties or as the result of war or some other change of circumstances. Early writers considered that every single provision of a treaty is indissolubly linked with the fate of the entire instrument which, in their view, lapses as the result of the frustration or non-fulfilment of any particular provision, however unimportant and non-essential. This is not the modern view. Neither is it the view which has secured the adherence of modern governmental and judicial practice, including that of the Permanent Court of International Justice. The latter on a number of occasions declined to treat individual provisions of a treaty as being indissolubly connected and interdependent. (See, for instance, Free Zones case, Series A/B, No. 46, p. 140, in which the Court treated Article 435 of the Treaty of Versailles as a "complete whole" independent of the rest of the Treaty; and the Advisory Opinions relating to the competence of the International Labour Organisation, Series B, No. 2, pp. 23, 24, and Series B, No. 13, p. 18, with regard to the independent position of Part XIII of the Treaty.) In a different sphere, the Opinion of this Court in the case of the Reservations to the Genocide Convention shows that there may be reasonable limits to the notion of the indivisibility of a treaty and that some of its provisions may not be of a nature essential to the treaty as a whole.

International practice on the subject is not sufficiently abundant to permit a confident attempt at generalization and some help may justifiably be sought in applicable general principles of law as developed in municipal law. That general principle of law is that it is legitimate—and perhaps obligatory—to sever an invalid condition from the rest of the instrument and to treat the latter as valid provided that having regard to the intention of the parties [p 57] and the nature of the instrument the condition in question does not constitute an essential part of the instrument. Utile non debet per inutile vitiari. The same applies also to provisions and reservations relating to the jurisdiction of the Court. It would be consistent with the previous practice of the Court that it should, if only possible, uphold its jurisdiction when such a course is compatible with the intention of the parties and that it should not allow its jurisdiction to be defeated as the result of remediable defects of expression which are not of an essential character. If that principle were applied to the case now before the Court this would mean that, while the French acceptance as a whole would remain valid, the limitation expressed in the words "as understood by the Government of the French Republic" would be treated as invalid and nonexistent with the further result that Norway could not rely on it. The outcome of the interpretation thus adopted would be somewhat startling inasmuch as it would, in the present case, favour the very State which originally made that reservation and defeat the objection of the defendant State—an aspect of the question commented upon in another part of this Opinion. That fact need not necessarily be a decisive reason against the adoption of any such interpretation.

However, I consider that it is not open to the Court in the present case to sever the invalid condition from the Acceptance as a whole. For the principle of severance applies only to provisions and conditions which are not of the essence of the undertaking. Now an examination of the history of this particular form of the reservation of national jurisdiction shows that the unilateral right of determining whether the dispute is essentially within domestic jurisdiction has been regarded by the declaring State as one of the crucial limitations—perhaps the crucial limitation—of the obligation undertaken by the acceptance of the Optional Clause of Article 36 of the Statute. As is well known, that particular limitation is, substantially, a repetition of the formula adopted, after considerable discussion, by the Senate of the United States of America in giving its consent and advice to the acceptance, in 1946, of the Optional Clause by that country. That instrument is not before the Court and it would not be proper for me to comment upon it except to the extent of noting that the reservation in question was included therein having regard to the decisive importance attached to it and notwithstanding the doubts, expressed in various quarters, as to its consistency with the Statute. It will also be noted that some-governments, such as those of India and the Union of South Africa, have attributed so much importance to that particular formulation of the reservation that they cancelled their previous acceptance of the Optional Clause in order to insert, in a substituted Declaration of Acceptance, a clause reserving for themselves the right of uni-lateral determination. To ignore that clause and to maintain the [p 58] binding force of the Declaration as a whole would be to ignore an essential and deliberate condition of the Acceptance.

From the point of view of the Government concerned there were weighty reasons why, anxious to frame its acceptance of the Optional Clause and its reservations thereto in such a manner as to preserve full freedom of national decision in the matter of submission of future disputes to the Court, it attached importance to formulating this particular reservation. In a significant passage, cited in paragraph 25 of the Preliminary Objections of Norway, the Rapporteur of the Committee for Foreign Affairs of the French Chamber said in relation to the reservation in question: "The French sovereingty is not put in issue and its rights are safeguarded in all spheres and in all circumstances." In fact, as is suggested in another part of this Opinion, there are only few disputes which cannot, without giving rise to an irrefutable imputation of bad faith, be brought within the orbit of the assertion that they pertain to a matter essentially within the domestic jurisdiction of the State concerned. Similarly, as already stated, there is but little substance in the view that the freedom of determination by the State interested is effectively limited for the reason that it must be exercised in good faith and that the Court is the judge whether it has been so exercised. The Court is therefore confronted with the decisive fact that the Government in question was not prepared to subscribe or to renew its commitment of compulsory judicial settlement unless it safeguarded in that particular way its freedom of action. That particular formulation of the reservation is an essential condition of the Acceptance as a whole. It is not severable from it. The phrase "as understood by the Government of the French Republic" must be regarded as being of the very essence of the undertaking in question. It is not a collateral condition which can be separated, ignored and left on one side while all others are given effect. The Acceptance stands and falls with that particular reservation and that particular formulation of the reservation. Without these words the Government which made that reservation would not have been willing to accept the commitments of the compulsory jurisdiction of this Court.

The Court cannot properly uphold the validity of the Acceptance as a whole and at the same time treat as non-existent any such far-reaching, articulate and deliberate limitation of its jurisdiction. To do so would run counter to the established practice of the Court— which, in turn, is in accordance with a fundamental principle of international judicial settlement—that the Court will not uphold its jurisdiction unless the intention to confer it has been proved beyond reasonable doubt. The Court certainly cannot assume jurisdiction if there is a clearly expressed intention to deny it in specified circumstances. This means that it would not be possible for the Court to disregard that part of the reservation in question which claims for the State concerned the right to determine its [p 59] application. It is not possible for the Court to do otherwise than to regard this particular part of the reservation, so specifically formulated, as constituting an essential and not severable part of the instrument of acceptance. It might perhaps be possible— I express no view on the subject—to disregard and to treat as invalid some other reservation which is contrary to the Statute and thus to maintain the Acceptance as a whole. This is not possible with regard to a reservation directly referring to and excluding the jurisdiction of the Court. On the other hand, as I pointed out, it is not possible for the Court to act affirmatively upon that part of the reservation seeing that it is contrary to the Statute. It is thus not possible for the Court, while upholding the validity of the Acceptance, either to act upon that part of the reservation or to ignore it. The inescapable solution of the dilemma is to treat the entire Acceptance as invalid.

***

This being so, my conclusion on this aspect of the question is that the reservation of national jurisdiction as qualified by the French Government is an essential part of its acceptance of the obligations of the Optional Clause; that it cannot be severed from the Acceptance as a whole; that as it is contrary to the Statute of the Court and as it deprives the Acceptance of the requisite element of legal obligation it must be held to be invalid and to invalidate the Acceptance as a whole; and that, there being no valid Acceptance, there is no instrument upon which France can rely and which, in the absence of agreement of Norway to submit to the jurisdiction of the Court apart from the Optional Clause, can provide a basis for the jurisdiction of the Court.

***
It is necessary in this connection to refer to the Judgment of the Court in the case concerning Rights of Nationals of the United States of America in Morocco. In that case, brought before it by an application based on Article 36 (2) of the Statute, the Court exercised jurisdiction although the Acceptances both of the applicant and the defendant State contained the "automatic reservation". To what extent is the Court now bound by the fact that it assumed jurisdiction in that case? Upon investigation that case proves irrelevant for the present issue.

In the first instance, in the case of the Rights of Nationals of the United States in Morocco the jurisdiction of the Court was not challenged by the defendant State; the latter did not invoke the "automatic reservation". There was, therefore, no direct occasion for the Court to embark upon an examination of the validity of that reservation and of the Acceptance as a whole. [p 60]

Secondly, although in that case France relied in her Application upon the Optional Clause of Article 36 (2) of the Statute, the jurisdiction of the Court was in fact exercised not on the basis of the Optional Clause but on the principle of forum prorogatum, i.e. on what was actually a voluntary submission independent of the source of jurisdiction originally invoked by the applicant party. The Government of the United States agreed to the jurisdiction of the Court without admitting that the Court was competent on the basis of the Optional Clause. The relevant passage of the Counter-Memorial of the United States was as follows: "The United States Government does not raise any jurisdictional issue in the proceeding, even though it does not concur in the allegations with respect to the compulsory jurisdiction of the Court which have been presented by the French Government, it being its understanding that its abstaining from raising the issue does not affect its legal right to rely in any future case on its reservations contained in its acceptance of the compulsory jurisdiction of the Court." (Case concerning Rights of Nationals of the United States of America in Morocco: Pleadings, Oral Arguments, Documents, vol. i, p. 262.) This statement is of significance seeing that in the course of the written proceedings the Government of the United States of America withdrew its Preliminary Objection which it had raised on account of the insufficient clarification of the identity of the Parties. That Objection was withdrawn as soon as it became clear that both France and Morocco would be bound by the Judgment of the Court (ibid., vol. ii, pp. 424-434). It is thus clear that in that case the Court exercised jurisdiction not only because—unlike in the present case— the defendant Party agreed to it but also because it agreed to it on the basis other than the Declaration of Acceptance. The dispute now before the Court is the first case—an entirely novel case—in which a Party has claimed the right, denied to it by Article 36 (6) of the Statute, to substitute itself for the Court in the matter of a decision as to its jurisdiction. This being so, I need not discuss the question as to the extent to which the Court would be bound by the precedent of the case of the United States Nationals in Morocco, if that case were relevant to the issue now before the Court.

***

It is essential to examine the view that it is not open to the Court to treat the French Acceptance as invalid seeing that Norway has not put forward any such assertion and that by relying, in view of the principle of reciprocity, on the French reservation she implicitly recognized the validity of the French Acceptance. I am unable to agree with that view. It would be open to Norway, by consenting to the jurisdiction of the Court irrespective of the French Acceptance, to confer competence upon the Court by way [p 61] of forum prorogatum. However, Norway has not submitted to the jurisdiction of the Court in any way. She has challenged it on various grounds. This being so, the fact that she has not raised the particular issue of the validity of the French Acceptance as a whole cannot endow with validity an instrument otherwise invalid. Even if Norway had agreed to the jurisdiction of the Court, it would not have followed that the Court could have exercised it on the basis of the French Declaration of Acceptance. The defendant State cannot, by refraining from raising objections, grant dispensation from invalidity. No one can do it—including, perhaps, the Court itself. The Court must have before it as a basis of its jurisdiction a valid text. It must ascertain the existence of that text. In the past it has, when occasion arose, raised the question of its jurisdiction propria motu (see e.g. the case of the Administration of the Prince von Pless, Series A/B, No. 52, p. 15). It is open to the Court, for that purpose, to ascertain the views of the parties on the subject by availing itself of the useful provision of its Rules which enable it to address questions to the parties at any stage of the oral proceedings.

As stated, the invalidity is inherent in the Declaration of Acceptance formulated in that way. It is not the case that the Declaration is valid until an occasion arises in which that particular reservation is relied upon by one party and challenged by the other with the result that its inconsistency with the Statute is thus brought to light. The Declaration is invalid ab initio. Brief reflection shows the irrelevance of the fact that neither party has challenged the validity of the Declaration and that the Court must therefore act upon it. For, clearly, the State which has formulated the "automatic reservation" is not likely, or entitled, to question it. The respondent State which relies upon it—by virtue of reciprocity (as Norway has done in the present case)—is not interested in challenging its validity. It finds it an effective, though possibly somewhat embarrassing, weapon of defence—in some cases the only effective means of defence unless it decides to steer the uncertain course of invoking simultaneously and by way of alternative submissions both the invalidity of the reservation and the reservation itself. For these reasons no importance can reasonably be attached to the fact that the validity of the "automatic reservation" has not been challenged by either party. Seeing that one party is responsible for its inclusion in its Declaration of Acceptance and that the other Party finds it necessary or imperative to rely on it, I can see but little force in the argument pointing to the fact that the validity of that reservation has not been put in issue by either party.

***
Reference must be made in this connection to the argument pointing to the existence of certain treaties of obligatory arbitration [p 62] concluded in the past which, expressly or by implication, conferred upon the signatories the right to determine the arbitrability of a particular dispute. The arbitration treaties which were concluded before the First World War and which contained the then customary reservations of national honour and independence were generally regarded as recognizing by implication such right of unilateral determination. In some cases that right was expressly reserved. That argument is, in any case, irrelevant seeing that those treaties were not subject to the limitation of Article 36 (6) of the Statute of the Court. Were they valid from the point of view of the question whether they contained effective legal obligations? The question is, once more, of an academic character seeing that these treaties were not concluded within the framework of any organic statute of a tribunal possessing jurisdiction to determine their validity. They were devoid of an element of effective legal obligation. They provided a basis for a compromis if the parties so wished. They were never applied against the will of the defendant State. While it may thus be pedantic to enquire into the legal validity of the treaties in question in circumstances wholly different from the problem now before the Court, their practical insignificance does not seem to be open to doubt. With isolated exceptions, they were concluded at a time when a system of obligatory arbitration existed in name only.

Above all, treaties of obligatory judicial settlement providing for the right of unilateral determination of the jurisdiction of the tribunal virtually disappeared after the First World War following upon the establishment of the Permanent Court of International Justice. In practically all—and certainly the principal—treaties of arbitration and judicial settlement concluded after the First World War the right to determine the disputed jurisdiction of the tribunal was conferred upon the tribunal itself (as, e.g., in the Swiss-German Treaty of 3 December, 1921, Article 4; or in the various Locarno Arbitration Treaties of 16 October, 1925—e.g., Article 16 of the Treaty between Germany and Poland). The important multilateral treaties of obligatory judicial settlement concluded after the First and Second World Wars include specific provisions to that effect—as does, for instance, Article 41 of the General Act for the Pacific Settlement of International Disputes of 26 September 1928 and the Pact of Bogota of 30 April 1948. Article V of the latter treaty provides as follows: "The aforesaid procedures may not be applied to matters which, by their nature, are within the domestic jurisdiction of the State. If the parties are not in agreement as to whether the controversy concerns a matter of domestic jurisdiction, this preliminary question shall be submitted to decision by the International Court of Justice, at the request of any of the parties." Article 38 of the most recent multilateral treaty of obligatory judicial settlement—the European Convention of 29 April 1957 for the Peaceful Settlement of Disputes—is to the same effect. An examination of over two hundred treaties in the volume published [p 63] in 1949 by the United Nations and entitled "Systematic Survey of Treaties for the Pacific Settlement of International Disputes, 1928-1948", reveals that only a very small number of treaties— perhaps not more than six—contain a reservation of the right of unilateral determination. The express acknowledgment of the power of the Court to determine its jurisdiction in cases in which that jurisdiction is disputed has thus become, even apart from the Statute of the Court, a uniform feature of the practice of States. The "automatic reservation", should it continue to be applied by the Court directly or indirectly, will arrest or reverse that trend which is an essential condition of any true system of obligatory judicial settlement.

***

I must now consider some of the implications of a decision of the Court holding that a Declaration of Acceptance which includes the "automatic reservation" is invalid. Any such decision has a bearing upon Declarations, similarly formulated, of a number of other States. These now include the United States of America, Mexico, Pakistan, India, South Africa, Liberia, and, perhaps, to some limited extent the United Kingdom of Great Britain and Northern Ireland. The latter, in a Declaration made on 18 April, 1957, excluded from the Acceptance any question "which, in the opinion of the Government of the United Kingdom, affects the national security of the United Kingdom or of any of its dependent territories". I am conscious of some apprehended consequences of a decision of the Court holding that the manner in which the Optional Clause has been accepted by an increasing number of States, traditionally wedded to the cause of international judicial settlement, has the effect of rendering their Acceptance invalid. Moreover, that form of accepting the jurisdiction of the Court has not been confined to the Optional Clause. It has been followed, under its influence, in some other texts purporting to provide for the obligatory jurisdiction of the Court. (See, e.g., the reservation of the United States of America to the Pact of Bogota: Year Book of the Court, 1947-1948, p. 144, n. 2. In a series of agreements relating to economic aid and concluded between the United States of America and some other States—as, for instance, with China on 3 July 1948—the following provision occurs: "It is understood that the undertaking of each Government [providing for the jurisdiction of the Court] ... is limited by the terms and conditions of such effective recognition as it has heretofore given to the compulsory jurisdiction of the International Court of Justice under Article 36 of the Statute of the Court": ibid., 1948-1949, pp. 152-155.)

The circumstance that a decision of the Court may affect Governments which have had no opportunity to express their view on the [p 64] subject is a cause of concern. It would have been preferable if, in accordance with Article 63 of the Statute, the Governments which have made a Declaration in these terms had been given an opportunity to intervene. Failing that, it is possible for those Governments to adopt the attitude that, in accordance with Article 59 of the Statute, the authority of the decision of the Court is limited to the present case and that they are at liberty to assert their attitude on the matter on another occasion.

In so far as it is within the province of the Court to consider the purpose of the system of the Optional Clause as provided in Article 36 (2) of its Statute, it is bound to attach importance to the fact that the "automatic reservation" has tended to impair the legal—and moral—authority and reality of the Optional Clause. Through the operation of reciprocity the practice of illusory acceptances must in the end encompass most declaring Governments including, as in the present case, those which accepted the Optional Clause without reservations.

It might be said that to look in that way upon a Declaration of Acceptance thus formulated is to underestimate its moral value and to disregard the fact that enlightened Governments are not likely to invoke the reservation in question lightly and abusively. Yet, to stress the moral value of the Declaration is to go some way in admitting that it is devoid of legal force. Moreover, there is little substance in the assumption that Governments exhibit reluctance to invoke reservations to their acceptance of the jurisdiction of international tribunals or that any moral impropriety attaches to reservations being invoked. It is a good legal right of Governments to do so. It is seldom that a Government cited before the Court in pursuance of a unilateral application has admitted the jurisdiction of the Court as following from the instrument invoked by the applicant State. In the present case, Norway, which has accepted the Optional Clause without any reservations, save that of reciprocity, has not abandoned the right of unilateral determination which accrues to her by virtue of the French form of acceptance.

It is difficult to attach importance to the suggestion that an Acceptance containing the "automatic reservation" is not wholly devoid of legal value seeing that it may at least provide a basis for the acceptance of the jurisdiction of the Court by way of voluntary submission through the operation of the principle of forum - prorogatum. No such basis is required for that purpose. A unilateral application altogether unrelated to any previous acceptance of the jurisdiction of the Court is sufficient for that purpose provided that the defendant State is willing to submit to the jurisdiction of the Court.
If in law an Acceptance of that nature does not constitute a text embodying legal obligations then the decision of the Court in that sense does no more than register a fact; it provides an [p 65] opportunity for any Government so minded to put right a faulty Declaration of Acceptance; and it assists in arresting a tendency which threatens to disintegrate that minimum of compromise which is embodied in the Optional Clause. It is not suggested that the Court should be guided by a desire to achieve these objects— -however important they ma}' be for the integrity of international undertakings and the cause of international justice. Neither is it within the province of the Court to assess the propriety of a practice according to which a State, while in fact retaining freedom of action on the matter of submission of disputes to the Court, gains the moral and political advantages associated with professed adherence to the principle of obligatory judicial settlement. What the Court must do is to apply the legal principles governing the matter. It has been said that as States are not at all bound to accept the jurisdiction of the Court and as their Acceptance is in the nature of a voluntary sacrifice, it is not fitting to examine it too closely. The Court cannot be concerned with considerations of this nature. It cannot weigh the niceties of political advantage. For it may be argued that, if as the result of such Acceptance States gain in prestige and reputation while in fact not surrendering their freedom of decision, the nature of the sacrifice is not obvious. Also, while the Government making the "automatic reservations" retains freedom of action, it throws upon the defendant State, which has not appended any such reservation, the difficult and often embarrassing responsibility of invoking what, in the eyes of some, may be an odious and peremptory reservation. The present case has shown the implications of the resulting situation.

If the Court could legitimately be concerned with issues transcending that immediately before it, it might be considered its duty to discourage, in so far as it lies with it, the progressive disintegration of the institution of the Optional Clause as evidenced, inter alia, by the tendency to adopt reservations such as that here examined. Governments are under no compulsion, legal or moral, to accept the duties of obligatory judicial settlement. When accepting them, they can limit them to the barest minimum. But the existence of that minimum, if it is to be a legal obligation, must be subject to determination by the Court itself and not by the Government accepting it. A purported obligation, however apparently comprehensive, which leaves it to the will of the State to determine the very existence of the obligation, cannot be the basis of an instrument claimed to found the jurisdiction of the Court. That view seems to be drastic and startling only if it is assumed that principles of law which generally apply in respect of the validity of texts purporting to create a legal obligation do not apply in the case of Governments. Any such assumption is inconsistent with the function of a Court of Justice. [p 66]

For the latter reason, the problem involved is of even wider import than the question of the jurisdiction of the Court. It raises an issue which is of vital significance for the preservation of its judicial character. That issue is whether it can be part of the duty of the Court to administer and to give the status of a legal text to instruments which in fact do not create legal rights and duties. The judicial character of the Court may become endangered if it were to assume the task of interpreting and applying texts which, being devoid of the element of effective legal obligation, are essentially no more than a declaration of political purpose. Such danger may be inherent in any readiness to elevate to the merit of a legal commitment what is no more than a non-committal declaration of intention to be implemented at the option of the Government concerned.

***

My conclusion is therefore that, having regard to the reservation relating to matters which are essentially within domestic jurisdiction as understood by the French Republic, the French Declaration of Acceptance is invalid for the reason:

(1) That it is contrary to the Statute of the Court;

(2) That it is incapable of giving rise to a legal obligation inasmuch as it claims, and effectively secures, the right of unilateral determination of the extent and of the existence of the obligation of judicial settlement with regard to a comprehensive and indefinite category of disputes covering potentially most disputes which may-come before the Court;

(3) That the particular qualification of the reservation in question forms an essential part of the Acceptance and that it is not possible to treat it as invalid and at the same time to maintain the validity of the reservation to which it is attached or of the Acceptance as a whole.

Accordingly, in my view the entire French Declaration of Acceptance must be treated as devoid of legal effect and as incapable of providing a basis for the jurisdiction of the Court. It is for that reason that, in my view, the Court has no jurisdiction over the dispute. The majority of the Court has reached the same result by acting upon the "automatic reservation" and the French Declaration of Acceptance—both of which I consider to be invalid. However, as the Court has expressly stated that, having regard to the circumstances before it, its Judgment does not pre-judge the major issue involved, I feel that a Separate Opinion—as distinguished from a Dissenting Opinion—meets the requirement of the case.

(Signed) Hersch Lauterpacht.

[p 67]
DISSENTING OPINION OF JUDGE GUERRERO

[Translation]

I regret to find myself in disagreement with the operative part of the Judgment and with a few of the considerations on which it is founded.

On the other hand, I share the view of the Court when it recognizes that, in the present case, the jurisdiction of the Court depends upon the Declarations made by the Parties in accordance with Article 36, paragraph 2, of the Statute.

This view does not seem to me to conflict with the principle that the problem of the Court's jurisdiction is reduced to determining the extent of the obligations assumed by the Parties and to verifying their conformity with the provisions of the Statute which the Court is obliged to observe and respect for which it must ensure.

The consideration of the Court is therefore directed to the instrument by virtue of which it is seised, that is to say, the special agreement or the jurisdictional clause.

In the jurisprudence of the Court, there are to be found very definite indications for the signatories of these instruments. I shall mention only the Order of the Permanent Court of International Justice made on August 19th, 1929, in the case of the Free Zones of Upper Savoy and the district of Gex.

The representatives of France and Switzerland, Parties to this dispute, were in agreement on communication by the Court unofficially to the Agents of both Parties of any indications which might appear desirable as to the result of the Court's deliberation.

After stating in the Order that the spirit and letter of its Statute did not allow the Court to act in accordance with the agreement between the Parties and that the Court could not, on the proposal of the Parties, depart from the terms of the Statute, the Order of August 19th, 1929, stated:

"Nevertheless, it is important to set forth clearly that special agreements whereby international disputes are submitted to the Court should henceforth be formulated with due regard to the forms in which the Court is to express its opinion according to the precise terms of the constitutional provisions governing its activity, in order that the Court may be able to deal with such disputes in the ordinary course and without resorting, as in the present case, to a construction which must be regarded as strictly exceptional." (Order of August 19th, 1929. Case of the Free Zones, p. 13, Series A, No. 22.)

What is said with regard to special agreements applies equally to the conditions in which States formulate their jurisdictional clauses. In the latter, as in the former, the consensus of the Parties [p 68] is not sufficient to establish the jurisdiction of the Court. It is further necessary to ascertain whether that consensus is compatible with the provisions of the Statute and whether it can be applied without the Court's being obliged to depart from those provisions.
It should be pointed out that, in the case of the Free Zones, the Court decided ex officio on the incompatibility of the Franco-Swiss Agreement with the provisions of the Statute of the Court. It did not wait for the question of incompatibility to be raised by the Parties.

It is highly probable that it would have been the same in the present case if the Court had not considered that it should not "examine whether the French reservation is consistent with the undertaking of a legal obligation and is compatible with Article 36, paragraph 6, of the Statute".

One of the aspects of the problem raised by the second part of the first Objection put forward by the Norwegian Government was the question whether that Government is entitled to rely on the restrictions placed by France on the obligation assumed on March 1st, 1949, and whether Norway, equally with France, was entitled to except from compulsory jurisdiction disputes understood by Norway to be essentially within its national jurisdiction.

This aspect of the problem was examined in to-day's Judgment.

I shall endeavour to consider briefly the other aspect of the problem which the Court did not think it necessary to examine, namely, that of the compatibility of the French reservation with the provisions of the Statute of the Court.

The French Government's Declaration accepting the compulsory jurisdiction of the Court contains the following reservation:

"This declaration does not apply to differences relating to matters which are essentially within the national jurisdiction as understood by the Government of the French Republic."

The great defect of this reservation is that it does not conform either to the spirit of the Statute of the Court or to the provisions of paragraphs 2 and 6 of Article 36.

It is obvious that the purpose of paragraph 2 is to establish the compulsory jurisdiction of the Court between States which accede to the optional clause. By the fact that France reserves her right to determine herself the limit between her own national jurisdiction and the jurisdiction of the Court, France renders void her main undertaking, for the latter ceases to be compulsory if it is France and not the Court that holds the power to determine the limit between their respective jurisdictions.

The reservation conflicts also with paragraph 6 of Article 36, which is in the following terms: [p 69]

"In the event of a dispute as to whether the Court has jurisdiction, the matter shall be settled by the decision of the Court."

This principle is common to all arbitral and judicial tribunals of an international character.
The Court would perhaps be the only tribunal that would be compelled to refuse to deal with a dispute submitted to it whenever a State invoked the reservation in question to claim the right to determine that limit.

Without going in detail into the questions raised by the French reservation, I wish, nevertheless, to point out that it is an obstacle to the exercise of the judicial function attributed to the Court and that it seriously affects the efficacity of the optional clause.

These considerations are, in my view, sufficient to prove the urgent necessity for a judicial decision on the validity of reservations which go beyond what is permitted by Article 36 of the Statute.

Although Article 36 has been construed as meaning that a declaration of accession to the optional clause may contain reservations, it is certain that it was never the intention of the authors of the Statute that such reservations should serve to enable a State to evade the undertakings involved in the declaration provided for by Article 36, paragraph 2, or unilaterally to arrogate to itself rights which the Statute confers solely on the Court.

Such reservations must be regarded as devoid of all legal validity. It has rightly been said already that it is not possible to establish a system of law if each State reserves to itself the power to decide itself what the law is.

It is clear, moreover, that the new practices introduced in August 1946 are contrary to the spirit and to the purpose of the Statute of the Court and the Charter of the United Nations FN1.

---------------------------------------------------------------------------------------------------------------------
FN1 American Bar Association Journal, March 1947, No. 3, p. 249, and May 1947, No. 5, p. 432.
---------------------------------------------------------------------------------------------------------------------

The problem to be solved is, however, a simple one. It is, in fact, the problem whether the unilateral will of one State or the common will of the Parties before the Court can have priority over the collective will expressed in an instrument as important as the Statute of the Court.

It may not be inappropriate to recall that when Article 36 of the Statute was construed as meaning that it gave the right to accede to the optional clause with reservations, this was under the favour-able influence of the attitude which the Members of the League of Nations had adopted in regard to the jurisdiction of the Court. Their declarations of acceptance were accompanied only by reser-vations that came within the framework of Article 36 of the Statute. The anxiety of the Members of the League of Nations was that the [p 70] movement towards the final establishment of international compulsory jurisdiction, which was developing so well before the Second World War, should not be impeded in any way whatsoever.

It was only in the early days of the United Nations that the situation changed completely, when one of its Members declared, on August 14th, 1946, that it accepted the compulsory jurisdiction of the Court, provided that its Declaration should not apply, inter alia, to disputes with regard to matters which are essentially within its own domestic jurisdiction, as determined by itself.

Six other States have up to the present followed the example set on August 14th, 1946. Should this practice gain other followers, the optional clause will cease to be an instrument capable of bringing about compulsory jurisdiction between States.

The validity of these new reservations has, of course, not yet been examined by any international organ of the United Nations. There is, in fact, no other procedure to be followed in regard to declarations of accession to paragraph 2 of Article 36 than that which is provided for in paragraph 4 of the same Article. The Declarations are deposited w0ith the Secretary-General of the United Nations, who transmits copies of them to the Parties to the Statute and to the Registrar of the Court.

What it will be found difficult to understand is what reason the Court could have had for not dealing with the question when it was seised of the Franco-Norwegian dispute, in the course of which the Parties invoked the terms of their respective declarations of accession to the optional clause.
***
As regards the operative part of the Judgment, I shall confine myself to saying that I cannot agree that the Court is without jurisdiction when its lack of jurisdiction is founded on the terms of a unilateral instrument which I consider to be contrary to the spirit and to the letter of the Statute and which, in my view, is, for that reason, null and void.

(Signed) J. G. Guerrero.

[p 71]
DISSENTING OPINION OF JUDGE BASDEVANT

[Translation ]

I regret that I am unable to concur in the Judgment of the Court that it is without jurisdiction in the present case and I believe I must indicate briefly the reasons for my dissent.

In order to appraise the value of the Preliminary Objection raised by the Norwegian Government to the jurisdiction of the Court, the Court has placed itself on the ground on which the Parties chose to argue the matter, namely, Article 36, paragraph 2, of the Statute of the Court and the Declarations of the Governments of the Kingdom of Norway and of the French Republic accepting the compulsory jurisdiction of the Court in accordance with that Article. I do not dispute this point of departure.

The Court has concentrated its attention on the reservation which is contained in the French Declaration and which provides that "this declaration does not apply to differences relating to matters which are essentially within the national jurisdiction as understood by the Government of the French Republic". The Court has pointed out that by virtue of the condition of reciprocity embodied in the two Declarations and provided for in Article 36, paragraph 3, Norway is entitled to rely on that reservation. I interpret the reciprocity clause in the same manner.

Nor do I consider it necessary, any more than the Court does, to deal with the question of the initial validity of that reservation with regard to the present case.

It is less the reservation considered by itself and so to speak in abstracto than the manner in which Norway's attitude should be interpreted when she invoked the reservation on the basis of reciprocity, which is at the source of my dissent. In other words I confine myself strictly to the present case: a dispute between France and Norway, a jurisdictional objection raised by Norway to the Application presented by France.

The Judgment of the Court upholds this objection to the jurisdiction on the ground that Norway, invoking the French reservation on the basis of reciprocity, has declared that the present matter was essentially within its national jurisdiction as understood by the Norwegian Government. The position thus adopted by the Norwegian Government was regarded by the Court as sufficient to preclude the compulsory jurisdiction of the Court which was in principle accepted under the Declarations of the two Governments.

It is with regard to the interpretation thus placed upon the position adopted by the Norwegian Government that I feel the most serious doubts.

It is possible to imagine that a State invoking the reservation should intend to put it forward as categorical in character so that the opinion expressed by that State with regard to the character of the dispute would be sufficient to preclude the jurisdiction of the Court, without further consideration by the Court: it is not my [p 72] intention to prejudge in any way the question of the validity of the reservation, interpreted as having such a scope. I merely observe that that State would have to manifest that that is the scope which it gives to the opinion it expresses, that its will to assume responsibility for such an attitude would have to be sufficiently apparent. However, I find it difficult to ascribe to Norway such an intention, or such an attitude which would scarcely be consistent with Norway's traditional attitude in the matter of arbitration and international jurisdiction; I find it difficult to consider that Norway intended to assume such a responsibility, political and moral, not only vis-à-vis the other Party and before the Court in the present dispute but in a more general manner and by such a precedent, before the United Nations and finally, by reason of the subject-matter of the proceedings, with regard to her own financial credit.

For the terms in which Norway has referred to the reservation are most moderate. They do not confer upon the reservation a categorical character signifying that the Court ought to confine itself to the reservation and not consider the matter further.

The reference to the reservation appears in paragraph 23 of the Preliminary Objections but it appears there only in a hypothetical form. On the basis of considerations which are fully developed, the Preliminary Objections first state this conclusion: "It is clear, therefore, that in bringing before the Court the dispute set out in its Application ... the French Government is asking the Court to adjudicate upon questions of municipal law and not upon questions of international law, i.e. upon questions which do not fall within the jurisdiction conferred upon the Court by the Declarations made by the Parties under Article 36, paragraph 2, of the Statute." Immediately following this passage, the Preliminary Objections add: "There can be no possible doubt on this point. If, however, there should still be some doubt, the Norwegian Government would rely upon the reservations made by the French Government in its Declaration of March 1st, 1949."

The Norwegian Government thus begins by stating very strongly the contention that the dispute relates to questions of municipal law and does not, therefore, fall within the jurisdiction of the Court. The soundness of this contention and the value of the arguments put forward in support of it are clearly submitted to the consideration of the Court. The Norwegian Government claims that its contention is irrebuttable and that there can be no possible doubt on this point. It does refer, however, to a hypothetical situation, a situation in which there should still be some doubt, and it is only with regard to that hypothetical situation that the Norwegian Government refers to the French reservation.

The whole Norwegian argument with regard to the reservation appears in the Preliminary Objections, but quite apart from the fact that the argument is there presented only hypothetically, Norway has not interpreted the reservation as constituting a categorical means whereby a State may preclude the jurisdiction [p 73] of the Court. Such an interpretation is possible: Norway has not put it forward. Whilst not stating exactly what her view was, Norway puts forward a more moderate interpretation to the effect that "such a reservation must be interpreted in good faith and should a Government seek to rely upon it with a view to denying the jurisdiction of the Court in a case which manifestly did not involve a 'matter which is essentially within the national jurisdiction' it would be committing an abus de droit which would not prevent the Court from acting".
Norway thereby acknowledges the Court's power to control the exercise by a State of its right to invoke the reservation. What is the extent of this power? The words quoted above do not define the extent of this power, but some indication has been supplied by the statement appearing at the end of the argument on the First Preliminary Objection and at the end of what was said regarding the reservation invoked by Norway. The Norwegian Government begins by asserting its right to rely upon the French reservation but does not stop there. It considers it appropriate to justify the use it makes of that right and in this connection adds the following words: "Convinced that the dispute ... is within the domestic jurisdiction, the Norwegian Government considers itself fully entitled to rely on this right." It would have been unnecessary for the Norwegian Government to state its conviction on this point if it had purported to confer upon its own understanding of the nature of the dispute a decisive character taking it outside the control of the Court. If it says that it is convinced that the dispute is within the domestic jurisdiction, it is because it derives this conviction from the considerations relied upon to prove that the dispute is within the domain of Norwegian law and not of international law. And, "accordingly", in other words as a result of the conviction thus acquired, it "requests the Court to decline, on grounds that it lacks jurisdiction, the function which the French Government would have it assume".

If this passage is compared with the importance of the position occupied in the Preliminary Objections by the argument on the character of the dispute as determined by the character of the law which is applicable to it, one is led to the view that, in the mind of the Norwegian Government, the two grounds upon which it relies in support of its first Preliminary Objection converge and that in the present case the determination of the character of the matter will depend upon the law to be applied.

This interpretation is confirmed by the fact in the subsequent written and oral proceedings, the Norwegian Government carefully concentrated on the character of the applicable law in support of its objection to the jurisdiction. Only one allusion was made on behalf of the Norwegian Government to the French reservation, with indirect and very brief reference to the condition of reciprocity at the hearing of May 20th, 1957. And indeed Counsel for the Norwegian Government merely made the allusion in support of his conclusion that the undertakings binding the two States in the [p 74] matter of jurisdiction "only relate to disputes of international law". This confirms the interpretation given above of the intentions of the Norwegian Government and this interpretation is in harmony with the frequently repeated assertion that the Norwegian Government does not reject the jurisdiction of the Court absolutely, because it so chooses, but on grounds which have been carefully set out, thus showing that it was intended that the Court should adjudicate upon them.

It would have been in the interests of Norway to confer a categorical character upon the defence provided by the French reservation. She has not done so for a highly commendable reason, because she was anxious to respect her international obligations.

In the matter of compulsory jurisdiction, France and Norway are not bound only by the Declarations to which they subscribed on the basis of Article 36, paragraph 2, of the Statute of the Court. They are bound also by the General Act of September 26th, 1928, to which they have both acceded. This Act is, so far as they are concerned, one of those "treaties and conventions in force" which establish the jurisdiction of the Court and which are referred to in Article 36, paragraph 1, of the Statute. For the purposes of the application of this Act, Article 37 of the Statute has substituted the International Court of Justice for the Permanent Court of International Justice. This Act was mentioned in the Observations of the French Government and was subsequently invoked explicitly at the hearing of May 14th by the Agent of that Government. It was mentioned, at the hearing of May 21st, by Counsel for the Norwegian Government. At no time has any doubt been raised as to the fact that this Act is binding as between France and Norway.

There is no reason to think that this General Act should not receive the attention of the Court. At no time did it appear that the French Government had abandoned its right to rely on it. Even if it had maintained silence with regard to it, the Court "whose function it is to decide in accordance with international law such disputes as are submitted to it" could not ignore it. When it is a matter of determining its jurisdiction and, above all, of determining the effect of an objection to its compulsory jurisdiction, the principle of which has been admitted as between the Parties, the Court must, of itself, seek with all the means at its disposal to ascertain what is the law. In a matter in which such research was less imperatively necessary, the Permanent Court did not hesitate to undertake it, stating that "in the fulfilment of its task of itself ascertaining what the international law is, it ... has included in its researches all precedents, teachings and facts to which it had access and which might possibly have revealed the existence of one of the principles of international law contemplated in the special agreement". (P.C.I.J. Judgment No. 9, p. 31.)

On acceding to the General Act, on May 31st, 1931, the French Government, in so far as it was explicitly authorized to do so by Article 39, sub-paragraph (b), and by Article 41 of that Act, declared [p 75] that its accession, involving inter alia the acceptance of the compulsory jurisdiction of the Court, applied to disputes "other than those which the Permanent Court of International Justice may recognize as bearing on a question left by international law to the exclusive competence of the State". As this reservation was formulated by France, Norway may, as stated in Article 39, paragraph 3, of the General Act, rely upon it as against France.

Such was the law in force between France and Norway concerning the compulsory jurisdiction of the Court at the time when France accepted afresh the compulsory jurisdiction of the Court by her Declaration of March 1st, 1949, on the basis of Article 36, paragraph 2, of the Statute. The law thus in force embodied the reservation concerning the exclusive competence of the State, but, on the one hand, there was the qualification of that reservation regarding what is recognized by international law and, on the other hand, the Court was given the power to verify, when the reservation should come to be pleaded, whether it was rightly or wrongly invoked.

The Declaration by which the French Government accepted compulsory jurisdiction on the basis of Article 36, paragraph 2, of the Statute contains a reservation of wider scope, since it refers not to what is recognized by international law, but to the understanding of the Government which invokes the reservation and, further, since it does not submit that understanding to the verification of the Court. At all events, it does not do so expressly. The Declaration thus limits the sphere of compulsory jurisdiction more than did the General Act in relations between France and Norway. Now, it is clear that this unilateral Declaration by the French Government could not modify, in this limitative sense, the law that was then in force between France and Norway.
In a case in which it had been contended that not a unilateral declaration but a treaty between two States had limited the scope as between them of their previous declarations accepting compulsory jurisdiction, the Permanent Court rejected this contention and said in this connection:

"The multiplicity of agreements concluded accepting the compulsory jurisdiction is evidence that the contracting Parties intended to open up new ways of access to the Court rather than to close old ways or to allow them to cancel each other out with the ultimate result that no jurisdiction would remain." (P.C.I.J., Series A/B, No. 77, p. 76.) A way of access to the Court was opened up by the accession of the two Parties to the General Act of 1928. It could not be closed or cancelled out by the restrictive clause which the French Government, and not the Norwegian Government, added to its fresh acceptance of compulsory jurisdiction stated in its Declaration of 1949. This restrictive clause, emanating from only one of them, does not constitute the law as between France and Norway. The clause is not sufficient to set aside the juridical system existing between them on this point. It cannot close the way of [p 76] access to the Court that was formerly open, or cancel it out with the result that no jurisdiction would remain.

Between France and Norway, on the point now under consideration, the acceptance of compulsory jurisdiction is, therefore, to-day as prior to the French Declaration of March Ist, 1949, set aside only in respect of such disputes as the Court may recognize as bearing on a question left by international law to the exclusive competence of the State.

This presentation of the state of the law existing between France and Norway explains the sense attached by Norway to her reliance on the French reservation. She relied on it, and could only rely on it, in the sense that this reservation has in relations between France and Norway, that is to say, not as a reservation the application of which depends on the discretionary judgment of the State wich relies on it, but as a reservation the scope of which depends on what is recognized by international law as found by the Court. I cannot suppose that Norway intended to give the reservation a more absolute sense which would be in conflict with the law existing in this matter between the two countries.

This interpretation, involving a reference to what is recognized by international law as found by the Court, is in complete harmony with the moderate interpretation which Norway gave to the reservation and with the small place it occupies in her reasoning which, on the other hand, went to great lengths to show that the dispute relates to questions of Norwegian law and not to questions of international law and, on that ground, does not come within the jurisdiction of the Court.

In view of all this reasoning—and even from the mere perusal of the Preliminary Objections—I cannot believe that it was the Norwegian Government's intention to prove to the satisfaction of the Court that the dispute relates only to questions of Norwegian law, to ask the Court to find that it agrees with this view and then to add immediately that the Court's opinion on this point is of no importance and that it is only the Norwegian Government's opinion that counts.

The Norwegian Government's intention seems to me to be quite different. In invoking the French reservation, its intention was that its bearing on the present case should be considered in the light of the elements of the case: the subject of the claim and the law applicable. It is on this footing that the appeal to the reservation must be judged and that the discussion between the Parties in fact developed.

The Norwegian Government might have followed another course. When it invoked the French reservation, it might have relied, in this connection, on the fact that this case is concerned with public loans, with measures affecting the monetary system of Norway. I do not prejudge the validity of such considerations. That was the course followed in the case of the nationality decrees in Tunis and Morocco and it led the Permanent Court to find that questions of nationality are amongst those which international law [p 77] leaves to the jurisdiction of the State but that it is otherwise when the application of treaties is involved in regard to them. The Norwegian Government did not take this course. The only grounds which it advanced and which, if accepted, would be such as to prove that the present dispute brings before the Court questions which international law leaves to the exclusive jurisdiction of Norway, are those relating to the nature of the law to be applied for the settlement of this dispute, namely, Norwegian law and not international law.

As the Judgment interprets the Norwegian Government's intention in a different way from that in which I have felt it proper to interpret it—and that is the source of my dissent—it was not necessary for it to consider whether the dispute brought before the Court falls exclusively within the application of Norwegian law and whether, on that ground, it falls outside the jurisdiction of the Court either by the application of Article 36, paragraph 2, of the Statute or through the effect of the French reservation invoked by Norway without further explanation. In view of the silence of the Judgment, I shall confine myself to some very brief observations on this point.

I understand that the wording adopted for the Submissions in the Application should have led the Norwegian Government to put forward its first Preliminary Objection. The same terms might have been used in the Submissions of a bondholder proceeding against his Norwegian debtor before a Norwegian tribunal. But the discussion before the Court eliminated all assimilation between these two cases and, in the course of these proceedings, it was frequently asserted, particularly on the Norwegian side, that the dispute between the French Government and the Norwegian Government was different from the dispute between bondholders and Norwegian debtors and came within the purview of a different branch of law.

The French Government is here acting in the exercise of its right under international law to protect its nationals as against a foreign State. The Judgment rightly recalls that, in its Note of January 27th, 1955, the French Government proposed to the Norwegian Government that the dispute should be referred to an international tribunal in order to determine, on the basis of the general principles of international law, whether the gold clause which, it contended, was contained in the bonds in question, had to be respected. The Judgment recalls also that, at the very outset of the diplomatic dispute, the French Legation in Oslo, in its Note dated June 16th, 1925, stated that it believed a contradiction to exist between the Norwegian law of December 15th, 1923, and the obligations which had been assumed towards the holders of the loans of the Mortgage Bank of Norway, and contended, in this connection, that it would not seem that a unilateral decision can be relied upon as against foreign creditors. In the proceedings before the Court, the French Government continually impugned this law of 1923, from this point of view, and in its final Submissions filed [p 78] on May 25th, 1957, it asked the Court to adjudge and declare that undertakings as to the amount of the debts contracted under the loans referred to in the Application cannot be unilaterally modified. The French Government placed reliance en Judgments Nos. 14 and 15 of the Permanent Court of International Justice, contending that, in the present case as previously in the cases of the Serbian loans and the Brazilian Federal loans, the loans in question are international loans. It complained that Norway was practising discrimination to the advantage of Danish and Swedish holders and to the detriment of French holders, and it claimed that this discrimination constituted a direct violation of international law. On all those grounds it sought to obtain redress through a decision of the Court which, without passing upon the financial adjustment of payments which the French Government declared itself ready to study with the Norwegian Government, would find that the debtor in the case of the loans specified in the Application cannot validly discharge his obligation except by payments as they fall due in gold value.

It is on this ground that the French Government intended to place the claim it brought against the Norwegian Government. It is not for me to prejudge the reply that should be given to it on any of the points thus raised. I confine myself to noting that adjudication upon this claim is a matter that comes within the purview not of Norwegian law but of international law.

No doubt, in order that the questions of law thus referred to, and others of the same kind raised in the proceedings, may come up for consideration, it must first be determined that the loans in dispute, or some of them, do in fact contain a gold clause. This is a question of the facts involved in the case, and these have been set out in the Memorial and Counter-Memorial. This statement of the facts may bring up certain questions of Norwegian law concerning, for instance, the initial validity of the gold clause in the loans in dispute. But, if the Court is seised of questions of international law in the dispute at present pending between France and Norway, and if, for that reason, the Court has jurisdiction to adjudicate on this dispute, it obviously follows that the Court will also have to examine the questions of fact that arise. It must include among these any questions of the interpretation of such Norwegian laws as may call for consideration. It has never been contended that the Court should refer such questions to the consideration and decision of any particular national tribunal.

Having regard to the sense I attach to the Norwegian Government's intention in invoking the French reservation, and having regard to the nature of the questions actually submitted to the Court, I do not think that Norway is justified, in this case, in declining the jurisdiction of the Court on the ground of the reservation concerning its national jurisdiction.

(Signed) Basdevant.

[p 79]
DISSENTING OPINION OF JUDGE READ

I regret that I am unable to concur in the decision of the Court, in this case, and that it has become necessary for me to indicate the reasons which have prevented me from concurring with the majority. As I am of the opinion that the Court should reject all the Preliminary Objections, and deal with the merits, I must examine all aspects of the case, and, in doing this, shall consider the following questions:

First Question—The nature and scope of the dispute, as it now presents itself to the Court.

Second Question—The Norwegian contention that "The subject of the dispute as defined in the Application is within the domain of municipal law and not of international law, whereas the compulsory jurisdiction of the Court in relation to the Parties involved is restricted, by their Declarations of November 16th, 1946, and March 1st, 1949, to disputes concerning international law;".

Third Question—The Norwegian contention that "As to that fart of the claim which relates to the bond certificates issued by the Mortgage Bank of Norway and the Small Holding and Workers' Housing Bank of Norway, these two Banks have a legal personality separate from that of the Norwegian State; the action cannot therefore be brought against that State as a borrower; whereas moreover the jurisdiction of the Court is limited to disputes between States;".

Fourth Question—The Norwegian contention that "The holders of bond certificates for whose protection the French Government considers itself entitled to institute international proceedings have not first exhausted the local remedies."

Fifth Question—The Norwegian request that the Court should "adjudge and declare that the claim put forward by the Application of the French Government of July 6th, 1955, is not admissible".

***

First Question—The nature and scope of the dispute as it now presents itself to the Court.

This is the fundamental question, because the conclusions reached with regard to the matters in dispute depend almost entirely on whether the controversy is looked at as it was in the earlier stages of the case, or in the form which it has taken in the course of the Written and Oral Proceedings. [p 80]

In the Application, the French Agent asked the Court to adjudge:

(1) that there was a real gold clause;

(2) that the borrower can only discharge the substance of his debt by payment of the gold value both of the coupons and of the principal payments.
The Norwegian Agent considered that these requests related solely to issues of Norwegian national law which the Court is incompetent to adjudge in a case commenced by Application. But, during the Oral Proceedings, the Final Submissions of the French Government "On the Merits" put forward three claims which involved:

In paragraph 1

request for judgment by the Court that payment to foreign holders of the bonds must be made without any discrimination; and

In paragraph 3

request for judgment by the Court that Norway cannot by unilateral extraterritorial legislation modify the rights of the French bondholders, without negotiation or arbitration; and

In paragraphs 2, 4 and 5

request for judgment based on the gold clause.

(It may be convenient to refer to the first two of these issues as discrimination and extraterritoriality, respectively.)

It is obviously impossible to suggest that the Final Submissions, raising these issues, relate to matters which are either exclusively or essentially within the national jurisdiction of Norway. To meet this position, the Norwegian Agent has urged the Court to reject the Final French Conclusions. They have been attacked on the ground that they give rise to a new claim.

The French Agent replied by citing the Chorzow judgment, and by contending that "The intentions of the Statute are therefore perfectly clear: it is possible to amend Submissions any time up to the end of the proceedings."

It is true that it has been the established practice of this Court, and of the Permanent Court, to permit the Parties to modify their Submissions up to the end of the Oral Proceedings. Indeed, the President asked the Parties to file their Final Submissions before terminating the Oral Proceedings; and, in so doing, he was following a practice of long standing. Thus it was open to France to amend the Submissions at that stage. But the right is subject to two limitations. The first limitation is that, when there is an appreciable [p 81] change, the other Party must have a fair opportunity to comment on the amended Submissions. In this case, the amendment was made at the close of the French opening statement, and Norway has had two opportunities to reply, of which full advantage has been taken.

The second condition is that the amendment must be an amendment. It must not consist of an attempt by the Applicant Government to bring a new and different dispute before the Court. If so, the amended Submissions are not admissible, unless the new elements have been incorporated in the dispute either by the Respondent Government or by the two Governments in the course of the Written and Oral Proceedings.
Accordingly, it is necessary to consider whether the allegedly new elements—discrimination and extraterritoriality—raise a new dispute, or whether they define the issues in the dispute which was brought to the Court by the Application.

The Statute, by Article 40, imposes on the Applicant Government the requirement that "the subject of the dispute and the Parties shall be indicated". It does not require that the issues shall be defined; and, indeed, it makes it abundantly clear, by Article 48, that the definition of the issues by Submissions is to be done in the course of the Written and Oral Proceedings. (In this regard, the French text of Article 48 shows that this is so, while the English text is obscure.) Applications have usually contained statements of the issues involved; but these have been treated by this Court and the Permanent Court as indications of the nature of the case.

It is in this light that the Application must be examined. Did it sufficiently indicate the dispute as it has developed in the course of the Written and Oral Proceedings, and as it has been formulated in the French Final Submissions? In particular, did it sufficiently indicate a dispute involving the two contested elements: discrimination and extraterritoriality?

The Application gives particulars with regard to the different issues of bonds involved. It sets forth, in a general way, the emergence of the controversy between the French bondholders, represented by the National Association of French Security Holders,, and the Borrowers, the Norwegian State and the two Banks. It mentions the formal intervention by the French Government on behalf of its nationals in May, 1953, and subsequent negotiations between the Governments, which did not lead to a settlement. It ends with the indication of the claim, as stated above.

It thus appears that the Application sufficiently indicated that the case was intended to relate to the dispute which had been at issue between the French Government and bondholders and the Nor-wegian borrowers and Government for thirty years and twenty days.

That dispute had certainly been based on the three elements: discrimination, extraterritoriality, and the existence and obligation [p 82] of the gold clause in the bonds. Nevertheless, the part of the Application which purported to indicate the subject of the dispute was obscure.

Norway takes the position that the words used in the Application to indicate the subject of the dispute confined it to the existence of the gold clause and the obligation of the bonds. France contends that the two contested issues had been in controversy for more than thirty years as essential elements of the dispute, and that the actual claim as stated in the Application is broad enough to include them. The claim reads:

"And that the borrower can only discharge the substance of his debt by the payment of the gold value of the coupons on the date of payment and of the gold value of the redeemed bonds on the date of repayment."

The obligation of the bonds depended on three things—the contract, the law and the relevant legislation. The relevant statute which had been under consideration by the two Governments was the law of December 15, 1923. The two issues under consideration— discrimination and extraterritoriality—were inseparably related to that law. That this was so understood by Norway is plainly indicated by the fact that the text of the law was set forth in the third paragraph of the Preliminary Objections, and subsequently treated as the cornerstone of the Norwegian case.

In these circumstances, I am compelled to accept the French contention, and to reach the conclusion that the French Final Submissions should not be rejected.

But, even if it is assumed that the claim, as stated in the Application, is confined to the existence of the gold clause and the obligation of the bonds, and that it did not include the contested elements (discrimination and extraterritorial legislation), it does not follow that the French Final Submissions must necessarily be rejected. If the contested elements were incorporated into the dispute by Norway alone, or by the two Governments, in the course of the Written and Oral Proceedings, it would not be open to Norway to complain at this late stage. In order to examine this aspect of the matter, it is necessary to assume that the claim, as stated above, must be construed as confined to the gold clause and the obligation of the bonds, and as excluding the contested elements.

Accordingly, and with that assumption in mind, I must examine the way in which the allegedly new elements were brought into the case. It will be seen that, from the beginning of the proceedings in the Court, France based its pleadings and oral arguments on the view that they had already been included in the Application. But it will also appear that Norway understood that these contested elements were an integral part of the merits of the dispute before the Court. It will emerge that the request for rejection of the French [p 83] Final Submissions is based on the extremely technical point that the indication of the issues, as set forth in the Application, was so badly drafted that it failed to disclose the real scope and extent of the dispute as understood and developed by both France and Norway. It will appear that Norway took such a dominant part in the enlargement of the dispute in the course of the Written and Oral Proceedings that it is not open to Norway to complain now by raising the extremely technical point referred to above.


The actual dispute, on the governmental level, commenced with the first French Note, dated 16 June, 1925, and included, together with all the rest of the diplomatic correspondence, in the Memorial. This Note, which was concerned with the claims of French holders of bonds of the Mortgage Bank of Norway, raised the two issues: discrimination and extraterritoriality. The Norwegian reply took the form of the Note, dated 9 December 1925, transmitting a letter from the Mortgage Bank defending its position. This letter questioned the gold clause. It admitted the fact of discrimination in favour of Swedish bondholders and against the French, defending it as being based on good will. It dealt with extraterritoriality as follows:

"The question has in all cases been determined by reference to the Law of December 15th, 1923. In accordance with this Law, if the creditor refuses to accept payment in Bank of Norway banknotes at their nominal gold value, the debtor may claim postponement of the payment for as long as the Bank is exempt from redeeming its notes in gold at their nominal value."

"The French Note states that a law of this kind can only apply to nationals and not to foreign bondholders. This, however, is a view which cannot be maintained. In any event the question would naturally fall to be decided by a Norwegian Court in accordance with Norwegian legislation and in accordance with Norwegian law and it is quite clear that the decision would be binding on all concerned."

Accordingly, for more than thirty years, the controversy was based on the three main elements: discrimination, extraterritoriality and the problem of interpretation and obligation arising out of the gold clause.

Then came the Application, which is being considered upon the assumption that it must be construed as cutting down the controversy to a single issue. I am reluctant to adopt a narrow and restrictive interpretation of the words used in the Application, in aid of a highly technical argument designed for the sole purpose of preventing justice from being done. Nevertheless, I must proceed on the assumption that the narrow and restrictive interpretation is right, and consider what happened in the course of the treatment of the issues by the Parties. [p 84]

As might have been expected, France proceeded to deal with the case as if the controversy had continued, uncurtailed by the Application and including the contested elements. The case was dealt with in the Memorial by raising and discussing the issues which are now embodied in paragraphs 2, 3, 4 and 5 of the French Final Submissions. As regards paragraph 3, the extraterritorial point, it was summed up in a sentence:

"The question which arises may therefore be simply put in the following way: can a debtor State, by means of an internal law providing for the currency of unconvertible banknotes, alter the substance of its external debt?"

The issue dealt with in paragraph 1 of the Final Submissions, discrimination, was mentioned in the Memorial, and fully argued in the Observations and Submissions. All of the issues, as set forth in the Final Submissions, were fully argued in the Reply and in the course of the Oral Proceedings.

There was, at first, some difference in the course followed by Norway. I have already pointed out that Norway, in paragraph 3 of the Preliminary Objections, set forth the text of the Law of December 15, 1923, which became the cornerstone of its case. Later, in paragraph 29, in discussing the legal basis of the course followed by Norway, it was stated that "it was the Law of December 15, 1923, which was applied". But in taking the "First Objection", Norway limited that objection to "the dispute, as defined in the said Application", and put forward arguments which could have no relevancy except on the assumption that the actual controversy had been curtailed by the Application so as to exclude the contested elements, discrimination and extraterritoriality.


It was the Counter-Memorial, the Rejoinder and the oral arguments by Norway that brought about the fundamental change in the scope of the dispute. For, assuming the curtailment of the controversy by the wording of the Application, its enlargement so as to include the contested elements was indeed a fundamental change.

The Counter-Memorial devoted nearly three pages to a discussion of the legal aspects of discrimination; and eleven pages to a much more important issue. Norway put forward the argument that the action of the Norwegian legislature in enacting the Law of December 15, 1923, and other relevant laws was justified by the historical background. That background was one of world-wide economic catastrophe: a sort of universal bankruptcy. The argument was that Norway, in the special circumstances, was justified in suspending gold payments, or the payment of gold equivalents. That justification necessarily involved a correlative obligation to give equal treatment to all creditors involved. [p 85]

The Rejoinder carried the arguments bearing directly on the questions of discrimination and extraterritoriality even further. It developed the argument based on the practice of States in dealing with economic catastrophe by fiscal measures. It brought into the case entirely new considerations: the principles of international law concerning "national treatment" of aliens, and the system of the "minimum" or "international standard". As in the case of the argument based on State practice, these principles necessarily involve the problem of discrimination and bear directly on the extent of the Norwegian legislative power. The extent to which the Rejoinder goes in enlarging the scope of the issues is indicated by the fact that one hundred and thirty-four pages of the two volumes are devoted to these aspects of the case.

In the Oral Proceedings, the same trend was observed. The Norwegian Agent and Counsel devoted a very large proportion of their time to the discussion of the two issues which the Agent now asks the Courts to strike out of the case. One of the Counsel went so far as to devote the whole of his time to one of them.

In these circumstances, I am of the opinion that the French Final Conclusions do not go beyond the limits of the dispute in the form which it took in the course of the Written and Oral Proceedings ; and that the responsibility for any enlargement of the dispute which may have taken place since the Application is mainly due to Norway. At any rate, Norway certainly shared that responsibility with France. It is not open to Norway, at this stage, to complain about this enlargement.

***

Second Question—The Norwegian contention that "The subject of the dispute as defined in the Application is within the domain of municipal law and not of international law, whereas the compulsory jurisdiction of the Court in relation to the Parties involved is restricted, by their Declarations of November 16th, 1946, and March 1st, 1949, to disputes concerning international law;".

This question was dealt with in two parts by Norway. In the first part it was discussed upon the assumption that it was being put to the Court for its decision. The second part deals with a subsidiary aspect of the question in which the Court is being asked to deal with it not on the basis of its own decision, but by merely registering a decision of the Norwegian Government automatically ousting the jurisdiction of the Court. [p 86]

First Part

This question is confined to "the dispute as defined in the Application". It does not relate to the controversy as it existed between the two Governments in the thirty years preceding the Application or to the issues as discussed and dealt with by France and Norway in the course of the Written and Oral Proceedings. It has nothing to do with the subject-matter of the dispute as set forth in the French Final Submissions. It is not in any sense relevant to the actual case which is now before the Court. It is included in the Norwegian Final Submissions and it represents a position which has been maintained at all stages by Norway, in which the arguments have been qualified and restricted to the dispute as defined in the Application.

In dealing with the First Question I have taken the position that the French Final Conclusions should not be rejected, and it necessarily follows that I am of the opinion that the Second Question, the point which was raised in the first Preliminary Objection, has no relevancy at the present stage. The actual question as it existed when the point -was first taken was of a substantial character, but the objection that the dispute was within the domain of municipal law and not of international law has been maintained in relation to the present position of the case.

The objection involves the very nature of the case and cannot be considered effectively without touching upon the merits. I do not propose to give my views with regard to the merits, but it is necessary for me to look at the merits in order to determine the sort of issues which they raise—i.e. whether they are issues of national law or of international law or both. I must consider the problem presented by this objection from three different aspects:

First Aspect: That the issue submitted by the Application is purely a matter of national law and does not raise any issue of international law.

This is the heart of the first Preliminary Objection. If the bond contracts operated under international law, or if, either originally or at a later stage, they gave rise to international obligations due from Norway to France, it would no longer be possible to suggest that the dispute was based solely on municipal law.

At the early stages of the transaction, the position is reasonably clear. When the French bondholder bought a Norwegian bond, there were only two parties to the executory contract which came [p 87] into being—the bondholder and the Norwegian borrower, either the State or one of the two Banks. The Government of France had no part in the transaction. It was made under national law and there was possible conflict between the different laws involved, French, English and Norwegian. The determination of which law controlled any particular aspect of the matter was a problem to be resolved by the law of the forum in which the suit was brought. The court would apply the rules of private international law which governs the choice of law, and then apply the chosen law to the issues before it. Those rules and the chosen law would both be national, and not international, law.
At this stage the transaction came solely within the plane of national law. It would therefore be a matter in which the Court was incompetent to adjudicate, and in which it would be necessary if dealing with the Merits to say that there were no rules of international law governing the transaction. It would not be open to this Court to decide upon the issues of choice of law, of interpretation of the contract, or of the extent of its obligation.

The next stage was when France undertook diplomatic action as a result of the suspension by Norway of payment in gold or in gold equivalents in pursuance of the provisions of the law of 1923. There is a difference between France and Norway as to the date of the adoption of the dispute by the French Government, but that is unimportant.

France claims that the adoption of the position of the French bondholders by the French Government—the assertion by France to Norway of the French views as to the obligation of the bonds, and the refusal by Norway to concur and act accordingly—transformed this dispute from one between private individuals and the Norwegian borrowers into one between France and Norway, but something more is needed than the mere adoption of a dispute under the national law to give rise to a "question of international law" within the meaning of the expression as used in Article 36, paragraph 2, clause (b). There must have been a breach by Norway of an obligation under international law due to France.

Norway contends that the dispute as set forth in the Application remained a dispute under the national law of Norway with which this Court cannot deal. But I have already suggested that the Application, properly construed, was broad enough in its terms to raise those aspects of the problem which consist solely of questions of international law, and I have also indicated that in my opinion the issues are now settled, not by the wording of the Application but by the wording of the Final Submissions of the Government [p 88] of the French Republic.

In the French Final Submissions, "On the Merits", the first paragraph clearly raises the question of discrimination, and the third paragraph raises the question of whether Norway could, in conformity with the principles of international law, by legislative action unilaterally modify the substance of the contracts between Norwegian borrowers and French bondholders.

In these circumstances, there can be no doubt that questions of international law are involved and that the Court is competent to deal with the claim submitted to it. At any rate, there can be no serious question as to its competence as regards the claim based on discrimination and as regards the claim based on the law of December 15th, 1923.

Second Aspect: That Norway discriminated against the French bondholders and in favour of the Danish and Swedish bondholders.

I have already referred to this question in dealing with the First Question, and have mentioned it in discussing the First Aspect above. It is, however, necessary to develop it further and to examine the grounds on which Norway has sought to justify the discrimination.

The fact of discrimination is beyond question, but Norway argues that there were times when the French bondholders were more favourably treated than the Danes and Swedes. But two wrongs do not make a right, and in my opinion the question of balance of advantage is irrelevant.

Further, I cannot help thinking that the payment in Swedish crowns involved very substantial discrimination. One thing is certain, and that is that on the 23rd December, 1946, a proposal was submitted by France for a settlement of the case, which had then been a sore spot in Franco-Norwegian relations for twenty-one years. This proposal was in the nature of a compromise, asking that the French bondholders should be paid in Swedish crowns on their capital payments, and that the coupons should be paid in Norwegian crowns. The Norwegian Government did not even answer this proposal.

Norway also questions the existence of a rule of international law requiring equality of treatment, but that is a matter of merits. What must be borne in mind now is that the question as to whether such a rule of international law existed was certainly a "question of international law" within the meaning of Article 36.

Norway relies strongly on the argument that discrimination was justified because it was based on good-will. It is not clear whether it was good-will towards the Danish or Swedish investors or towards Denmark and Sweden. This question of good-will has been repeat[p 89] edly raised and discussed by Norway, commencing on the 9th December, 1925, but its meaning and significance are still obscure. There is no suggestion that the refusal to accord the same sort of treatment to France or to the French investors was based on ill-will, and I cannot believe that the argument intends to suggest that international law considers that discrimination, if based on either good-will or ill-will, ceases in some mysterious manner to be discriminatory. At any rate, the question whether good-will can justify discrimination is a matter of international law and not of the national law of the respondent State.

Norway also argues that the payments to the. Swedish bondholders were ex gratia, and therefore not a proper subject for complaint by France. This argument is based upon the assumption that the French bondholders had no legal right to get anything better than Norwegian crowns (or sterling or francs), and that they had no right to receive gold or gold equivalents. But that is begging the question, and the objections to the jurisdiction must be dealt with upon the assumption that the Applicant's contentions with regard to the merits are justified and that the Respondent's conten-tions with regard to the merits are wrong. The case must be considered on the assumption that the bonds contained a real gold clause binding on Norway.

It is, of course, true that this question of discrimination has been an important element in the controversy for thirty-two years, but it has been imported into dispute before this Court largely by reason of the justification on which Norway relies for its action in enacting the law of December 15th, 1923, and in establishing the cours force and impairing the obligation of the bonds. That is a point which I shall deal with more fully in discussing the Third Aspect. But the Norwegian action has been justified on the basis of world-wide economic catastrophe in which Norway and other States were compelled to take legislative measures impairing the obligations of debtors within the country as regards both resident and non-resident creditors. Such a justification obviously raises the question as to whether international law, if it sanctions such a course, permits it where the State in question is discriminating between different classes of creditors.

I do not need now to express any opinion on this question of justification, but I have no doubt that it involves questions of international rather than of national law.

Third Aspect: The French contention that the enactment by Norway of extraterritorial legislation purporting to impair the obligations [p 90] due to foreign bondholders resident in France was contrary to international law.

This contention was raised in the French Final Submissions "On the Merits", paragraph 3. In the course of the controversy, and throughout the written and oral proceedings, France has developed two main arguments along these lines. The first argument is based upon the view that international law treats the obligations arising from the marketing of bonds abroad as being something more than obligations arising under national law. Where, as in this case, the bonds have been:

(1) marketed abroad;

(2) expressed in several currencies;

(3) payable abroad;

(4) expressed in several languages;

it is argued that they cannot be repudiated without giving rise to a breach of international law.

France contends that this position is supported by the practice of States as indicated by the arbitrations in such matters, especially in the closing years of the last century and the early years of this century, and reliance is also placed on Article 1 of the Hague Convention of 1907. The terms of this Convention were at first put forward as establishing a legal obligation to submit to arbitration in the matter of the recovery of contract debts. But this position has been abandoned, and in the later stages France was relying on the Convention as establishing the nature and character of the obligation arising out of contract debts claimed from the Government of one country by the Government of another country as being due to its nationals.

The French position was contested in all its phases by Norway.

The second French contention arises out of what has been referred to as the special French doctrine with regard to governmental action within a State impairing the obligation of debts due to non-resident aliens. It is contended by France that this doctrine expresses a broad principle of international law which would prevent a State from enacting extraterritorial legislation impairing the contractual rights of non-resident aliens. The French argument is based largely on this being a general principle of law recognized by civilized nations, and it is countered by the argument put forward on behalf of Norway, which is of a two-fold character— Norway relies largely on the practice of States, and also on the rule of the minimum standard. [p 91]
It will thus be seen that the French claim and the Norwegian justification in this aspect of the question are both based upon considerations of international law and have nothing whatever to do with national law.

It is, of course, impossible for me at the present stage to indicate my views as to whether France or Norway is right, whether the matter is considered from the point of view of discrimination or of extraterritoriality. On the other hand, I find insuperable difficulty in reaching the conclusion that a case involving these issues can be treated as being solely one of national law; and I am forced to the conclusion that the first Preliminary Objection should be rejected.

Second Part

In the Preliminary Objections, after arguing that the subject of the dispute as defined in the Application was within the domain of municipal law and not of international law, Norway considered that there could be no possible doubt on this point. If, however, there should still be some doubt, the Norwegian Government intimated that it would rely upon the reservation made by the French Government in its Declaration of March Ist, 1949. After discussing this Declaration, it was stated that "convinced that the dispute which has been brought before the Court by the Application of July 6th, 1955, is within the domestic jurisdiction, the Norwegian Government considers itself fully entitled to rely on this right".

In invoking the provision contained in the reservation to the French Declaration, which provided for the automatic ouster of the jurisdiction by the unilateral action of the respondent Government, Norway was exercising a right of a highly technical character, and the question naturally arises whether there was complete compliance with all of the provisions of the Declaration. The reservation reads as follows:

"This Declaration does not apply to disputes relating to matters which are essentially within the national jurisdiction as understood by the Government of the French Republic." (The translation of the French original has been changed by substituting the word "disputes" for "differences" in order to bring the English text into harmony with the French text.)

Norway, in putting forward this highly technical objection, did not make any statement or give any evidence indicating that this dispute related to matters which are essentially within the national jurisdiction as understood by the Norwegian Government. It made a bald statement that it was convinced that the dispute was "within the domestic jurisdiction", which is quite a different matter. There [p 92] never at any time has been any question about the dispute being within the domestic jurisdiction of Norway. The real question has been whether the dispute was not also and primarily a matter to be determined not by the Norwegian law but by international law. However, Norway made it plain enough that it desired to invoke the French Declaration.

I have refused to apply any rigid and purely literal interpretation to the Application and have insisted that it should be interpreted so as to give effect to what obviously was the intention of France and the understanding of Norway. It would be completely inconsistent for me to seek to apply a rigid and purely literal interpretation to the words used by Norway when it sought to invoke the French Declaration. Accordingly, I am compelled to reach the conclusion that Norway did effectively invoke the French Declaration when the point was taken in the Preliminary Objections.

On the other hand, I do not think that Norway has maintained its position in this regard.

Having purported to invoke in the Preliminary Objections the reservation contained in the French Declaration, Norway did not incorporate this subsidiary point in its actual Submission. Indeed, the actual Submission relating to the first Preliminary Objection was inconsistent with the notion embodied in the Declaration. It asked the Court to find that the subject of the dispute was within the sphere of municipal law and not of international law, while the reservation envisaged a position in which that was not to be decided by the Court, but by the understanding of the Norwegian Government.

The point was not mentioned by Norway in the Counter-Memorial, in the Rejoinder or in the Oral Proceedings. Further, in the Norwegian Final Submissions of May 23rd—"On the Preliminary Objections"—the Court is asked to make a finding that "1. The subject of the dispute, as defined in the Application, is within the domain of municipal law and not of international law." This actual Submission by Norway is inconsistent with the maintenance of the position taken in the Preliminary Objections when the French Declaration was invoked. Here again, the formal request that the Court should make this finding is utterly inconsistent with the idea the decision should be made by Norway and not by the Court.

It might be thought that, notwithstanding the omission of this point from the Norwegian Final Submissions, it was maintained in the closing statements made on behalf of Norway during the Oral Proceedings. [p 93]

At the beginning it was said, on behalf of Norway:

"In these circumstances, I should not like to take advantage of the Court's patience by repeating what we have already had the honour to set forth in our oral arguments. We maintain our positions in their entirety both as regards the merits and as regards the Preliminary Objections."

It is clear that Norway here was maintaining the position which had been taken in the course of the oral arguments and that no reference was intended to any matter touched upon in the Written Pleadings but not dealt with in the course of the Oral Proceedings.

Later, in dealing with the fourth Objection, which concerned exhaustion of local remedies, it was stated:

"All that we have written and all that we have submitted orally to the Court in regard to our fourth Objection therefore still stands."

In this instance it was clearly intended, as regards the fourth Objection, to maintain all positions which had been taken during the Written Proceedings whether or not they had been maintained in the course of the Oral Proceedings.
The final position was taken towards the end when it was said:

"The Norwegian Government maintains its Submissions in their entirety as I presented them at the sitting on May 23rd..."

I have no doubt in my own mind that the Norwegian Agent and Counsel realized that it was no longer proper to rely upon the French Declaration. In view of the form which the dispute had taken in the course of the Written and Oral Proceedings and especially having in mind that Norway had used 134 pages in the Rejoinder in arguing the international questions involved in the merits of the dispute, it was no longer possible seriously to suggest that Norway understood that the actual dispute before the Court related "to matters which are essentially within the national jurisdiction as understood by the" Norwegian Government.

It is true that Norway has not formally abandoned the course which it adopted when it purported to invoke the reservation contained in the French Declaration. Nevertheless, I am compelled to reach the conclusion that Norway has not maintained that position and that it is necessary to comply with Norway's request to deal with the case on the basis of the Norwegian Final Submissions of May 23rd.

But even if I thought that Norway had maintained its Objection based on the reservation to the French Declaration, I should still have difficulty in accepting an objection to the jurisdiction of the Court based upon the Second Part of the first Preliminary Objection. [p 94]

My first difficulty relates to the text of the Declaration. It is necessary, for Norway to succeed, to establish that the Norwegian Government understands that the dispute relates to matters which are essentially within the Norwegian national jurisdiction. It is not sufficient to establish that the Norwegian Government pretends to understand, or declares that it understands that the dispute comes essentially within the scope of Norwegian national law. The text does not use the word "pretends" or "declares" and it does use language that suggests that it had in mind a genuine understanding.

When the provisions of the reservation were invoked by Norway, it was not contended that they conferred an arbitrary power to oust the jurisdiction of the Court. Norway took the position that "should a Government seek to rely upon it with a view to denying the jurisdiction of the Court in a case which manifestly did not involve a 'matter which is essentially within the national jurisdiction' it would be committing an abus de droit which would not prevent the Court from acting".

I am in agreement with the position taken by Norway in this regard, but I do not think that it goes quite far enough. A case might involve a matter essentially within the national jurisdiction and yet not come within the scope of "disputes relating to matters which are essentially within the national jurisdiction". Further, I should be disinclined to bring notions of "good faith" and abus de droit into the question. Practically speaking, it is, I think, impossible for an international tribunal to examine a dispute between two sovereign States on the basis of either good or bad faith or of abuse of law.
Nevertheless, I think that the basic principle underlying the position taken, by Norway in this regard should be accepted. I think that the wording of the reservation to the Declaration properly construed means that the respondent State, in invoking the reservation, must establish that there is a genuine understanding, i.e. that the circumstances are such that it would be reasonably possible to reach the understanding that the dispute was essentially national. Whether the circumstances are such is not a matter for decision by a respondent Government, but by the Court. But, assuming that such circumstances existed, the conclusion reached by a respondent Government could not be reviewed by the Court.

I am unable to accept the view that the reservation should be interpreted as giving the respondent Government an arbitrary power to settle any question of jurisdiction which arises by the assertion that the Government understands that the matter is essentially within the national jurisdiction regardless of whether that assertion is true or false.

Such a construction of the clause would lead to something unreasonable and absurd. It would, of course, if that interpretation [p 95] is accepted, be necessary to conclude that the Declaration ran contrary to Article 36, paragraph 6, of the Statute, and was null and void.

But this interpretation runs directly contrary to the rule which was laid down by the Permanent Court in the Polish Postal Service in Danzig (P.C.I. J., Series B, No. 11, p. 39)

"It is a cardinal principle of interpretation that words must be interpreted in the sense which they would normally have in their context, unless such interpretation would lead to something unreasonable or absurd."

This rule was approved in the Advisory Opinion of this Court: Competence of Assembly regarding admission to the United Nations, I.C.J. Reports J950, at page 8.

If we apply the principles of this rule to the present case we find that the relevant words in their natural and ordinary meaning make sense in their context and that, in my opinion, is an end of the matter. It is inadmissible, by a process of interpretation, to rewrite the clause in question as if it had read: "disputes relating to matters as regards which the Government of the French Republic has declared that it understands that they are essentially within the national jurisdiction". The words actually used, "as understood", if given their natural and ordinary meaning, connote a real understanding, and not a fictitious understanding unrelated to the facts.

Having these considerations in mind, it is necessary for me to examine the question whether the circumstances are such that it would be reasonably possible to reach an understanding that the dispute was essentially national.

At the time when Norway invoked the reservation there can be no doubt as to the propriety of the action. At that time, it was certainly reasonably possible, considering the Application alone together with any light that had been thrown upon it by the Memorial, to reach such an understanding. But, as a result of the course taken in the Written and Oral Proceedings, it is now possible to look at the dispute with full knowledge of its essential character. The dispute, in the form which it has now taken, and in which it is expressed in the French Final Submissions, involves a threefold claim based on: discrimination, extraterritoriality and the gold clause. The first two are based solely on international law while the third is based primarily on national law. I have already pointed out that throughout the Written and Oral Proceedings, the first and the second claims have been discussed at great length by France and at much greater length by Norway. In these circumstances, I find it impossible to reach the conclusion that Norway could have reasonably understood that the case was essentially within the Norwegian national jurisdiction. [p 96]

Accordingly, having considered both the First Part and the Second Part, I have reached the conclusion that the first Norwegian Preliminary Objection, as embodied in the first recital to the Submissions of the Agent of the Norwegian Government on May 23rd, 1957, should be rejected.

***

Third Question—The Norwegian contention that "As to that fart of the claim which relates to the bond certificates issued by the Mortgage Bank of Norway and the Small Holding and Workers' Housing Bank of Norway, these two Banks have a legal personality separate from that of the Norwegian State; the action cannot therefore be brought against that State as a borrower ; whereas moreover the jurisdiction of the Court is limited to disputes between States;".

I cannot accept the Norwegian contention as regards these Banks. I agree that they have separate legal personalities distinct from that of the Norwegian State, but that does not wholly dispose of the matter.

The record shows that in 1954 a bondholder brought an action against the Mortgage Bank of Norway in a French court, the Tribunal de la Seine. The Bank objected to the jurisdiction of that Court on the ground that it was an instrumentality of the Norwegian Government, and for that purpose furnished the court with a certificate, signed by the Minister of Finance of Norway and dated 28th December, 1931, to that effect. It is established that the Bank, both in the matter of the litigation and in the course followed as regards gold payments, payments in Swedish crowns, and other matters in dispute, was not acting as a separate personality with a separate power of decision, but was acting on the basis of the advice, instruction and approval of the Minister of Justice of Norway and the Minister of Finance of Norway. This has been the case since the 9th December, 1925, as is proved by Annex V to the Memorial. The proceedings in the French court were concluded in March, 1956, by a default judgment owing to the unwillingness of the Bank to appear and contest the proceedings on the merits.

It thus appears that the Norwegian State completely identified itself with the Bank for the purpose of preventing the bondholder from obtaining a judicial determination of his rights. It is a sound doctrine that a party cannot blow both hot and cold at the same time, and Norway cannot retreat from the position of complete identification taken in 1931, and persisted in in the proceedings before the French court, for the purpose of preventing this Court from adjudicating upon the matter. [p 97]

***
Fourth Question—The Norwegian contention that "The holders of bond certificates for whose protection the French Government considers itself entitled to institute international proceedings have not first exhausted the local remedies."

From the very commencement of the diplomatic negotiations up to the present time, Norway has consistently and persistently insisted that the bondholders should resort to the Norwegian courts for the purpose of having these courts interpret the clauses in the bonds and determine the nature and extent of the obligations to the borrowers thereunder. But, at the same time and just as consistently and persistently, Norway has asserted that the question has been governed by the law of 15th December, 1923, and that that law is applicable to and binding upon foreigners. I have quoted above the actual statement by Norway, made at the commencement of the controversy.

The rule of international law requiring the exhaustion of the local remedies is of great importance. When a State adopts the cause of its nationals as against a respondent State in a dispute which originally was one of national law, it is important to obtain the ruling of the local courts with regard to the issues of fact and law involved, before the international aspects are dealt with by an international tribunal. It is also important that the respondent State which is being charged with breach of international law should have a fair opportunity to rectify the position through its own tribunals. It is necessary to begin the consideration of the fourth Preliminary Objection with the assumption that France must establish resort to an exhaustion of local remedies before the claims of the French bondholders can be submitted to this Court.

France has put forward three reasons for not resorting to the domestic tribunals in this case.

In the first place, France suggests that the rule with regard to the necessity for exhaustion of local remedies is limited to cases in which the aggrieved individuals have taken up residence within the jurisdiction of the respondent Government and thus consented to the exercise by the tribunals of that country of jurisdiction over them.

France has not been able to put forward any persuasive authority for accepting this limitation on the application of the rule and, indeed, the weight of authority is the other way.

In the second place, France also contends that the proper law of the contract is French and that the proceedings could be undertaken in the French courts. But this is a matter of private international law on which I do not propose to express any opinion. It is not directly relevant to the application of the rule of exhaustion of local remedies which, as a rule of public international law, is [p 98] concerned with the exhaustion of remedies available in the respondent State.

In the third place, France contends that the bondholders should be excused from having undertaken proceedings in the Norwegian courts because such proceedings would offer no reasonable prospect of establishing their rights.

Here we must again draw a clear-cut line between the original dispute based on national law and the dispute before this Court which is based upon international law. In this Court, the main complaints against Norway on the international plane are:

1st—discrimination;
2nd—extraterritoriality;

3rd—the gold clause issue.

The bondholder could not possibly bring proceedings in the Norwegian courts with regard to the first or the second issues. His only course of action was a suit for breach of contract.

The question, therefore, is whether the bringing of an action in the Norwegian courts by a French bondholder is a course which could be reasonably expected of him, or whether it would have been a procedure of obvious futility.

I have difficulty in reaching the conclusion that the bondholder could reasonably have been expected to bring proceedings in the Norwegian courts. Since 9th December, 1925, he has had the notion hammered into his head by the Norwegian Government that such a course would be futile because the matter was governed by the law of 15th December, 1923. If he had brought an action and had persuaded the Norwegian court that there was a real gold clause in his bond, he would have met an insuperable barrier in the law of 1923. It would have been in vain for him to have argued that the enactment of that law was contrary to the rules of international law.

It has been suggested in the Oral Proceedings that he might have asked the court to do one of two things—namely, to interpret the law as being inapplicable to foreigners, or to hold that the law was unconstitutional by reason of its retroactive character. But the French bondholder had never heard of these possibilities, neither of which was suggested at any time in the course of the diplomatic negotiations or in the course of the negotiations which took place between the French National Association and the Mortgage Bank.

In the fourth place, it has been argued that the rule with regard to exhaustion of local remedies has no application where the rights of the applicant national have been impaired by the direct inter-vention of the respondent Government or Parliament. If there ever was a case in which the respondent Government and Parliament had intervened to impair the rights of non-resident aliens, it is in the present instance. It is obvious from the terms of the Note of 9th December, 1925, that the Mortgage Bank was not acting under [p 99] its own motion but under pressure from the Minister of Justice and the Minister of Finance. Further, the Storthing, the supreme legislative authority, in enacting this law was directly intervening so as to impair the rights of the French bondholders. Here I am not suggesting that either the Minister of Justice, the Minister of Finance, the Norwegian Government or the Storthing adopted and followed any course that was improper, but when I am dealing with an objection to the jurisdiction I am compelled to assume as against Norway matters which might well be changed on consideration of the merits.

In view of these circumstances I find difficulty in upholding the fourth Norwegian objection, and am led to the view that it should be rejected.

***
Fifth Question—The Norwegian request that the Court should "adjudge and declare that the claim put forward by the Application of the French Government of July 6th, 1955, is not admissible".

I have already given my reasons for thinking that the claim of the French Government, with which the Court is now dealing, is the claim as set forth in the French Final Submissions. In a sense therefore, the Fifth Question is hardly relevant. But, construing the question as relating to the claim before the Court, I am of the opinion that it is not inadmissible. To appreciate the position, it is necessary to bear in mind that there are three complaints before the Court.

The first is the charge by France that Norway discriminated against the French bondholders, contrary to the rules of international law. This charge, which I have been calling "discrimination", is formulated in the first paragraph of the French Submissions on the merits.

The second is the charge by France that Norway, by unilateral action in violation of the rules of international law, enacted legislation impairing the obligation of the bonds, to the detriment of the French investors. This charge, which I have been calling "extraterritoriality", is formulated in the third paragraph of those Submissions.

These elements of the dispute are causes of action which, in my opinion, are admissible. This Court alone is competent to dispose of them. They cannot be referred to the Norwegian courts, because those courts are not competent to dispose of a dispute, under international law, between France and Norway. The complaints, as regards discrimination and extraterritoriality, do not touch the breach of any legal obligation owed by Norway to the French bondholders. They relate solely to the obligations imposed on Norway by international law vis-à-vis France.[p 100]

The third complaint is that which concerns the existence and obligation of the gold clause. It is based on the law of contract, and the contract, in this instance, is governed by Norwegian national law and not by international law. This complaint is formulated in the second, fourth and fifth paragraphs of the French Submissions on the merits. This element of the dispute is a cause of action which, in my opinion, is inadmissible. It is a matter that is and was within the scope of the jurisdiction of the Norwegian courts, in suits by the French bondholders against the Norwegian borrowers. France could not, by adopting the claims of French nationals, change the legal nature of the claims, and transfer them from the national to the international plane.

I do not think that the jurisdiction of the Norwegian courts to deal with the contractual cause of action, the third complaint under consideration, is in any way impaired by the existence of the first and second complaints which they are not competent to adjudicate. That is so notwithstanding that the three elements are so closely related. But, at the same time, I am of the opinion that the compe-tence of this Court to adjudge the two purely international elements is not ousted, by reason of the coexistence of a closely related, but severable, element which is within the exclusive national competence of Norway.

Accordingly, I have reached the conclusion that the Court should reject the Norwegian objections in so far as they relate to the first and third paragraphs of the French Submissions on the merits; and allow the Norwegian objections in so far as they relate to the second, fourth and fifth paragraphs thereof.

Norway has asked the Court, in the Submissions of May 23rd, 1957, to deal with the merits. This is a conditional request, which would come into operation only if the Court decided that the claim was admissible. As the Court is taking the position that it is not competent to deal with any part of the dispute, it is not desirable that I should proceed to discuss the merits, although my own view is that they should be dealt with in so far as they relate to the first and third paragraphs of the French Submissions. In dealing with the points of jurisdiction and admissibility, it has been necessary for me to look at the merits from time to time, and to make certain observations with regard to them. It was not intended in making these observations to indicate in any way what my opinion would be in the event that it became necessary to consider and dispose of the merits.

(Signed) J. E. Read.

 
     

 

 

 

 

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