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[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�the 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�one 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�and 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�the [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�the enemy or
non-enemy status of Interhandel and the bona fides of its pretensions -
-stands out in both phases of the dual controversy�that 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 �Interhandel�Eshould 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 �Interhandel�Eis 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�the 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�the character of the Swiss company�but 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�local as
well as international�does 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�assuring in this way the respect due to the
sovereign jurisdiction of States�by 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�civil 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�as
far as I can understand it�was 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 �Eold 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�an 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�not some [p 58] other body�determined 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�Equot;disputes relating to matters which
are essentially within the national jurisdiction as understood by the
Government of the French Republic" �construed 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"�Ethat 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�whatever it was�that 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�as distinct from the forms
in which relief is claimed, which have I think too greatly controlled the
decision of the Court�is 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�taking 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�notwithstanding all the other issues within it�is
and has always been whether Interhandel'�the nominal holder of the shares in
the United States of America�was [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�apart from the Swiss arguments based on Article III of the Annex
to the Washington Accord (res judicata)�have 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"�as,'of course, it had already done�and 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�whatever terms are used to diminish the
significance of the official Swiss attitude after the Accord and before 26th
August 1946�it 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�our opinion is that
Interhandel is Swiss�that is our contention�that 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�Letter 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�Equot;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�Ethe official head of that
Department�had 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�the 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�it is true�with
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�Ethe existence of one, and only one, interest�should 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?
---------------------------------------------------------------------------------------------------------------------
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-
---------------------------------------------------------------------------------------------------------------------
[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
---------------------------------------------------------------------------------------------------------------------
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
---------------------------------------------------------------------------------------------------------------------
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."
---------------------------------------------------------------------------------------------------------------------
[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)�which 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�the Court has maintained�merely 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�Esubject
to one exception�applies 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�namely, 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�has 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"�i.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�and as a reason of its
opposition to�the 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�for reasons not connected with that
reservation�to 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�with 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�an 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�though not according
to the determination of the United States�is 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�and
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�it 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)�the objection which invokes
the automatic reservation�Eof 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�that is to
say, if the automatic reservation is valid�Ean 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�as 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�assuming that the sale had not been accomplished With utmost
expedition prior to any request for interim measures�Eseeing 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�as well as, in
that connection, that of the Declaration of Acceptance as a whole�must 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�as it were�as 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�unhampered by any other
objections to its jurisdiction. There would otherwise be no point in
requiring the injured party to exhaust local remedies�only, 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�and
rejected�before 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�it
implies �a previous decision as to the validity of the automatic reservation
and of the manner in which it has been invoked.[p 101]
***
Moreover�and this is the crucial aspect of the jurisdictional issue before
the Court�the 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�or permissible for it�to 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�even 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�a 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�and, indeed, obvious�safeguard 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�that it is by its Statute precluded from acting upon�Ethe "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�subject 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�such 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�approved by a very substantial majority of fifty-one votes to
twelve�was 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�in addition to another wide reservation in the American Declaration
of Acceptance relating to the interpretation of multilateral treaties�the
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�commonly known as the Taft-Knox treaties�providing 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"�requiring the consent of two-thirds of the
Senate�for "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�nearly thirty of them, including the Treaty
with Switzerland of February 16th, 1931�which, 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�a 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�or anticipate�these
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�that it has expressly denied to
it�the 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�by
a leaning�in 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�all 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�assuming that the application of any such tests were
consistent with the terms of the Declaration of Acceptance�to 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�coupled in the case
of the United States with a uniform [p 114] insistence on the right of
unilateral determination�that 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�and
cannot properly do so�if 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�and to itself alone�the 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�and not merely by
virtue of her own determination�essentially 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�as
distinguished from political and moral considerations�restricting 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�who
had adhered to the Optional Clause without reservations�considered 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�that is to say, although that reservation is invalid�the
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�which must be
read as forming part of the present Opinion�why 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�as all general principles of law�a 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�and 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)�I 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�though I was unable to
subscribe to that view�that 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�and, with it, inevitably the question of the validity of the
Declaration of Acceptance as a whole�are squarely before the Court. There
may be reasons militating in favour of postponing a decision holding that
that [p118] particular Declaration of Acceptance�and, by necessary
implication, similar Declarations of Acceptance�are 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�legally
ineffective�Declaration 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�and it is one with which the Court cannot be
concerned�is 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�a 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�a 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�namely, if there existed a valid Declaration of Acceptance�would
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�as, 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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