21 March 1959

 

General List No. 34

 
     

international Court of Justice

     
 

Interhandel

 
     

Switzerland

 

v. 

United States

     
     
 

Judgment

 
     
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BEFORE: President: Klaestad;
Vice-President: Zafrulla Khan;
Judges: Basdevant, Hackworth, Winiarski, Badawi, Armand-Ugon, Kojevnikov, Sir Hersch Lauterpacht, Moreno Quintana, Cordova, Wellington Koo, Spiro-poulos, Sir Percy Spender;
Judge ad hoc: Carry
   
PermaLink: http://www.worldcourts.com/icj/eng/decisions/1959.03.21_interhandel.htm
   
Citation: Interhandel Case (Switz. v. U.S.), 1959 I.C.J. 6 (Mar. 21)
   
Represented By: Switzerland: M. Georges Sauser-Hall, Professor emeritus of the Universities of Geneva and Neuchatel, as Agent;
M. Paul Guggenheim, Professor at the Law Faculty of the University of Geneva and at the Graduate Institute of International Studies, as Co-Agent;
assisted by
M. Henri Thevenaz, Professor of International Law at the University of Neuchatel, as Counsel and Expert;
M. Michael Gelzer, Doctor of Laws;
M. Hans Miesch, Doctor of Laws, First Secretary of Embassy, as Experts;

United States: the Honorable Loftus Becker, Legal Adviser of the Department of State, as Agent;
assisted by
Mr. Stanley D. Metzger, Assistant Legal Adviser for Economic
Affairs, Department of State;
Mr. Sidney B. Jacoby, Professor of Law, Georgetown University, as Counsel.

 
     
 
 
     
 

[p.6]

The Court,

composed as above,

delivers the following Judgment:

On October 2nd, 1957, the Ambassador of the Swiss Confederation to the Netherlands filed with the Registrar an Application dated October 1st instituting proceedings in the Court relating to a dispute which had arisen between the Swiss Confederation and the United [p 8] States of America with regard to the claim by Switzerland to the restitution by the United States of the assets of the Société internationale pour participations industrielles et commerciales S.A. (Interhandel).

The Application, which invoked Article 36, paragraph 2, of the Statute and the acceptance of the compulsory jurisdiction of the Court by the United States of America on August 26th, 1946, and by Switzerland on July 28th, 1948, was, in accordance with Article 40, paragraph 2, of the Statute, communicated to the Government of the United States of America. In accordance with paragraph 3 of the same Article, the other Members of the United Nations and the non-Member States entitled to appear before the Court were notified.

Time-limits for the filing of the Memorial and the Counter-Memorial were fixed by an Order of the Court on October 24th, 1957, and subsequently extended at the request of the Parties by an Order of January 15th, 1958. The Memorial of the Swiss Government was filed within the time-limit fixed by that Order. Within the time-limit fixed for the filing of the Counter-Memorial, the Government of the United States of America filed preliminary objections to the jurisdiction of the Court. On June 26th, 1958, an Order recording that the proceedings on the merits were sus-pended under the provisions of Article 62 of the Rules of Court, granted the Swiss Government a time-limit expiring on September 22nd, 1958, for the submission of a written statement of its observations and submissions on the preliminary objections. The written statement was filed on that date and the case became ready for hearing in respect of the preliminary objections.

The Court not including upon the Bench a judge of Swiss nationality, the Swiss Government, pursuant to Article 31, paragraph 2, of the Statute, chose M. Paul Carry, Professor of Commercial Law at the University of Geneva, to sit as Judge ad hoc in the present case.

Hearings were held on November 5th, 6th, 8th, 10th, nth, 12th, 14th and 17th, 1958, in the course of which the Court heard the oral arguments and replies of the Honorable Loftus Becker, on behalf of the Government of the United States of America, and of M. Sauser-Hall and M. Guggenheim, on behalf of the Swiss Government.

In the course of the written and oral proceedings, the following submissions were presented by the Parties:

On behalf of the Government of the Swiss Confederation, in the Application:

"May it please the Court:
To communicate the present Application instituting proceedings to the Government of the United States of America, in accordance with Article 40, paragraph 2, of the Statute of the Court; [p 9]

To adjudge and declare, whether the Government of the United States of America appears or not, after considering the contentions of the Parties,

1. that the Government of the United States of America is under an obligation to restore the assets of the Société internationale four participations industrielles et commerciales S.A. (Interhandel) to that company;

2. in the alternative, that the dispute is one which is fit for submission for judicial settlement, arbitration or conciliation under the conditions which it will be for the Court to determine.

The Swiss Federal Council further reserves the right to supplement and to modify its submissions."

On behalf of the same Government, in the Memorial:

"May it please the Court to adjudge and declare:

A. Principal Submissions

1. that the Government of the United States of America is under an obligation to restore the assets of the Société internationale pour participations industrielles et commerciales S.A. (Interhandel) ;

2. in the alternative, that in case the Court should not consider that proof of the non-enemy character of the property of the Société internationale pour participations industrielles et commerciales S.A. (Interhandel) has been furnished, an expert selected by the Court should be designated, in accordance with Article 50 of the Statute of the Court, with the task of

(a) examining the documents put at the disposal of the American Courts by Interhandel,

(b) examining the files and accounting records of the Sturzenegger Bank the seizure of which was ordered by the public authorities (Ministère public) of the Swiss Confederation on June 15th, 1950, subject to the reservation, however, that the expert in his expert opinion shall refer only to such documents as relate to the Interhandel case and shall be instructed to observe absolute secrecy concerning the documents of the Sturzenegger Bank, its clients and all other individuals and legal persons if such documents are not relevant to the case pending before the Court,

for the purpose of enabling the Court to determine the enemy or non-enemy character of the Interhandel assets in the General Aniline and Film Corporation.

B. Alternative Submissions in case the Court should not sustain the Swiss request to examine the merits of the dispute

1. (a) that the Court has jurisdiction to decide whether the dispute is one which is fit for submission either to the arbitral tribunal provided for in Article VI of the [p 10] Washington Accord of 1946, or to the arbitral tribunal provided for by the Treaty of Arbitration and Conciliation between Switzerland and the United States of February i6th, 1931;

(b) that in case of an affirmative reply to submission (a) either the arbitral tribunal provided for in the Washington Accord or the tribunal provided for in the Treaty of Arbitration and Conciliation of 1931, has jurisdiction to examine the dispute, and that the choice of one or the other tribunal belongs to the applicant State;

2. in the alternative:

(a) that the Court has jurisdiction to decide whether the dispute is fit to be submitted to the arbitral tribunal provided for by Article VI of the Washington Accord of 1946;

(b) that in case of an affirmative reply to submission (a) the said tribunal has jurisdiction to examine the dispute;

3. in the further alternative:

(a) that the Court has jurisdiction to decide whether the dispute is fit to be submitted to the arbitral tribunal provided for by the Treaty of Arbitration and Conciliation of 1931 between the Swiss Confederation and the United States of America;

(b) that in case of an affirmative reply to submission (a) the said tribunal has jurisdiction to examine the dispute;

4. in the final alternative:

that the dispute between the Swiss Confederation and the United States of America should be submitted to the examination of the Permanent Commission of Conciliation provided for in Articles II-IV of the Treaty of Arbitration and Conciliation of I931.

The Swiss Federal Council furthermore reserves the right to supplement and to amend the preceding submissions."

On behalf of the Government of the United States of America, in the Preliminary Objections:

"May it please the Court to judge and decide:

(1) First Preliminary Objection
that there is no jurisdiction in the Court to hear or determine the matters raised by the Swiss Application and Memorial, for the reason that the dispute arose before August 26th, 1946, the date on which the acceptance of the Court's compulsory jurisdiction by this country became effective;

(2) Second Preliminary Objection
that there is no jurisdiction in the Court to hear or determine the matters raised by the Swiss Application and Memorial, for the reason that the dispute arose before July 28th, 1948, [p 11]

the date on which the acceptance of the Court's compulsory-jurisdiction by this country became binding on this country as regards Switzerland;

(3) Third Preliminary Objection
that there is no jurisdiction in this Court to hear or determine the matters raised by the Swiss Application and Memorial, for the reason that Interhandel, whose case Switzerland is espousing, has not exhausted the local remedies available to it in the United States courts;

(4) Fourth Preliminary Objection
(a) that there is no jurisdiction in this Court to hear or determine any issues raised by the Swiss Application or Memorial concerning the sale or disposition of the vested shares of General Aniline and Film Corporation (including the passing of good and clear title to any person or entity), for the reason that such sale or disposition has been determined by the United States of America, pursuant to paragraph(b) of the Conditions attached to this country's acceptance of this Court's jurisdiction, to be a matter essentially within the domestic jurisdiction of this country; and

(b) that there is no jurisdiction in this Court to hear or determine any issues raised by the Swiss Application or Memorial concerning the seizure and retention of the vested shares of General Aniline and Film Corporation, for the reason that such seizure and retention are, according to international law, matters within the domestic jurisdiction of the United States.

The United States of America reserves the right to supplement or to amend the preceding submissions, and, generally, to submit any further legal argument."

On behalf of the Swiss Government, in its Observations and Submissions:

"May it please the Court to adjudge and declare:

1. to dismiss the first preliminary objection of the United States of America;

2. to dismiss the second preliminary objection of the United States of America;

3. either to dismiss, or to join to the merits, the third preliminary objection of the United States of America;

4. either to dismiss, or to join to the merits, preliminary objection 4 (a) of the United States of America;
either to dismiss, or to join to the merits, preliminary objection 4 (b) of the United States of America. [p 12]

The Swiss Federal Council maintains and confirms its main and alternative submissions as set out on pages 67 and 68 of the Memorial of the Swiss Confederation of March 3rd, 1958.

The Swiss Federal Council supplements its main submissions by the following alternative submission:

The Swiss Federal Council requests the Court to declare that the property, rights and interests which the Société internationale pour participations industrielles et commerciales S.A. (Interhandel) possesses in the General Aniline and Film Corporation have the character of non-enemy (Swiss) property, and consequently to declare that by refusing to return the said property the Government of the United States of America is in breach of Article IV, paragraph r, of the Washington Accord of May 25th, 1946, and of the obligations binding upon it under the general rules of international law.

The Swiss Federal Council further reserves the right to supplement and to modify the preceding submissions."

On behalf of the same Government, Submissions deposited in the Registry on November 3rd, 1958:

"A. Principal Submissions

1. that the Government of the United States of America is under an obligation to restore the assets of the Société internationale pour participations industrielles et commerciales S.A. (Interhandel) ;

2. in the alternative, that in case the Court should not consider that proof of the non-enemy character of the property of the Société internationale pour participations industrielles et commerciales S.A. (Interhandel) has been furnished, an expert selected by the Court should be designated, in accordance with Article 50 of its Statute, with the task of:

(a) examining the documents put at the disposal of the American courts by Interhandel,

(b) examining the files and accounting records of the Sturzenegger Bank, the seizure of which was ordered by the public authorities (Ministère public) of the Swiss Confederation on June 15th, 1950, subject to the reservation, however, that the expert in his expert opinion shall refer only to such documents as relate to the Interhandel case, and shall be instructed to observe absolute secrecy concerning the documents of the Sturzenegger Bank, its clients and all other individuals and legal persons, if such documents are not relevant to the case pending before the Court,

for the purpose of enabling the Court to determine the enemy or non-enemy character of the Interhandel assets in the General Aniline and Film Corporation.

B. Alternative Principal Submission

The Swiss Federal Council requests the Court to declare that the property, rights and interests which the Société internationale [p 13] pour participations industrielles et commerdales S.A. (Interhandel) possesses in General Aniline and Film Corporation have the character of non-enemy (Swiss) property, and consequently to declare that by refusing to return the said property, the Government of the United States is acting contrary to the decision of January 5th, 1948, of the Swiss Authority of Review based on the Washington Accord, and is in breach of Article IV, paragraph 1, of the Washington Accord of May 25th, 1946, and of the obligations binding upon it under the general rules of the law of nations.

C. Submissions regarding the Submissions of the Government of the United States following its Preliminary Objections

1. To dismiss the first preliminary objection of the United States of America;
2. To dismiss the second preliminary objection of the United States;
3. Either to dismiss, or to join to the merits, the third preliminary objection of the United States of America;
4. Either to dismiss, or to join to the merits, the preliminary objection 4 (a) of the United States of America;

either to dismiss, or to join to the merits, the prehminary objection 4 (b) of the United States of America;

In the alternative

should the Court uphold one or the other of the preliminary objections of the United States of America, to declare its competence in any case to decide whether the United States of America is under an obligation to submit the dispute regarding the validity of the Swiss Government's claim either to the arbitral procedure provided for in Article VI of the Washington Accord of 1946, or to the Arbitral Tribunal provided for in the 1931 Treaty of Arbitration and Conciliation, or to the Conciliation Commission provided for in the same Treaty, and to fix the subsequent procedure.

D. Submissions on the merits in the event of the Court accepting one or other of the preliminary objections of the United States of America and accepting jurisdiction in conformity with the alternative submission as under C

1. To declare that the United States of America is under an obligation to submit the dispute for examination either to the arbitral procedure of the Washington Accord or to the Tribunal provided for in the Arbitration and Conciliation Treaty of 1931, and that the choice of one or the other Tribunal belongs to the Applicant State.

2. In the alternative:
that the United States of America is under an obligation to submit the dispute to the arbitral procedure provided for in Article VI of the Washington Accord of 1946.[p 14]

3. In the further alternative:
that the United States of America is under an obligation to submit the dispute to the Arbitral Tribunal provided for in the Arbitration and Conciliation Treaty of 1931 between the Swiss Confederation and the United States of America.

4. In the final alternative:
that the United States of America is under an obligation to submit the dispute for examination by the Permanent Conciliation Commission provided for in Articles II-IV of the Arbitration and Conciliation Treaty of 1931."

At the hearing on November 6th, 1958, the Agent for the Government of the United States of America reaffirmed the submissions set forth in the Preliminary Objections.

For his part, the Agent for the Swiss Government repeated, at the hearing on November 12th, 1958, the submissions he had filed on November 3rd, whilst reserving his right to modify them after hearing any explanations that might be put forward on behalf of the Government of the United States of America.

At the hearing on November 14th, 1958, the Agent for the Government of the United States of America reaffirmed and maintained his earlier submissions whilst emphasizing that the preliminary objections were directed against all of the alternative as well as the principal submissions made on behalf of the Swiss Government.

Finally, at the hearing on November 17th, 1958, the Agent for the Swiss Government maintained the submissions he had filed in the Registry on November 3rd, 1958, which thus acquired the character of final submissions.

***

The declarations by which the Parties accepted the compulsory jurisdiction of the Court are as follows:

Declaration of the United States of America of August 14th, 1946 (in force since August 26th, 1946):

"I, Harry S. Truman, President of the United States of America, declare on behalf of the United States of America, under Article 36, paragraph 2, of the Statute of the International Court of Justice, and in accordance with the Resolution of August 2, 1946, of the Senate of the United States of America (two-thirds of the Senators present concurring therein), that the United States of America recognizes as compulsory ipso facto and without special agreement, in relation to any other state accepting the same obligation, the jurisdiction of the International Court of Justice in all legal disputes hereafter arising concerning

(a) The interpretation of a treaty; [p 15]

(b) Any question of international law;

(c) The existence of any fact which, if established, would constitute a breach of an international obligation;

(d) The nature or extent of the reparation to be made for the breach of an international obligation;

Provided, that this declaration shall not apply to

(a) Disputes the solution of which the Parties shall entrust to other tribunals by virtue of agreements already in existence or which may be concluded in the future; or

(b) Disputes with regard to matters which are essentially within the domestic jurisdiction of the United States of America as determined by the United States of America; or

(c) Disputes arising under a multilateral treaty, unless (1) all parties to the treaty affected by the decision are also parties to the case before the Court, or (2) the United States of America specially agrees to jurisdiction; and

Provided further, that this declaration shall remain in force for a period of five years and thereafter until the expiration of six months after notice may be given to terminate this declaration."

Declaration of Switzerland of July 6th, 1948 (in force since July 28th, 1948):

"The Swiss Federal Council, duly authorized for that purpose by a Federal decree which was adopted on 12 March 1948 by the Federal Assembly of the Swiss Confederation and became operative on 17 June 1948,

Hereby declares that the Swiss Confederation recognizes as compulsory ipso facto and without special agreement, in relation to any other State accepting the same obligation, the jurisdiction of the International Court of Justice in all legal disputes concerning:

(a) The interpretation of a treaty;
(b) Any question of international law;
(c) The existence of any fact which, if established, would constitute a breach of an international obligation;
(d) The nature or extent of the reparation to be made for the breach of an international obligation.

This declaration, which is made under Article 36 of the Statute of the International Court of Justice, shall take effect from the date on which the Swiss Confederation becomes a party to that Statute and shall have effect as long as it has not been abrogated subject to one year's notice."

***
The present proceedings are concerned only with the preliminary objections raised by the Government of the United States of [p 16] America. It is nevertheless convenient to set out briefly the facts and circumstances as submitted by the Parties which constitute the origin of the present dispute.

By its decisions of February 16th and April 24th, 1942, based on the Trading with the Enemy Act of October 6th, 1917, as amended, the Government of the United States vested almost all of the shares of General Aniline and Film Corporation (briefly referred to as the GAF), a company incorporated in the United States, on the ground that these shares in reality belonged to the I.G. Farbenindustrie company of Frankfurt or that the GAF was in one way or another controlled by that enemy company.

It is not disputed that until 1940 I.G. Farben controlled the GAF through the Société internationale pour entreprises chimiques S.A. (I.G. Chemie), entered in the Commercial Register of the Canton of Bâle-Ville in 1928. However, according to the contention of the Swiss Government, the links between the German company I.G. Farben and the Swiss company I.G. Chemie were finally severed by the cancellation of the contract for an option and for the guaran-tee of dividends, a cancellation which was effected in June 1940, that is, well before the entry of the United States into the war. The Swiss company adopted the name of Société internationale pour participations industrielles et commerciales S.A. (briefly referred to as Interhandel) ; Article 2 of its Statute as modified in 1940 defines it as follows: "The enterprise is a holding company. Its object is participation in industrial and commercial undertakings of every kind, especially in the chemical field, in Switzerland and abroad, but excluding banking and the professional purchase and sale of securities." The largest item in the assets of Interhandel is its participation in the GAF. Approximately 75% of the GAF "A" shares and all its issued "B" shares are said to belong to Interhandel. A considerable part, approximately 90%, of these shares and a sum of approximately 1,800,000 dollars, have been vested by the Government of the United States.

Towards the end of the war, under a provisional agreement between Switzerland, the United States of America, France and the United Kingdom, property in Switzerland belonging to Germans in Germany was blocked (Decree of the Federal Council of February 16th, 1945) The Swiss Compensation Office was entrusted with the task of uncovering property in Switzerland belonging to Germans or controlled by them. In the course of these investigations, the question of the character of Interhandel was raised, but as a result of investigations carried out in June and July, 1945, the Office, considering it to have been proved that Interhandel had severed its ties with the German company, did not regard it as necessary to undertake the blocking of its assets.

For its part, the Government of the United States, considering that Interhandel was still controlled by I.G. Farben, continued to seek evidence of such control. In these circumstances the Federal [p 17] Department of Public Economy and the Federal Political Department ordered the Swiss Compensation Office provisionally to block the assets of Interhandel; this was done on October 30th, 1945. The Office then carried out a second investigation (November 1945-February 1946) which led it to the same conclusion as had the first.

On May 25th, 1946, an agreement was concluded between the three Allied Powers and Switzerland (the Washington Accord). Under one of the provisions of the Accord, Switzerland undertook to pursue its investigations and to liquidate German property in Switzerland. It was the Compensation Office which was "empowered to uncover, take into possession, and liquidate German property" (Accord, Annex, II, A), in collaboration with a Joint Commission "composed of representatives of each of the four Governments" (Annex, II, B). The Accord lays down the details of that collaboration (Annex, II, C, D, E, F) and provides that, in the event of dis-agreement between the Joint Commission and the Compensation Office or if the party in interest so desires, the matter may within a period of one month be submitted to a Swiss Authority of Review composed of three members and presided over by a Judge. "The decisions of the Compensation Office, or of the Authority of Review, should the matter be referred to it, shall be final" (Annex, III). In the event, however, of disagreement with the Swiss Authority of Review on certain given matters, "the three Allied Governments may, within one month, require the difference to be submitted to arbitration" (Annex, III).

The Washington Accord further provides:

"Article IV, paragraph 1.

The Government of the United States will unblock Swiss assets in the United States. The necessary procedure will be determined without delay.

Article VI.

In case differences of opinion arise with regard to the application or interpretation of this Accord which cannot be settled in any other way, recourse shall be had to arbitration."

After the conclusion of the Washington Accord, discussions with regard to Interhandel between the Swiss Compensation Office and the Joint Commission as well as between representatives of Switzerland and the United States were continued without reaching any conclusion accepted by the two parties. The Office, while declaring itself ready to examine any evidence as to the German character of Interhandel which might be submitted to it, continued to accept the results of its two investigations; the Joint Commission challenged [p 18] these results and continued its investigations. By its decision of January 5th, 1948, given on appeal by Interhandel, the Swiss Authority of Review annulled the blocking with retroactive effect. It had invited the Joint Commission to participate in the procedure, but the latter had declined the invitation. This question was not referred to the arbitration provided for in the Washington Accord.

In these circumstances, the Swiss Government considered itself entitled to regard the decision of the Swiss Authority of Review as a final one, having the force of res judicata vis-à-vis the Powers parties to the Washington Accord. Consequently, in a Note of May 4th, 1948, to the Department of State, the Swiss Legation at Washington invoked this decision and the Washington Accord to request the Government of the United States to restore to Interhandel the property which had been vested in the United States. On July 26th, 1948, the Department of State rejected this request, contending that the decision of the Swiss Authority of Review did not affect the assets vested in the United States and claimed by I.G. Chemie. On September 7th, 1948, in a Note to the Department of State, the Swiss Legation in Washington, still relying on its interpretation of the Washington Accord, maintained that the decision of the Swiss Authority of Review recognizing Interhandel as a Swiss company was legally binding upon the signatories of that Accord. It expressed the hope that the United States Government would accordingly release the assets of Interhandel in the United States, failing which the Swiss Government would have to submit the question to the arbitral procedure laid down in Article VI of the Washington Accord. On October 12th, 1948, the Department of State replied to that communication, maintaining its previous view that the decision of the Swiss Authority of Review was inapplicable to property vested in the United States. It added that United States law in regard to the seizure and disposal of enemy property authorized non-enemy foreigners to demand the restitution of vested property and to apply for it to the courts. On October 21st, 1948, Interhandel, relying upon the provisions of the Trading with the Enemy Act, instituted proceedings in the United States District Court for the District of Columbia. Direct discussion between the two Governments was then interrupted until April 9th, 1953, on which day the Swiss Government sent to the Government of the United States a Note questioning the procedure applied in the United States in the Interhandel case, stating that this procedure had led to a deadlock, and suggesting negotiations for a satisfactory settlement.

Up to 1957 the proceedings in the United States courts had made little progress on the merits. Interhandel, though it had produced a considerable number of the documents called for, did not produce all of them; it contended that the production of certain documents was prohibited by the Swiss authorities as constituting an offence under Article 273 of the Swiss Criminal Code and as violating banking [p 19] secrecy (Article 47 of the Federal Law of November 8th, 1934). The action brought by Interhandel was the subject of a number of appeals in the United States courts and in a Memorandum appended to the Note addressed by the Department of State to the Swiss Minister on January nth, 1957, it was said that Interhandel had finally failed in its suit. It was then that the Swiss Government, on October 2nd, 1957, addressed to the Court the Application instituting the present proceedings. The assertion in the Note of January nth, 1957, that Interhandel's claim was finally rejected proved, however, to be premature, as the Court will have occasion to point out in considering the Third Objection of the United States.

As stated, the exchange of notes with regard to Interhandel which had taken place in 1948, was resumed in 1953. In its Note of April 9th, 1953, the Swiss Legation at Washington suggested negotiations between the two Governments with a view to arriving amicably at a just and practical solution of the problem of Interhandel; these suggestions were repeated in the Notes of December 1st, 1954, and March 1st, 1955; they were not accepted by the Department of State. Finally, the Swiss Note of August 9th, 1956, formulated proposals for the settlement of the dispute either by means of arbitration or conciliation as provided for in the Treaty between Switzerland and the United States of February 16th, 1931, or by means of arbitration as provided for in the Washington Accord. This approach did not meet with the approval of the Government of the United States, which rejected it in its Note, already referred to, of January nth, 1957.

***
The subject of the claim as set forth in the final submissions presented on behalf of the Swiss Government, and disregarding certain items of a subsidiary character which can be left aside for the moment, is expressed essentially in two propositions:

(1) as a principal submission, the Court is asked to adjudge and declare that the Government of the United States is under an obligation to restore the assets of the Société internationale four farticifations industrielles et commerciales S.A. (Interhandel);
(2) as an alternative submission, the Court is asked to adjudge and declare that the United States is under an obligation to submit the dispute to arbitration or to a conciliation procedure in accordance with certain conditions set forth first in the principal submissions and then in the alternative submissions.

The Government of the United States has put forward four preliminary objections to the Court's dealing with the claims of the Swiss Government. Before proceeding to examine these objections, the Court must direct its attention to the claim, formulated for the [p 20] first time in the Observations and Submissions of the Swiss Government, which is in the following terms:

"The Swiss Federal Council requests the Court to declare that the property, rights and interests which the Société internationale pour participations industrielles et commerciales S.A. (Interhandel) possesses in General Aniline and Film Corporation have the character of non-enemy (Swiss) property, and consequently to declare that by refusing to return the said property the Government of the United States of America is in breach of Article IV, paragraph i, of the Washington Accord of May 25th, 1946, and of the obligations binding upon it under the general rules of international law."

In its final Submissions, deposited in the Registry on November 3rd, 1958, the Swiss Government gives the following explanation with regard to this claim:

"The Swiss Government, after examining the Preliminary Objections of the United States of America, has come to the conclusion that these involve the modification of the Swiss Government's principal and alternative Submissions, which are as follows."

The claim in question, however, which is described as "alternative principal Submission", does not constitute a mere modification; it constitutes a new claim involving the merits of the dispute. Article 62, paragraph 3, of the Rules of Court, however, is categorical:

"Upon receipt by the Registrar of a preliminary objection filed by a party, the proceedings on the merits shall be suspended."

Consequently, the new Swiss submission relating to a request for a declaratory judgment, presented after the suspension of the proceedings on the merits, cannot be considered by the Court at the present stage of the proceedings.

***
First Preliminary Objection

The First Objection of the Government of the United States seeks a declaration that the Court is without jurisdiction on the ground that the present dispute arose before August 26th, 1946, the date on which the acceptance of the compulsory jurisdiction of the Court by the United States came into force. The declaration of the United States does indeed relate to legal disputes "hereafter arising". The Government of the United States maintains that the dispute goes back at least to the middle of the year 1945, and that divergent opinions as to the character of Interhandel were exchanged between the American and Swiss authorities on a number of occasions before August 26th, 1946. [p 21]

The Court would recall that the subject of the present dispute is indicated in the Application and in the Principal Final Submission of the Swiss Government which seeks the return to Interhandel of the assets vested in the United States. An examination of the documents reveals that a request to this effect was formulated by Switzerland for the first time in the Note of the Swiss Legation at Washington dated May 4th, 1948. The negative reply, which the Department of State describes as its final and considered view, is dated July 26th, 1948. Two other Notes exchanged shortly afterwards (on September 7th and October 12th of that same year) confirm that the divergent views of the two Governments were concerned with a clearly-defined legal question, namely, the restitution of Interhandel's assets in the United States, and that the negotiations to this end rapidly reached a deadlock. Thus the dispute now submitted to the Court can clearly be placed at July 26th, 1948, the date of the first negative reply which the Government of the United States described as its final and considered view rejecting the demand for the restitution of the assets. Consequently the dispute arose subsequently to the date of the entry into force of the Declaration of the United States.

During the period indicated by the Government of the United States (the years 1945 and 1946), the exchanges of views between the Swiss authorities on the one hand and the Allied and, in the first place, the American authorities, on the other, related to the search for, and the blocking and liquidation of, German property and interests in Switzerland; the question of the Swiss or German character of Interhandel was the subject of investigations and exchanges of views for the purpose of reaching a decision as to the fate of the assets in Switzerland of that company. It was only after the decision of the Swiss Authority of Review of January 5th, 1948, definitely recognizing the non-enemy character of the assets of Interhandel and, in consequence, putting an end to the provisional blocking of these assets in Switzerland, had, in the opinion of the Federal Government, acquired the authority of res judicata, that that Government for the first time addressed to the United States its claim for the restitution of Interhandel's assets in the United States.

The discussions regarding Interhandel between the Swiss and American authorities in 1945, 1946 and 1947 took place within the framework of the collaboration established between them prior to the Washington Accord and defined in that Accord. The representatives of the Joint Commission and those of the Swiss Compensation Office communicated to each other the results of their enquiries and investigations, and discussed their opinions with regard to Interhandel, without arriving at any final conclusions. Thus, for instance, the minute of the meeting of the Joint Commission on September 8th, 1947, records:

"The representatives of the Swiss Compensation Office stated that their investigations had yielded only negative results and [p 22] that they were still waiting for the Allies to furnish their documents which the Swiss Compensation Office was ready to discuss with the Allied experts."

The Court cannot see in these discussions between the Allied and Swiss officials a dispute between Governments which had already arisen with regard to the restitution of the assets claimed by Interhandel in the United States; the facts and situations which have led to a dispute must not be confused with the dispute itself; the documents relating to this collaboration between the Allied and Swiss authorities for the purpose of liquidating German property in Switzerland are not relevant to the solution of the question raised by the first objection of the United States.

The First Preliminary Objection must therefore be rejected so far as the principal submission of Switzerland is concerned.

In the Alternative Submission, Switzerland asks the Court to adjudge and declare that the United States is under an obligation to submit the dispute to arbitration or conciliation.

In raising its objection ratione temporis to the Application of the Swiss Government, the Government of the United States has not distinguished between the principal claim and the alternative claim in the Application. It is, however, clear that the alternative claim, in spite of its close connection with the principal claim, is nevertheless a separate and distinct claim relating not to the substance of the dispute, but to the procedure for its settlement.
The point here in dispute is the obligation of the Government of the United States to submit to arbitration or to conciliation an obligation the existence of which is asserted by Switzerland and denied by the United States. This part of the dispute can only have arisen subsequently to that relating to the restitution of Interhandel's assets in the United States, since the procedure proposed by Switzerland and rejected by the United States was conceived as a means of settling the first dispute. In fact, the Swiss Government put forward this proposal for the first time in its Note of August 9th, 1956, and the Government of the United States rejected it by its Note of January nth, 1957.

With regard to the Alternative Submission of Switzerland, the First Preliminary Objection cannot therefore be upheld.

***

Second Preliminary Objection
According to this Objection, the present dispute, even if it is subsequent to the date of the Declaration of the United States, arose before July 28th, 1948, the date of the entry into force of the Swiss Declaration. The argument set out in the Preliminary Objections is as follows: [p 23]

"The United States Declaration, which was effective August 26th, 1946, contained the clause limiting the Court's jurisdiction to disputes 'hereafter arising', while no such qualifying clause is contained in the Swiss Declaration which was effective July 28th, 1948. But the reciprocity principle ... requires that as between the United States and Switzerland the Court's jurisdiction be limited to disputes arising after July 28th, 1948... Otherwise, retroactive effect would be given to the compulsory jurisdiction of the Court."

In particular, it was contended with regard to disputes arising after August 26th, 1946, but before July 28th, 1948, that "Switzerland, as a Respondent, could have invoked the principle of reciprocity and claimed that, in the same way as the United States is not bound to accept the Court's jurisdiction with respect to disputes arising before its acceptance, Switzerland, too, could not be required to accept the Court's jurisdiction in relation to disputes arising before its acceptance."

Reciprocity in the case of Declarations accepting the compulsory jurisdiction of the Court enables a Party to invoke a reservation to that acceptance which it has not expressed in its own Declaration but which the other Party has expressed in its Declaration. For example, Switzerland, which has not expressed in its Declaration any reservation ratione temporis, while the United States has accepted the compulsory jurisdiction of the Court only in respect of disputes subsequent to August 26th, 1946, might, if in the position of Respondent, invoke by virtue of reciprocity against the United States the American reservation if the United States attempted to refer to the Court a dispute with Switzerland which had arisen before August 26th, 1946. This is the effect of reciprocity in this connection. Reciprocity enables the State which has made the wider acceptance of the jurisdiction of the Court to rely upon the reservations to the acceptance laid down by the other Party. There the effect of reciprocity ends. It cannot justify a State, in this instance, the United States, in relying upon a restriction which the other Party, Switzerland, has not included in its own Declaration.

The Second Preliminary Objection must therefore be rejected so far as the Principal Submission of Switzerland is concerned.
Since it has already been found that the dispute concerning the obligation of the United States to agree to arbitration or conciliation did not arise until 1957, the Second Preliminary Objection must also be rejected so far as the Alternative Submission of Switzerland is concerned.

***

Fourth Preliminary Objection

Since the Fourth Preliminary Objection of the United States relates to the jurisdiction of the Court in the present case, the Court will proceed to consider it before the Third Objection which [p 24] is an objection to admissibility. This Fourth Objection really consists of two objections which are of different character and of unequal scope. The Court will deal in the first place with part (b) of this Objection.

The Government of the United States submits "that there is no jurisdiction in this Court to hear or determine any issues raised by the Swiss Application or Memorial concerning the seizure and retention of the vested shares of General Aniline and Film Corporation, for the reason that such seizure and retention are, according to international law, matters within the domestic jurisdiction of the United States".

In challenging before the Court the seizure and retention of these shares by the authorities of the United States, the Swiss Government invokes the Washington Accord and general international law.

In order to determine whether the examination of the grounds thus invoked is excluded from the jurisdiction of the Court for the reason alleged by the United States, the Court will base itself on the course followed by the Permanent Court of International Justice in its Advisory Opinion concerning Nationality Decrees issued in Tunis and Morocco (Series B, No. 4), when dealing with a similar divergence of view. Accordingly, the Court does not, at the present stage of the proceedings, intend to assess the validity of the grounds invoked by the Swiss Government or to give an opinion on their interpretation, since that would be to enter upon the merits of the dispute. The Court will confine itself to considering whether the grounds invoked by the Swiss Government are such as to justify the provisional conclusion that they may be of relevance in this case and, if so, whether questions relating to the validity and interpretation of those grounds are questions of international law.

With regard to its principal Submission that the Government of the United States is under an obligation to restore the assets of Interhandel in the United States, the Swiss Government invokes Article IV of the Washington Accord. The Government of the United States contends that this Accord relates only to German property in Switzerland, and that Article IV "is of no relevance whatever in the present dispute".

By Article IV of this international agreement, the United States has assumed the obligation to unblock Swiss assets in the United States. The Parties are in disagreement with regard to the meaning of the term "unblock" and the term "Swiss assets". The interpretation of these terms is a question of international law which affects the merits of the dispute. At the present stage of the proceedings it is sufficient for the Court to note that Article IV of the Washington Accord may be of relevance for the solution of the present dispute and that its interpretation relates to international law.

The Government of the United States submits that according to international law the seizure and retention of enemy property [p 25] in time of war are matters within the domestic jurisdiction of the United States and are not subject to any international supervision. All the authorities and judicial decisions cited by the United States refer to enemy property; but the whole question is whether the assets of Interhandel are enemy or neutral property. There having been a formal challenge based on principles of international law by a neutral State which has adopted the cause of its national, it is not open to the United States to say that their decision is final and not open to challenge; despite the American character of the Company, the shares of which are held by Interhandel, this is a matter which must be decided in the light of the principles and rules of international law governing the relations between belligerents and neutrals in time of war.

In its alternative Submission, the Swiss Government requests the Court to adjudge and declare that the United States is under an obligation to submit the dispute to arbitration or conciliation. The Swiss Government invokes Article VI of the Washington Accord, which provides: "In case differences of opinion arise with regard to the application or interpretation of this Accord which cannot be settled in any other way, recourse shall be had to arbitration." It also invokes the Treaty of Arbitration and Conciliation between Switzerland and the United States, dated February i6th, 1931. Article I of this Treaty provides: "Every dispute arising between the Contracting Parties, of whatever nature it may be, shall, when ordinary diplomatic proceedings have failed, be submitted to arbitration or to conciliation, as the Contracting Parties may at the time decide." The interpretation and application of these provisions relating to arbitration and conciliation involve questions of international law.

Part (b) of the Fourth Preliminary Objection must therefore be rejected.

Part (a) of the Fourth Objection seeks a finding from the Court that it is without jurisdiction to entertain the Application of the Swiss Government, for the reason that the sale or disposition by the Government of the United States of the shares of the GAF which have been vested as enemy property "has been determined by the United States of America, pursuant to paragraph (b) of the Conditions attached to this country's acceptance of this Court's jurisdiction, to be a matter essentially within the domestic jurisdiction of this country". The Preliminary Objections state that: "Such declination encompasses all issues raised in the Swiss Application and Memorial (including issues raised by the Swiss-United States Treaty of 1931 and the Washington Accord of 1946)", but they add: "in so far as the determination of the issues would affect the sale or disposition of the shares". And they immediately go on to say: "However, the determination pursuant to paragraph^ of the Conditions attached to this country's acceptance of the Court's [p 26] compulsory jurisdiction is made only as regards the sale or disposition of the assets."

During the oral arguments, the Agent for the United States continued to maintain that the scope of part (a) of the Fourth Objection was limited to the sale and disposition of the shares. At the same time, while insisting that local remedies were once more available to Interhandel and that, pending the final decision of the Courts of the United States, the disputed shares could not be sold, he declared on several occasions that part (a) of the Fourth Objection has lost practical significance, that "it has become somewhat academic", and that it is "somewhat moot".
Although the Agent for the United States maintained the Objection throughout the oral arguments, it appears to the Court that, thus presented, part (a) of the Fourth Objection only applies to the claim of the Swiss Government regarding the restitution of the assets of Interhandel which have been vested in the United States. Having regard to the decision of the Court set out below in respect of the Third Preliminary Objection of the United States, it appears to the Court that part (a) of the Fourth Preliminary Objection is without object at the present stage of the proceedings.

***

Third Preliminary Objection

The Third Preliminary Objection seeks a finding that "there is no jurisdiction in this Court to hear or determine the matters raised by the Swiss Application and Memorial, for the reason that Inter-handel, whose case Switzerland is espousing, has not exhausted the local remedies available to it in the United States courts".

Although framed as an objection to the jurisdiction of the Court, this Objection must be regarded as directed against the admissibility of the Application of the Swiss Government. Indeed, by its nature it is to be regarded as a plea which would become devoid of object if the requirement of the prior exhaustion of local remedies were fulfilled.

The Court has indicated in what conditions the Swiss Government, basing itself on the idea that Interhandel's suit had been finally rejected in the United States courts, considered itself entitled to institute proceedings by its Application of October 2nd, 1957. However, the decision given by the Supreme Court of the United States on October 14th, 1957, on the application of Interhandel made on August 6th, 1957, granted a writ of certiorari and readmitted Interhandel into the suit. The judgment of that Court on June 16th, 1958, reversed the judgment of the Court of Appeals dismissing Interhandel's suit and remanded the case to the District [p 27] Court. It was thenceforth open to Interhandel to avail itself again of the remedies available to it under the Trading with the Enemy Act, and to seek the restitution of its shares by proceedings in the United States courts. Its suit is still pending in the United States courts. The Court must have regard to the situation thus created.

The rule that local remedies must be exhausted before international proceedings may be instituted is a well-established rule of customary international law; the rule has been generally observed in cases in which a State has adopted the cause of its national whose rights are claimed to have been disregarded in another State in violation of international law. Before resort may be had to an international court in such a situation, it has been considered necessary that the State where the violation occurred should have an opportunity to redress it by its own means, within the framework of its own domestic legal system. A fortiori the rule must be observed when domestic proceedings are pending, as in the case of Interhandel, and when the two actions, that of the Swiss company in the United States courts and that of the Swiss Government in this Court, in its principal Submission, are designed to obtain the same result: the restitution of the assets of Interhandel vested in the United States.

The Swiss Government does not challenge the rule which requires that international judicial proceedings may only be instituted following the exhaustion of local remedies, but contends that the present case is one in which an exception to this rule is authorized by the rule itself.

The Court does not consider it necessary to dwell upon the assertion of the Swiss Government that "the United States itself has admitted that Interhandel had exhausted the remedies available in the United States courts". It is true that the representatives of the Government of the United States expressed this opinion on several occasions, in particular in the memorandum annexed to the Note of the Secretary of State of January nth, 1957. This opinion was based upon a view which has proved unfounded. In fact, the proceedings which Interhandel had instituted before the courts of the United States were then in progress.

However, the Swiss Government has raised against the Third Objection other considerations which require examination.

In the first place, it is contended that the rule is not applicable for the reason that the measure taken against Interhandel and regarded as contrary to international law is a measure which was taken, not by a subordinate authority but by the Government of the United States. However, the Court must attach decisive importance to the fact that the laws of the United States make available to interested persons who consider that they have been deprived of their rights by measures taken in pursuance of the Trading with the Enemy Act, adequate remedies for the defence of their rights against the Executive. [p 28]

It has also been contended on behalf of the Swiss Government that in the proceedings based upon the Trading with the Enemy Act, the United States courts are not in a position to adjudicate in accordance with the rules of international law and that the Supreme Court, in its decision of June 16th, 1958, made no reference to the many questions of international law which, in the opinion of the Swiss Government, constitute the subject of the present dispute. But the decisions of the United States courts bear witness to the fact that United States courts are competent to apply international law in their decisions when necessary. In the present case, when the dispute was brought to this Court, the proceedings in the United States courts had not reached the merits, in which considerations of international law could have been profitably relied upon.

The Parties have argued the question of the binding force before the courts of the United States of international instruments which, according to the practice of the United States, fall within the category of Executive Agreements; the Washington Accord is said to belong to that category. At the present stage of the proceedings it is not necessary for the Court to express an opinion on the matter. Neither is it practicable, before the final decision of the domestic courts, to anticipate what basis they may adopt for their judgment.

Finally, the Swiss Government laid special stress on the argument that the character of the principal Submission of Switzerland is that of a claim for the implementation of the decision given on January 5th, 1948, by the Swiss Authority of Review and based on the Washington Accord, a decision which the Swiss Government regards as an international judicial decision. "When an international decision has not been executed, there are no local remedies to exhaust, for the injury has been caused directly to the injured State." It has therefore contended that the failure by the United States to implement the decision constitutes a direct breach of international law, causing immediate injury to the rights of Switzerland as the Applicant State. The Court notes in the first place that to implement a decision is to apply its operative part. In the operative part of its decision, however, the Swiss Authority of Review "Decrees: (1) that the Appeal is sustained and the decision subjecting the appellant to the blocking of German property in Switzerland is annulled..." The decision of the Swiss Authority of Review relates to the unblocking of the assets of Interhandel in Switzerland; the Swiss claim is designed to secure the restitution of the assets of Interhandel in the United States. Without prejudging the validity of any arguments which the Swiss Government seeks or may seek to base upon that decision, the Court would confine itself to observing that such arguments do not deprive the dispute which has been referred to it of the character of a dispute in which the Swiss Government appears as having adopted the cause of its national, Interhandel, for the purpose of securing the [p 29] restitution to that company of assets vested by the Government of the United States. This is one of the very cases which give rise to the application of the rule of the exhaustion of local remedies.

For all these reasons, the Court upholds the Third Preliminary Objection so far as the principal Submission of Switzerland is concerned.

In its alternative claim, the Swiss Government asks the Court to declare its competence to decide whether the United States is under an obligation to submit the dispute to arbitration or conciliation. The Government of the United States contends that this claim, while not identical with the principal claim, is designed to secure the same object, namely, the restitution of the assets of Interhandel in the United States, and that for this reason the Third Objection applies equally to it. It maintains that the rule of the exhaustion of local remedies applies to each of the principal and alternative Submissions which seek "a ruling by this Court to the effect that some other international tribunal now has jurisdiction to determine that very same issue, even though that issue is at the same time being actively litigated in the United States courts".

The Court considers that one interest, and one alone, that of Interhandel, which has led the latter to institute and to resume proceedings before the United States courts, has induced the Swiss Government to institute international proceedings. This interest is the basis for the present claim and should determine the scope of the action brought before the Court by the Swiss Government in its alternative form as well as in its principal form. On the other hand, the grounds on which the rule of the exhaustion of local remedies is based are the same, whether in the case of an international court, arbitral tribunal, or conciliation commission. In these circumstances, the Court considers that any distinction so far as the rule of the exhaustion of local remedies is concerned between the various claims or between the various tribunals is unfounded.

It accordingly upholds the Third Preliminary Objection also as regards the alternative Submission of Switzerland.

For these reasons,

The Court,

by ten votes to five, rejects the First Preliminary Objection of the Government of the United States of America;

unanimously,

rejects the Second Preliminary Objection;

by ten votes to five,

finds that it is not necessary to adjudicate on part (a) of the Fourth Preliminary Objection; [p 30]

by fourteen votes to one,
rejects part (b) of the Fourth Preliminary Objection; and

by nine votes to six,

upholds the Third Preliminary Objection and holds that the Application of the Government of the Swiss Confederation is inadmissible.

Done in French and English, the French text being authoritative, at the Peace Palace, The Hague, this twenty-first day of March, one thousand nine hundred and fifty-nine, in three copies, one of which will be placed in the archives of the Court and the others transmitted to the Government of the Swiss Confederation and the Government of the United States of America, respectively.

(Signed) Helge Klaestad,
President.

(Signed) Garnier-Coignet,
Deputy-Registrar.

Judge Basdevant states that he concurs in the decision that the Application is inadmissible as that decision is set forth in the operative part of the Judgment, but he adds that his opinion on this point was reached in a way which, in certain respects, differs from that followed by the Court. Basing himself on the provisions of the Statute and of the Rules of Court, he considered that, in order to assess the validity of the objections advanced, he should direct his attention to the subject of the dispute and not to any particular claim put forward in connection with the dispute. The subject of the dispute and the subject of the claim are explicitly differentiated in Article 32, paragraph 2, of the Rules of Court. Accordingly, he has directed his attention to the statement in the Application to the effect that the latter submits to the Court the dispute relating to "the restitution by the United States of the assets" of Interhandel. This indication of the subject of the dispute, which is confirmed by an examination of the correspondence, reveals the scope of the dispute, shows that it is not limited to whatever may have been discussed at any particular moment between the two Governments and consequently throws a light upon the date at which the dispute between them arose. He was thus led to the conclusion that the dispute to which the Application relates did not arise until after July 28th, 1948, and this factual finding is sufficient to justify the rejection of the first two preliminary objections. [p 31]

In his view, the subject of the dispute justifies, in this case, the requirement of the preliminary exhaustion of local remedies on the ground that if, through them, Interhandel obtains satis-faction, the subject of the dispute will disappear. He refrained from complicating the problem by considering any particular claim that might be put forward in connection with the dispute indicated in the Application. In considering the question whether in fact the local remedies have been exhausted, he based himself largely on the factual data mentioned in the Judgment. He took account also of certain other facts葉he fact that, at the date of the memorandum of January nth, 1957, an appeal by Interhandel was pending in the American courts, the mention by the Swiss Co-Agent (at the hearing on October 12th, 1957) of the application made to the Supreme Court, with the comment that that application also would end in a negative decision and, finally, the mention in the preamble of the Order of the Court of October 24th, 1957, of a judicial proceeding then pending in the United States.

As the anticipated effect of a judgment on a preliminary objection is to determine whether the proceedings on the merits will or will not be resumed, he might have agreed that the Court should confine itself to adjudicating on the Third Objection which it has upheld. As the Application is declared to be inadmissible, this puts an end to the proceedings and all the other questions that were connected with them no longer arise. He considered, nevertheless, that it was his duty to follow the Court in the examination of the other points with which it dealt and, on those points, he concurs in the operative part of the Judgment.

Judge Kojevnikov states that he concurs in the Judgment of the Court so far as the First, Second, Third and part (a) of the Fourth Preliminary Objections of the Government of the United States are concerned. He is, however, unable to concur in the reasoning of the Judgment relating to the Second Preliminary Objection since, in his opinion, the Judgment should have been based not on the question of reciprocity, which is of very great importance, but upon the factual circumstances which show that the legal character of the dispute between the Swiss Government and the Government of the United States was clearly defined only after July 28th, 1948, the date of the entry into force of the Swiss Declaration.

Judge Kojevnikov is further of the opinion that the Third Objection should have been upheld by the Court, not only as a contention relating to the admissibility of the Application, but also with regard to the jurisdiction of the Court.

Finally, he considers that part (b) of the Fourth Preliminary Objection, having regard to its subject-matter, ought not to have [p 32] been rejected but, in the present case, should have been joined to the merits if the Court had not upheld the Third Objection.

M. Carry, Judge ad hoc, states that he regrets that he cannot subscribe to the decisions taken by the Court on the Third and part (a) of the Fourth Objections of the Government of the United States. He agrees generally with the dissenting opinion of President Klaestad.

He considers that in any event the Third Objection should not have been upheld in so far as it was directed against the alternative claim of the Swiss Government relating to arbitration or conciliation. He regards that claim as separate and distinct from the principal claim, since it did not relate to the merits of the dispute but only to the procedure for its settlement. By this claim the Court was invited to pass only upon the arbitrability of the dispute, not on the obligation of the United States to return the assets of Interhandel. That latter question was within the exclusive jurisdiction of the tribunal to be seised. It follows, in his opinion, that the rule relating to the exhaustion of local remedies was not applicable to the alternative claim of the Swiss Government, inasmuch as, by that claim, the applicant State sought to secure from the inter-national tribunal a result different from that which Interhandel is seeking to obtain in the American courts. The question of exhaustion of local remedies is one which could arise only before the arbitral tribunal seised of the case: the Court should not, in his opinion, encroach upon the jurisdiction of that tribunal.
Judges Hackworth, Cordova, Wellington Koo and Sir Percy Spender, availing themselves of the right conferred upon them by Article 57 of the Statute, append to the Judgment of the Court statements of their separate opinions.

Vice-President Zafrulla Khan states that he agrees with Judge Hackworth.

President Klaestad and Judges Winiarski, Armand-Ugon, Sir Hersch Lauterpacht and Spiropoulos, availing themselves of the right conferred upon them by Article 57 of the Statute, append to the Judgment of the Court statements of their dissenting opinions.

(Initialled) H. K.
(Initialled) G.-C.

[p 33]
SEPARATE OPINION OF JUDGE HACKWORTH

I agree with the conclusions of the Court that the contention by Switzerland that the Government of the United States is under an obligation to restore the assets in the United States, claimed by Interhandel, or, in the alternative, to submit the dispute to arbitration or conciliation, is inadmissible because of the non-exhaustion by Interhandel of its remedies in the courts of the United States.

But I regret that I am unable to concur in the rejection by the Court of the First Preliminary Objection submitted by the United States contesting the jurisdiction of the Court to entertain the Swiss Application.

***

The First Preliminary Objection

In my view this Objection should have been sustained for the following reasons:

The Declaration by the United States accepting the compulsory jurisdiction of the Court was filed with the Secretary-General of the United Nations on August 26th, 1946. The Declaration was limited to "legal disputes hereafter arising", i.e. to disputes arising after August 26th, 1946. In my judgment the dispute here in question arose well in advance of the filing of the Declaration. To arrive at a proper understanding of the intrinsic nature of the controversy, it is necessary to examine it as a whole and from its inception. To separate it into two phases熔ne having to do with the blocking of Interhandel's assets in Switzerland, and the other relating to the vesting of assets claimed by Interhandel in the United States預nd to reach conclusions on that basis impresses me as an unrealistic and somewhat artificial approach to the problem. The facts and the history of the controversy do not, in my view, lend themselves to such a process of simplification.

It is common ground that General Aniline and Film Corporation, an American corporation, was created by I.G. Farbenindustrie, A.G., of Frankfurt, Germany. It is also common ground that I.G. Chemie (Interhandel), a Swiss corporation, was founded on the initiative of, and originally was controlled by, I.G. Farben. The Swiss Government has contended that this tie between Interhandel and I.G. Farben was terminated in 1940 when Interhandel was reorganized. This has never been admitted by the United States.

It is unnecessary and inappropriate for present purposes to undertake definitively to pass upon these contentions. Suffice it to say that in point of fact the core of the dispute between the Parties is, and from the beginning has been, of a twofold character葉he [p 34] enemy or non-enemy status of Interhandel, and the enemy or non-enemy status of assets said to belong to Interhandel. These questions have from the outset constituted the gravamen of the dispute between the two Governments. They are two interrelated aspects of one and the same problem. At no time has either been divorced from the other. It was because of the supposed enemy taint of Interhandel that shares in the General Aniline and Film Corporation, claimed by Interhandel, were vested as enemy property in 1942; it was because of this same supposed enemy taint that an effort was made by the United States to bring about the blocking of Interhandel's assets in Switzerland. It is an oversimplification of the problem to conclude, in the light of known facts, that the controversy regarding assets in Switzerland was or is something separate and apart from that relating to assets in the United States, or to assume that one began where the other left off. The controversy cannot be separated in two geographical sectors, nor is it divisible by elements of time. The same bone of contention葉he enemy or non-enemy status of Interhandel and the bona fides of its pretensions - -stands out in both phases of the dual controversy葉hat relating to assets in Switzerland and that relating to assets in the United States. It has been continuous. The historical background bears witness to this conclusion.

The Order issued by the Secretary of the Treasury on February 16th, 1942, and that issued by the Alien Property Custodian on February 15th, 1943, recite that the shares of General Aniline and Film Corporation, now claimed by Interhandel, had been vested as enemy property. The last-named Order described the shares as property owned by or held for the benefit of I.G. Farbenindustrie A.G., of Frankfurt, Germany.

On the same day on which the Order of February 16th, 1942, was issued the Department of State sent an Aide Memoire to the Swiss Minister in Washington informing him of the action taken and stating that it had been taken "because, in the judgment of the Secretary of the Treasury, these shares are actually controlled by German interests". The Aide Memoire disclaimed any intention on the part of the Government of the United States to impair, injure, or otherwise adversely affect legitimate Swiss interests. Nothing was done or said by Switzerland.

Certain steps were later taken by Interhandel to retrieve the shares, including the filing in 1948 of a civil action in the United States District Court for the District of Columbia. These latter steps although of historical interest are not important for present purposes.

Meanwhile the Allied Powers in occupation of Germany, and particularly the United States, undertook to bring about the blocking by the Government of Switzerland of assets of Interhandel in that country. The discussions which ensued are directly relevant [p 35] to the question whether the present dispute arose prior to the date on which the United States accepted jurisdiction of the Court.

Without undertaking to give a comprehensive review of these discussions it will be pertinent at the outset to refer to some of those which occurred prior to August 26th, 1946. Although the Swiss Government in late 1945 provisionally blocked the assets of Interhandel, it took the position almost from the start that Interhandel had severed its ties with I.G. Farben in 1940, and that there was, therefore, no need to decree the blocking of its property. (Memorial, para. 18.) This may be said to have marked the beginning of a definite divergence of views and hence of a dispute as to the status of Interhandel and its assets. The position of the Swiss Government was first definitely stated in a communication addressed by Mr. R. Hohl, of the Swiss Federal Department, Division of Foreign Affairs, to Mr. Daniel J. Reagan, Counsellor of the United States Legation at Berne, on November 6th, 1945. This communication, after referring to several talks which Mr. Reagan had had with Mr. Hohl's predecessor, and to an investigation made by the Swiss Compensation Office "which did not lead to the discovery of any document which would permit the conclusion that I.G. Chemie is a company under the control of Germany", added:


"I would like to inform your authorities of the foregoing and in doing this to stress the point that the very thorough investigations in Switzerland have failed to establish the actual existence of a tie between I.G. Chemie and I.G. Farben. You could also inform Washington that the Federal Authorities are going to maintain this temporary blocking until January 31, 1946, and to raise it thereafter unless prior to that date proof has been furnished on the part of the Americans or Allies that I.G. Chemie has to be considered a company predominantly under German influence within the meaning of the decrees of February 16, April 27, and July 3, 1945." (Preliminary Objection, Exhibit 12.)

This statement reveals a definite disagreement by the Swiss authorities with the contentions of the Government of the United States that Interhandel was acting as a cloak for I.G. Farben, the only qualification being an offer to receive proof from the United States or its Allies, and within a fixed time, that I.G. Chemie "has to be considered a company predominantly under German influence".

On January 19th, 1946, the Legation sent a communication to Mr. Hohl in which, after referring to an earlier communication requesting that the provisional blocking of Interhandel's assets be extended beyond the date of January 31st, he also referred to a reported change in the structure of Interhandel. It was stated:

"My Government has now requested me to convey to you its concern with the circumstance that this change in the structure of [p 36] a concern which it regards as German controlled and which has been blocked as such by the competent authorities of your Government ostensibly was permitted by those authorities.

My Government asks that I indicate to you its desire that no changes in the structure or organization of any company at present blocked under Federal decrees with respect to German assets be permitted. It regards this matter as particularly important in view of proposals made by your Government to discuss with the Allied Governments the problem of German assets in Switzerland. My Government intends to revert to this subject in any conferences which may be held in the near future with respect to this problem.

I am advised by my British and French colleagues that they are addressing letters to you in a parallel sense." (Ibid., Exhibit II.)

The proposed discussions referred to in this quotation later took place in Washington between delegations of France, Great Britain, the United States and Switzerland, and resulted in the signing, on May 25th, 1946, of an Agreement known as the Washington Accord. This Accord provided among other things: (a) for liquidation by Switzerland of property in Switzerland "owned or controlled by Germans in Germany" (the proceeds of which were to be turned over to the Allied Reparation Agency for the rehabilitation of countries devastated or depleted by Germany during the war) ; and (b) for the unblocking by the Government of the United States of Swiss assets in the United States. It also provided (Article VI) for the arbitration of differences which might arise with regard to the application or interpretation of the Accord. (Ibid., Exhibit 28.)

This Accord has been invoked by Switzerland in the present case and will be referred to hereinafter.
Following conclusion of the Washington Accord, the discussions between representatives of Switzerland and of the United States with respect to Interhandel's assets in Switzerland continued, and on August 10th, 1946, the Swiss Compensation Office sent a communication to Mr. Harry Leroy Jones (a representative of the United States Department of Justice) in care of the American Legation in Berne, saying:

"As you know, we have made two investigations concerning this firm. According to the results of our detailed researches, we are of the opinion that the firm 選nterhandel should not be blocked. Nevertheless, we blocked it provisionally in view of the fact that representatives of the United States have declared several times that they possess documents proving that the firm 選nterhandel is controlled by Germans. Unfortunately, we have not yet been able to learn the nature of these documents." (Ibid., Exhibit 14.) [p 37]

While the door was left ajar for a further discussion "to the end that the affair in question can be liquidated as soon as possible", there is a definite note of finality to the Swiss Conclusion that the assets of Interhandel should not be blocked.

Still later, on August 16th, 1946, in a memorandum from Mr. Conover to Mr. Plitt, Attache and Counsellor, respectively, of the American Legation, the former gave an account of a conference which he and Mr. Jones had had that afternoon with Mr. Fontanel of the Swiss Political Department. He said that Mr. Fontanel explained that he had called upon Mr. Petitpierre, Head of the Political Department, and presented a letter from Mr. Jones; that Mr. Petitpierre had stated that I.G. Chemie would not immediately be unblocked, "but that it was improper for the S.C.O. [Swiss Compensation Office] to make available to American or other foreign representatives documents relating to a firm which, after two investigations by the S.C.O., had been determined to be Swiss owned", and that "Mr. Petitpierre, therefore, felt that it was incumbent upon the American authorities to present evidence to contradict these findings". (Ibid., Exhibit 15.)

Here again we have a statement by the Head of the Political Department of the Swiss Government that "after two investigations by the S.C.O., Interhandel had been determined to be Swiss owned", and that it was "incumbent upon the American authorities to present evidence to contradict these findings".

It would seem to be manifest from these documents that whereas the United States was maintaining that Interhandel was a German controlled organization, the Swiss Government was taking the definite position that Interhandel was completely divested of German control or interest. It can scarcely be doubted that a difference of view amounting to a dispute had thus eventuated, and that that dispute related both to the status of Interhandel and to its assets. The Swiss position, opposed to that of the United States, had become definite, and this prior to the time of the filing of the Declaration of the United States on August 26th, 1946.

There can be little point to saying, as was said in the oral presentations, that this period was devoted to friendly co-operation. The discussions were polite, to be sure, but nevertheless they were pointing in opposite directions. The dispute had not been formalized in diplomatic exchanges from the higher channels, but this is not a criterion. The officials, on both sides, represented their governments; they were acting in no other capacity. They were the officials in charge of the subject-matter. They had been designated by their governments to try to come to an understanding, but instead had reached an impasse on the crucial issues. Neither side deviated from its position.[p 38]

But it is said that the dispute related to assets in Switzerland. So it did, but it was much broader than this. The gravamen of the dispute related to the status and operations of Interhandel. Was it truly a neutral concern, or was it acting as a cloak for I.G. Farben,. the parent organization? Switzerland said that Interhandel had been cleansed of the taint of enemy character; that it was now wholly neutral in composition and its assets were assets of a neutral. The United States did not agree. Measured by any yardstick there appears to be no escape from the conclusion that there was a definite dispute between the Parties, a dispute not alone as to assets of Interhandel in Switzerland but a dispute as to the status of Interhandel itself and the bona fides of its pretensions vis-a-vis I.G. Farben. It was in the wake of this dispute that Switzerland later made claim to assets in the United States said by Switzerland to be neutral property.

***

Between the dispute concerning assets in Switzerland and the present dispute relating to assets in the United States, there is a definite connecting fink. This link is shown by later exchanges of diplomatic correspondence between the two Governments:

On June 4th, 1947, the Swiss Legation in Washington sent an Aide Memoire to the Department of State stating that the competent Swiss Authorities had allowed an appeal by Interhandel against the blocking of its assets and that it appeared very likely that the blocking would soon be lifted. In that event, it was said, "the Swiss authorities are confident that a favourable settlement will be reached with respect to the stock of the General Aniline and Film Corporation, which belongs to Interhandel and which was vested in the Alien Property Custodian in February 1942". (Ibid., Exhibit 16.)

The Department of State replied, June 18th, 1947, stating that the question of the disposition to be made of the Interhandel case was one to be dealt with through the Joint Commission provided for in the Washington Accord and that:

"... Under these circumstances the Government of the United States in conformity with the obligations it undertook under the Washington Accord of May 25, 1946, is unable to consider the question raised in the reference note in any other forum than the Joint Commission.

During the course of the negotiations leading to the Accord of May 25, 1946, the United States representatives made clear that a decision on the Interhandel case can have no effect of any settlement of or decision on the vesting action by the Alien Property Custodian of February 1942 of the stock of the General Aniline and Film Corporation. The United States Government has not changed its views in this matter." (Ibid., Exhibit 17.) [p 39]

In a further communication addressed to the Department of State on May 4th, 1948, the Minister of Switzerland referred to procedures taken in Switzerland with respect to Interhandel and stated that the Swiss Authority of Review had, on January 5th, 1948, retroactively lifted the blocking of Interhandel. It was said that, since the three Allied governments had not within the time provided by the Washington Accord asked to have the difference submitted to arbitration, the decision of the Authority of Review "declaring Interhandel a Swiss concern has become final and binding upon all parties to the Accord". The Note concluded:

"Under Article IV of the Washington Accord, the Government of the United States agreed to the release of Swiss assets in the United States.

The Minister would therefore appreciate it if the Department of State would contact the competent government agencies with a view to having the vested property returned to Interhandel." (Ibid., Exhibit 19.)

By a Note dated July 26th, 1948, to the Swiss Charge d'Affaires ad interim, the Department of State rejected the request for the release of the vested assets claimed by I.G. Chemie (Interhandel) stating "as the final and considered view of this Government on the matter " that:

"As representatives of the Swiss Government have heretofore been informed, this Government considers the decision of the Swiss Authority of Review as having no effect on the question of the assets in the United States vested by this Government and claimed by I.G. Chemie.

The decision of the Swiss Authority of Review was made on an appeal of I.G. Chemie from a provisional blocking order by the Swiss Compensation Office pursuant to the Swiss Federal Council Decree of February 16, 1945, and not on an appeal taken under the terms of the Washington Accord of May 25, 1946. The question of whether the assets in Switzerland held by I.G. Chemie are German assets which come within the provisions of the Washington Accord is still before the Joint Commission. Plainly the decision of the Swiss Authority of Review, when made as a result of an appeal under a Swiss decree rather than as a result of an appeal by the Joint Commission or by an interested party under the Accord, is not binding upon the United States, even as to the status of I.G. Chemie assets in Switzerland." (Ibid., Exhibit 20.)

This correspondence amply demonstrates that the present dispute concerning the enemy or non-enemy status of Interhandel and the enemy or non-enemy status of assets in the United States claimed by Interhandel is nothing more than a continuation of the pre-[p40]viously existing dispute with respect to Interhandel and its assets in Switzerland. It is said in the quotation just given that the decision of the Authority of Review is not binding on the United States "even as to the status of I.G. Chemie assets in Switzerland". From this it would seem to be manifest that the earlier phase of the dispute was never resolved except by ex parte proceedings in Switzerland, which were not recognized by the United States, and that that dispute continued unabated and was immediately carried over to vested assets in the United States. The Swiss insistence upon the binding force of the decision of the Swiss Authority of Review accentuates the continuance of the dispute.

The issues relating to the enemy or non-enemy status of Interhandel and of the claimed assets have not changed since 1945, when the blocking of assets in Switzerland was first raised between the Parties. To say that the present dispute relates to the restitution of assets in the United States and that this dispute arose on July 26th, 1948, when the Swiss Government's note of May 4th, 1948, requesting restoration of the assets was given a negative reply by the United States, states only part of the problem. It confuses the subject of the dispute with the object to be attained. The subject of the dispute is one thing and the object to be attained by its solution is quite a different thing. If there were no dispute regarding the status of Interhandel and the assets, there presumably could be no dispute regarding restoration of the assets. The first-named dispute, as previously stated, has existed since 1945. It is on the outcome of this dispute that restoration of assets depends.

***
On the basis of the foregoing, I conclude that the present dispute arose prior to the filing on August 26th, 1946, of the Declaration by the United States accepting compulsory jurisdiction of the Court, and that under that Declaration the Court was without jurisdiction to entertain the claim of the Swiss Government.

The First Objection should have been sustained and the Application should have been dismissed.

(Signed) Green H. Hackworth.

[p 41]
SEPARATE OPINION OF JUDGE CORDOVA

I am in disagreement with the majority of the Court both with its reasoning as well as to its conclusion with regard to the First Preliminary Objection of the United States. The United States claims that, since the dispute in this case arose prior to August 26th, 1946, the Court lacks jurisdiction to consider and adjudicate the claim of the Swiss Government. I agree with such contention.

The United States Declaration of Acceptance of the compulsory jurisdiction of the Court limits the submission to its competence to the "legal disputes hereafter arising", that is to say, after the date of the Declaration, August 26th, 1946. The paramount questions to decide this First Preliminary Objection, therefore, are the definition of the international legal dispute which has been brought by Switzerland before the Court as well as the date of its inception.

The majority of the Court, it seems to me, based its decision on this Objection on the assumption that the legal dispute between the Parties is constituted by the different attitudes taken by them on the question of the restoration of the assets to the Interhandel by the United States. With this most essential finding of the Court I cannot concur, and, from this difference of points of view derive the difference in the conclusions reached by the majority and by me. If the real dispute before the Court is limited to the restoration of the vested assets of Interhandel then, of course, the conclusion that it arose after August 26th, 1946, is right and right is also the decision to reject the first objection; but I am bound to differ with the majority because in my way of thinking the legal dispute, the real difference between governments, lies in their opposite views with regard to the legal character of Interhandel, enemy or neutral.

The Parties in this suit are in complete agreement in regard to the law which should be applied in the case. In particular, they agree on the positive and the negative aspects of the principle of international law which permits a belligerent State to seize and vest enemy property lying within its territory on the one hand, and, on the other, prohibits the same State to take property belonging either to a neutral country or to its subjects. The whole diplomatic discussion of the two Governments and the pleadings of their Agents show the agreement on this principle, which moreover is also incorporated in the law of the United States, the Trading with the Enemy Act of October 6th, 1917. This law empowers the United States Government to seize and appropriate the assets of nationals of an enemy country but, at the same time, excludes [p 42] from such action the property of nationals of a neutral State, making it possible for neutral property wrongfully seized to be returned to its owners. There is complete agreement of the Parties with regard to both the applicable law and the inevitable consequence of the application of such law, the legal vesting of the assets of Interhandel by the United States or its return to the Swiss company.

The United States Government seized the property of Interhandel, constituted mainly, and among other assets, by 90 per cent of the stock of the General Aniline and Film Corporation, organized and doing business in the United States. In vesting these assets, the United States relied on its contention that Interhandel was, in fact, German owned, serving only as a cloak for the Frankfurt firm, I.G. Farben. The Swiss Government, after having made investigations, reached the conclusion that that was not the case; that Interhandel, at the time of the seizure of its shares in the General Aniline and Film Corporation, February 16th and April 24th, 1942, was not any more controlled by German interests, having as far back as June 1940 broken all its financial and administrative connections with the German company.

This basic legal dispute between the Parties, the juridical character of Interhandel, develops itself into some other differences as, for example, the return of the shares, or that related to the different procedures to solve such dispute as with regard to the obligation of the United States to abide by the decision of the Swiss Authority of Review or the obligation of the same Govern-ment to take part in conciliatory proceedings or to arbitrate the dispute. All of these secondary differences are based either on the Washington Accord of May 25th, 1946, or on the Treaty of Arbitration and Conciliation of February 16th, 1931. In my opinion, all these differences are phases only of one and the same legal dispute葉he neutral or enemy character of Interhandel. Should both Governments have been in agreement with regard to the character of Interhandel, either as belligerent or as neutral, this case would have never come before the Court, nor before the local tribunals of the United States. The claim would have never existed.

If the Swiss Government would have presented its claim before the Court based only on the refusal by the United States to abide by the decision of the Washington Accord or to arbitrate the dispute in compliance with the Treaty of 1931, I might have been inclined to believe that the dispute would have been upon the non-compliance of such Accord or of such Treaty; but having presented its claim on the basis of the application of the international law principle of the respect due by belligerents for neutral property, I believe that the subsidiary Swiss submissions constitute only a means to arrive at the same conclusion sought by the plaintiff, the recognition that Interhandel was a neutral company and, as [p 43] a corollary, that it has a right to the return of the assets. In other words, the return or restoration of the assets to Interhandel is nothing else but a practical consequence of the solution of the real and only legal dispute of the Parties葉he character of the Swiss company傭ut not the basic dispute itself. The return of the shares and other assets, in itself, is not perhaps even a legal dispute.

Once the determination of the legal dispute has thus been made, it is necessary to fix the time when it really arose. Only then will we be in a position to analyse the first Preliminary Objection in the light of these two basic questions.

The United States Government vested Interhandel's property on February 16th and April 24th, 1942. This action was taken, as I have said, on the basis of the assumed enemy character of Inter-handel by the United States authorities in spite of its apparent Swiss nationality. So it was notified to the Swiss Diplomatic Agent m Washington in a Memorandum of February 16th, 1942 (Exhibit 10 of the Preliminary Objections of the United States). This Memorandum also stated that such action did not mean, in any way, the intention to take over any bona fide Swiss property, a statement which evidently meant that the vested shares and other assets of Interhandel were not considered bona fide property of the Swiss corporation. This is the first document in our record to show that one Party stated its position to the other with regard to the character of Interhandel as an enemy-controlled company. The Swiss Government did not immediately question such enemy character, nor, therefore, the right of the United States to vest its property. It decided first to make some investigations in order to find out what was the real situation between Interhandel and the German company, Farben Industries of Frankfurt. According to the allegations in the case, the two investigations conducted by the competent Swiss authority showed that Interhandel and Farben Industries had broken completely their relations since 1940, that is, even before the United States came into the World War; the Swiss Government communicated these findings to the American authorities, expressing the hope that "a settlement will be reached with regard to the Interhandel's property in the United States", the assets and stock that had been vested in 1942. This petition was made known to the United States Government in the Me-morandum dated June 4th, 1947 (Exhibit 16, Preliminary Objections). In other words, the Swiss Government would never have claimed the restoration of the assets had it not come to the con-clusion that Interhandel was a bona fide neutral Swiss company, nor the United States would have ever vested such assets, had it not believed the Interhandel was in reality an enemy-owned firm.[p 44]

There are many other communications between the two Governments regarding different aspects and shades of the negotiations relating to the character of Interhandel, but all of them were connected with the provisional blocking in Switzerland by the Swiss Government of the Interhandel properties; the Memorandum dated June 4th, 1947, seems to be the first document on record in which the opposed views of the Swiss Government to the thesis of the United States are stated with regard to Interhandel's character of enemy owned company in connection with the return of the vested property by the United States. I would have therefore accepted the date of June 4th, 1947, as the date when the dispute between the two Governments with regard to the enemy or neutral character of Interhandel arose in connection with the vesting of the assets of the General Aniline and Film Corporation, had it not been for the expressions used by the Department of State in its Memorandum of June 18th, 1947, wherein in answer to the already mentioned Aide Memoire of June 4th, 1947, of the Swiss Government, the United States said (Exhibit 17 to the Preliminary Objections):

"During the course of the negotiations leading to the Accord of May 25, 1946, the United States representatives made clear that a decision on the Interhandel case can have no effect of any settlement of or decision on the vesting action by the Alien Property Custodian of February 1942 of the stock of the General Aniline and Film Corporation. The United States Government has not changed its views in this matter."

That is to say, the United States Government affirms that before May 25th, 1946, the date of the Washington Accord, it had already discussed and rejected the contention of the Swiss Government that the findings of the Swiss authorities under the Washington Accord, with regard to the character of Interhandel as neutral or enemy, should have the "effect of any settlement of or decision" on the question of the vesting of its assets and shares. Since this most important assertion has been left completely unanswered by the plaintiff Government, I feel justified in my belief that the dispute upon the legal character of Interhandel in relation with the vesting of the shares and assets by the United States arose even prior to the date of the Washington Accord, May 25th, 1946.

I conclude, therefore, that the dispute arose before the date of the Declaration of the United States, August 26th, 1946, and that the First Preliminary Objection should have been upheld by the Court.

I agree with the Court's decision to retain the Third Preliminary Objection, but, in my opinion, the reasoning of the majority, based mainly on the necessity to avoid the danger of two proceedings being followed様ocal as well as international妖oes not cover all the issues presented by Switzerland. I believe that the Court [p 45] should have founded its application of the principle of exhaustion of local remedies on a much broader basis.

The Court is justified in concluding that the local courts of the United States are dealing with exactly the legal suit which the Court would have to decide if it had to consider the merits of the case before the local remedies would have been exhausted; its finding that Interhandel should first exhaust all local remedies pending in the United States before this Court would be able to consider and adjudicate the same issues is, of course, entirely correct. But, besides the question of the existence of two parallel procedures, there are some other reasons which, in my opinion, the Court should have taken also into consideration in applying the principle to both the principal as well as to the subsidiary or alternative submissions of Switzerland.

The argument related to the parallel procedures which the principle of exhaustion of local remedies tries to avoid can successfully be opposed to the main as well as to the subsidiary submission related to the non-compliance by the United States of the decision of the Swiss Authority of Review and to its refusal to arbitrate the dispute. It cannot be opposed nevertheless against the contention put forward by Switzerland that the Court should decide that the United States are bound to enter into proceedings of conciliation in compliance with the Treaty of Arbitration and Conciliation of 1931. Conciliation being a procedure in the nature of an extra-judicial settlement by the parties and not ending in a binding decision certainly cannot be considered as a parallel international procedure to that followed before the local courts of the United States.

To apply the principle of exhaustion of local remedies to the claim of Switzerland with regard to conciliation, it is necessary to resort to other reasons which also underlie it. The principle, as I have said, is based and justified on grounds perhaps more important than the mere possible avoidance of conflicting procedures and decisions. The main reason for its existence lies in the indispensable necessity to harmonize the international and the national jurisdictions預ssuring in this way the respect due to the sovereign jurisdiction of States傭y which nationals and foreigners have to abide and to the diplomatic protection of the Governments to which only foreigners are entitled. This harmony, this respect for the sovereignty of States is brought about by giving priority to the jurisdiction of the local courts of the State in cases of foreigners claiming against an act of its executive or legislative authorities. This priority, in turn, is assured only by means of the adherence to the principle of exhaustion of local remedies.

The right of the State, in the present instance Switzerland, to protect its national Interhandel, for an alleged wrongful act of a foreign government, that of the United States, does not legally [p 46] arise until the judicial authorities of the latter decide irrevocably upon such wrongful act through a decision of its judicial authorities. Before the tribunals of the respondent State have handed down its final decision, the State may not be considered liable internationally because and for the simple and good reason that the damage has not as yet been consummated. This principle informs all systems of law幼ivil as well as criminal, local as well as international.

A State may not even exercise its diplomatic protection, and much less resort to any kind of international procedure of redress until its subject has previously exhausted the legal remedies offered him by the State of whose action he complains.

In the present case it cannot be affirmed that the damage to Interhandel has been caused by the vesting of its property by the local authorities of the United States until such vesting has been definitely consummated, that is, until the judicial authorities of the Unites States will have definitely confirmed such action by a judgment which will have the force of res judicata. Then, and only then, will Interhandel and the Swiss Government be entitled to resort to this International Court or any other competent international proceedings seeking redress for the supposed violation of the law of nations which the local authorities will not be any more in a position to grant. That is why the well-settled principle of international procedure of the exhaustion of local remedies is based on the fundamental idea that a claim is not ripe, that there is no international claim, until the damaged foreigner has complied with such principle.

In the present case it seems that there was a mistake with regard to the exhaustion of local remedies since the United States Government itself expressed its opinion that such exhaustion had already been effected. On this false impression, it seems, the Swiss Government presented before the Court its Application instituting proceedings against the United States. But once this wrong belief had been dispelled, the juridical situation預s far as I can understand it謡as that such Application had been wrongfully brought before the Court. In other words, it seems to me that the finding of the Court should have been, that the different claims of the Swiss Government before the Court, the restoration of the vested assets, the obligation of the United States to comply with the decision of the Swiss Authority of Review and the duty of the respondent Government to arbitrate or conciliate the dispute, could not be entertained by the Court not only because of the pending proceedings in the United States but because of the more general reason that an international claim does not yet exist in any of its different possible faces, restoration of property, submission to [p 47] arbitration or conciliation, or compliance with the terms of the Washington Accord, until the tribunals of the United States hand down their last and final decision on the suit brought before them by Interhandel.

(Signed) R. Cordova.

[p 48]
SEPARATE OPINION OF JUDGE WELLINGTON KOO

I agree with the conclusions of the Court in sustaining the Third Preliminary Objection submitted by the United States and in ruling that Switzerland's principal claim relating to the restitution of Interhandel's claimed assets in the United States and its alternative claim relating to the question of submission of the dispute to arbitration or conciliation are inadmissible on ground of the non-exhaustion by Interhandel of the remedies in the United States courts. But I regret I am unable to concur in the Court's rejection of the First Preliminary Objection raised by the United States. I maintain that this Objection should have been upheld, and I propose to set out the reasons for my view.

The First Preliminary Objection is based upon the condition ratione temporis in the United States Declaration of August 26th, 1946, accepting the compulsory jurisdiction of this Court under Article 36, paragraph 3, of the Statute. This condition limits the acceptance to "all legal disputes hereafter arising...". Thus the date of the Declaration is the crucial date. Did the present dispute arise before this date as claimed by the United States or after this date as claimed by Switzerland ?

Before dealing with the question, it is, however, necessary to give a summary of the facts and situations leading to the dispute.

By an Order of February 12th, 1942, the Secretary of the Treasury of the United States ordered vested over 90 per cent of the shares of the General Aniline and Film Corporation (GAF), a company incorporated in the State of Delaware, together with a sum of approximately $1,800,000. These assets were later vested in the Alien Property Custodian under Orders No. 5 and No. 907 issued by him respectively on February 24th, 1942, and February 15th, 1943. All these vesting Orders were based upon the Trading with the Enemy Act of October 6th, 1917, as amended.

GAF owns almost half of the ordinary shares of Interhandel, while approximately 75 per cent of its own shares and all its issued "B" snares are said to belong to Interhandel, which is the new name for the old company I.G. Chemie (Internationale Gesellschaft fur Chemische Unternehmungen Aktiengesellschaft). It should be recalled that I.G. Chemie was a Swiss corporation founded in 1928 with its seat in Basel, Switzerland, by I.G. Farben, a German corporation with its seat in Frankfurt, Germany, and largely owned and controlled by Germans. Switzerland claims that the ties between [p 49] the two corporations were legally and completely severed in June, 1940, after its reorganization in 1939-1940 while the United States contends that they were not severed and that Interhandel continued to be controlled or influenced by I.G. Farben after June 1940.

It appears clear from the evidence before the Court that the United States vested the GAF shares under the Trading with the Enemy Act because they were German-controlled. Thus, in the aide-memoire of February 12th, 1942, the same date as that of the first vesting order handed to the Swiss Minister in Washington by the Secretary of State, it is stated:

"This action is being taken because, in the judgment of the Secretary of the Treasury, these shares are actually controlled by German interests, and because it is important that this company be freed from German control in order that its facilities may be effectively utilised in this country's war effort."

The United States has consistently maintained this view of the German character of I.G. Chemie, now Interhandel, through all these years, and has not abandoned or modified it. Switzerland, on the other hand, has taken the opposite view since 1945 and has not in any way revised it.

This Swiss attitude was initially manifested as the result of the first investigation conducted by the Swiss Compensation Office from June nth to July 7th, 1945. Although the letter of November 6th, 1945, from Mr. R. Hohl of the Foreign Affairs Division of the Swiss Federal Political Department to Mr. David J. Reagan of the United States Legation at Berne informed him of a recent decision to have the assets of I.G. Chemie blocked for a limited time, it pointed out at the same time that the decision was made

"in spite of the fact that this investigation did not lead to the discovery of any document which would permit the conclusion that I.G. Chemie is a company under the control of Germany" and "in order to permit your authorities, if they persisted in regarding this holding as under German influence, to furnish proof for it". (Annex 12 to Prehminary Objections.)

Indeed, the same letter asked Mr. Reagan to

"inform your authorities of the foregoing and in doing this to stress the point that the thorough investigations in Switzerland have failed to establish the actual existence of a tie between I.G. Chemie and I.G. Farben". (Ibid.)

The second investigation was made by the Swiss Compensation Office from November 5th, 1945, to February 25th, 1946. The result of this investigation, according to the Swiss Compensation Office, [p 50] simply confirmed the result of the first investigation. From that time on, the attitude of Switzerland on the Swiss character of Interhandel became clearly fixed. The subsequent correspondence between the Swiss Compensation Office and the United States re-presentatives, particularly the letters exchanged of August 10th, 1946, August 20th, 1946, and August 22nd, 1946, and the minutes of the meeting between these representatives and certain members of the Federal Council on August 15th, 1946, although the immediate subject-matter was the question of procedure concerning the joint investigation of the Swiss assets of Interhandel, nevertheless showed clearly that their differences of opinion on this subject stemmed from the basic conflict of their views as to the character of the company. The United States representatives considered Interhandel to be a German-controlled company and therefore stated that:

"it was intended that there be a joint investigation of I.G. Chemie to determine the extent of German influence in which you specifically would furnish us with your evidence. It is to be regretted that our. recollections in this regard differ." (Annex 4 to Swiss Observations and Conclusions.)

The Swiss authorities, on the other hand, were willing only to receive and consider proofs from the United States representatives, and refused to open Swiss files to them for examination, because they adhered to their view that:
"it was improper for the Swiss Compensation Office to make available to American or other foreign representatives documents relating to a firm which, after two investigations by the Swiss Compensation Office, had been determined to be Swiss owned".

A preliminary question to consider is: what constitutes an international dispute? According to the criterion well established by the Court, especially in the Peace Treaties case (I.C.J. Reports 1950, p. 74), an international dispute will be held to exist when the two sides hold clearly opposite views concerning the question". In the light of this definition, the dispute in the present case, in my view, is a manifest one, consisting in a sharp difference of opinion on a question of fact, a conflict of interests relating to the character of Interhandel, i.e whether its ties with I.G. Farben were or were not in fact completely severed by its reorganization in 1939-1940.

The dispute arose when the Swiss Compensation Office concluded from its two investigations undertaken between June 1945 and February 1946 that Interhandel was no longer under German influence from 1940 onwards and when the Swiss Government adopted this conclusion and based its arguments on it in all the discussions with the United States representatives, before the [p 51] United States Declaration of Acceptance of August 26th, 1946, and even before the Washington Accord of May 25th, 1946.

The applicant State also contended (English translation of Observations, p. 7) that

"the dispute could at the earliest have arisen on October 12th, 1948, when the Department of State finally declared that it could not agree with the opinion of the Federal Council that the decision of the Swiss Authority of Review of January 5th, 1948, was binding on the United States in so far as it established, within the meaning of the Washington Accord, that Interhandel was a Swiss company".

An examination of the diplomatic correspondence between the Department of State and the Swiss Legation in Washington discloses the fact that it was not the first time that the United States took the position it did in the note of October 12th, 1948, that the decision of the Swiss Authority of Review was not binding upon the United States, because it "was not one under the Accord". In a memorandum to the Swiss Legation of June 18th, 1947, regarding Interhandel it is stated:

"The question of the disposition to be made of this case is one which under the terms of the Accord and annex thereto must be dealt with through the Joint Commission..."

"During the course of the negotiations leading to the Accord of May 25th, 1946, the United States representatives made clear that a decision on the Interhandel case can have no effect of any settlement of or decision on the vesting action by the Alien Property Custodian of February 1942 of the stock of the General Aniline and Film Corporation. The United States Government has not changed its views in this matter."

Again in its note of July 26th, 1948, the Department of State says:

"As representatives of the Swiss Government have heretofore been informed, this Government considers the decision of the Swiss Authority of Review as having no effect on the question of the assets in the United States vested by this Government and claimed by I.G. Chemie. "
In short the Swiss position is that since Article IV of the Washington Accord provides for the United States Government

"to unblock Swiss assets in the United States",

and since the Swiss Authority of Review under the Accord has determined the Swiss character of Interhandel, its assets in GAF, vested by the United States Government, should be unblocked.[p 52]

On the other hand the United States has not only denied the binding effect of the said decision of the Swiss Authority of Review but also challenged the relevance of the Washington Accord in the case, since in its view, the said Article IV relates only to Swiss assets blocked in the United States and has nothing to do with German assets vested in the Alien Property Custodian.

This confrontation of the two opposite views did not originate with the note of the Department of State of October 12th, 1948, but dates back to the two decisions of the Swiss Compensation Office given in the period of June 1945-February 1946, on the Swiss character of Interhandel. The Swiss Authority of Review merely reviewed the above-mentioned decisions subsequently on appeal of Interhandel against the temporary blocking of its assets and adopted them as the basis for its own decision.

It was the two decisions of the Swiss Office of Compensation which marked the beginning of the attitude of the Swiss Government as to the Swiss character of Interhandel預n attitude which is opposed to that of the United States.

As to its position regarding the question of the relevance of the Washington Accord to the decisions of the Swiss Compensation Office and the Authority of Review, the Note of the Department of State to the Swiss Minister in Washington of July 26th, 1948, referring to its aide-memoire of April 21st, 1948, also states:

"The Department further pointed out that this had been the consistent view of the Government of the United States since May 25 1946, and that concurrently with the signing of the Accord this understanding was stated to, and understood by, Swiss officials."

It is true that the Swiss Government denied that there was any trace in the records of the negotiations which resulted in the Washington Accord of May 25th, 1946, of declarations made by the United States representatives, and took the position:

"At any rate, any such declarations would have no binding effect on the signatories of the Accord by reason of not being mentioned in the Accord nor in its Annex, nor in the letters exchanged the same day."

But it is equally true that the view of the United States as to the enemy-controlled character of Interhandel, which is the core of the dispute in the present case, has not changed in any measure from the time of the negotiations for the Accord, in May 1946, and indeed, as has been shown above, even from the time of the vesting of the GAF shares in 1942, just as the Swiss Government has not modified its stand as to the Swiss or neutral character of Interhandel from the time of the two decisions of the Swiss Compensation Office in November 1945 and February 1946. The United States Note of [p 53] July 26th, 1948, only further confirmed its previous view of the enemy-controlled character of Interhandel and did not originate that view.

There remains one question to consider, namely, whether the discussions between the United States representatives and the Swiss Authorities concerning the German or Swiss character of Interhandel are relevant to the present dispute and whether they do not relate only to Interhandel's assets in Switzerland. In my view their relevance is self-evident. The character of Interhandel, whether German of Swiss, that is, whether enemy or neutral, is the crucial issue in the present case with reference to its assets in the United States just as it was with reference to its assets in Switzerland. It is on this issue that the two Parties are in conflict from the time when the Swiss Authorities defined their attitude on the basis of the decision of the Swiss Compensation Office in June 1945-February 1946, later confirmed by the Swiss Authority of Review. Both Parties have maintained their respective positions, not only with regard to Interhandel's assets in Switzerland but also with full realization of the consequent effect upon Interhandel's GAF assets in the United States. As was claimed by Swiss counsel in the oral pleadings,

"When property belongs to Swiss physical or legal persons whose Swiss character has already been confirmed in a binding and just manner by the Authority of Review set up under the Washington Accord, they must inevitably follow the fate of property unblocked in Switzerland."

It is clear that the real subject of the dispute before the Court is the question of the enemy or neutral character of Interhandel and not the restitution of its GAF assets, which is only the object of the Swiss claim; and that it arose before August 26th, 1946, the date of the United States Declaration of Acceptance of the jurisdiction of the Court. I am, therefore, of the opinion that the First Preliminary Objection should have been sustained by the Court.

(Signed) Wellington Koo.

[p 54]
SEPARATE OPINION OF SIR PERCY SPENDER

In my opinion, as a result of the inclusion in the United States Declaration of Acceptance of the Court's jurisdiction of its Reservation (b) stipulating that the Declaration should not apply to disputes with regard to matters which are essentially within the domestic jurisdiction of the United States as determined by the United States, the Court has no valid United States acceptance of its jurisdiction before it and is without competence to entertain the Application of the Government of Switzerland. This conclusion emerges from an examination of Objection 4 (a).

The Court upholds the Third Objection and holds that the Application of the Swiss Government is inadmissible. Having regard to this decision the Court being further of the opinion that part (a) of the Fourth Objection is without object at the present stage of the proceedings, finds it not necessary to adjudicate thereon.

There is more than a little practical wisdom to recommend this as a course to follow. The Objection presents issues of far reaching significance. They concern not only the interests of the two States engaged in the present proceedings but those of other States as well. I would have preferred to adopt towards part (a) of the Fourth Objection the same attitude as has the Court, but after considerable reflexion I regret that this is not open to me.

To decide upon all other objections raised by the United States to the Court's jurisdiction and not to deal with this Objection, is to leave unanswered questions which strike at the very roots of the Court's jurisdiction.

The United States has challenged jurisdiction on a number of grounds. It has failed on its Objections 1, 2 and 4 (b), which are objections to the jurisdiction of the Court. It has succeeded on its Third Objection, but this has properly been treated by the Court as a plea not to its jurisdiction but to the admissibility of the Application of the Swiss Government.

Before however adjudicating upon the Third Objection, the Court, in my opinion, is obliged first to satisfy itself that otherwise it has jurisdiction. It cannot be so satisfied unless and until it rules upon Objection 4 (a).

The United States under this Objection has invoked the automatic reservation contained in its Declaration of Acceptance. It declines thereunder to submit to the jurisdiction of the Court the matter of the sale and disposition of the shares in GAF, including the passing of title. This declination applies to all the issues raised in the Swiss Application and Memorial, including, but not limited [p 55] to, the Swiss-United States Treaty of Conciliation and Arbitration 1931 and the Washington Accord of 1946.

This objection was maintained in the United States' final conclusions and submissions.

Neither State to the present proceedings was willing to examine too critically the vital questions posed by the Objection. The Objection was handled tenderly by both and for understandable reasons.
The issues involved raised their heads in the Norwegian Loans case (I.C.J. Reports 1957, p. 9). Here also, each side walked discreetly around them. Because in that case the validity of the reservation of the Republic of France was not questioned by the Parties, because indeed both Parties to the dispute regarded the reservation as expressing their common will relating to the Court's competence, the Court gave effect to the reservation as it stood and as the Parties recognized it.

In the present case the validity of the United States reservation was questioned by the Swiss Government. In the course of the oral argument the Co-Agent for Switzerland submitted (inter alia):

"As we have already said in our observations, so-called automatic reservations are incompatible not only with the very principle of compulsory arbitration (Article 36 (2) ... of the Statute), but also with Article 36 (6) ... which gives the Court the power to determine its own jurisdiction."

In the formal submissions of the Government of Switzerland made at the end of the oral proceedings, it rather moved away from this by contending that the Objection now being limited in the present case to the right to dispose of and sell the shares in GAF, it was in reality completely linked with the fate of the United States Objection 4 (b) relating to the domain that is reserved according to customary international law. I cannot agree.

If the reservation of the United States is invalid because of incompatibility with Article 36 of the Statute of the Court, it would be impossible for the Court to act upon it. More than this, if it is invalid this may involve as in my opinion it does the total invalidity of the United States Declaration of Acceptance rendering it null and void.

The jurisdiction of the Court depends upon the Declarations of Acceptance made by the Parties before it in these proceedings. Whether it has or has not jurisdiction depends not only upon the consensus of agreement to be derived from a comparison of the two Declarations, but upon whether that consensus is compatible with the provisions of the Court's Statute. [p 56]

Is, then, the United States reservation (b) compatible with Article 36 of the Statute? And if not, what are the legal consequences which flow from this incompatibility?

The Court can only function within its Statute and within the limits of its authority. It cannot depart from the terms of the Statute.

If the reservation of the United States is inconsistent with the Statute, or if the result of its inclusion in its Declaration is to render the latter wholly inoperative as an acceptance of the Court's jurisdiction, the Court, in my opinion, is bound so to declare.

Article 36 (6) of the Statute provides that in the event of a dispute as to whether the Court has jurisdiction the matter shall be settled by the decision of the Court. But the United States reservation (b) empowers the United States exclusively on its own determination to say in the event of a dispute whether the Court has or has not jurisdiction. In the event of a dispute as to the Court's jurisdiction the matter is not settled by the decision of the Court unless the United States so agrees. It determines whether the matter shall or shall not be settled by the Court. But it is the Court and the Court alone that under the Statute is to decide its jurisdiction. It is not competent for a State to reserve to itself a right to withdraw from the Court in the event of a dispute as to whether the Court has jurisdiction in a particular case, the very matter which by virtue of Article 36 (6) shall be settled by the decision of the Court.

The United States in this case has invoked its reservation and so sought to prevent the Court from exercising the authority given to it and discharging the duty imposed upon it by its Statute.

This reservation may be used by the United States to prevent the Court from discharging its function and to exclude from the Court's competence at any time any dispute with regard to any matters which the United States itself determines as essentially within its domestic jurisdiction.

Whether any jurisdiction at any time resides in the Court in respect of any dispute; whether there is any obligation upon the United States to accept the jurisdiction of the Court on any dispute, depends upon the will or subjective determination of that State, a determination that may be made even after the dispute has been brought before the Court.

This reservation is clearly inconsistent and incompatible with Article 36 (6) of the Statute and with the concept of compulsory jurisdiction and reciprocal obligation contemplated in Article 36 (2) thereof. An "obligation" to recognize the jurisdiction of the Court, the existence or extent of which "obligation" in respect to any particular dispute is a matter which can be determined by the State concerned, is not a legal obligation at all.

It is in no way relevant to assume, as assume I do, that the United States would seek to use its reservation with prudence and reason. [p 57]

In my opinion reservation (b) of the United States is invalid. If so, the Court is unable to give any effect to it.

What are the consequences of its invalidity?

The answer seems to me dependent upon the enquiry whether the reservation, either wholly or in part, is severable from the rest of the Declaration.

Is it permissible to discard the reservation altogether or the words "as determined by the United States", leaving what remains of the Declaration valid, and operative?

The answer is clearly, I would think, "no", and for the reason that the reservation, of which the words "as determined by the United States of America" are the core, is not a mere term but an essential condition of the United States Acceptance. The reservation could be described as a critical reservation without which the Declaration of Acceptance would never have been made. This seems reasonably self evident. It is not in my opinion permissible to have recourse to the debate in the United States Senate when the Declaration was before it; nor, were it permissible, would it be necessary or profitable. The will and the intent of the United States is to be found in its expression thereof in its Declaration of Acceptance and nowhere else. The meaning of the reservation, automatic in character, is clear. To sever this reservation or the words "as determined by the United States" and to hold that the Declaration after severance represents the will and intent of the United States would be to ignore the proper construction to be accorded to the Declaration as a whole. To do so would impose upon the United States an acceptance quite different to that which it made. It would have no warrant in law. In my opinion the reservation is a vital and unseverable condition of the Declaration of Acceptance. If it is bad, neither it nor any part of it can be severed from the whole. If it is invalid, as in my opinion it is, the whole Declaration is null and void.

In my opinion this concludes the matter. The Court is without jurisdiction.

Certain other possible constructions of the reservation should however be considered.

May it not be read as implying that the determination of the United States must be "reasonable" and so save it from any inconsistency with Article 36 (6) ?

So to read the reservation would require us to disregard its terms. That is precisely one of the things the reservation was intended to remove from any jurisdiction of or any review by the Court. The history of the reservation would itself prove this abundantly. But there is no need to go beyond the words of the reservation itself. There was excepted by the United States from the field of its acceptance of the Court's jurisdiction any dispute which it溶ot some [p 58] other body妖etermined as essentially within its own domestic jurisdiction, and irrespective of whether or not this Court should think the exercise by the United States of its sovereign power in so determining was or was not reasonable or the circumstances such as would make it reasonably possible for it so to determine. The United States, and it alone, was the sole judge of its action and/or of its reasonableness.

In the Norwegian Loans case, Judge Read, when dealing with the terms of a somewhat comparable French reservation"disputes relating to matters which are essentially within the national jurisdiction as understood by the Government of the French Republic" 幼onstrued it as permitting the Court to review the reasonableness of the circumstances under which the reservation was invoked. Whether the circumstances were such that it would be reasonably possible for Norway (relying in that case on the principle of reciprocity) to reach an understanding that the dispute was essentially national, would be a question for the Court to determine. But if those circumstances existed the conclusion reached by the State could not be questioned. In other words, whether the circumstances were such was not for a Government but for the Court. If, however, such circumstances existed, the conclusion of the Government concerned determined the matter (I.C.J. Reports 1957, p. 93).

It is not necessary to examine the reasons of that distinguished Judge in reaching this view. I think it reasonably clear that, had he been faced with the reservation in this case, he would have come to a quite different conclusion. The learned Judge was, of course, dealing with an automatic reservation couched in different terms. Had he felt compelled to interpret, its words as meaning that the relevant Government had an arbitrary power to settle any question of jurisdiction, then it would have been necessary for him to conclude that the Declaration of France was null and void as contrary to Article 36 (6) of the Statute. "It is inadmissible, by a process of interpretation, to rewrite the Clause in question as if it read 'disputes relating to matters as regards which the Government ... has declared that it understands that they are essentially within the national jurisdiction'." (P. 95.) That would have conferred an arbitrary power. The reservation in this case is at least as strong. The word "determined" is one of very definite content.

In my opinion there is no room whatever for construing the United States reservation by implying into it a concept that the determination must be reasonable or that it must not be unreasonable.

There remains to be considered whether the reservation should be interpreted in the sense that the Court has jurisdiction to decide whether it is invoked in good faith. [p 59]

This reservation left the question of jurisdiction specifically to be "determined" by the United States of America and by it alone. It cannot be construed as meaning that the words inserted by the United States as a reservation from the Declaration of Acceptance should be read as containing the words "provided it is so determined by the United States of America in good faith". There is no room for redrafting the reservation and giving it an entirely different meaning to that which its words bear and which they clearly enough were intended to bear.

To do so would involve rewriting proviso (b) of the United States Declaration of Acceptance, would distort the meaning of the Declaration by imposing a quite different reservation upon the United States to that inserted by it as a condition of its acceptance. There is no room for questions of abuse of power or good faith or bad faith in relation to a determination by the Government concerned that the dispute is within its domestic jurisdiction.

In my opinion, the reservation of the United States proviso (b) to its Declaration of Acceptance is invalid. Neither it nor any part of it can be severed therefrom since it is of the essence of the Declaration of Acceptance. The Declaration is incompatible with any compulsory legal obligation and with Article 36 (6). It has no legal force as a declaration under Article 36 (2). Accordingly, I am compelled to the conclusion that the United States Declaration of Acceptance is, and has from its inception been, null and void. The United States cannot sue or be sued in this Court on the basis of its Declaration. It has, in short, never legally submitted to the jurisdiction of the Court.

In the result I am of opinion that the Court has no jurisdiction to deal with the Application of the Government of Switzerland except so to declare. Since however the majority of the Court take the view that the objection should not be decided at the present stage of the proceedings, I deem it my duty to express my views on the other objections put forward by the United States.

First Objection

The United States Declaration of Acceptance of the compulsory jurisdiction of the Court is hmited to disputes "hereafter arising" that is arising after the 26th August 1946. Disputes which had theretofore arisen are accordingly excluded.

The purpose and intent of such a provision is clear. It accepts the Court's jurisdiction on disputes arising after the relevant date. It excludes from it all disputes which have arisen before the 27th August 1946. If a dispute existed before this date, it matters not in what form it may subsequently be presented to the Court or what the legal issues directly connected with and relevant to the [p 60] dispute may be or become, or what the nature of the relief claimed, that dispute is not within the competence of the Court.

Such a provision, if it is not to be interpreted in a manner to exceed the intention of the State accepting the jurisdiction of the Court, should receive a broad construction.

A "dispute" within the meaning of the provision need not be spelt out or defined with legal exactitude or particularity. It is enough if its subject-matter and its nature are identifiable. A dispute may arise long before it crystallizes into its component parts or reveals all its different facets. No special formality is necessary. It need not arise in the course of diplomatic negotiations. It may do so independently thereof and may precede negotiations.


Nor is it a condition precedent to a "dispute" arising that one State must indicate that it intends to resort to international judicial or arbitral procedure or action unless its claim is satisfied. A State party to a dispute may temporarily abandon its contention; may subsequently revive it and then decide to seek a remedy by judicial or other proceedings or action.

A dispute may lie dormant for years. The decision to take action and the nature of the action to be taken, the forum to be chosen, or the remedy to be sought are not decisive as to whether a dispute at any given time exists or existed.

A dispute may, as not infrequently happens, enter upon a new phase. An entirely separate dispute may of course arise between the parties with which the existing dispute is only casually con-nected. But if the substance of the dispute remains the same, the fact that it has entered upon a new phase or that other issues directly connected with and relevant to the dispute in which the parties are also in disagreement are subsequently added or appear, or that new claims for relief are presented, cannot alter the problem such as is here presented to the Court. Were it otherwise, legal ingenuity would usually be able to transmute a dispute which clearly enough was beyond the jurisdiction of the Court, into one within its competence. The Court should concern itself with substance, not form.

"Disputes" within the meaning of the United States Declaration must bear the same interpretation as the same word appearing in Article 36 of the Statute, with which it is co-terminous in meaning. A State submitting to the jurisdiction of the Court is entitled to place reliance upon the judicial pronouncements of this Court and its predecessor, as to the meaning to be given to this word when settling and agreeing upon the terms of its Declaration of Acceptance.[p 61]

The Permanent Court of International Justice and this Court have on a number of occasions considered the meaning of this word. In my opinion it is not necessary to go beyond the pronouncement of the Permanent Court of International Justice in the Mavrommatis Palestine Concessions (P.C.I.J., Series A, No. 2 at p. 14), "a dispute is a disagreement on a point of law or fact, a conflict of legal views or interests between two persons". See, too, German Interests in Polish Upper Silesia (P.C.I.J., Series A, No. 6 at p. 14); Chorzow Factory Case (P.C.I.J., Series A, No. 13 at pp. 10 and 11); Asylum Case (I.C.J. Reports 1950, at p. 403). Nothing which appears in the Right of Passage over Indian Territory (I.C.J. Reports 1957) qualifies this definition.

In the light of these observations, did then the dispute, the subject of the litigation, arise before or after the 26th August 1946?

To provide the correct answer it is necessary to determine what the dispute is.

The dispute "relates" to an alleged obligation of the United States to restore to Interhandel certain assets within the United States. These assets were the shares in G.A.F. But to say that the dispute "relates" to a certain subject-matter does not state or identify the nature of the dispute.

There could not be other than complete agreement with the view expressed in the Court's judgment that facts and situations which lead to a dispute must not be confused with the dispute itself. Neither should the "dispute" be confused with the "claim" or claims for relief, which normally may be expected to follow the dispute itself, or with the subject-matter of each claim. The present case is an example of the need in particular to distinguish between the "subject-matter of the dispute", the "dispute" and the "claim".

The relevant facts in the present case which constitute the dispute have not altered since 2nd October 1957 when the Swiss Application was filed. Yet since the date thereof a number of new claims have been put forward. Nonetheless, the "dispute" has remained the same.

In the Swiss Application the dispute is referred to in the preambular paragraph as having arisen "relating" to the restitution by the United States of the assets above mentioned. The Application then proceeds to set out the facts on which the Application is founded. It refers to "dispute" throughout in the singular. It states inter alia that "the dispute" concerns the interpretation of a treaty and questions of international law and that its settlement "involves interpretation of the Washington Accord and an examination of questions of international law". Nowhere in the Application, except in so far as is to be determined from the facts stated, is "the dispute" defined. To state that the dispute "relates to, etc." does not itself indicate or determine its nature.[p 62]

Although two different claims for relief were put forward in the Application, Switzerland itself only refers throughout to one dispute which it had sought to have settled first by negotiation, then by seeking recourse to arbitration, etc., and finally by application to this Court.

It is that dispute謡hatever it was葉hat the Application asks the Court either to determine itself on the merits, or, alternatively, to declare is one fit for submission for "judicial settlement, arbitra-tion or conciliation".

What then, on a proper examination of the facts, was the nature of the dispute to which Switzerland is referring?

It is, I think, clear enough that it was, whether or not Interhandel, the nominal owners of the shares in G.A.F. at the time of vesting, was Swiss-owned or German-owned or controlled.

This, I think, is borne out by the correspondence and documents which passed between the Parties, and is supported by the Application itself and the Memorial.

The fundamental Swiss contention, in whatever different forms it seeks relief, or whenever a demand for restitution was made, is, that Interhandel was Swiss (neutral), not German (enemy). It is on the resolution of this dispute that any obligation by the United States to make restitution basically depends.
Whether the dispute were determined by this Court on its merits, or dealt with by arbitration or conciliation, the dispute預s distinct from the forms in which relief is claimed, which have I think too greatly controlled the decision of the Court擁s the same. And this remains so whether the Swiss Government, in seeking to have the shares restored to Interhandel, calls in aid Article IV of the Washington Accord, the decision of the Swiss Authority of Review, or the Arbitration and Conciliation Treaty of 1931.

If the dispute did not arise after 26th August 1946, it is not in my opinion competent for the Court to deal with that dispute in any way either on its merits or by declaring that that dispute "is fit for submission for judicial settlement, arbitration or conciliation". Such a dispute is wholly outside the jurisdiction of the Court.

There are I think certain signposts before and after the 26th August 1946 that give direction to our enquiry.

(a) The main, if not the only substantial reason why the United States repeatedly maintained that the "blocking" of Interhandel in Switzerland should be continued was because its principal asset was its participation in G.A.F. then being administered by the U.S. Alien Property Custodian. This was known to the Swiss authorities from at least July 1945 (Expose of Swiss Compensation
[p 63] Office, 24th September 1947, Annex 3 to the Swiss Memorial, p.7).

(b) The United States Authorities from July 1945 to August 1946 "repeatedly maintained to the Swiss authorities that the connection with I.G. Farben was still maintained". (Ibid.)

(c) In the opinion of the Swiss Compensation Office the German interest in Interhandel could not be proved.

(d) "Like the earlier enquiry the second investigation (Footnote November 1945-February 1946) established that Interhandel was in no degree under German influence." (Swiss Application 3 (b).)

(e) "Despite this quite categorical outcome the Swiss Compensation Office continued to block Interhandel葉aking into account the fact that the allied members of the Joint Commission, which meanwhile had been set up under the Washington Accord, had not been willing to accept the findings of the second enquiry." (Ibid.)

(f) The G.A.F. remained under the administration of the Alien Property Custodian from 1942 onwards because it was considered by the United States "to be a company under German control". (Decision of Swiss Authority of Review, Annex 19 to Swiss Memorial, para. B.)

(g) The question decided by the Swiss Authority of Review was whether Interhandel was under German control. (Ibid., para. 4.)

(h) The Swiss Authority of Review found this issue in favour of Interhandel and ordered the blocking to be annulled. (Ibid., paras. 11 and 12.)

(i) This decision provides one of the main supports relied on by the Swiss Government in this case.

(j) The Memorial of the Government of Switzerland under Part I thereof "Statement of Facts" states that Interhandel attempted many years before the Second World War "to free itself from all German influence and succeeded as we shall show". (First paragraph.) In paragraph 6 "To decide whether a preponderant German interest existed" in Interhandel the distribution of shares in that Corporation is examined. In paragraph 7 "To determine whether or not" Interhandel "was subject to German control" some importance was attributed to the composition of the machinery of the Corporation which subsequent paragraphs deal with. In paragraph 18 referring to the two decisions of the Swiss Office of Compensation it is stated that the first "found ... that Interhandel had completely severed its ties with I.G. Farben in 1940 and therefore there was no need to decree the blocking of its property", the second enquiry "confirmed that Interhandel was not controlled by the Germans". In Part II under "Statement of the Law" para-[p64]graph 81 states "The Swiss Government alleges that the property of the G.A.F. is Swiss. It is therefore incumbent upon it to prove that fact. Such proof would appear to us to be furnished as soon as it is established that the preponderant interest in the Corporation under the control of which G.A.F. is (in other words Interhandel) is in Swiss hands. This conclusion also results from the investiga-tions of the Swiss Compensation Office and from the decision of the Authority of Review which also cover the American assets. It is up to the respondent to furnish proof to the contrary."

(k) The Submissions to the Memorial recite (inter alia):

(i) The United States was by virtue of Article IV of the Washington Accord under an obligation to unblock Swiss assets in the U.S.A. including those of Interhandel. (1st recital.)

(ii) Interhandel was not under enemy control at the time of the entry of the United States into the Second World War. (2nd recital.)

(iii) G.A.F. was controlled by Interhandel. (2nd recital.)

(iv) The decision of the Swiss Authority of Review recognizes the Swiss character of Interhandel. (3rd recital.)

(v) That decision became res judicata vis-à-vis the parties to the Accord and so internationally binding on the United States of America. (4th recital.)

(vi) Independently of the above decision general international law prohibited the confiscation of private property belonging to nationals of neutral States. (5th recital.)

(vii) Accordingly the United States was bound as a result of the decision of the Swiss Authority of Review to restore the assets of Interhandel. (6th recital.)

(l) "Despite" the decision of the Swiss Authority of Review "the American authorities categorically refused to comply with the Swiss request for the release of the G.A.F. shares in the United States". (Paragraph 4 of Application.)

The essential nature of the dispute referred to by Switzerland in its Application and Memorial was whether or not Interhandel, the nominal owners of the shares at the time of vesting, was "Swiss" owned or "German" owned or controlled, in other words whether Interhandel had completely severed its ties with I.G. Farben.

The dispute so described may be put in different words, as indeed at times it has been, but it is that dispute, however described, which is presently before the Court and it is upon the resolution [p 65] of that dispute that the Swiss claim ultimately depends. If Interhandel were Swiss (neutral), not "German" (enemy), the Swiss claim is that its shareholding in G.A.F. was "Swiss" and should be restored to it.

Within this dispute there have arisen, as is not unusual, other issues between the Parties which are themselves the subject of dispute. But when examined it will be seen that they are but aspects or parts or phases of the same fundamental dispute.

The Swiss Government in its Application and Memorial stated in detail facts upon which it claimed to be in a position to establish that Interhandel was "Swiss" and accordingly that its shareholding in G.A.F. was Swiss. In its view whether this was "Swiss" was dependant upon whether Interhandel was Swiss as it claimed it was in a position to prove. In support of its case it has, however, placed much reliance upon the Washington Accord.

Thereunder it claims that by virtue of Article IV, paragraph i thereof, the United States assumed the obligation to unblock Swiss assets among which it claims are the assets in G.A.F. alleged to belong to the "Swiss" Corporation Interhandel. If Interhandel were Swiss, if, the Swiss Authority of Review found, it had severed its connections with I.G. Farben, then this shareholding it is contended was also Swiss. But assuming that this Article has any relevance to this case, the dispute remained the same.

Switzerland, in the Observations and Submissions on the Preliminary Objections, sought to supplement its claims by an alternative claim in which it requested the Court to declare that the "property" which Interhandel "possesses" in G.A.F. "have the character of non-enemy (Swiss) property and consequently (the italics here are mine) to declare that by refusing to return the said property the United States was acting contrary to the decision of the Swiss Authority of Review of January 1948 and was in breach of Article IV, paragraph 1, of the Washington Accord and of the obligations binding upon them under the general rules of international law".

Assuming that the decision of the Swiss Authority of Review is relevant to these proceedings, and this issue is also in dispute, it is clear that the Government of Switzerland is relying upon it as conclusive evidence against the United States of America on the real dispute before the Court, namely, as to the Swiss character of Interhandel and consequently the Swiss character of its shareholding in G.A.F.

The fundamental dispute溶otwithstanding all the other issues within it擁s and has always been whether Interhandel'葉he nominal holder of the shares in the United States of America謡as [p 66] "Swiss". And the enquiry under the objection is whether a dispute on that issue arose before the 26th August 1946.

The "neutral" or "enemy" character of interhandel was, of course, material under the Washington Accord for the purpose of carrying out its primary objective, namely, the uncovering, the census and the liquidation of German property in Switzerland. But the character of Interhandel had a significance both for Switzerland and the United States of America which went beyond this because of the assets in the United States of America which had stood in the name of Interhandel before they became "vested". Once the procedure under the Accord was completed, the Swiss case on this aspect is, and at all material times must have been, that it covered American assets and applies to "vested" property in the United States of America. (Annex 22 to Swiss Memorial; para. 81 of Swiss Memorial.) The United States for its part "because the principal assets" of Interhandel were the shares in G.A.F., had "repeatedly maintained to the Swiss Authorities that the connection with I.G. Farben was still maintained". (Annex 3 to Swiss Memorial.) It is, I think, a proper conclusion that both the United States of America and Switzerland in the discussions and correspondence which took place between the two countries after May 1946 at the latest, regarded the character of Interhandel in relation to the liquidation of German property in Switzerland as having a connected and significant bearing on Interhandel's shares in G.A.F.

Interhandel was a holding company. Its most important asset were the shares in G.A.F. It held over 90 per cent of the shares therein. Somewhat less than half of the ordinary shares of Inter-handel were the property of G.A.F. If Interhandel were held by the Swiss authorities to be "Swiss", whilst that could not預part from the Swiss arguments based on Article III of the Annex to the Washington Accord (res judicata)揺ave decided the fate of Interhandel "assets" in G.A.F., it could assume considerable importance in relation to them and any alleged obligation upon the United States to restore them to Interhandel. On the other hand, were Interhandel determined by them to be "German" or German controlled, this would have had an important practical bearing on any claim by Interhandel to have the shares restored to it.

It is contended by Switzerland that prior to the 26th August 1946, the Swiss authorities were not concerned with the fate of Interhandel's shareholding in G.A.F. Any difference of opinion, if any, which took place prior thereto, could, therefore, it is said, have had no relation to that shareholding.

To the extent to which it is necessary to deal with this contention, I cannot accept this as accurate. The United States were expecting Interhandel to bring suit in the United States to recover the shares in G.A.F. The letter of 20th August 1946 from the Swiss [p 67] Compensation Office to Mr. Le Roy Jones, described as Chief of the Alien Property Section Department of Justice of the United States (Annex 3 to Swiss Memorial, p. 9), appears sufficiently to establish that Switzerland shared the view that Interhandel would probably bring such a suit.

Whether any difference of opinion which took place before the date of the Washington Accord did or did not bear a relation to Interhandel's holding in G.A.F., I am of the opinion that after the date thereof it did have such a relation, and a direct one.

1. The Swiss Compensation Office, under the Washington Accord; was the authority empowered to uncover, take into possession and liquidate the property in Switzerland of Germans in Germany.

2. The view of the Swiss authorities is, and consistent with the case it makes out must, it seems to me, at the relevant times have been that:

(a) The Swiss Authority of Review was created by the Accord and its duty was, when required so to do, to review the decisions which the Swiss Compensation Office was called upon to take under the Accord.

(b) The fact that the Swiss Compensation Office began its investigations in respect to Interhandel before the conclusion of the Accord in no way would prevent a decision of the Authority of Review from having been taken within the framework of the Accord because of the provisions of Article 1 thereof. "In other words, though the investigations of the Swiss Compensation Office began ... before the conclusion of the Accord ... they were continued and completed within the framework of the Accord" (Swiss oral argument of nth November 1958). The decision of the Swiss Compensation Office "was made in observance of the Articles of the Accord" (Swiss Note of 7th September 1948, Annex 22 to Swiss Memorial). The significance of this viewpoint becomes apparent when seen against the light of the Swiss contention that the decision of the Swiss Authority of Review "confirming the non-German character of Interhandel became res judicata" since it was an appeal from the Swiss Compensation Office made by "the party (Interhandel) in interest" under the Accord.

3. The procedure laid down in Article III of the Annex to the Accord, the Swiss Government claims, would determine what were Swiss assets in the United States under Article IV of the Accord (Swiss Note of 7th September 1948, Annex 22 to Swiss Memorial). "The Washington Accord specifies in Article IV, Section I, that the Government of the United States is under an obligation to unblock Swiss assets in the United States, that is to say, all Swiss assets without any exception whatsoever. Who decides whether any particular property should be described as Swiss assets? Who decides on the criterion for distinguishing Swiss assets from German assets blocked in the United States?[p 68]

"If we study the Washington Accord in this connection, one thing is certain. When property belongs to Swiss physical or legal persons whose Swiss character has already been confirmed in a binding and final manner by the Authority of Review under the Washington Accord, they must inevitably follow the fate of property unblocked in Switzerland" (Swiss oral argument, nth November, 1958).

4. Under the Accord (Article III of Annex thereto) decisions of the Authority of Review, made under the provisions of the Accord, were final. But so also were the decisions of the Swiss Compensation Office, unless the Joint Commission was "unable to agree to the decision of that Office", or unless "the party in interest" desired the matter to be submitted to the Authority of Review. Article III of the Annex provides "The decisions of the Compensation Office or of the Authority of Review, should the matter be referred to it, shall be final."

5. A decision of the Swiss Compensation Office was, on the Government of Switzerland's case as I understand it, the initial step in the chain of proof to establish under Article IV of the Accord, whether Interhandel's ''assets" in the United States were or were not "blocked" assets, which under Article IV of the Accord, the United States of America was under obligation to unblock. If the Swiss Office of Compensation decided that Interhandel was "Swiss"預s,'of course, it had already done預nd it confirmed its determination or conclusion after the Washington Accord, and if the United States (or Joint Commission) did not contest its determination or conclusion, the view of the Government of Switzerland must have been it seems to me that that would decide the fate of Interhandel's "assets" in G.A.F. If the Joint Commission Powers refused to accept the decision of the Swiss Compensation Office and the matter went before the Authority of Review, its decision would become Switzerland claims res judicata unless the Allied Governments requested arbitration. In other words, if the Swiss character of Interhandel in Switzerland, as determined by the Swiss Compensation Office, was admitted or not contested or if on review Interhandel was determined by the Swiss Authority of Review to be Swiss, the shares in G.A.F., on the Swiss view of the Accord, would "inevitably follow the fate of property unblocked in Switzerland".

It is not without significance that as at the 12th December 1945, 454,948 "A" shares in G.A.F. were deposited in Switzerland in the form of certificates and these were claimed by Interhandel to be fully under its control.

Did or did not the Swiss Government, as from the date of the Accord, and before the 26th August 1946, hold the opinion that Interhandel was not "German" or under German control but "Swiss" and that consequently Interhandel's "assets" were "Swiss" [p 69] not "German"? If it did, it was an opinion directly opposed to that of the United States authorities. I am satisfied it did, irrespective of whether that opinion could be described as "provisional" or subject to possible change, or not. It was a firmly held opinion put forward in direct conflict with that held by the United States authorities since 1942. Moreover it seems to me clear enough that on Switzerland's case, it knew at least that the determination of the Swiss Compensation Office was a not unimportant factor in establishing the Swiss character of G.A.F. "assets" in the U.S.A. The Swiss Compensation Office was on its case a definite link in the procedure necessary to prove that Interhandel's "assets" in G.A.F. were Swiss assets in the U.S.A. The Swiss Compensation Office was the competent Swiss authority for this purpose.

Whether the convictions and contentions of the Swiss authorities are to be called provisional or otherwise謡hatever terms are used to diminish the significance of the official Swiss attitude after the Accord and before 26th August 1946擁t is I think sufficiently clear that the Swiss attitude must have been that Interhandel was Swiss, and accordingly its holding in G.A.F. was Swiss, with the consequence which flowed from that if their claim as to the applicability of Article IV of the Accord was correct.

It said in terms quite sufficient to establish a dispute熔ur opinion is that Interhandel is Swiss葉hat is our contention葉hat is our determination. If you persist in claiming otherwise, prove it, if you can.

I do not intend to detail all the further evidence which persuades me that the dispute existed before the 26th August 1946. I shall content myself with the following :

(a) The Swiss Compensation Office investigated Interhandel June-July 1945. It "drew ... the logical conclusion that Interhandel was a Swiss company..." (para. 3 (b) of Application). This conclusion was diametrically opposed to the official determination of the United States.

(b) The Swiss Compensation Office, against its conviction and only at the direction of the Swiss Federal Political and another Department, continued the "temporary" blocking of Interhandel. This was done, the Swiss Government states, under pressure by or as the result of representations from the Allied Governments, particularly the U.S.A. The blocking was continued not because there is any reason to suppose the Swiss Political Department differed with the conclusion of the Swiss Compensation Office, but because of the pressure or representations. The Swiss Compensation Office subsequently gave support to Interhandel's appeal to the Swiss Authority of Review. From at least July 1945 the Swiss [p 70] Compensation Office persisted in its view that Interhandel was "Swiss".

(c) The United States continued at all material times to assert that Interhandel was not "Swiss" but "German".

(d) An official statement of the Government of Switzerland contained in its letter of 6th November 1945 (Exhibit 12 to United States Preliminary Objections), after referring to the investigation of the Swiss Compensation Office, went on to state that a decision had been made recently to block for a limited time "in order to permit your authorities, if they -persisted in regarding this holding as under German influence to furnish the proof for it. This way one has taken into account the importance which your Government attaches to the matter."

(e) At this stage (November 1945), as appears from this letter, the Swiss position may be summed up as follows:

Our conclusion is that Interhandel is Swiss-owned. That is our opinion. You dispute it. We realize the importance your Government places on the result, but if you persist in your contention that the "holding" is under German influence, you prove it before the 31st January 1946.

(f) At least from February 1946 onwards, the Swiss Compensation Office remained adamant in its contention that Interhandel was "Swiss", not "German". It adhered throughout to this contention. The fact that it indicated to United States officials that if they could produce evidence to establish Interhandel was German-controlled, it was prepared to consider it, in no way diminishes the fact that it adhered firmly to its determination and was in disagreement with the United States authorities.

(g) The Swiss Political Department was informed not only of the determinations of the Swiss Compensation Office, but of discussions with United States officials. (See e.g. letter of 10th December 1945, President of the Swiss Compensation Office to M. Petitpierre, Head of Political Department of the Government of Switzerland, Annex 2 to Swiss Observations, and letter next referred to.)

Only a few further documents need be specifically referred to: 10th August 1946有etter Swiss Compensation Office to Mr. Harry Le Roy Jones

This letter stated that:

The Swiss Compensation Office was of opinion that Interhandel should not be blocked, and for the reason that Interhandel was in its view "Swiss", not "German". This was a view diametrically opposed to and in disagreement with the opinion of the United [p 71] States. It was a difference between the two countries on an issue of prime importance, in the Swiss view at least, and hardly less important from the point of view of the United States Alien Property Control in relation to the G.A.F. holding of Interhandel. There was a dispute on the real issue (cf. Annex 22 to Memorial, pp. 144 and 146). If Interhandel were unblocked, in the Swiss view of the Accord, the fate of G.A.F. shares "inevitably followed" that event.

Having stated its opinion as above, it refers to the United States opinion to which Swiss opinion was opposed as"Your opinion that the Interhandel firm is controlled by Germans".

In this letter one was saying Interhandel is not controlled by Germans, or it is our opinion it is not; the other was saying it is controlled by Germans, or it is our opinion that it is. And the relation of this clash of opinion on Interhandel's G.A.F. holding is at this stage manifest.

Minutes of Conference at Federal Political Department, 16th August 1946

The United States record of the meeting is set out in Exhibit 15 to its Preliminary Observations. Mr. Fontanel, who represented the Swiss Federal Political Department, stated that M. Petitpierre the official head of that Department揺ad said that Interhandel would not be immediately unblocked, that Interhandel "after two investigations by the Swiss Compensation Office had been determined to be Swiss-owned", and that M. Petitpierre therefore felt it was incumbent upon the American authorities to present evidence to contradict these findings. (Cf. para. 81 of the Swiss Memorial.)

The Swiss Record (Annex 5 to Swiss Observations) supports this, though it reads somewhat differently. It is, however, quite sufficient to rely upon the Swiss Record. Mr. Fontanel asked Mr. Le Roy Jones, who represented the United States at the conference, what stage had been reached in the Interhandel "affair". "If the Americans desire the blocking to be maintained, they would have to justify their request by furnishing us, if not with proof, at least with serious indications that I.G. Chemie is under German control."

It is, in my opinion, not possible to accept the argument that because no so-called "final position" was taken by Switzerland, no dispute existed. Parties in dispute frequently change their position. No so-called final deadlook is necessary to establish a dispute. On any realistic approach to the matter, the United States and Switzerland were then in dispute on the real issue on which they are now in dispute. [p 72]

Letter of 20th August, Swiss Compensation Office to Mr. Jones

This is six days before the operative date of the United States Declaration of Acceptance. There G.A.F. is clearly in the picture. The Swiss Compensation Office, which at that time was of opinion that the German interest "cannot be proved" (p. 9 of Annex 3 to Memorial), was stating that what was involved in the United States' request for further investigation by the Swiss Compensation Office, in collaboration with the United States Department of Justice and Office of the Alien Property Custodian, was "not merely an enquiry concerning the question of the blocking of I.G. Chemie or measures to be taken under the Washington Accord, but rather the discovery of documents in the interests of the Office of the Alien Property Custodian".

It is in my view not possible, on any reasonable reading of this letter, not to be satisfied that if the dispute had not arisen before this date, as I am of the opinion it had, it certainly at this time had. The Swiss Compensation Office had, before sending this letter, submitted the matter to the Federal Political Department. The whole letter merits special attention, but particularly the para-graph commencing with the words "Considering that the object..., etc.". The reply of that Department was to the effect that in the main "it confirms the point of view which I have already indicated to you and which I have outlined above. Namely, on the Swiss side, the opinion is held that it is now for the American authorities to furnish to the Swiss Compensation Office the means of proof which in the American view should lead the Swiss Office to block I.G. Chemie definitively, that it to say, to consider it... as being under German influence."
A few final observations:

In my opinion, it is not permissible to treat this objection as divisible into two parts corresponding to the principal and alternative submissions or claims as if there were two separate disputes, the first, one in which the Government of Switzerland espouses the cause of its national, the second, one in which she claims relief in an independent capacity.

To do so leads to error. Such an approach to this objection mistakes form for substance. It blurs the distinctions between the subject-matter of a dispute, the dispute itself and the submissions or claims for relief, which spring from the dispute. It disregards, in my view, the essential unity of the dispute in this case葉he single dispute referred to in the Swiss Application and Memorial. It focus-ses attention on the submissions or claims for relief rather than on the dispute itself.

All submissions and claims for relief are directed to one common purpose, to obtain for Interhandel restitution of its "assets" in G.A.F. The alternative submission or claim for relief, which directs [p 73] itself to a means by which this purpose might be achieved, has, to use the words of the Swiss Memorial (para. 90), "simply a subsidiary character".

To divide the objection in the manner indicated has, it seems to me, led to the error of seeking in respect of the first submission or claim for relief, the initial request by Switzerland for the return to Interhandel of its "assets" in G.A.F. and the first negative reply given by the United States to that request, and so disposing of the objection on this part, and then in turn disposing of what was considered a separate dispute by finding that the same fate should attend that, since it could not have arisen until after the first had.

In any event, I cannot agree that a test of demand and refusal in this case can be decisive in determining the date of the dispute. The "neutral" or "enemy" character of Interhandel being the essential dispute between the Parties, the fact that no claim or demand for restitution was made by Switzerland until after 26th August 1946 is irrelevant to the issue raised by the objection. When the demands or requests connected with either the principal or subsidiary claim for relief were made the dispute, in my view, already existed.

It is not without significance that the Memorial of Switzerland contains a number of paragraphs (35-40) which fall under the heading "Swiss Attempts to settle the Dispute". From a perusal of these paragraphs it is at once evident that the dispute with which we are here concerned and to which both the Swiss Application and its Memorial direct themselves had, as of course it must have, already arisen before any proposal to have recourse to arbitration or conciliation to settle the dispute was or could be made.

For the reasons above advanced, I think the first objection should have been upheld.

***
Second Objection

In dealing with this Objection the Court, following the course it did on the First Objection, has again divided what, in my opinion, is one dispute into two, elevating what was purely a subsidiary submission or claim for relief into a separate and distinct dispute. I have already expressed my reasons why I think this procedure inadmissible.

My approach to the Second Objection assumes, contrary to the view already expressed by me on the First, that the dispute arose after the 26th August 1946, and before the 28th July 1948. On that assumption I agree with the decision of the Court and with its reasons.[p 74]

If instead of the words "hereafter arising" there had been inserted the words "arising after the 26th August 1946", the Objection of the United States would, I think, hardly have been arguable. In my opinion the conclusion to be reached would be the same in both. A proper test in this case is to compare the Declarations of Acceptance of the two States and by so doing determine the scope of the Court's jurisdiction covered by each. This I think leads to the conclusion that the consensual agreement, the common ground, between the Parties includes all disputes arising after the effective date of the United States' Declaration, namely the 26th August 1946. The Declarations of each State concur in comprising the dispute in question within their scope.

The Second Objection should be dismissed.

I agree with the decision of the Court and its reasons in upholding the Third Objection and in rejecting Part (b) of the Fourth Objection.

(Signed) Percy C. Spender.

[p 75]
DISSENTING OPINION OF PRESIDENT KLAESTAD

Being unable to concur in essential parts of the Judgment, I feel bound to express my divergent opinion. I shall deal with the Preliminary Objections in the order which I consider appropriate.

I. In part (a) of its Fourth Preliminary Objection the Government of the United States submits

"that there is no jurisdiction in this Court to hear or determine any issues raised by the Swiss Application or Memorial concerning the sale or disposition of the vested shares of General Aniline & Film Corporation (including the passing of good and clear title to any person or entity), for the reason that such sale or disposition has been determined by the United States of America, pursuant to paragraph(b) of the Conditions attached to this country's acceptance of this Court's jurisdiction, to be a matter essentially within the domestic jurisdiction of this country".

This is the first time that the question of the validity of the American Reservation (b), or a similar reservation, has been in dispute between Parties to a case before the Court. It is the first time the Court has had occasion to adjudicate upon it.

The question of a similar French reservation was discussed in one Separate and two Dissenting Opinions appended to the Judgment in the Norwegian Loans case. But the Court did not consider and decide this question and was not in a position to do so, since the question of the validity of the reservation was not in dispute between the Parties, who had not laid it before the Court and had not argued it.

A similar situation arose at the first stage of the present case concerning a Swiss request for the indication of interim measures of protection. The Co-Agent of the Swiss Government referred to the question of the validity of the American Reservation (b), but he did not expressly contend that it is invalid. As to this question there did not at that time appear to exist any dispute which called for the consideration of the Court.

But now, at the present stage of the case, this question is in dispute between the Parties. The Government of the United States has invoked the Reservation, the Swiss Government has challenged its validity, and the United States Government has thereafter not withdrawn the Objection invoking the Reservation, but on the contrary expressly maintained it in its final Submissions presented to the Court on November 6th of last year. It is true that the Agent for the United States Government stated that this Preliminary [p 76] Objection has become "somewhat academic", or "somewhat moot". He explained that under Section 9 (a) of the United States Trading with the Enemy Act, the Government of the United States is forbidden to sell vested property as long as a suit for its return is pending before American courts, and he assured the Court that the vested shares in the General Aniline and Film Corporation would not be sold as long as the claim of Interhandel was pending before American courts. (Oral Proceedings, November 5th, 6th and 14th.) This does not, however, prevent the sale of these shares as soon as this claim is finally decided by American courts. The Agent further stated that the United States Government does not withdraw this Preliminary Objection (ibid., November 5th). And in his last address to the Court he asserted that "condition (b) of our Declaration is valid", and he again re-affirmed part (a) of the Fourth Preliminary Objection and asked the Court to adjudicate upon it (ibid., November 14th). In such circumstances it is clear to me that the Court must now consider the Reservation and adjudicate upon the Preliminary Objection invoking it.

This Reservation provides that the United States Declaration accepting the compulsory jurisdiction of the Court under Article 36, paragraph 2, of the Statute shall not apply to:

"(b) disputes with regard to matters which are essentially within the domestic jurisdiction of the United States of America as determined by the United States of America".

Article 36, paragraph 6, of the Statute of the Court provides:

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

In other words: the American Reservation provides that the matter shall be determined by the United States, while the Statute provides that it shall be decided by the Court. This juxtaposition of the two texts shows that the Reservation is in conflict with the Statute, Article 36, paragraph 6.

Article 1 of the Statute provides that the Court "shall function in accordance with the provisions of the present Statute". The same provision is inserted in Article 92 of the Charter of the United Nations. The Court is therefore, both by its Statute and by the Charter, prevented from applying that part of the clause which reserves to the United States the determination of the matter. It becomes impossible for the Court to act upon the words: "as determined by the United States of America".

It may be asked whether the fact that the Court cannot act upon these words which are in conflict with the Statute, also renders [p 77] it impossible for the Court to give effect to the other parts of the Declaration of Acceptance which are in accordance with the Statute.

The view has been expressed that the Reservation is for various reasons invalid and that this invalidity of the Reservation entails the invalidity of the Declaration of Acceptance as a whole. The necessary consequence of this view would be that the Government of the United States could neither sue nor be sued in accordance with the fundamental rule relating to the compulsory jurisdiction of the Court; that Government could neither act as a claimant nor become a defendant under Article 36, paragraph 2, of the Statute. It would, in other words, find itself in the same legal situation as States which have not submitted to the compulsory jurisdiction of the Court, by filing Declarations of Acceptance under Article 36, paragraph 2. Would such a consequence be in conformity with the true intention of the competent authorities of the United States ?

It has always been held by this Court as well as by the Permanent Court of International Justice that the compulsory jurisdiction of the Court depends on the will or intention of the Governments concerned.

It appears from the debate in the United States Senate concerning the acceptance of the compulsory jurisdiction of the Court, reported in the Congressional Record for July 31st and August 1st and 2nd, 1946, that fear was expressed lest the Court might assume jurisdiction in matters which are essentially within the domestic jurisdiction of the United States, particularly in matters of immigration and the regulation of tariffs and duties and similar matters. The navigation of the Panama Canal was also referred to. Such were the considerations underlying the acceptance of Reservation (b). It may be doubted whether the Senate was fully aware of the possibility that this Reservation might entail the nullity of the whole Declaration of Acceptance, leaving the United States in the same legal situation with regard to the Court as States which have filed no such Declarations. Would the Senate have accepted this Reservation if it had been thought that the United States would thereby place themselves in such a situation, taking back by means of the Reservation what was otherwise given by the acceptance of the Declaration? The debate in the Senate does not appear to afford sufficient ground for such a supposition.

For my part, I am satisfied that it was the true intention of the competent authorities of the United States to issue a real and effective Declaration accepting the compulsory jurisdiction of the Court, though擁t is true謡ith far-reaching exceptions. That this view is not unfounded appears to be shown by the subsequent attitude of the United States Government. [p 78]

By various Applications filed in the Registry of the Court on March 3rd, 1954, March 29th, 1955, June 2nd, 1955, and August 22nd, 1958, the Government of the United States submitted claims against Governments which had not filed any Declarations accepting the compulsory jurisdiction of the Court under Article 36, paragraph 2, of the Statute. In previous notes to these Governments the United States Government had invited them to file such Declarations of Acceptance. It is difficult to believe that other Governments would have been invited to do so if the Government of the United States had not itself had the true intention of submitting validly and effectively to the compulsory jurisdiction of the Court.

These considerations have led me to the conclusion that the Court, both by its Statute and by the Charter, is prevented from acting upon that part of the Reservation which is in conflict with Article 36, paragraph 6, of the Statute, but that this circumstance does not necessarily imply that it is impossible for the Court to give effect to the other parts of the Declaration of Acceptance which are in conformity with the Statute. Part (a) of the Fourth Preliminary Objection should therefore in my view be rejected.

II. With regard to the First and Second Preliminary Objections, I am in general agreement with the Court.

It should, however, be observed that the Court has not adjudicated upon the controversial and, in the present case, disputed question concerning the validity of Reservation (b) in the United States Declaration of Acceptance. If that Reservation should be considered as legally invalid, and if, as has been suggested, this invalidity should entail the invalidity of the Declaration as a whole, the Court would find itself without any valid American acceptance of its jurisdiction under Article 36, paragraph 2, of the Statute. Without the consent of the United States Government the Court would lack power to act in the present dispute, and the question of adjudicating upon the First and Second Preliminary Objections could not arise. The legal situation would be similar to the situation which arises when a claim is made against a State which has not filed any Declaration under Article 36, paragraph 2, and which has not otherwise submitted to the jurisdiction of the Court.

III. In its Third Preliminary Objection the United States Government challenges the jurisdiction of the Court on the ground that Interhandel has not exhausted the local remedies available to it in the United States courts.

The Court has held that an objection of this kind is not a plea to the jurisdiction of the Court, but a plea to the admissibility of the Application. Sharing this view I am further of the opinion that an adjudication upon this Objection presupposes that the Court has first established its jurisdiction, when that jurisdiction is challenged, [p 79] as it is in the present case. This Objection is of a temporary and relative character, dependent on the outcome of the lawsuit of Interhandel in the United States courts. It is not, as are the absolute objections to the jurisdiction of the Court, directed against that jurisdiction, which in the present case is governed by Article 36, paragraph 2, of the Statute, and the Swiss and United States Declarations made thereunder. The true legal nature of this Preliminary Objection becomes clear when it is considered that the dispute may, under certain conditions and in a modified form, again be submitted to the Court as soon as the remedy available to Interhandel in United States courts is finally exhausted.

For these reasons I consider that I shall have first to deal with all of the Preliminary Objections to the jurisdiction. Only if I should arrive at the conclusion that all of these Objections must be rejected, will the question of the application of the local remedies rule arise for me. This view is in accordance with the Order of June 27th, 1936, in the Losinger & Co. case, in which the Permanent Court of International Justice held that an objection based on the local remedies rule is an objection to the admissibility of the Application, and that the Court will have to adjudicate upon that question if it should assume jurisdiction.

IV. In part (b) of its Fourth Preliminar}' Objection, the United States Government contends:

"that there is no jurisdiction in this Court to hear or determine any issues raised by the Swiss Application or Memorial concerning the seizure and retention of the vested shares of General Aniline & Film Corporation, for the reason that such seizure and retention are, according to international law, matters within the domestic jurisdiction of the United States".

This is not, however, an accurate description of the dispute submitted to the Court by the Swiss Application and Memorial. That dispute relates to the alleged obligation of the United States to restore assets of Interhandel in the United States and, alternatively, to submit this dispute to arbitration or conciliation. What the Court has to consider is whether that dispute, according to international law, relates to matters within the domestic jurisdiction of the United States. I concur in the view of the Court that the dispute relating to these questions involves matters of international law, and that this Preliminary Objection should therefore be rejected.

It should, however, be observed that the Court has not adjudicated upon the controversial and, in the present case, disputed question concerning Reservation (b) and its relation to other parts of the United States Declaration of Acceptance.

If this Reservation should be considered as legally valid, it is difficult to see how it is possible for the Court to decide that the [p 80] dispute relates to international law and not to matters within the domestic jurisdiction of the United States, inasmuch as that question, as a consequence of the invocation of the Reservation, is to be determined by the United States and not by the Court, in so far as "the sale or disposition of the vested shares of the General Aniline & Film Corporation" is concerned.

If, on the other hand, the Reservation is to be considered as invalid, and if this invalidity should, as has been suggested, entail the invalidity of the Declaration of Acceptance as a whole, the question of adjudicating upon this Preliminary Objection could not arise. Without a valid Declaration accepting the Court's compulsory jurisdiction, the Court would lack jurisdiction to decide whether the dispute is of domestic or international character.

These considerations show how necessary it would have been to adjudicate upon part (a) of the Fourth Preliminary Objection before adjudicating upon part (b) of that Objection.

V. Having found that all of the Preliminary Objections to the jurisdiction of the Court must be rejected, I have now finally to deal with the Third Preliminary Objection to the admissibility of the Application, relating to the question of the exhaustion of the local remedies available to Interhandel in the United States courts.

It is pointed out on behalf of the United States Government that "the suit of Interhandel seeking a return of the stock is now being actively litigated in the trial court of the United States", and "that there now exists the possibility that Interhandel may secure a return of the stock in proceedings in the United States courts". (Oral Proceedings, November 5th and 6th.)

The Swiss Government has, however, submitted that the claim of Interhandel in the United States courts is based on the American Trading with the Enemy Act, while the claim of the Swiss Government submitted to this Court is based on the international Washington Accord. It is contended that the courts in the United States must decide the claim of Interhandel on the basis of the Trading with the Enemy Act, and that they are excluded from taking into consideration the Washington Accord on which the claim of the Swiss Government is based. If this contention is justified, it may be asked whether the remedy available in the United States courts is an effective remedy. The controversy which this question has raised pertains, however, to the merits of the present dispute. It cannot be decided at this preliminary stage of the proceedings without prejudging the final solution.

The Swiss Government has further invoked the decision of January 5th, 1948, rendered by the Swiss Authority of Review. It contends that this decision should be assimilated to an international arbitral award, and that the Court is, in fact, confronted with the [p 81] question of the execution of such an international award having the force of res judicata between the Parties to the present dispute. The Swiss Government asserts that the failure on the part of the United States to execute this decision constitutes a direct breach of international law causing damage directly to the Swiss State itself. In the view of the Swiss Government the local remedies rule is not applicable in such a case. In this connection the Swiss Government has referred to a number of questions which are in dispute between the Parties, particularly with regard to the legal character of the Swiss Authority of Review and of its decisions; with regard to the interpretation of its decisions of January 5th, 1948; as to the effect of that decision with regard to the disputed question relating to the neutral or enemy character of Interhandel; as to the direct or indirect consequence of that decision with regard to the assets of Interhandel in the United States.

These various questions are parts of the merits of the dispute. They do not only "touch" those merits; they go to their very roots. These questions cannot in my opinion be determined at this preliminary stage of the proceedings. Nor can it at present be decided with a sufficient measure of certainty whether they are relevant or irrelevant for the adjudication upon the Third Preliminary Objection. Only when the Court, after a regular procedure on the merits, has obtained more complete information with regard to the facts of the case and the legal views of the Parties, will the Court be in a sufficiently safe position to determine whether this Swiss contention is justified or not. The jurisprudence of the Permanent Court of International Justice shows how cautiously that Court acted when, in preliminary proceedings, it was confronted with similar questions.

The Swiss Government further contends that its claim also for other reasons relates to an initial or direct breach of international law, directly affecting established treaty rights of the Swiss State under such circumstances that the United States have become immediately responsible under international law. Reference is in this respect particularly made to Article IV of the Washington Accord, on which the Swiss Government bases its principal claim for restitution. Reference is also made to the Washington Accord, Article VI, and to the Treaty of Arbitration and Conciliation between Switzerland and the United States of 1931, on which the Swiss Government bases its alternative claim relating to the alleged obligation to submit the dispute to arbitration or conciliation.

The question whether this contention is justified or not, and whether it would have the effect of dispensing the Swiss Government from the observance of the rule relating to the exhaustion of local remedies, can in my opinion only be adequately appraised after a regular procedure dealing with the merits of the case. [p 82]

It may be added that the alternative Swiss claim relating to the question whether the International Court of Justice is competent to decide whether the dispute should be referred to arbitration or conciliation, cannot in any case be determined by local courts in the United States.

For these various reasons I consider that the Third Preliminary Objection should be joined to the merits.

(Signed) Helge Klaestad.

[p 83]
DISSENTING OPINION OF JUDGE WINIARSKI [Translation]

In its final alternative submission, the Swiss Government asks the Court to declare itself competent to decide whether the United States of America are under an obligation to submit the dispute regarding the validity of the Swiss claim either to arbitration or to conciliation. In the event of the Court declaring itself competent, the Swiss Government puts forward a number of submissions on the merits, presenting the claim formulated in its Application in various forms, but these do not affect the question here examined.

In upholding the Third Objection of the United States Government, so far as it concerns this alternative request, the Court declares that the procedure on the merits is inadmissible, although it might have led to a settlement of the dispute on that point. I cannot concur in that decision.

The United States Government argues that the alternative submissions are directed towards the same end as the principal submission, namely, the restitution to Interhandel of the assets it is claiming in the United States. 'Although they avoid the use of the word restitution, the alternative submissions are only alternative ways in which the intended recovery is sought to be accomplished."

The Court is not required to consider what was the purpose of the Swiss Government in formulating its alternative claim regarding arbitration and conciliation. That claim is presented as distinct from the principal claim and must be examined as such. Its subject-matter is clearly defined. It originated with the refusal of the United States Government to submit the dispute concerning Interhandel to arbitration and, in the view of the Swiss Government, the dispute is one that is fit to be settled on the basis of the Washington Accord and the Treaty of 1931. Here there is no question of the protection of the rights and interests of the national whose cause its Government is espousing; the rights and interests at stake derive directly from international instruments which the States have signed, and to that kind of dispute the rule of the exhaustion of local remedies does not apply.

As the Judgment says, the reason for the rule is to enable a State in which the rights of a foreign national are alleged to have been injured in breach of international law to provide a remedy by its own means within the framework of its own laws. But where the rights and obligations of the two States flow directly from their treaties and agreements there can be no question of settling such dispute by recourse to local remedies. The American courts [p 84] are competent to adjudicate on the rights of a Swiss national; they have no competence to adjudicate on the existence of an obligation on the part of the United States to submit to arbitration or conciliation. The legal problems are here on different planes and their solution must be different. In my opinion, the Third Preliminary Objection should be dismissed. If the Court holds that it is not possible at this stage of the proceedings to dismiss the objection without prejudging a question of merits, or, at the least, if it thinks that it is impossible to determine with certainty that the consequences of dismissal would not affect the merits, it could follow precedents and join the objection to the merits. That would enable it to resume the proceedings and to settle the dispute by a single judgment.

In support of the decision two reasons are given in which I cannot concur.

First, the Judgment says that one interest, and one alone, that of Interhandel, underlies both the proceedings resumed by that company in the United States courts and the present international proceedings, and that that interest should determine the scope of the action brought by the Swiss Government in both its submissions. Assuming that one and the same interest is the basis of both actions, it is difficult to agree that this consideration the existence of one, and only one, interest耀hould prevail over the reasons which limit the local remedies rule to claims by indi-viduals. In the case now under consideration the claim put forward in the alternative submission aims at obtaining a recognition that the United States are under an obligation to submit to arbitration or conciliation, and the Swiss Government may have a strong interest in seeing the Court offer it a legal remedy that has been denied it.

Furthermore, a decision by the Court dismissing the Third Objection of the United States so far as concerns the alternative submission would in no way affect the right of the arbitral tribunal, should one be set up, to apply the local remedies rule quite independently, should the occasion arise, while conciliation proceedings are not required to observe that rule.

For all these reasons, I am unable to concur in the decision of the Court which declares the claim formulated by the Swiss Government in its alternative submission to be inadmissible.

(Signed) B.Winiarsky.

[p 85]
DISSENTING OPINION OF JUDGE ARMAND-UGON
[Translation ]

Being to my regret unable to concur in the Court's decision on Objections Nos. 3 and 4(a), I think it is my duty to set forth the reasons for my dissenting opinion.

I

1. The Third Objection is founded upon the rule of the exhaustion of local remedies. It is not included as a qualification of the American declaration accepting the compulsory jurisdiction of the Court; it is invoked as a general principle of international law. The plea is an objection to the admissibility of the Application; it contests that admissibility only and is not directed against the Court's jurisdiction. The rule of the exhaustion of local remedies does not affect the jurisdiction of the Court, which may be competent, even if internal remedies have not been exhausted. Accordingly, the question of the admissibility of the Application lies outside the field of jurisdiction. In its Judgment in the Corfu Channel case this Court admitted the distinction between admissibility and jurisdiction (I.C.J. Reports 1947-1948, pp. 26-27); in other cases it has said that the exhaustion of the remedies is an argument in defence directed to the admissibility of the claim (I.C.J. Reports 1952, p. 114, and 1953, p. 23). The present judgment reaches the same conclusion. The Permanent Court had upheld the same contention. Therefore the Court cannot adjudicate on the admissibility of the Application until it has established its jurisdiction (Series A/B, No. 67, p. 24).

***

2. On October 2nd, 1957, the day on which the Swiss Application was filed, the local remedies were, in the opinion of the United States Government, exhausted. The Aide-Mémoire to the Note of the Department of State dated January nth, 1957, says that "the (Interhandel) case now stands dismissed without any qualification". "Interhandel has had the benefits of both remedies (administrative and judicial). Both its claim and suit have been dismissed." "Interhandel has received due process of law. The claim of Interhandel to the shares in question has thus been defeated." When the Application was filed, the United States Government was about to proceed with the sale of 70% of the shares of GAF.

Those are the circumstances in which Switzerland filed its Application. On October 3rd, 1957, the Swiss Government submitted a request for the indication of interim measures of protection.[p 86]

At the public hearing on October 12th, 1957, dealing with interim measures, Mr. Dallas S. Townsend, Co-Agent of the United States of America, made the following statement:

"Chemie unsuccessfully exhausted its appellate remedies to the Supreme Court, and when the six months period of grace had expired, without Chemie making the production, the District Court entered the order and in 1956 held that Chemie's complaint stood dismissed. Again Chemie appealed unsuccessfully to the Court of Appeals and in this way attempted to get back into the case. The Court of Appeals affirmed and now Chemie, in its second trip to the Supreme Court, is making another effort to get back into the case by petitioning the Supreme Court to review the decision of the Court of Appeals. This petition is now pending before the Supreme Court of the United States." (I.C.J.Reports 1957, pp. 108109, cited in the Memorial, paragraph 79.)

While the Court on October 3rd, 1957, was examining the Swiss Application for the indication of interim measures, the Supreme Court of the United States, on October 14th, 1957, received a petition for a writ of certiorari filed by Interhandel on August 6th, 1957, in which Counsel for the Parties were asked to discuss the question whether the United States District Court for the District of Columbia was justified in dismissing Interhandel's claim by application of a rule of procedure on the grounds that it had not obeyed an order for the production of the documents.

Do declarations by the representatives of the American Government express that Government's official opinion? Is the effect of an application for a writ of certiorari, by its mere presentment, to reopen a case which had been closed since August 6th, 1957, the date of the judgment given by the Court of Appeals? Were the Parties in agreement that local remedies were exhausted at the time when the Swiss Application was filed? Was that point in dispute at the time of its filing? In view of these circumstances, was the Application admissible and was the Swiss Government acting in good faith? A definite answer to all these questions presupposes information which the documents in the case do not at this stage of the proceedings furnish. Was it only on the date of the decision by the Supreme Court to grant the request for a writ of certiorari that the case was reopened FN1?

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FN1 The examination of this request led to the decision of the Supreme Court of june 16th, 1958, by which the judgment of the Court of Appeals was reversed.

The last part of the judgment of the Supreme Court says:

"On remand, the District Court possesses wide discretion to proceed in whatever manner it deems most effective. It may desire to afford the Government additional opportunity to challenge petitioner's good faith. It may wish to explore plans looking towards fuller compliance. Or it may decide to com-
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[p 87]
3. The principle of the exhaustion of local remedies is not absolute and rigid; it has to be applied flexibly according to the case. Some situations or facts may entitle the Court to accede to a request, even if the remedies have not been completely exhausted.

A limit is placed upon the rule of exhaustion if the period within which the remedies will be exhausted is not known. The Permanent Court acknowledged this limitation in its Order of February 4th, 1933, in the Prince von Pless case, on the grounds of an unwarrantable delay by the Polish tribunal, and the Court decided not to adjudicate upon the applicability of the principle of exhausting local remedies (Series A/B, No. 52, p. 16).

The Interhandel case, first brought before the American courts on October 27th, 1948, passed through various stages and was still not settled by June 16th, 1958 (nearly ten years later). A further unknown period will therefore have to elapse before the remedies are exhausted. That being so, are such slow remedies "adequate" and "effective", as is required by the arbitral award in the case of the Finnish vessels? (Reports of International Arbitral Awards, Vol. III, p. 1495.)

4. The substance of the Interhandel claim is to obtain from the American courts the restitution and the taking immediate possession of the vested shares and the handing over by the defendants to the claimant of all dividends and interest pertaining thereto. This claim is founded in law on the fifth amendment to the Constitution of the United States and the amended law of October 6th, 1917, relating to trading with the enemy. The Application of the Swiss Government in its final submission A, requests the Court to adjudge and declare that the Government of the United States of America is under an obligation to restore the assets of Interhandel; it takes its stand upon Article IV of the Washington Accord and on the principle of international law which forbids the confiscation of neutral property. The two claims, that of Interhandel and that of the Swiss Government, are based upon different legal grounds FN1.

---------------------------------------------------------------------------------------------------------------------
FN1 mence at once trial on the merits. We decide only that on this record dismissal of the complaint with prejudice was not justified.

The judgment of the Court of Appeals is reversed and the case is remanded to the District Court for further proceedings in conformity with this Opinion. It is so ordered."

It is seen therefore that the District Court may select alternatives or different expedients.

The Swiss Govemment is not acting in the present dispute as the representative of its national; the reparation claimed is not of the same legal character as that asked for by its national and the damage suffered by Switzerland is not identical with that incurred by Interhandel. The Permanent Court examined these questions very carefully in its Judgment (Series A, No. 17, pp. 27-28), as follows:

"It is a principle of international law that the reparation of a wrong may consist in an indemnity corresponding to the damage which the nationals of
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The Interhandel claim seeks to obtain by methods of local redress a decision by the American courts that the (in Interhandel's opinion) unlawful act of vesting is a violation of domestic law, whilst the Application of the Swiss Government is based upon damage caused by the breach of an international agreement and of the law of nations. It is not known whether, at this stage of the proceedings, Interhandel could or could not pursue its claim before the American courts and introduce there the legal grounds relied upon by the Swiss Government with a view to the claim being decided by the American courts. That would be a modification of Interhandel's claim and it would have to be ascertained whether American procedure permits such action. The Supreme Court of the United States, in its decision of June 16th, 1958, reversing the earlier decision in the Interhandel case, makes no allusion in its directives to the District Court to the questions of international law which, according to the Application of the Swiss Government, constitute the subject-matter of the dispute. According to the American Agent, the courts could examine that case. On the other hand, the Swiss Agent says that it would be impossible. This difference of opinion turns mainly upon the question of the application by the national courts of the Washington Accord in its character of Executive Agreement, a treaty which, not having been approved by Congress, is not incorporated in United States domestic law.

5. Even if such action proved to be possible, it would still have to be borne in mind that the Swiss Government is not a party to the dispute before the American courts. It would therefore seem that the local remedies sought in those courts might not afford a final redress to satisfy the case put forward by the Swiss Government. Where a question of international law is involved, only an international court can give a final decision.

The purpose of the local remedies rule is simply to allow the national tribunals in the first stage of the case to examine the international responsibility of the defendant State as presented in
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FN1 the injured State have suffered as the result of the act which is contrary to international law. This is even the most usual form of reparation; it is the form selected by Germany in this case and the admissibility of it has not been disputed. The reparation due by one State to another does not however change its character by reason of the fact that it takes the form of an indemnity for the calculation of which the damage suffered by a private person is taken as the measure. The rules of law governing the reparation are the rules of international law in force between the two States concerned, and not the law governing relations between the State which has committed a wrongful act and the individual who has suffered damage. Rights or interests of an individual the violation of which rights causes damage are always in a different plane to rights belonging to a State, which rights may also be infringed by the same act. The damage suffered by an individual is never therefore identical in kind with that which will be suffered by a State; it can only afford a convenient scale for the calculation of the reparation due to the State."
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[p 89]
the Application; that examination would of course have to be made by a national court. If that court is not competent to make a complete examination of the Swiss case from the point of view of its own law, the purpose of the rule of exhaustion would not be fulfilled.

For the moment, however, and without further information the Court cannot enter the field of hypotheses; it must abide by the terms of the Interhandel claim. The Application of the Swiss Government seeks (rightly or wrongly) reparation for direct damage caused to a State.

The unlawful act really derives from the failure of the American Government (according to Switzerland) to execute the decision of the Swiss Authority of Review, which is to be regarded as a judgment by an international arbitral tribunal, within the framework of the Washington Accord, and therefore binding upon the Parties to the dispute.

The examination of the Third Objection means prejudging a point which can only be dealt with along with the merits. The rule of the exhaustion of local remedies does not apply to a Case in which the act complained of directly injures a State. Is that act or is it not a breach of international law?

6. The Permanent Court was very cautious in upholding an objection based upon the local remedies rule and was in no hurry to relinquish its jurisdiction. In three cases it joined the objection to the merits (Series A/B, No. 54, Series A/B, No. 67, and Series A/B, No. 75); it upheld the objection in one case (Series A/B, No. 76) as a defence on the merits; in another case (Series A/B, No. 77) the Court accepted it on the basis of a treaty clause. The same objection was dismissed in two cases (Series A, No. 6, and Series A, No. 9). The present Court also dismissed it in the Ambatielos case. (I.C.J. Reports 1953, pp. 18, 22 and 23.)

This is therefore the first time that the Court is upholding, without joining it to the merits, a preliminary objection based upon the rule of exhaustion of local remedies and not included in the Declaration accepting the jurisdiction of the Court. The judicial precedents mentioned should not have been abandoned.

7. In its examination of the preliminary objections the Court has to avoid prejudging matters relating to the merits of the dispute, particularly when the questions raised, whether of fact or of law, show that the parties are in disagreement and when these questions are closely linked to the merits. Any such encroachment upon the merits of the dispute deprives the parties of the right given them by the Statute and Rules of Court to submit written pleadings and make oral statements on the merits of the dispute (Series A/B, No. 67, p. 24). [p 90]

8. The Permanent Court laid down wise directives when the objection on grounds of non-exhaustion of local remedies touches upon the merits. In its decision (Series A/B, No. 75, p. 55) it said:

"Whereas, at the present stage of the proceedings, a decision cannot be taken either as to the preliminary character of the objections or on the question whether they are well founded, and any such decision would raise questions of fact and law in regard to which the Parties are in several respects in disagreement and which are too closely linked to the merits for the Court to adjudicate upon them at the present stage;

Whereas, in view of the said disagreement between the Parties, the Court must have exact information as to the legal contentions respectively adduced by the Parties and the arguments in support of these contentions;

Whereas the Court may order the joinder of preliminary objections to the merits, whenever the interests of the good administration of justice require it."

For these reasons, at the present stage of the proceedings, it seems that the Third Objection to the Swiss principal submission should rightly and reasonably have been joined to the merits.

***
II
I. The United States Government submitted to the Court a Fourth Preliminary Objection, as follows:

"(a) That there is no jurisdiction in this Court to hear or determine any issues raised by the Swiss Application or Memorial concerning the sale or disposition of the vested shares of General Aniline and Film Corporation (including the passing of good and clear title to any person or entity) for the reason that such sale or disposition has been determined by the United States of America, pursuant to paragraph (b) of the Conditions attached to this country's acceptance of this Court's jurisdiction, to be a matter essentially within the domestic jurisdiction of this country."

And it adds, further, that the decision of the United States "applies to all the issues raised in the Swiss Application and Memorial, including, but not limited to, the Swiss-United States Treaty of Arbitration and Conciliation of 1931 and the Washington Accord of 1946". [p 91]

2. That objection has not been abandoned or withdrawn by the Government of the United States at this stage of the proceedings. The Swiss Government also asks the Court to adjudicate upon this form of the Fourth Objection.

Article 62, paragraph 5, of the Rules of Court provides that "after hearing the parties the Court shall give its decision on the objection or shall join the objection to the merits". To give a decision on an objection means either to uphold or to dismiss it, or to join it to the merits. When it admits an objection which puts a definite end to the Application, the Court may refrain from examining other objections. In the present case it has upheld an objection founded upon the rule of exhaustion of local remedies, which has a delaying character. The Swiss Government might be entitled to submit its Application afresh, if the local remedies have not exhausted the facts and legal arguments upon which its claim is based. The admission of the Third Objection by the Court does not have the effect of finally and fully dismissing the Swiss Application; the Court ought therefore to have decided on Objection 4 (a)謡hich would have that effect.

There is another reason why the Court ought to have done this. Examination of its jurisdiction was necessary in order that it might duly consider the Third Objection, which belongs to the class of objections to admissibility. But that objection could only be considered by the Court after it had established that it had jurisdiction.

3. The Declaration of the United States made under Article 36, paragraph 2, of the Statute of the Court provides that the Declaration shall not apply to: "(b) disputes with regard to matters which are essentially within the domestic jurisdiction of the United States of America as determined by the United States of America".

This Declaration consists of two parts, acceptance of the Court's jurisdiction and reservations to that acceptance. Those two elements of a single juridical act are separable. Nothing justifies us, when reading the text, in considering them as an indivisible whole.

4. A declaration accepting compulsory jurisdiction is a secondary act, one which can be linked to the application of paragraphs 2, 3 and 6 of Article 36 of the Statute. These clauses provide it with a legal substratum. The declaration has the character of a secondary act dependent upon a primary one. The Court, whose duty it is to safeguard its Statute, is certainly empowered to determine whether the secondary part of the declaration is in accord with the primary text; in doing so, it may appraise the legality of the different parts of the declaration in order to determine whether the relevant clauses of the Statute have been correctly applied. The declaration cannot run counter to the Statute. There can be no doubt of that. [p 92]

The last part of paragraph (b) of the United States reservation lays down that the United States of America will determine whether a dispute submitted to the Court relates to questions which he within the domestic jurisdiction of the United States of America. The clause "as determined by the United States of America", as applied in the present case, is incompatible with paragraph 6 of Article 36 of the Statute, which says: "In the event of a dispute as to whether the Court has jurisdiction, the matter shall be settled by the decision of the Court."

5. States may make reservations when accepting the jurisdiction of the Court under paragraphs 2 and 3 of Article 36, but those reservations cannot limit the right conferred upon the Court by the Statute to determine the question of its jurisdiction. No reservation is admissible in regard to paragraph 6. The Court is sole judge of its jurisdiction.

"Paragraph 6 of Article 36葉he Court has maintained洋erely adopted a rule consistently accepted by general international law in the matter of international arbitration." (Nottebohm case, Preliminary Objection, I.C.J. Reports 1953, p. 119.) And a little later the Court further emphasizes: "But even if this were not the case, the Court, 'whose function is to decide in accordance with international law such disputes as are submitted to it' (Article 38, paragraph 1, of the Statute), should follow in this connection what is laid down by general international law. The judicial character of the Court and the rule of general international law referred to above are sufficient to establish that the Court is competent to adjudicate on its own jurisdiction in the present case." (Ibid., p. 120.)

In this matter no country which has announced its accession to the Optional Clause can reserve for itself the right to make its opinion prevail over the jurisdiction of the Court, once the Court has been seised of a case. From that moment the powers of the Court cannot be curtailed; they must be exercised as established by the Statute. It lies exclusively with the Court to settle any dispute about jurisdiction. No government can impose its view upon the Court in this matter. The question of the Court's jurisdiction is one which only the Court can finally settle. That intention is clearly set out in paragraph 6 of Article 36, which is binding upon all States acceding to the Statute of the Court.

Judge Kellogg rightly argued this when he said: "Every Special Agreement submitting a case to this Court must be considered to have, as tacitly appended clauses thereto, all the pertinent articles of 'the Court's Statute, and must, in case of doubt as to its meaning, be interpreted in the fight of such provisions of the Statute of the Court" (Series A, No. 24, p. 33). The same is true of any declaration founded upon paragraph 2 of Article 36. [p 93]

6. The Parties to a dispute cannot depart from the Statute of the Court unilaterally or by agreement between themselves. The Permanent Court had occasion to adjudicate on this latter point. In the Free Zones case the parties had agreed in their Special Agreement to request the Court to let them know unofficially the content of its deliberations before delivering judgment. That request was refused as contrary to Articles 54, paragraph 3 (Secrecy of Deliberations) , and 58 (Reading of Judgment in open Court) of the Statute. The same Court declared in its Order of August 19th, 1929: "In contradistinction to that which is permitted by the Rules (Article 32), the Court cannot, on the proposal of the parties, depart from the terms of the Statute."

Another instance may be given: a declaration of the parties whereby they do not consider themselves bound by the Court's judgment, cannot be allowed, being contrary to Article 59 of the Statute (Series A/B, No. 46, p. 161). The rules of substance and procedure fixed by the Statute must be regarded as immutable: neither the Court nor the parties can break them.

7. Since the reservation in regard to paragraph 6 of Article 36 contained in (b) of the American Declaration ("as determined", etc.) is obviously contrary to that paragraph, and cannot be linked to the application of any text in the Statute, the Court should regard it as unwritten and inoperative in the present case. That is to say, the respondent Government cannot rely upon it in support of its Objection 4 (a). The clause in question, not being provided for in any part of the Statute, should be declared without effect vis-à-vis the Court.

That conclusion does not imply that the acceptance of the Court's jurisdiction, given in the American Declaration, is altogether without value and to be considered as null and void in its entirety. Such a view would run counter to the clear intention of the respondent State, which has submitted cases to the Court's decision both as claimant and respondent. The way in which this Declaration was employed by the Government of the United States in those cases shows that the reservation in paragraph (b) was not a determining factor at the time of its formulation and submission. The United States Government even stated in the present case, when objecting to the jurisdiction of the Court, during the hearings on the indication of interim measures of protection, that it did not "intend to imply that it envisages use of paragraph (b) ... with respect to all aspects of the Interhandel controversy which may be involved in the (Swiss) submission. The United States Government will in due course, upon further study, disclose its position in these respects in further detail." Indeed, in the United States objections to the Swiss Application, paragraph (b) is restricted to the "matter of the sale or disposition of such shares (GAF), including the passing of good and clear title to any person or entity". In the view of the [p 94] United States Government, paragraph (b) of its reservation can be separated from the rest of the acceptance and even from the other reservations. The Declaration as a whole is not linked to the clause mentioned in paragraph (b), which is an accessory stipulation.

Consequently, this objection 4 (a) should be dismissed and the jurisdiction of the Court upheld.

(Signed) Armand-Ugon.

[p 95]
DISSENTING OPINION OF SIR HERSCH LAUTERPACHT

In its Judgment, after rejecting three preliminary objections of the United States of America, the Court has declared the Application of the Government of Switzerland to be inadmissible on account of non-exhaustion of local remedies in the courts of the United States. By doing so the Court has assumed jurisdiction both in the present case and in any future case connected with the present proceedings after the local remedies have been exhausted. In my view, there being before the Court no valid declaration of acceptance of its jurisdiction and no voluntary submission to it, the Court is not in a position to exercise any kind of jurisdiction over this case, including that of declaring the claim to be inadmissible. The same subject to one exception預pplies to its jurisdiction to decide on any of the preliminary objections. That exception arises from the objection based on the so-called automatic reservation which peremptorily and decisively rules out any jurisdiction of the Court with regard to a crucial aspect of the dispute and which renders the other objections irrelevant. That objection also necessarily involves the question of the validity of the Declaration of Acceptance of the defendant State.

***

In its Application of October 2nd, 1957, instituting proceedings in the present case the Government of Switzerland asked the Court to adjudge and declare that

"(1) the Government of the United States of America is under an obligation to restore the assets of the Société internationale pour participations industrielles et commerciales S. A. (Interhandel) to that company;

(2) in the alternative, that the dispute is one which is fit for submission for judicial settlement, arbitration or conciliation under the conditions which it will be for the Court to determine."

In its Memorial and its Observations on the Preliminary Objections of the United States the Government of Switzerland elaborated and amplified the above principal requests formulated in the Application. However, the substance of the Application溶amely, the restitution of the assets of Interhandel and the obligation of the Government of the United States to submit the dispute to arbitration or conciliation揺as remained unchanged. The successive formulations of the Swiss Conclusions are reproduced in the Judgment of the Court.

The Government of Switzerland has invoked the jurisdiction of the Court in reliance upon the Declaration of Acceptance, which [p 96] took effect on August 26th, 1946, of the jurisdiction of the Court on the part of the United States, as well as upon its own Declaration of Acceptance of July 28th, 1948. Paragraph 2 (b) of the Declaration of Acceptance of the United States provided that the Declaration shall not apply to "disputes with regard to matters which are essentially within the domestic jurisdiction of the United States of America as determined by the United States of America".

In its Preliminary Objections the Government of the United States invoked the reservation thus formulated. It stated there, in Part (a) of the Fourth Preliminary Objection, as follows:

"(a) The sale or disposition by the Government of the United States of America of the stock in General Aniline & Film Corporation, vested as enemy assets under the United States Trading with the Enemy Act, has been determined by the United States of America, pursuant to paragraph (b) of the Conditions attached to this country's acceptance of the Court's compulsory jurisdiction to be a matter essentially within the domestic jurisdiction of the United States. Accordingly, pursuant to paragraph (b) of the said Conditions, the United States of America respectfully declines to submit to the jurisdiction of the Court the matter of the sale or disposition of such shares, including the passing of good and clear title to any person or entity. Such determination by the United States of America that the sale or disposition by the Government of the United States of the stock in General Aniline & Film Corporation is a matter essentially within its domestic jurisdiction applies to all the issues raised in the Swiss Application and Memorial, including, but not limited to, the Swiss-United States Treaty of Arbitration and Conciliation of 1931 and the Washington Accord of 1946."

In the course of the Oral Hearing the Agent of the United States of America formally maintained that preliminary objection both in his opening statement and in his Reply. However, while doing so, he drew the attention of the Court to the fact that according to the law of the United States the Government of the United States could not dispose of the assets of Interhandel so long as the case was pending before the courts of the United States. For that reason he suggested that, at the present stage of the proceedings before this Court, that preliminary objection was "moot"擁.e., apparently, without practical importance. Nevertheless, in his Reply, while insisting that that objection "is somewhat moot in the case at this time", he formally reiterated that objection and asked the Court "to judge and decide as there requested". He had previously said:

"Our use of the automatic reservation limited to the sale or disposition of the G.A.F. vested shares is not arbitrary; the Court has never examined and we assume will not examine into the motives which lead nations to exercise the automatic reservation." [p 97]

It may be added that the Government of the United States had, on a previous occasion, invoked that reservation in connection with預nd as a reason of its opposition to葉he request submitted by the Government of Switzerland for an indication of provisional measures of protection. The Court, in its Order of October 24th, 1957, declined庸or reasons not connected with that reservation葉o indicate preliminary measures there requested (I.C.J. Reports 1957, p. 105).

***

In the case now before the Court the Government of the United States has invoked the automatic reservation only in the matter of the sale and disposition of the assets of Interhandel, but not with regard to certain other aspects of the dispute, in particular the legality of the original seizure of the assets of the Company. The Government of the United States has, in repeated statements, attached importance to that limitation of its reliance on the "automatic reservation". However, it does not appear that any such differentiation corresponds to the terms or objects of the application of the Swiss Government or that it is of decisive practical or legal importance. The Swiss Application asks the Court to declare and adjudicate that the "Government of the United States of America is under an obligation to restore the assets of Interhandel". Now it is clear that if the Government of the United States, in reliance upon the automatic reservation, proceeds to sell or otherwise to dispose of the assets of Interhandel, notwithstanding any judgment of or proceedings before this Court, it will not be in the position "to restore the assets" of Interhandel. It may, in pursuance of any judgment of the Court, offer to pay compensation in place of the assets to be restored. Yet that is not the object of the Swiss Application which asks for the restoration of the assets謡ith the concomitant and, in the estimation of the Swiss Government, essential rights of control over the affairs of Interhandel.

In view of this, no decisive importance attaches to the fact that the Government of the United States has refrained from invoking the reservation in question with regard to the original seizure and subsequent retention of the stock of Interhandel預n aspect of the question which does not appear in the application of the Swiss Government; with regard to that question the United States, in Objection 4 (b), challenges the jurisdiction of the Court as being a matter which according to international law葉hough not according to the determination of the United States擁s within its domestic jurisdiction. The more relevant fact is that the automatic reservation invoked in Objection 4 (a) has been invoked with regard to the exclusive subject-matter of the Application and the principal Conclusion advanced by the applicant Government.[p 98]

Moreover, in so far as there arises in the present case the question of the validity of the automatic reservation and of the Declaration as a whole預nd it is these questions which inevitably call for an answer before the Court can in any way assume jurisdiction in the matter, even to the extent of deciding on the other preliminary objections擁t seems immaterial whether the automatic reservation covers all or merely one aspect of the case.

The same considerations apply to the alternative request and conclusion of the Swiss Government, namely, that relating to the obligation of the United States to submit the dispute to the procedures of arbitration or conciliation. As the Preliminary Objection 4 (a)葉he objection which invokes the automatic reservation of the United States is specifically stated to apply also to the question of arbitration and conciliation, it is impossible for the Court to declare itself competent to decide on that aspect of the Swiss Application without assuming a position in relation to the validity of the automatic reservation and of the Declaration of Acceptance as such. If that reservation is effective then it is impossible for the Court to declare that the United States is bound to submit the entire dispute to arbitration or conciliation for in that case葉hat is to say, if the automatic reservation is valid-an arbitration tribunal or conciliation commission has no power to decide or to make recommendations on the main Swiss Application and Conclusion, namely, the obligation of the United States to restore the assets of Interhandel. The Court can assume jurisdiction with regard to the obligation of arbitration or conciliation only on the assumption that the reservation in question is ineffective and invalid or that it has been unreasonably invoked and must therefore be disregarded for these reasons or at least that it is within the power of the arbitration tribunal or conciliation commission to disregard that reservation on these grounds. The same applies, for reasons which will be stated presently, to the request to join this aspect of the dispute to the merits. The Court cannot, at any stage of the proceedings, act without regard to the instrument which purports to confer jurisdiction upon it or, for reasons outside the realm of legal considerations, postpone a decision on the subject.

Neither can the Court consider itself to be relieved of that duty for the reason that the Government which has made the automatic reservation part of its Declaration of Acceptance and which formally maintains it, as does the defendant Government in the present case, finds it opportune at a particular stage of the proceedings to describe it as being of no practical importance預s being "moot". This is so for reasons more cogent than that a Government cannot formally maintain an objection and at the same time invite the Court to treat it as being of no importance. If that objection is maintained and if it is not dismissed by the [p 99] Court, it can subsequently be acted upon by the interested Government whenever it deems it convenient to do so. In the present case it has been submitted on behalf of the Government of the United States that it is prevented by the law of the United States from selling or otherwise disposing of the assets of Interhandel so long as a final decision of an American court has not declared these assets to be validly vested in the United States of America. Yet there is room for the possibility that, unless the automatic reservation has been withdrawn by the United States, or declared invalid by the Court, the Government of the United States may be at liberty, subsequent to any such final decision of its courts in its favour, to proceed to sell or otherwise dispose of the assets of Interhandel notwithstanding any judgment of the Court declaring itself competent with regard either to the principal request or the subsidiary request relating to arbitration or merely declaring the application inadmissible pending the exhaustion of local remedies before American courts. It is not certain to what extent the Government of the United States of America could be prevented from doing so as the result of any indication of provisional measures of protection預ssuming that the sale had not been accomplished With utmost expedition prior to any request for interim measures seeing that the United States has invoked the automatic reservation as applying to all aspects and stages of the dispute. The possibility cannot be ruled out, although it cannot fittingly be anticipated, of a change in the law of the United States which at present prevents the Government from selling the assets of Interhandel prior to a final decision of American courts.

For these reasons, whatever may be the accuracy of the suggestion advanced on behalf of the United States of America that the question of the automatic reservation "had become moot" at the present stage of the proceedings, a proper administration of justice requires that its validity預s well as, in that connection, that of the Declaration of Acceptance as a whole洋ust be decided at the very first stage of the proceedings before the Court. The automatic reservation has been invoked by the defendant State; it has been maintained by it; it has been challenged by the applicant State; it is of immediate legal relevance. There is, therefore, no room for accepting the submission of the Government of the United States of America that the question of the automatic reservation, having somehow become "moot", should be postponed to a further stage of the proceedings.

The same considerations render it impossible to accede to the submission of the Government of Switzerland that that objection be joined to the merits. The objection based on the automatic reservation cannot be properly joined to merits for the reason that being of a formal and peremptory character, namely, being depen-[p100]dent solely upon the determination by the United States, it cannot by definition be examined upon its merits in relation to the substance of the dispute. For it operates automatically, irrespective of the merits of the dispute, by its own propulsion預s it were預s the result of the physical act of having been invoked. This is so unless the Court decides, at the very first stage of the proceedings, that the question of the reasonableness and good faith of the reliance on the automatic reservation must in any case be within the jurisdiction of the Court. For these reasons, the Court has, in my view, no power to declare itself competent to consider, either directly or by joining it to the merits, the subsidiary request of the Swiss Government relating to the obligation of the United States of America in the matter of arbitration or conciliation until it has decided that the automatic reservation is invalid, and cannot be acted upon, or that, if valid, the Court has the power to pass in every individual case upon the propriety of the action of the Government which invokes it. For, as noted, the Government of the United States has expressly declared that the objection based on the automatic reservation applies also to the question of arbitration and conciliation. The Court cannot properly declare itself competent or, by joining the objection to the merits, envisage such competence, without examining the principal and fundamental questions decisive for the very possibility of its competence.

These considerations are also relevant to the preliminary objection of the Government of the United States relating to the non-exhaustion of local remedies. Any decision of the Court allowing that objection implies an assumption of the jurisdiction of the Court both at the present stage and for the future in the event if, after the local remedies have been unsuccessfully exhausted, Switzerland once more submits her application to the Court. A Judgment of the Court, based on the fact of non-exhaustion of local remedies, implies the assurance to the applicant State that, once it has done its best to exhaust local remedies, the Court will proceed to the adjudication of the dispute on the merits蓉nhampered by any other objections to its jurisdiction. There would otherwise be no point in requiring the injured party to exhaust local remedies熔nly, once it had done so, to see its claim defeated on account of some other preliminary objection. It is largely for that reason that according to the established practice of the Court preliminary objections must be examined預nd rejected傭efore the plea of admissibility is examined. If this is so, then the very decision of the Court declaring the application to be non-admissible on account of non-exhaustion of local remedies calls for擁t implies 預 previous decision as to the validity of the automatic reservation and of the manner in which it has been invoked.[p 101]

***

Moreover預nd this is the crucial aspect of the jurisdictional issue before the Court葉he automatic reservation now invoked by the United States of America and contained in its Declaration of Acceptance raises, for reasons to be outlined presently, the question of the effectiveness and validity of that Declaration of Acceptance as a whole. Upon the answer to that question depends whether it is possible for the Court to enquire into any preliminary objection other than that based on the automatic reservation. If the Court is not confronted with an effective and valid Declaration of Acceptance, there is no object in examining any other preliminary objections.

In my judgment, there is not before the Court a legally effective and valid Declaration of Acceptance by reference to which it is in the position to assume jurisdiction with regard to any aspect of the dispute or by reference to which it is incumbent upon it熔r permissible for it葉o examine any preliminary objection other than that relying upon the automatic reservation. In my view, the Government of the United States, having in its Declaration of Acceptance of August 26th, 1946, purported to accept the jurisdiction of the Court subject to the reservation of matters essentially within the domestic jurisdiction of the United States as determined by the Government of the United States, did not, in legal effect, become a party to an instrument which confers upon it rights and which imposes upon it obligations. This is so for the following reasons:

(a) the reservation in question, while constituting an essential part of the Declaration of Acceptance, is contrary to paragraph 6 of Article 36 of the Statute of the Court; it cannot, accordingly, be acted upon by the Court; which means that it is invalid;

(b) that, irrespective of its inconsistency with the Statute, that reservation by effectively conferring upon the Government of the United States the right to determine with finality whether in any particular case it is under an obligation to accept the jurisdiction of the Court, deprives the Declaration of Acceptance of the character of a legal instrument, cognizable before a judicial tribunal, expressing legal rights and obligations;

(c) that reservation, being an essential part of the Declaration of Acceptance, cannot be separated from it so as to remove from the Declaration the vitiating element of inconsistency with the Statute and of the absence of a legal obligation. The Government of the United States, not having in law become a party, through the purported Declaration of Acceptance, to the system of the Optional Clause of Article 36 (2) of the Statute, cannot invoke it as an applicant ; neither can it be cited before the Court as defendant by reference to its Declaration of Acceptance. Accordingly, there being [p 102] before the Court no valid Declaration of Acceptance, the Court cannot act upon it in any way容ven to the extent of examining objections to admissibility and jurisdiction other than that expressed in the automatic reservation.

In some, but not all, respects, the position in the case now before the Court is the same as in the case of Certain Norwegian Loans in which, however, it was the defendant State which, availing itself of the operation of the principle of reciprocity, invoked the automatic reservation incorporated in the Declaration of Acceptance of the applicant Government. In that case the Court in refraining from entering into the question of the validity of the automatic reservation and of the Declaration of Acceptance attached importance to the fact that these questions were not put in issue by either Party. In my Separate Opinion in that case I expressed the view that the validity of the instrument invoked as a basis of the jurisdiction of the Court' must be a matter for the decision of the Court proprio motu regardless of whether that issue has been raised by the parties (I.C.J. Reports 1957, p. 61). In the present case both the validity of the automatic reservation and the manner of its exercise have been challenged by the applicant State. Upon the answer to these challenges depends the decision of the Court upon one of the vital aspects of its jurisdiction. Moreover, the answer of the Court to the challenge to the validity of the automatic reservation inevitably raises the issue of the effectiveness and the validity of the Declaration of Acceptance as a basis of any pronouncement of the Court on any aspect either of jurisdiction or of the merits. Whatever may be the inconvenience and the difficulties, from various points of view, of a decision on these questions, it is not possible for a judicial tribunal to postpone it.

***

My view as to the validity of the automatic reservation and of the Declaration of Acceptance which incorporates it, is the same as that expressed in my Separate Opinion in the case of Certain Norwegian Loans. In order to avoid repetition I must refer generally to that Opinion for a more detailed exposition of some of the grounds on which my conclusions in the present case are based. However, the present case is concerned with different parties, one of which is the United States of America預 party which has invoked and maintained the automatic reservation incorporated in its Declaration of Acceptance. Having regard to the long association of the United States of America with this type of reservation and to the availability of evidence surrounding the circumstances of its adoption by that State in its Declaration of Acceptance, it is necessary to review some aspects of that Opinion in the light of the above circumstance. On page 57 of that Opinion I stated as follows:[p 103]

"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."

No such considerations obtain in the present case. On the contrary, the historic antecedents surrounding the adoption of that Declaration of Acceptance are directly relevant to its interpretation.

It is convenient, before proceeding, to state the meaning of the expression "automatic reservation". That expression is intended to convey that once that reservation has been invoked by the Government in question the part of the Court is limited to the automatic function of registering the fact that the reservation has been invoked and that the Court is bound to hold, without examining its merits, that it is without jurisdiction.

***

In the Separate Opinion in the Norwegian Loans case I stated (on p. 43) as follows my view that it was not open to the Court to act upon the "automatic" reservation:

"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 contrary to 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 not necessary to reiterate here in detail the reasons formulated in that Opinion and substantiating the view that the automatic reservation is contrary to the Statute. They include some such considerations as that if the Court must treat as binding the determination by one of the parties to the effect that the Court is without jurisdiction then the Court cannot exercise the duty imposed upon it by Article 36 (6) of the Statute (except for registering, [p 104] by way of a necessarily automatic act, the fact that it is without jurisdiction for the reason that a party to the dispute has so determined) ; that the Court, as shown by its practice and as indicated by compelling legal principle, cannot act otherwise than in accordance with its Statute, of which it is the guardian; that while governments are free not to accept the jurisdiction of the Court at all or to accept it subject to reservations and limitations, they cannot do so in derogation of express provisions of the Statute; and that that applies with special force to a provision of the Statute relating to an indispensable預nd, indeed, obvious耀afeguard of such compulsory jurisdiction as may, by their own free will, be accepted by the parties to the Statute.

"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." (I.C.J. Reports 1957, at p. 47.)

The Court is the guardian of its Statute. It is not within its power to abandon, in deference to a reservation made by a party, a function which by virtue of an express provision of the Statute is an essential safeguard of its compulsory jurisdiction. This is so in particular in view of the fact that the principle enshrined in Article 36 (6) of the Statute is declaratory of one of the most firmly established principles of international arbitral and judicial practice. That principle is that, in the matter of its jurisdiction, an international tribunal, and not the interested party, has the power of decision whether the dispute before it is covered by the instrument creating its jurisdiction.

What is the legal meaning of the fact that the Court is unable to act upon葉hat it is by its Statute precluded from acting upon the "automatic" reservation? The legal meaning of that fact is that the reservation in question is invalid, that is to say, that the Court being bound by its Statute is not in a position to apply it; that that reservation is therefore without force and legal effect. There is no element of disapproval or adverse moral or legal judgment, offensive to the dignity of a sovereign State, in a proposition of that nature. Invalidity, in the contemplation of the law, is nothing else than inherent incapacity to produce legal results. Sovereign States are free to append to their Acceptance any kind of reservation or limitation耀ubject only to the qualification that reservations and limitations which are contrary to the Statute cannot be acted upon by the Court. There is otherwise no element of illegality in an Acceptance of that character. The Court is not concerned with the political implications of, and possible objections to, a Declaration which, while in law incapable of achieving that object, purports to give expression and support to the principle of [p 105] obligatory judicial settlement of disputes between nations. Neither is the Court called upon to examine in detail arguments of some dialectical complexion intended to infuse into such Declaration an element of consistency with the Statute耀uch as that by per-forming the automatic function of registering the determination made by the State in question that a matter is essentially within its domestic jurisdiction the Court in law exercises the substantive and decisive function entrusted to it by Article 36 (6) of the Statute.

It is impossible for the Court to attach importance to the argument that as Governments are free to accept or not to accept the obligations of the Optional Clause of Article 36 of the Statute, they are free to do so subject to reservations of their unlimited free choice. A person or a State may be free to join an association or to accede to a treaty. This does not mean that they are entitled to join or accede on their own terms in disregard of the rules of the association or of the provisions of the treaty. Governments possess no unlimited right to make reservations. In the Advisory Opinion on the Reservations to the Genocide Convention the Court rejected the contention that the unanimous consent of all parties to the treaty is necessary to enable the State to become a party to the treaty subject to a reservation. But the Court equally declined to accept the view that the right to append reservations is unlimited. On the contrary, it made "the compatibility of a reservation with the object and purpose of the Convention" the decisive test of their admissibility (I.C.J. Reports 1951, p. 24). It said: "The object and purpose of the Convention thus limit both the freedom of making reservations and that of objecting to them" (at p. 24). It is for that reason that while most of the recent conventions allow reservations to their articles, they expressly exclude them with regard to some of the essential articles of the Convention. Of that practice, the Conventions of 1958 relating to the law of the sea provide an instructive example. This applies also to conventions regulating subjects of limited scope such as the Convention of July 28th, 1951, relating to the Status of Refugees (Article 42 of the Convention).

It must be noted that, unlike in the case of some other States which adhered to the system of the Optional Clause subject to the automatic reservation, in the case of the United States of America the question of the conformity of that reservation with the Statute of the Court was clearly present to the minds of, and discussed by, the members of the legislative organ responsible for that reservation. In fact that question constituted the main and most prominent subject of the discussion in the Senate (see Congressional Record, Vol. 92 (1946), p. 10763 (Senator Donnell); ibid. (Senator Connally); pp. 10764 and 10770 (Senator Morse); p. 10837 (Senator Pepper); pp. 10837-10839 (a general discussion); p. 10840 (Senator Donnell)).[p 106]

There is thus no question here of a State being confronted with the consequences of an action the legal import of which was not clear to the organ responsible for it. This is so quite apart from the fact, to which detailed reference is made elsewhere in the present Opinion, that that action預pproved by a very substantial majority of fifty-one votes to twelve謡as in keeping with the continuous attitude of the legislative organ in question to obligatory arbitral and judicial settlement in so far as it concerns the United States of America.

***

The second ground why, apart from its inconsistency with the Statute, it is impossible for the Court to apply the reservation in question is that, in consequence thereof, the instrument in which it is contained is not an instrument conferring legal rights and creating legal obligations. This is so for the reason that a purported undertaking in which one party reserves for itself the exclusive right to determine the extent or the very existence of its obligation is not a legal undertaking and that the instrument embodying it is not a legal instrument cognizable before a court of law. That aspect of the question is elaborated on pages 43-48 of my Separate Opinion in the case of Certain Norwegian Loans and it is not therefore necessary to repeat here the views there expressed, in particular those derived from general principles of law applicable alike to all instruments, whether bilateral or unilateral, intended to create legal rights and obligations. The only elaboration that is required in this connection of that view is that dictated by the fact that the automatic reservation now before the Court is one incorporated in the Declaration of Acceptance of the United States of America.

The insistence on the right of unilateral determination of the existence of a legal obligation to submit a dispute to arbitral or judicial settlement has been the unvarying feature of the practice of the United States and, in particular, of the branch of the Government of the United States endowed by the Constitution with the power of decisive participation in the process of ratification of treaties. Although occasionally, in treaties other than treaties providing generally for compulsory arbitral or judicial settlement, the United States of America has accepted in advance the jurisdiction of international tribunals in the matter of the interpretation and the application of those treaties, including necessarily those relating to the jurisdiction of those tribunals to determine their competence when acting in that capacity, it has been unwilling to do so with regard to treaties providing generally for obligatory arbitral or judicial settlement. With regard to those treaties the consistent attitude of the legislative body entrusted by the Con-[p107]
stitution with advising and consenting to ratification has been to reserve the right, for itself or the United States generally, to determine with regard to any particular dispute whether there rested upon the United States the obligation of arbitral or judicial settlement as generally provided for in the instrument.

As already stated, any such condition must be considered to constitute, in terms of law, a denial of the legal obligation of compulsory judicial or arbitral settlement. However, that has been the attitude of the United States both generally and in relation to the particular instrument now before the Court, namely, the Declaration of Acceptance of August 26th, 1946. The United States of America has accepted the obligations of Article 36 (2) of the Statute on condition that in any particular case it is for the Government of the United States of America, and not for the International Court of Justice, to determine whether a matter is essentially within the domestic jurisdiction of the United States of America. That condition, covering as it does a potentially all-comprehensive category of disputes relating to matters essentially within domestic jurisdiction, has replaced擁n addition to another wide reservation in the American Declaration of Acceptance relating to the interpretation of multilateral treaties葉he traditional formula requiring the consent of the Senate, or of the Government of the United States of America, to the submission of any particular dispute to the international tribunal. This Court, whose jurisdiction is grounded solely and exclusively in the consent of the defendant State, must respect that essential condition of the Declaration of Acceptance.

***

It is of importance, as showing both the consistency of the determination of the United States of America to preserve the ultimate power of decision with regard to its commitments on the subject and the absolute character of that condition, to review some of the principal events in the history of the attempts, since the beginning of the modern practice of compulsory arbitration at the end of the nineteenth century, to associate the United States of America with the practice of compulsory judicial and arbitral settlement.

On January 11th, 1897, a general treaty of arbitration was signed between the United States of America and Great Britain containing provisions for the adjudication of disputes concerning pecuniary claims against either Party and controversies involving the determination of "territorial claims". Provisions of some stringency surrounded both groups of disputes. Thus with regard to territorial claims it was laid down that disputes shall be submitted to a tribunal composed of six members, three of whom were to be judges of the Supreme Court of the United States or of the circuit courts [p 108] and the other three were to be judges of the British Supreme Court of Judicature or members of the Judicial Committee of the Privy Council. It was laid down that only an award given by a majority of not less than five to one was to be final (unless within three months either party protested against it). Moreover, it was provided that, in case one of the tribunals, constituted for the decision of matters not involving the determination of territorial claims, should decide that the determination of the case before it necessarily involved "the decision of a disputed question of principle of grave general importance affecting the national rights of such party as distinguished from the private rights whereof it is merely the international representative", the jurisdiction of the tribunal should cease and the case should "be dealt with in the same manner as if it involved the determination of a territorial claim" (Moore, A Digest of International Law, Vol. VII (1906), p. 77). Notwithstanding these safeguards the Senate declined to give its consent to the treaty.

In 1904 and 1905 the Government of the United States, following the pattern of the arbitration treaty concluded in 1903 between Great Britain and France, negotiated arbitration treaties with a number of States, including France, Switzerland, Great Britain, Italy, and Mexico. The treaties contained the then customary reservations of vital interests, independence and national honour. The Senate amended these treaties by stipulating that the "special agreement" therein provided in respect of any particular dispute should be in the form of a treaty requiring the consent and advice of two-thirds of the Senate (Congressional Record, February 13th, 1905, p. 2477).

When in 1907 the United States signed the Hague Convention on Pacific Settlement of International Disputes, the "advice and consent" in respect of ratification was given by the Senate subject to the "understanding" in the matter of Article 53 of the Convention relating to the formulation of the "compromis" by the tribunal in case the parties are unable to agree on the subject; the "understanding" expressly excluded from the competence of the Permanent Court of Arbitration the power to frame the "compromis" (Malloy, Treaties between the United States and Other Powers, Vol. II (1910), pp. 2247, 2248).

On August 3rd, 1913, the Government of the United States, in an effort to achieve a measure of obligatory arbitration, signed two bilateral general arbitration treaties幼ommonly known as the Taft-Knox treaties用roviding for submission to arbitration of disputes involving a "claim of right" made by one party against another and "justiciable in their nature by reason of being susceptible of decision by the application of the principles of law or equity". The treaties, which in each case provided for a special agreement, laid down that should the parties disagree as to whether a dispute [p 109] is justiciable the question of justiciability should be submitted to a Joint High Commission of Enquiry and that the dispute should proceed to arbitration only if all but one members of the Commission reported that the dispute was justiciable. The Senate amended the treaties but substituted the term "treaty"羊equiring the consent of two-thirds of the Senate庸or "agreement" in relation to the requirement of special agreement; it struck out the provisions relating to determination of the matter by the Joint Commission. Thereupon the Government of the United States abstained from proceeding with the ratification of those treaties (S. Doc. 476; 62nd Congress, 1st and 2nd Sessions).

On occasions the power of final decision on the part of the Senate has been reserved even in bilateral treaties limited to arbitral settlement of pecuniary claims. This was the case in the Special Agreement of August 18th, 1910, between the United States of America and Great Britain providing for the submission to arbitration of pecuniary claims between the two countries. Article 1 of that Agreement provided that the claims submitted to arbitration "shall be grouped in one or more schedules which, on the part of the United States, shall be agreed on by and with the advice and consent of the Senate" (International Arbitral Awards, Vol. VI, p. 9).

At the close of the First World War the insistence on the right of final determination with regard to matters of domestic jurisdiction showed itself, in a different sphere, in the fifth reservation of the "Lodge reservations" approved by the Senate on November 13th, 1919, in connection with the Treaty of Versailles and the Covenant of the League of Nations. The Senate reserved to the United States "exclusively the right to decide what questions are within its domestic jurisdiction".

Similar considerations, as shown by a study of the record of the discussions in the Senate, underlay the principal reservation of the United States when on January 27th, 1926, the Senate passed a Resolution consenting to the adherence of the United States to the Statute of the Permanent Court of International Justice. That reservation provided that the Court shall not entertain without the consent of the United States a request for an advisory opinion touching any dispute or question in which the United States had or claimed to have an interest. Members of the League of Nations were not in a position to accept the reservation in that form and, in consequence, the United States did not become a party to the Statute (League of Nations, Official Journal, Suppl. 75, p. 122; Official Journal, 1929, p. 1857).

The insistence on the part of the United States, in the matter of treaties of obligatory arbitration and judicial settlement, that it must reserve for itself the ultimate right to determine the existence of the obligation to submit a particular dispute to arbi-[p 110]tration or judicial settlement continued to manifest itself in the period preceding and following the Second World War. Between 1928 and 1931 the United States concluded a large number of arbitration treaties溶early thirty of them, including the Treaty with Switzerland of February 16th, 1931謡hich, while invariably incorporating the reservation of matters which are "within the domestic jurisdiction of either of the Contracting Parties", provided at the same time for the necessity of a special agreement in each case. Such agreement was "in each case [to] be made on the part of the United States of America by the President thereof, by and with the advice and consent of Senate".

On January 5th, 1929, the United States of America signed the General Treaty of Inter-American Arbitration預 treaty which contained the reservation relating to disputes "which are within the domestic jurisdiction of any of the Parties to the dispute and are not controlled by international law". The following "understanding" was made part of the ratification of the United States of America: "that the special agreement in each case shall be made only by the President, and then only by and with the advice and consent of the Senate, provided two-thirds of the Senators present concur" (Systematic Survey of Treaties for the Pacific Settlement of International Disputes 1928-1948, p. 504).

In the period following upon its Declaration of Acceptance, of August 26th, 1946, of the compulsory jurisdiction of the Court subject to the automatic reservation, the United States have attached importance to extending the principle involved therein to other instruments, both multilateral and bilateral, of obligatory judicial or arbitral settlement to which they have become a party. They did so, for instance, in relation to the American Treaty of Pacific Settlement of April 30th, 1948 (Pact of Bogota) which, in its Article V, provided that the procedures of pacific settlement laid down therein shall not apply "to matters which, by their nature, are within the domestic jurisdiction of the State" and that "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". The United States appended to that Treaty a reservation which reads, in part, as follows:

"The acceptance by the United States of the jurisdiction of the International Court of Justice as compulsory ipso facto and without special agreement, as provided in this Treaty, is limited by any jurisdictional or other limitations contained in any Declaration deposited by the United States under Article 36, paragraph 4, of the Statute of the Court, and in force at the time of the submission of any case" (ibid., p. 1174).[p 111]

A similar limitation has been incorporated in a number of bilateral agreements relating to specific matters, such as economic aid. Thus the Treaty of July 3rd, 1948, between the United States and China relating to economic, aid provides as follows:

"It is understood that the undertaking of each Government [relating to 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" (Yearbook, I.C.J., 1948-1949, pp. 152-155).

***

In view of this consistent and persistent assertion, as here surveyed, of freedom of action in the matter of the justiciability or arbitrability of any particular dispute, notwithstanding the general obligation of arbitral or judicial settlement, and in view of the determination of the United States of America to retain the right of decision as to the existence of its obligation in any particular case, it must be abundantly clear that the Court must give full effect and weight to that attitude, so uniformly manifested, of the United States of America. As a matter of possible developments that attitude may not be enduring for all time; sovereign States, including the United States of America, have occasionally changed their historic attitude in matters equally or more funda-mental. But it is not within the province of the Court to speculate on熔r anticipate葉hese developments. Neither can it with any propriety be influenced by any speculation as to differing attitudes of the legislative and executive branches of the Government of the United States in this matter. The principle as expressed in the automatic reservation of the Declaration of the United States of America must be regarded as representing the consistent and deliberate position of that country.

The Court cannot arrogate to itself the competence to curtail that right of final determination by assuming the power to decide whether that right has been exercised reasonably or in good faith. To assume any such power would mean to deny to the United States of America the very right which it stipulated as a condition of its Declaration of Acceptance and which, if there were any doubt on the subject, is substantiated as rooted in an historic tradition of striking continuity. Of that tradition it is beyond the power of the Court to approve or to disapprove. This would be so even if there did not exist the additional and weighty reason that the greatest caution must guide the Court, in the matter of its jurisdiction, in attributing to a sovereign State bad faith, an abuse of a right, or unreasonableness in the fulfilment of its obligations. [p 112]

No assistance can be derived in this respect from the suggestion that, in deciding whether a matter is essentially within the domestic jurisdiction, the Court shall assume that, unless there are obvious reasons to the contrary, the Government in question has made the determination reasonably and in good faith. Even assuming that a differentiation between a determination which is wrong, one which is obviously and unreasonably wrong, and one which, although unreasonable, is not arbitrarily and abusively so, provides a proper basis for judicial decision in a matter affecting the jurisdiction of the Court itself, the fact remains that the United States of America has not conceded to the Court葉hat it has expressly denied to it葉he right to make any such decision, however favourably influenced in advance by a presumption that the United States has acted correctly in determining a matter to be essentially within its domestic jurisdiction. It is impossible for the Court to base its decision on the shifting sands of the proposition that a contention advanced by a party is plausible, or at least that it may be given the benefit of being held plausible, although it is in law wholly untenable. I find it juridically repugnant to acquiesce in the suggestion that in deciding whether a matter is essentially within the domestic jurisdiction of a State the Court must be guided not by the substance of the issue involved in a particular case but by a presumption傭y a leaning擁n favour of the rightfulness of the determination made by the Government responsible for the automatic reservation. Any such suggestion conveys a maxim of policy, not of law. Moreover, the very existence, if admitted, of any such presumption in favour of the State relying upon its automatic reservation would make particularly odious and offensive a finding of the Court to the effect that, notwithstanding that presumption, the reservation has been invoked unreasonably and in bad faith. Any such construction of the function of the Court which is calculated to put the Court in the invidious position of having to make pronouncements of that kind in the matter of its own jurisdiction is, for that additional reason, open to objection.

The circumstances of the case now before the Court show clearly the delicate and wholly discretionary nature of the task with which the Court may be confronted if it were to assume the function of deciding the accuracy or propriety or good faith of the determination made by the Government of the United States that the sale and disposition of the assets of Interhandel is a matter falling essentially within the domestic jurisdiction of the United States. What are the considerations to which the Court must attach weight in this connection? Is it the fact that Interhandel is incorporated under the laws of one of the States of the United States of America; that its physical assets are located in the United States of America; that it is engaged in fields of production essential to [p113] the defence efforts and war-time needs of the United States of America; that the law of the United States (the Trading with the Enemy Act) empowers the President to vest the property of Interhandel, to sell or liquidate it in the interests of and for the benefit of the United States; and, moreover, that it requires the President to sell that property to American citizens only預ll these facts confirming, it is asserted, the contention that the matter is essentially within the domestic jurisdiction of the United States? Or shall the Court attach importance to the view that the sale and disposal of assets which have become, or may become, the subject-matter of a Judgment of this Court or of an arbitration tribunal are excluded by that very fact from the sphere of domestic jurisdiction; that, according to the firmly established jurisprudence of the Court, the fact that a matter is governed by national legislation does not prevent it from being governed at the same time by the international obligations of the State; and that the differentiation, adopted by the Government of the United States, between the seizure of the assets by virtue of the legislation of the United States (a seizure which is merely asserted to be essentially within the domestic jurisdiction of the United States of America) and the sale and disposal of the proceeds of that seizure (which sale and disposal are conclusively determined by the United States to be within its domestic jurisdiction) is solely an act of will authorized by the terms of the Declaration of Acceptance but wholly unrelated to the merits of the case ? Can the Court say that such differentiation, though unreal, is not unreasonable; or that, though unreasonable, it is not wholly arbitrary; or that, if arbitrary, it is not in bad faith seeing that it relies on the unqualified terms of the Declaration of Acceptance? These questions, which it is not intended to answer in this Opinion, show the nature of the task confronting the Court, if it were to sit in judgment on the legality or good faith of the determination made by the Government of the United States of America.

In my separate opinion in the case of Certain Norwegian Loans I pointed to the special difficulties arising in applying the tests of good faith and reasonableness預ssuming that the application of any such tests were consistent with the terms of the Declaration of Acceptance葉o the elastic, indefinite and potentially all-comprehensive notion of matters essentially within the domestic jurisdiction of the State. It may comprise practically every act or omission within national territory. That comprehensiveness of the notion of matters of domestic jurisdiction renders impracticable the attempt to review the accuracy of the determination, made by a government, that a matter is essentially within domestic jurisdiction. There is no question here of ruling out altogether the abiding duty of every State to act in good faith. The decisive difficulty is that in view of the comprehensiveness of the notion of domestic jurisdiction幼oupled in the case of the United States with a uniform [p 114] insistence on the right of unilateral determination葉hat right assumes in effect the complexion of an absolute right not subject to review by the Court. This might not necessarily be the case if, for instance, a government were to make a reservation of matters arising in the course of hostilities as determined by that govern-ment and if subsequently it were to proceed to determine as such an event which arose in time of peace undisturbed by any armed contest, whether amounting to war or not.

The above considerations apply also to the question whether, as requested by Switzerland, the Court can join to the merits the preliminary objection of the Government of the United States of America based on the automatic reservation. To join the objection to the merits is to assert the competence of the Court to decide, by reference to the merits of the case, whether the matter of the sale and disposition of the assets of Interhandel is in law essentially within the domestic jurisdiction, or whether it can reasonably and in good faith be determined that it is so. However, it is exactly the power to make a decision of this kind that has been denied to the Court by virtue of the explicit reservation of the United States. If the Court has the power to declare that the determination made by the Government of the United States is wholly devoid of legal foundation so as not to constitute a reasonable exercise of the right reserved in the Declaration then, contrary to that Declaration, it is the Court and not the United States of America that makes the decisive determination in question. The joining of that objection to the merits would arrogate to the Court the power of a decision of that nature; it could have no other purpose. It cannot aim at enabling the Court to decide on the validity of the automatic reservation or of the Declaration as a whole. For these questions cannot conceivably be answered by reference to the merits of the dispute. In fact, the joining of the objection based on the automatic reservation to the merits implies the recognition in principle of the validity of that reservation as well as of the Declaration as a whole.

Any decision of the Court which arrogates to it a competence denied to it by the express terms of the jurisdictional instrument relied upon by the parties disturbs the continuity of the established jurisprudence of the Court. That jurisprudence has been based on the accepted principle of international law that the jurisdiction of the Court is based invariably on the consent of the parties, given in advance or in relation to a particular dispute. Admittedly, once that consent has been given the Court will not allow the obligation thus undertaken, or the effectiveness of that obligation, to be defeated by technicalities or evasion. Thus the Court has assumed jurisdiction by virtue of implied consent through so-called forum prorogatum; on occasions, in order to make its jurisdiction effective, it has declared itself competent to award compensation in cases in [p 115] which the parties conferred upon it jurisdiction to adjudicate upon the main issue of responsibility. But the Court has not assumed jurisdiction預nd cannot properly do so擁f jurisdiction is expressly denied to it. The Court cannot pronounce whether a State has reasonably determined that a matter is essentially within its domestic jurisdiction if that State has expressly, deliberately and as a conspicuous condition of its Declaration of Acceptance, reserved to itself預nd to itself alone葉he right to determine that question. This is so in particular in relation to a State whose attitude in that matter has for over half a century exhibited a pronounced degree of uniformity and consistency.

In fact, by virtue of its Judgment in the case of Certain Norwegian Loans the Court is precluded, unless it decides to depart from the principle therein acted upon, from reviewing the propriety or the accuracy or the good faith of the determination made by the United States of America. There the Court applied the French automatic reservation, as invoked by Norway, without entering into the question whether the subject of the dispute was in law actually within the domestic jurisdiction of Norway:

"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 1st, 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." (I.C.J. Reports 1957, p. 27.)

The position was made even clearer by the passage immediately following. The Court said: "In view of the foregoing it is not necessary for the Court to examine the first ground of the first Objection", namely, the objection of Norway that the matter was according to international law預nd not merely by virtue of her own determination容ssentially within her domestic jurisdiction.

The very fact that, by virtue of its Statute, the Court, in interpreting a particular jurisdictional instrument, is the ultimate judge of the question, imposes upon it a special and exacting responsi-bility. The circumstance that the Court has no power to pronounce on the manner and justification of the exercise of the automatic reservation adds substance to the view that, in a Declaration of Acceptance of that kind, there is absent the indispensable element of legal obligation. The Court being a legal tribunal cannot apply what, as a matter of legal effect, is essentially no more than a declaration of principle and of general willingness to submit disputes to the jurisdiction of the Court. [p 116]

Attention has been drawn in this connection to the protestations, the sincerity of which is open neither to examination nor doubt, that the faculty of determination would not be used capriciously but with due regard to the reputation and the traditions of the United States in the matter of international judicial and arbitral settlement. However, these very assurances emphasize the sense of the absence of a legal bond預s distinguished from political and moral considerations羊estricting the freedom of action of the United States in this respect. Moreover, while the nation which accepts the Optional Clause subject to the automatic reservation may vouch for its own good faith and moderation in invoking that reservation, it is not in a position to do so with regard to the other signatories of the Optional Clause who, by virtue of reciprocity, automatically acquire as against that State the right to invoke the automatic reservation. In the case of Certain Norwegian Loans, Norway謡ho had adhered to the Optional Clause without reservations幼onsidered herself fully entitled to invoke the automatic reservation against the State which had incorporated it in its Declaration of Acceptance. The Court held that she was entitled to do so. The legal consequences of the automatic reservation are not limited to the State which incorporates it in its Declaration of Acceptance; these consequences are automatically multiplied, as against the Declaring State, by the number of other Signatories of the Optional Clause. In fact, in so far as it is possible or permissible at all to refer to any legal sanction for what is an entirely legitimate act, this is the only legal sanction of the automatic reservation.

***
The preceding considerations also supply, substantially, an answer to the question whether although the Court cannot act upon the automatic reservation葉hat is to say, although that reservation is invalid葉he Declaration of Acceptance may, apart from that reservation, be treated as otherwise subsistent and given effect by the Court. In the case concerning Certain Norwegian Loans I gave reasons in my Separate Opinion謡hich must be read as forming part of the present Opinion謡hy that question must be answered in the negative. These reasons included the general principle of law governing the subject, namely, the principle that a condition which, having regard to the intention of the party making it, is essential to and goes to the roots of the main obligation, cannot be separated from it. This is not a mere refinement of private law, or of any municipal system thereof, but預s all general principles of law預 maxim based on common sense and equity. A party cannot be held to be bound by an obligation divested of [p 117] a condition without which that obligation would never have been undertaken.


These considerations of fair and reasonable interpretation must be applied to a Declaration in which a State accepts the obligations of the Optional Clause subject to the automatic reservation. If that reservation is an essential condition of the Acceptance in the sense that without it the declaring State would have been wholly unwilling to undertake the principal obligation, then it is not open to the Court to disregard that reservation and at the same time to hold the accepting State bound by the Declaration. In the case of the United States of America that aspect of the situation seems so compelling as to be outside the realm of controversy. As has been shown above in connection with the asserted right of the Government of the United States of America to determine in each case the existence of the obligation to resort to judicial or arbitral settlement, that safeguard has been of the essence of every general commitment which the United States of America has been willing to undertake in that sphere. Having regard to these reasons預nd to the reasons which I set forth in greater detail in the Separate Opinion in the case of Certain Norwegian Loans (I.C.J. Reports 1957, pp. 55-59)悠 come to the conclusion that there is not before the Court a valid and effective Declaration of Acceptance by reference to which the Court can assume jurisdiction in the present case with regard to any aspect of the dispute.

Neither is there any legal possibility of postponing the decision of the Court on that fundamental jurisdictional issue. Unlike in the case of Certain Norwegian Loans, that question is now directly before the Court and, as a matter of ordinary administration of justice, it must be decided before the Court gives a judgment which implies the possibility of future proceedings on the merits. The automatic reservation has been invoked; although stated to have become "moot", it has been formally maintained by the defendant Government. It has been challenged by the applicant Government. I have already given reasons why the submission that the automatic reservation has become "moot" in the present case cannot be accepted as a matter either of fact or legal relevance. In the case of Certain Norwegian Loans it was possible to maintain葉hough I was unable to subscribe to that view葉hat as neither party challenged the validity either of the automatic reservation or of the Declaration as such the Court was not in a position to raise the issue proprio motu. In the present case the question of the validity of the automatic reservation and of the manner of its application預nd, with it, inevitably the question of the validity of the Declaration of Acceptance as a whole預re squarely before the Court. There may be reasons militating in favour of postponing a decision holding that that [p118] particular Declaration of Acceptance預nd, by necessary implication, similar Declarations of Acceptance預re ineffective in law whether invoked by or against the declaring State. However, these are not reasons of a legal nature.

There is a further additional factor of decisive importance which, in my view, renders it impossible to avoid the principal jurisdictional issue as presented by the Parties. In the case of Certain Norwegian Loans it was the applicant State which had made its Declaration of Acceptance subject to the automatic reservation; that State was not in a position to raise the issue of the validity of that reservation and of its own Acceptance. The defendant State, for reasons which need not be examined here, acted on the view that the success of its case would be best assured by invoking, through the mechanical operation of the principle of reciprocity, the automatic reservation incorporated in the Acceptance of the applicant State. The position is wholly different in the case now before the Court. The defendant State has formally availed itself, in respect of the crucial aspect of the dispute, of the automatic reservation contained in its Declaration of Acceptance. Its right to do so effectively was challenged by the applicant Government on the alternative grounds of the invalidity of the automatic reservation and the alleged arbitrary manner in which it had been invoked. Whatever may be the basis of the challenge to the automatic reservation as such or the propriety of the appeal to it in the case before the Court, it is clear that the issue has been raised before the Court and that the Court cannot discharge its duty without examining and answering it.

It is not permissible to attach importance to the circumstance that a decision of the Court holding the Declaration of Acceptance made by the United States of America to be ineffective and invalid would, in this particular case, enure to the benefit of the very State which made that kind of Declaration. This is not a case of a State benefiting from its own wrong. As already stated, there is no element of illegality involved in a Declaration of Acceptance which is inconsistent with the Statute of the Court. No rule of international law forbids governments to perform acts and make declarations which are incapable of producing legal effects. The Court cannot be concerned with the question of the propriety or effectiveness, from any point of view other than the legal one, of a Declaration which purports to accept the compulsory jurisdiction of the Court but which, in law, fails to do it for the reason that it leaves it to the State concerned to determine whether a particular dispute is subject to the jurisdiction of the Court.

Neither is there any sanction involved in treating such a Declaration of Acceptance as legally non-existent. For it operates equally [p 119] in relation to the declarant State and to its actual or potential opponents. There is no sanction involved in giving full effect to the condition on which, and on which alone, a State has accepted the jurisdiction of the Court. The United States cannot avail itself of its様egally ineffective優eclaration of Acceptance in order to bring an action before the Court against another State; but for the very reason that the Declaration is legally ineffective no State can invoke it against the United States. Such indirect sanction as there is預nd it is one with which the Court cannot be concerned擁s of a different nature. While it unfailingly protects the declarant Government from the jurisdiction of the Court, it deprives it, with equal certainty, of the benefits of that jurisdiction in cases in which the declarant Government is the plaintiff.

***
For the reasons which I have stated and which compel me to dissent from the Judgment of the Court, I have come to the conclusion that, having regard to the invalidity of the automatic reservation and, consequently, of the Declaration of Acceptance as a whole, the scope of a jurisdictional judgment of the Court in the present case must be reduced to a minimum. The Court is not in a position to act negatively by declining jurisdiction on account of Objections i and 2 (the Objections ratione temporis) and Objection 4 (b) (relating to matters alleged, but not determined, by the United States of America to be within its domestic jurisdiction). For any such negative decision presupposes the existence of a valid Declaration of Acceptance in relation to which jurisdictional objections can be examined, and answered. For the same reason the Court cannot declare the Application to be inadmissible on account of non-exhaustion of local remedies. Moreover, any such declaration of inadmissibility implies admissibility after local remedies have been exhausted預 contingency which cannot properly be contemplated on the basis of the existing Declaration of Acceptance of the United States of America. The only course which, in my opinion, is properly open to the Court is to hold that in view of the invalidity of the automatic reservation and the consequent invalidity of the Declaration of Acceptance there is not before it an instrument by reference to which it can assume jurisdiction in relation to any aspect of the dispute. These consequences may seem to be startling. However, they appear to be so only if we disregard the nature and the contents of the instrument by reference to which the jurisdic-tion of the Court is here being invoked.

As the Court has decided, at least provisionally, to proceed on the basis that the Declaration of Acceptance of the United States is a valid legal instrument cognizable by the Court, I considered it my duty to participate in the formation of the Court's Judgment. [p 120]

I have concurred in it with regard to the first and second Objections ratione temporis. On the other hand, I would have been in favour of joining to the merits the third Objection, relating to the exhaustion of local remedies, in so far as it bears upon the principal claim for the restitution of the assets of Interhandel. In this respect I concur generally in the reasons expressed in the dissenting opinions of President Klaestad and Judge Armand-Ugon.

I have also been unable to associate myself with the decision holding that the subsidiary claim of the Government of Switzerland relating to the obligation of the United States to submit the dispute to arbitration or conciliation is inadmissible on account of the non-exhaustion of local remedies by Interhandel. I cannot accept the contention of the United States that the demand for restitution which forms the subject-matter of the Swiss Application and which, in substance, is now being litigated before the Courts of the United States and the demand by the Swiss Government for arbitration and conciliation are essentially one dispute. I consider that with regard to that aspect of the claim of Switzerland there apply, with some cogency, the principles which are now firmly rooted in the jurisprudence of the Court and which were clearly expressed in the Judgment of the Permanent Court in the Chorzów Factory case (Series A, No. 17, p. 28). The Court said there:

"...The rules of law governing the reparation are the rules of international law in force between the two States concerned, and not the law governing relations between the State which has committed a wrongful act and the individual who has suffered damage. Rights or interests of an individual the violation of which rights causes damage are always in a different plane to rights belonging to a State, which rights may also be infringed by the same act. The damage suffered by an individual is never therefore identical in kind with that which will be suffered by a State; it can only afford a convenient scale for the calculation of the reparation due to the State."

There must exist weighty reasons for any departure from that principle so clearly formulated. That principle is not a mere doctrinal refinement. An international award may give to a State satisfaction different from restitution of the property seized; a State may have a legal interest, independent of any material compensation and restitution, in vindicating the remedy of arbi-tration provided for in the Treaty. It may also have a legal interest in having its right to arbitral proceedings determined as soon as possible without being exposed, after the local remedies have been exhausted, to a further considerable delay in establishing that right by a decision of this Court.

Moreover, the Judgments of the Court in the Ambatielos case (I.C.J. Reports 1952, p. 44, and 1953, p. 18) were based on the proposition that, in deciding whether the Court is competent to [p 121] determine whether a State is under an obligation to submit a dispute to arbitration, this Court will not anticipate the decision of that tribunal on any question dividing the Parties. Thus, the arbitration tribunal may have views of its own on the extent of the obligation, in the present case, to comply with the rule of exhaustion of local remedies. This being so, it would seem to follow from the Judgments in the Ambatielos case and from general considerations that that question must be left to the decision of the arbitration tribunal and that the Court ought not to decline to consider the request of Switzerland on the subject on the ground that local remedies have not been exhausted.

Finally, in so far as the procedure of conciliation is concerned, it must not be taken for granted that the legal requirement of exhaustion of local remedies would be fully or invariably applied by a conciliation commission which is not bound to proceed exclusively on the basis of law.

***

I deem it necessary to add some observations with regard to Preliminary Objection 4(b) in which the Government of the United States challenges the jurisdiction of the Court on the ground that the issues relating to the seizure and retention of the assets of Interhandel "are, according to international law, matters within the domestic jurisdiction of the United States" (as distinguished from the question of the sale and disposition of the assets of Interhandel預 question which the Government of the United States has determined, in reliance upon the automatic reservation, to be within the domestic jurisdiction of the United States). The Court has rejected Preliminary Objection 4 (b) by reference to the principle enunciated by the Permanent Court of International Justice in the Advisory Opinion on Nationality Decrees in Tunis and Morocco (P.C.I.J., Series B, No. 4). I concur in that result although it is clear that the test adopted by reference to that Opinion reduces to the bare minimum the practical effect envisaged by the reservation in question. For it is not often that a case may arise in which the grounds of international law relied upon by the applicant State are not, upon provisional examination, relevant to the issue.

However, the main interest of that preliminary objection lies in the fact that there is in the Declaration of Acceptance of the United States no reservation which covers that objection. While concentrating on the reservation of matters of domestic jurisdiction as determined by itself, the United States did not in fact append the more usual reservation of matters which according to international law are essentially within its domestic jurisdiction. Now a State is not entitled to advance a preliminary objection against [p 122] the jurisdiction of the Court unless there is a limitation to that effect either in the Declaration of Acceptance or in the Statute of the Court. The Court, in examining and rejecting that objection on its merits, has held, by implication, that a reservation of that kind is inherent in every Declaration of Acceptance and that there is no need to spell it out expressly. I am in agreement with that conclusion so indirectly formulated. As stated, and that view is confirmed by the rejection by the Court of that objection in conformity with the generous and elastic test laid down in the Opinion on the Tunis and Morocco Nationality Decrees, the advantage accruing to the defendant State by a recognition of an implied existence of that reservation is distinctly limited. From whatever angle the question is approached, it matters little whether a reservation of this kind is incorporated in a Declaration of Acceptance. States are in any case fully protected from any interference whatsoever by the Court in matters which are according to international law essentially within their jurisdiction. They are so protected not by virtue of any reservation but in consequence of the fact that if a matter is exclusively within the domestic jurisdiction of a State, not circumscribed by any obligation stemming from a source of international law as formulated in Article 38 of its Statute, the Court must inevitably reject the claim as being without foundation in international law.

As the United States has made no reservation of matters which according to international law are within its domestic jurisdiction, Preliminary Objection 4 (b) must properly be regarded as a defence on the merits and normally溶amely, if there existed a valid Declaration of Acceptance謡ould have to be examined, during the proceedings on the merits, as being a substantive plea in the sense that there is no rule of international law limiting the freedom of action of the United States on the subject. That defence, if justified, is of a potency transcending that of any reservation. In view of the difficulties and uncertainties to which the reservation of matters of domestic jurisdiction has given rise in the past, I consider it useful to draw attention to some considerations relevant to the fact that the Court has treated the non-existing reservation of matters which according to international law are within domestic jurisdiction as if it were part of the American Declaration of Acceptance.

(Signed) Hersch Lauterpacht.

[p 123]
DISSENTING OPINION OF JUDGE SPIROPOULOS
[Translation ]

I regret that, for the reasons given below, I am unable to concur in the view of the Court in regard to the Third Preliminary Objection of the United States of America.

I. The effect of the objection concerning the non-exhaustion of local remedies on the Swiss principal submission (strictly speaking this should be described as an "objection to admissibility") can be determined only by reference to the bases of the Swiss action before the Court. Now that action is based on an alleged breach of the Washington Accord and of the general rules of international law.

The Swiss Government contends that, under the Washington Accord, the United States of America is obliged to "unblock" all Swiss assets in the United States, regardless of the category to which they belong. This construction is contested by the Government of the United States of America which asserts that the Washington Accord does not relate, and could not relate, to any vested assets, even if found to be Swiss, and that such assets consequently remain outside the scope of the Washington Accord and are governed by the Trading with the Enemy Act.

What is the legal position in this case? According to Article IV of the Washington Accord, the Government of the United States of America has undertaken the obligation to unblock "Swiss assets" in the United States of America. It has also undertaken to "determine the necessary procedure without delay".

The question arises whether the obligation incumbent upon the United States of America refers also to any assets that may be found to be Swiss that are vested under the Trading with the Enemy Act. If so, has the necessary procedure for the unblocking of vested Swiss assets been determined by the United States of America? Is it possible, in accordance with Article IV of the Washington Accord, if need be, to consider the Trading with the Enemy Act as the appropriate unblocking procedure for the freeing of the shares of GAF? (It is known that Interhandel is in the process of following the procedure prescribed by the Trading with the Enemy Act before the American courts with a view to the freeing of the shares of GAF.)

How is it possible to decide whether the principle of the exhaustion of local remedies is applicable in this case, without knowing (a) whether the United States of America is, on the basis of the Washington Accord, under an obligation to free the shares of GAF [p 124] (as being Swiss assets); and (b) whether the freeing procedure of the Trading with the Enemy Act is the appropriate "unblocking" procedure from the standpoint of the Washington Accord?


2. According to another basic argument of the Swiss Government, the obligation incumbent on the United States of America to unblock the vested assets of Interhandel follows also from the decision given on January 5th, 1948, by the Swiss Authority of Review, which is based on the Washington Accord and which is considered by the Swiss Government to be an international judicial decision. Since the Interhandel company was recognized by that decision as being "Swiss", all the assets of that company, including therefore the assets in America, should, according to the Swiss Government, be considered as being "Swiss" by all the States parties to the Washington Accord.

According to the Swiss Government, the non-execution of an international decision by the United States of America causes an injury directly to the Swiss State and, according to that Government, there is here a direct breach of international law which immediately infringes the rights of Switzerland as plaintiff.

3. To answer these questions, it is essential to consider the significance of various articles of the Washington Accord. But this cannot be done without considering the merits of the dispute. It is only by considering the merits of the dispute, however, that the Court will be in a position to adjudicate on the question whether the exhaustion of the remedies at present available to Interhandel is or is not, under the Washington Accord, a necessary condition for the examination by the Court of the merits of the dispute between the United States of America and Switzerland.

4. What has been said above relates to the Swiss principal submission. As, in my opinion, the Third Preliminary Objection of the United States of America should not be upheld, I have not to express an opinion concerning the effect of this objection on the Swiss alternative submission. It is only if I had expressed an opinion in favour of upholding the American Third Objection that the problem of the effect of that objection on the Swiss alternative submission would have arisen for me預s, indeed, it has arisen for the Court. Nevertheless, in order to be consistent with my vote as regards the effect of the Third Objection on the Swiss principal submission, I voted in favour of joining the American Third Preliminary Objection to the merits.

5. As I come to the conclusion that the Third Preliminary Objection should be joined to the merits, I should logically give [p 125] my opinion also as to whether Preliminary Objection N0.4(0) is well founded in order to consider the effect of that objection in relation to the Swiss submissions. However, as the Court has not adjudicated on that question, any opinion I might express would be only of a purely theoretical character and would be extraneous to the questions on which the votes of the Court were given. I therefore refrain from expressing any opinion on the question whether Objection 4 (a) should be upheld, joined to the merits or rejected.

(Signed) J. Spiropoulos.

 
     

 

 

 

 

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