Before the Council of the International Civil

Aviation Organization (ICAO) Under the ICAO

Rules for the Settlement of Differences (Doc. 7782/2)

**RESPONSE OF**

**THE UNITED STATES OF AMERICA**

**TO THE PRELIMINARY OBJECTIONS PRESENTED BY**

**THE MEMBER STATES OF THE EUROPEAN UNION**

In Re the Application and Memorial of the United States

of America Relating to the Disagreement Arising under the

Convention on International Civil Aviation

done at Chicago on December 7, 1944

Montreal

September 15, 2000

David S. Newman

Agent of the United States of America

United States Department of State

Table of Contents

> **I. Summary** .... 1
>
> **II. Argument** .... 2
>
> 1\. the negotiations 2
>
> 1.1. The history of the negotiations 2
>
> 1.2. The negotiations addressed the details of the U.S claims 6
>
> 1.3. The Respondents applied the wrong standard 7
>
> 1.4. Negotiations need not cover specific legal claims 8
>
> 2\. the local remedies rule 9
>
> 2.1. The Respondents' legal authority is inapposite 10
>
> 2.2. The Respondents fail to distinguish claims for
>
> direct injury to a State 12
>
> 2.3. The Respondents fail to prove the availability of effective
> remedies 15
>
> 3\. the requested relief 17
>
> 3.1. The Respondents' argument is unsubstantiated 18
>
> 3.2. The Respondents would deprive the
>
> Council of powers essential to perform its duties\... 19
>
> 3.3. The Respondents' position is
>
> inconsistent with the Convention and the Rules 20
>
> **III. Conclusion** 22
>
> list of exhibits 24

The United States of America (hereinafter \"the Applicant\") hereby
responds to the "Preliminary Objections Presented by the Member States
of the European Union" filed on behalf of Austria, Belgium, Denmark,
Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the
Netherlands, Portugal, Spain, Sweden, and the United Kingdom
(hereinafter \"the Respondents\") with respect to the Application and
Memorial of the United States of America (hereinafter \"the U.S.
Memorial\"), filed on March 14, 2000, relating to the Disagreement
Arising under the Convention on International Civil Aviation Done at
Chicago on December 7, 1944 (hereinafter \"the Convention\").

**I. Summary**

On March 14, 2000, after extensive negotiations among the parties had
failed to resolve the dispute, the United States filed its Application
and Memorial asserting that the Respondents, in adopting and undertaking
to apply in their territories European Council Regulation (EC) No.
925/1999 (the \"Regulation\"), violated their international obligations
under the Chicago Convention and its Annex 16. The U.S. Memorial
requested that the Council resolve the questions of interpretation and
application of the Chicago Convention and its Annexes raised by the
Respondents' actions and grant the Applicant appropriate relief.

By pleading dated July 18, 2000, the Respondents raised preliminary
objections (hereinafter "the Preliminary Objections") under Article 5 of
the Rules for the Settlement of Differences, ICAO Doc. No. 7782/2
(hereinafter "the Rules") challenging the jurisdiction of the Council to
hear the U.S. claims. The Respondents based their objections on three
grounds.

First, Respondents argued that the Applicant failed to meet the
jurisdictional requirement for negotiations prior to initiating dispute
resolution under Article 84. With respect to this first issue, the
Respondents' objection fails, first, because it is based on an erroneous
set of facts \-- Respondents' selective history of contacts with the
United States (Annex 1 to the Preliminary Objections) simply ignores
relevant communications between the Parties that disprove Respondents'
allegations. In addition, Respondents rely on the wrong legal standard
for pre-filing negotiations under the Convention and the Rules.

Second, Respondents challenged Council jurisdiction on grounds that the
U.S. claims were not first litigated in local courts in Europe. This
second argument also must fail, because the local remedies rule of
international law, on which the Respondents rely, does not

apply to claims, such as those in the present proceeding, by which a
State seeks enforcement of its own rights under an international
agreement.

Finally, the Respondents argued that the Council lacks authority, even
after finding a party has violated the Convention and its Annexes, to
create new obligations requiring the party to cease its unlawful conduct
and comply with its legal obligations. This position is entirely
unsubstantiated, it would deny the Council of powers essential to
perform its duties, and it is inconsistent with the Convention and the
Rules.

For all of these reasons, the Applicant requests that the Preliminary
Objections be denied and that the Council order the Respondents to file
their counter-memorials.

**II. Argument**

1\. THE NEGOTIATIONS

> The Respondents argue first that the U.S. Application and Memorial
> should be dismissed for failure of the United States to attempt to
> resolve this dispute by proper negotiations. Preliminary Objections at
> ¶¶ 9 *et seq*. To support this argument, the Respondents assert that
> "none of the questions of interpretation and application of the
> Convention raised by the US in its Memorial have been discussed."
> *Id*. at ¶ 9. The Respondents are wrong as a matter of fact, but they
> also misstate the applicable legal standard for pre-filing
> negotiations.

> **1.1 The history of the negotiations.**

The Respondents' history of negotiations with the United States, as set
forth in Annex 1 to the Preliminary Objections, is incomplete and
inaccurate in material respects. In addition, substantial portions,
including details of the Respondents' unacceptable settlement proposals,
are irrelevant to the Council's decision. The history of diplomatic
negotiations relating to this dispute is over three years long and
includes innumerable written and oral communications. Because of both
the frequency of these communications and the different levels of
formality at which they occurred, it would be virtually impossible to
set out a complete history. Consequently, the following describes only a
limited number of communications, which are more than sufficient to
rebut the Respondents' allegations. The communications establish not
only that negotiations to settle the dispute had taken place between the
parties and that these negotiations were not successful (the applicable
legal standard), but also that the dispute could not be settled by
negotiation.

Contrary to the Respondents' allegations, the United States first raised
its concerns about proposed restrictions on hushkitted aircraft through
demarches delivered to each of the Respondents in May 1997, just prior
to a May 14-15, 1997, meeting of the European Civil Aviation Conference
(ECAC) Directors-General for Civil Aviation. At that time, the
regulatory measure was under consideration in ECAC. In its
communications with the Respondents, the United States emphasized the
inconsistency of the measure with international noise standards as
established in ICAO. Attachment 1 hereto is a cover letter and an
example of a demarche delivered to the Respondents in May 1997, in
accordance with Department of State instructions, by U.S. embassy
officials. The Respondents disregarded the concerns raised by the United
States in this and subsequent communications and ultimately proceeded to
adopt the Regulation.

In the course of negotiations, beginning in 1997 and carrying into 2000,
the United States adequately advised Respondents of the scope of the
dispute, providing detailed allegations of the Regulation's
inconsistency with the Convention and its Annex 16. For example, a
letter dated February 19, 1999, from U.S. Department of Transportation
Secretary Slater to the Honorable Neil Kinnock, Member of the European
Commission (Attachment 2 hereto), detailed U.S. concerns with the
Regulation, including those arising under the Convention and Annex 16.
After explaining that the regulation could result in over \$1 billion of
economic harm, including lost aviation product sales, and disrupt
trans-Atlantic trade in aircraft, aircraft engines, and air
transportation services, the letter noted specifically, with respect to
the proposed Regulation, that:

> > "it deviates from internationally-recognized aircraft noise
> > standards which we collectively established through the
> > International Civil Aviation Organization (ICAO);"
>
> > "the regulation is based on a design, not a performance
> > requirement;"
>
> > "the regulation's provisions concerning transfers, leases and
> > changes of registration prefer aircraft registered in EU member
> > states over identical aircraft registered in third countries
> > (including the United States);" and
>
> > "\'hushkitted\' and \'re-engined\' U.S. aircraft fully comply with
> > the most recent and most stringent ICAO noise standards (Chapter
> > 3)."

Similar letters from Secretary Slater to officials of each of the
Respondents also were delivered in February 1999, in accordance with
Department of State instructions. These letters also detailed the U.S.
concerns relative to the Regulation. Copies of the letters delivered by
U.S. embassy officials in Berlin and Madrid are Attachment 3 hereto.

> It is clear that the U.S. communications were considered by the
> Respondents, as they countered the February 19, 1999, letter from
> Secretary Slater with a response dated February 26, 1999, from Mr.
> Neil Kinnock, Member of the European Commission. In that letter,
> Respondents purported to answer the U.S. arguments raised in the
> February 19 letter by stating, among other things, that "\[t\]he
> proposed Regulation does not introduce a new noise standard," and that
> "\[t\]he proposed measure is not discriminatory." The letter further
> attempts to justify the design standards and specifically refers to
> the detailed technical meetings between the two sides and the U.S.
> request for high-level meetings. *See* Attachment 4 hereto.
>
> The United States again detailed its concerns with the Regulation in a
> demarche delivered in each of Respondents' capitals, in accordance
> with instructions from the Department of State dated August 23, 1999.
> That demarche included the following points:
>
> B. The United States opposes the Regulation because it fails to
> recognize aircraft certificated by the FAA that are compliant with
> noise standards established in the International Civil Aviation
> Organization (ICAO), to which EU Member States agreed. The Regulation
> threatens the future of uniform, global noise standards in ICAO. It is
> based on an arbitrary design standard, rather than a performance
> standard. It imposes discriminatory restrictions on U.S.-manufactured
> hushkits, certain new engines, and aircraft. It has already caused
> economic harm to United States interests.
>
> C. These effects are especially disturbing because the Regulation will
> have little or no effect in meeting the Regulation's stated objectives
> (i.e., the reduction of aircraft engine noise).
>
> *See* Attachment 5 hereto (demarche delivered in response to
> Department of State instructions by U.S. embassy officials in
> Brussels).

Respondents confirmed delivery of the above-referenced demarche in a
letter dated September 3, 1999, from Mr. Neil Kinnock, Member of the
European Commission, to Secretary Slater stating, "\[a\]s you would
expect, I have been informed of the demarche taken by the US
administration in the 15 capitals of the EU Member States on the hushkit
regulation" and indicating later in the response the view that such
demarches setting out the U.S. position were counterproductive.[^1] The
Kinnock letter is Attachment 6 hereto.

Throughout the entire course of negotiations and beyond, the Respondents
have refused to meet the consistent U.S. demand that the Regulation
unconditionally be repealed, withdrawn, or indefinitely suspended. The
Respondents offered only a limited suspension of the Regulation, and
have imposed conditions for settlement that were unacceptable to the
United States. These respective positions are reflected in numerous
written communications, including the Respondents' Exhibit EC-7 to the
Preliminary Objections, a letter dated February 3, 2000, from Madame de
Palacio, Vice President of the European Commission, to U.S. Secretary of
Transportation Rodney Slater and U.S. Secretary of Commerce William
Daley. That letter clearly reflects the common view of the parties that
it had not been possible to resolve the dispute, despite extensive
negotiations. Furthermore, it reiterates the Respondents' rejection of
the U.S. demand for withdrawal or indefinite suspension of the
Regulation and it lists Respondents' demands for any settlement, which
demands the United States believed would undermine the efforts of CAEP.
Days after receiving that letter, Secretary Slater sent a letter, dated
February 7, 2000, observing that no possible resolution of the dispute
was in sight and, in light of Respondents' position, the United States
was compelled to pursue dispute settlement under Article 84. *See*
Secretary Slater's letter at Attachment 7 hereto.

The Respondents' allegation, in Annex 1 to the Preliminary Objections,
that the United States agreed *ad referendum* on February 23, 2000, to a
"Joint Declaration" is irrelevant, but also is unsubstantiated. The
draft document referenced by the Respondents generally represents
nothing more than Respondents' proposal to the United States. The
unbridgeable differences between the Parties at the time the United
States filed its Application and Memorial in the present case also are
reflected in a motion for resolution of March 14, 2000,[^2] which was
overwhelmingly approved by the European Parliament on March 30, 2000,
stating:

> The European Parliament: ....
>
> 4\. Considers that demands made by the US for an indefinite suspension
> of the EU regulation are totally unacceptable and will entail an
> unsustainable situation in the EU exposing people to noise levels
> which endanger their health and quality of life; ....
>
> 7\. Will only consider a limited review of Council Regulation (EC) No.
> 925/1999 of 29 April 1999 concerning the provisions of aeroplanes
> registered in third countries before these provisions enter into force
> in April 2002, on the condition that the US administration makes a
> written, binding commitment, including a timetable not exceeding the
> end of 2001, to attain world-wide standards similar to or more
> stringent than those laid down in the said regulation.
>
> *See* Attachment 8 hereto (extract of resolution adopted by the
> European Parliament). The resolution, which refers to the U.S.
> settlement position as being "totally unacceptable," presents a clear
> message that further negotiations would be futile.

> Despite good faith efforts to negotiate a settlement of this dispute,
> it was clear, in light of the entrenched and irreconcilable positions
> of the Parties, that a negotiated resolution of the dispute had been
> attempted, but had not succeeded, and further, that settlement was not
> possible as of the time the Applicant initiated this proceeding. The
> United States filed its Application and Memorial on March 14, 2000,
> after nearly three years of diplomatic efforts had failed to resolve
> the differences between the Parties and each side had related to the
> other its respective concerns and its demands for settlement.

> **1.2 The negotiations addressed the details of the U.S. claims.**

> As demonstrated above, the United States identified during pre-filing
> negotiations with the Respondents the various concerns raised by the
> Regulation, including the violations of the Convention and its Annex
> 16 that form the basis of the U.S. claim. In these communications, the
> United States: complains that the Regulation deviates from
> international standards, including its improper reliance on a design
> standard; challenges the Regulation for its discrimination based on
> the state of registry of aircraft; and declares that the Regulation
> has the effect of rejecting noise certifications granted to U.S.
> registered aircraft. Those communications are a small sampling of the
> U.S. pleas to the Respondents to comply with their international
> obligations and the Respondents' refusal to reverse their unlawful
> action. It is thus clear that the Respondents were made abundantly
> aware of the relevant bases for the U.S. concerns. It is equally clear
> that the factual allegations forming the essential underpinning of the
> Respondents' first grounds for challenging the Council's jurisdiction
> in this matter are incorrect and without substance.

> **1.3 The Respondents applied the wrong standard.**

> In addition to making inaccurate allegations of fact to support their
> claim of inadequate negotiations, the Respondents also apply the wrong
> legal standard for negotiations, to the extent they assert that a
> State may not [initiate]{.underline} a proceeding under Article 84
> unless the dispute "cannot be settled by negotiation." This standard,
> found in Article 84, is the threshold for the Council
> [deciding]{.underline} a dispute.[^3] In contrast, the standard for
> initiating an Article 84 proceeding is far lower. As set out in
> Article 2 of the Rules, all that is required to file an application
> and memorial under Article 84 is "A statement that negotiations to
> settle the disagreement had taken place between the parties but were
> not successful."[^4] Thus, the Convention and the Rules for the
> Settlement of Disputes address two different junctures in the dispute
> resolution process with two different standards for negotiations: (1)
> to initiate an Article 84 proceeding, an applicant may be asked to
> prove that negotiations were held, but were unsuccessful; and (2)
> before the Council will decide the dispute, the applicant may be asked
> to prove that the dispute could not be resolved by negotiations.[^5]
> The negotiations that took place in advance of the U.S. filing would
> satisfy either standard.

> The precedent relied upon by the Respondents to define the obligation
> to negotiate is inapposite, because it corresponds with the standard
> for the Council deciding a dispute, rather than the standard in
> Article 2 of the Rules for a party initiating an Article 84
> proceeding. Specifically, in the *North Sea Continental Shelf* case,
> quoted in the Preliminary Objections at ¶ 13, the International Court
> of Justice's judgment interpreted the disputants' obligation to
> negotiate based on a treaty provision requiring the disputants to
> reach an agreement, rather than just requiring them to hold
> negotiations.[^6]

> Respondents' own exhibits establish that negotiations were extensive
> and cooperative, but unsuccessful. *See* Respondents' attachments EC-7
> and EC-8 to the Preliminary Objections. Those attachments, as well as
> the February 7, 2000 letter of Secretary Slater (Attachment 7 hereto)
> declaring that the Respondents' refusal to consider indefinite
> suspension of the Regulation compelled the United States to pursue
> dispute-resolution procedures in ICAO under Article 84, establish that
> negotiations were held, but were unsuccessful, and that the dispute
> could not be resolved thereby. Therefore, whether the Council were to
> apply the standard of Article 84 or the standard in Article 2 of the
> Rules, it should determine that the Applicant met the prerequisite for
> pre-filing negotiations and reject the Respondents' argument.

1.4 Negotiations need not cover specific legal claims.

The Respondents assert that "negotiations should ... relate to the legal
issues dividing the parties\... and should lead to properly articulated
legal claims." Preliminary Objections at ¶ 12. To the contrary, as
stated by the Permanent Court of International Justice:

\[n\]egotiations do not of necessity always presuppose a more or less
lengthy series of notes and despatches; it may suffice that a discussion
should have been commenced, and this discussion may have been very
short; this will be the case if a deadlock is reached, or if finally a
point is reached at which one of the Parties definitely declares himself
unable, or

refuses, to give way, and there can therefore be no doubt that the
dispute cannot be settled by diplomatic negotiation.

*The Mavrommatis Palestine Concessions*, 1924 P.C.I.J. Series A, No. 2
at 13. In determining the adequacy of pre-filing negotiations, the
International Court of Justice and the Permanent Court before it also
have considered whether a reasonable probability exists that further
negotiations would lead to a settlement. *See, e.g.*, *Mavrommatis*,
1924 P.C.I.J. Series A, No. 2 at 13; *South West Africa*, Preliminary
Objections, 1962 I.C.J. 319, 344-46.

If the Council deems it appropriate to evaluate the probability of
settlement at the time the United States filed its Application and
Memorial, then the Council should heed the wisdom of the Court in
*Mavrommatis*, which emphasized that the parties to the disagreement
were in the best position "to judge as to political reasons which may
prevent the settlement of a given dispute by diplomatic negotiation."
*See* *Mavrommatis,* 1924 P.C.I.J. Series A, No. 2 at 15. In this
regard, the Council should note that the Applicant filed the present
proceeding after three years of extensive, but unsuccessful,
negotiations. The Council should further note the entrenched positions
of each side -- the United States sought unconditional relief from the
unlawful Regulation, while the Respondents insisted on leveraging an
agreement with the United States on new aircraft noise standards to be
adopted by ICAO in exchange for a limited and conditional suspension of
the Regulation.

2\. THE LOCAL REMEDIES RULE

The Respondents also argue that the U.S. claims are inadmissible due to
the failure of U.S. persons harmed by the Regulation to exhaust local
remedies. In its pleadings, the Respondents devote considerable time to
proving the existence of the local remedies rule, but fail to sustain
their burden of showing that the rule applies in this case. *See
Elettronica Sicula S.p.A* (*ELSI Case*), 1989 I.C.J. 15 at ¶¶ 49-63.
Undisputedly, the local remedies rule exists; however, it does not apply
to the present claims arising from direct injuries to the United States
under the Convention and its Annex 16.

Any analysis of this issue should begin with a comprehensive statement
of the local remedies rule (which Respondents failed to provide in their
Preliminary Objections). According to the case of *Ambatielos*, upon
which Respondents rely, application of the rule:

means that the State against which an international action is brought
for [injuries suffered by private individuals]{.underline} has the right
to resist such an action if the persons alleged to have been injured
have not first exhausted all the remedies available to them under the
municipal law of that State.

*Ambatielos*, 12 Rep. Int'l Arb. Awards 83, 118-19 (1956) (emphasis
added). Historically, the rule is considered only in connection with a
State's responsibility for an unlawful act committed on its territory
against a foreign national, where the State committing the unlawful act
refuses to compensate the victim. *Case Concerning the Air Services
Agreement of March 27, 1946* (United States v. France), 54 I.L.R. 304 at
¶ 28 (Dec. 9, 1978) (hereinafter the "*Change-of-Gauge Arbitration*").
In general terms, the rule limits the admissibility of claims put
forward by a State on behalf of its injured nationals to prevent the
substitution of an international proceeding for the ordinary process of
appeal. *See* Lauterpacht, *International Law* (1970) vol. I at 397.

The local remedies rule applies only to cases of diplomatic protection
as opposed to instances of direct injury to the state. Brownlie,
*Principles of Public International Law,* at 496 (5th ed. 1998)
(hereinafter "Brownlie"). Diplomatic protection cases typically involve
the property or personal rights of an alien created and protected under
the local law of another State. Only after the alien has duly attempted
to vindicate his rights in the host State can he turn to his own
government. 2 Restatement (Third) of the Foreign Relations Law of the
United States, § 713, comment a (1987). Furthermore, where a dispute
concerns the consistency of national legislation with international law,
as distinguished from complaints of individual specific injuries, it has
been said that the rule does not apply. *See* A.A. Trindade, *The
Application of the Rule of Exhaustion of Local Remedies in International
Law* (1983) at 188-93 (and cases cited therein decided under the
European Convention on Human Rights).

**2.1 The Respondents' legal authority is inapposite.**

The cases relied upon by the Respondents in their argument all fall
within the scope of the cited rule, because they are diplomatic
protection cases. In these cases, a State pursued claims on behalf of
its nationals, generally to obtain compensation for injury to the
nationals caused by acts attributable to the foreign State. *See* G.
Schwarzenberger and E. Brown, *A Manual of International Law* at 144
(6th ed. 1976) (explaining that the rule is relevant only when a State
is adopting as its own a claim of one of its nationals); T. Meron, "The
Incidence of the Rule of Exhaustion of Local Remedies," 35 Brit.Y.B.
Int'l L. 83, 87-88 (1959) (hereinafter "Meron"). For example,
Respondents discuss the *ELSI Case*, in which the United States sought
reparations for injuries suffered by private U.S. companies. *ELSI
Case*, 1989 I.C.J. 15. There, the Court recognized the inapplicability
of the local remedies rule to cases where there is a treaty violation
causing a direct injury to a State that is distinct from the injury to
its nationals; however, under the facts before it, the Court found no
such distinct injury to the State.[^7] In support of that finding, the
Court noted that the United States itself had referred to the matter in
oral argument as "a claim of the Government of the United States of
America on behalf of Raytheon Company and Machlett Laboratories,
Incorporated." *ELSI Case,* 1989 I.C.J. at ¶¶ 51, 52.

The Respondents also rely upon the *Interhandel Case*, which involved
claims brought by the Swiss Government on behalf of Swiss nationals
whose property was seized by the World War II allies and who failed to
obtain restitution in U.S. courts.[^8] In that case, Switzerland argued
that it suffered a direct breach of international law and therefore was
not subject to the local remedies rule. *Interhandel Case* (Switzerland
v. U.S.) 1959 I.C.J. 6, 28 (Judgment). However, the Court found, as it
did later in the *ELSI Case*, that the Swiss Government's case was bound
up with the diplomatic protection claim, by which the government adopted
the cause of its national. *Interhandel Case* at 28. As exemplified by
these cases, diplomatic protection actions, to which the local remedies
rule does apply, typically derive from claims for compensation for
damages suffered by private persons for which a foreign government
allegedly is responsible.[^9]

Unlike the cases discussed by the Respondents, the present case involves
a direct injury to the United States distinct from any potential claims
for compensation that U.S. nationals might pursue in local courts in
Europe. The rule does not require the Applicant to pursue recourse under
the legal system of another State or of any other economic community or
regional body to which the Applicant does not belong. *See*
*Change-of-Gauge* *Arbitration*, 54 I.L.R. at ¶ 6.7. The U.S. claims at
issue, which may be resolved only by binding and generally applicable
declarations relating to the interpretation and application of the
Convention and its Annex 16, could not be brought in local courts in
Europe by any individual or class of U.S. nationals.

**2.2 The Respondents fail to distinguish claims for direct injury to a
State.**

While the relevant case law distinguishes between cases of diplomatic
protection and cases involving a claim for a direct injury to a State
distinct from the claims of its nationals, the Respondents fail to
recognize that distinction and would apply the local remedies rule in
error to the U.S. claims. *See* M. Shaw, *International Law,* (4th ed.
1997) at 567-68; Brownlie at 496.[^10] A State's claim for breach of an
international agreement under which no rights accrue directly to private
persons is a claim for a direct injury to which the local remedies rule
does not apply. *See, e.g.*, *Change-of-Gauge* A*rbitration*, 54 I.L.R.
at ¶ 31.

It has been recognized that cases may contain elements of both
diplomatic protection claims and direct injury claims. In such cases, if
the "real objects and interests" underlying the claim are the interests
of the State, then the claim may be characterized as one for a direct
injury to the State. C. Amerasinghe, *Local Remedies in International
Law* 108-14, 128-129 (1990). Making this determination requires
consideration of which elements are preponderant in the claim. Meron, 35
B.Y.I.L. at pp. 84-86. Meron focuses on two factors to determine the
predominant elements of a claim: (1) the subject of the dispute and (2)
the nature of the claim.

*Id*. at 86-87. Once classified, the determination should be applied to
the case as a whole; the case should not be divided. *Id*. at 84-86,
quoted in Amerasinghe at 124-25.

Applying the above standards to the pending U.S. claims compels the
conclusion that the Council confronts a claim of direct injury to the
United States. Nonetheless, the Respondents allude to concerns expressed
by the United States about its airlines and manufacturers as a basis for
suggesting this is a diplomatic protection claim and invoking the local
remedies rule. Preliminary Objections at ¶ 20. Most often, situations
involving a direct injury to a State due to another States' treaty
violation also will result in consequential harm to private persons.
This does not change the nature of the claim, especially in situations
such as the present where the applicant claims no damages, but merely
requests a decision on the interpretation and application of a treaty.
Brownlie at 501. The fact that a State may be acting to protect those in
need of protection does not transform the claim to one of diplomatic
protection. *See* Meron, 35 Brit.Y.B. Int'l L. at 86.

In considering this relationship, the Council should find instructive
the *Change-of-Gauge* *Arbitration*, 54 I.L.R. 304. That case arose
under the air services agreement between the United States and France
when France denied the right of Pan Am, a U.S. airline, to "change
gauge" in London (i.e., use an aircraft on the segment between the
United States and London that was larger than the aircraft used on the
segment between London and Paris). France argued that the airline in
question, Pan Am, was required to exhaust local remedies before the
United States could pursue a claim. The arbitral tribunal found the
local remedies rule inapplicable, because the bilateral agreement under
which the United States made its claim conferred rights to conduct air
services between States, not to private parties, and the obligations at
issue concerned the conduct of air transport services, not the treatment
accorded particular foreign nationals. *Change-of-Gauge* *Arbitration*,
54 I.L.R. at ¶ 31.

Even though the dispute in the *Change-of-Gauge Arbitration* arose over
actions taken by French government officials against a particular U.S.
airline, the arbitral tribunal recognized that the essential issue in
the U.S. claim was the interpretation and application of the bilateral
agreement, not the harm to Pan Am. *Change-of-Gauge* *Arbitration*, 54
I.L.R. 304; *see* *also* Amerasinghe, *Local Remedies in International
Law* (1990) at 108-14 (considering whether the

State is really protecting its own interests), and 128-129 (suggesting
that the "real objects and interests" underlying a claim determine
applicability of the local remedies rule).

A second case directly on point, also concerning an air services
agreement, is the *U.S.-U.K. Arbitration concerning Heathrow Airport
User Charges*, Award on the First Question, 102 I.L.R. 215 (1992)
(hereinafter the "*Heathrow Arbitration*"). In that case, the arbitral
tribunal addressed the applicability of the local remedies rule to a
U.S. claim that the U.K. had violated provisions in the U.S.-U.K. air
services agreement relating to airport user charges. *Id*. at ch. 3. The
tribunal applied the *ELSI Case* test, considering whether the U.S.
claim was "distinct and independent" from the claims of its nationals.
*Heathrow Arbitration,* 102 I.L.R. at ch. 3, ¶ 6.9. Underlying its
determination that the United States was pursuing rights distinct and
independent of those of its airline, the tribunal found that: (1) the
subject matter of the dispute was the alleged violation of a treaty that
created rights and obligations between the States concerned; (2) the
treaty concerned the conduct of air services, which is a State
prerogative; and (3) the treaty was a comprehensive code for operation
of air services and its component parts, such as the user charges
article, could not be severed. *Heathrow Arbitration,* 102 I.L.R. at ch.
3, ¶ 6.11. The *Heathrow Arbitration* tribunal also noted the importance
of the U.S. interest in the interpretation and application of the treaty
in the future, when the identity of affected nationals may change.
*Heathrow Arbitration*, 102 I.L.R. at ch. 3, ¶ 6.11. These factors
highlighted the significant differences between any potential private
claims of U.S. airlines and the direct claims of the United States. The
tribunal determined that the predominant element in the dispute was the
direct interest of the United States itself and, therefore, the local
remedies rule was not applicable. *Heathrow Arbitration* at ch. 3, ¶¶
6.18-6.19.[^11]

The *Change-of-Gauge Arbitration* and the *Heathrow Arbitration* are
directly on point with the present dispute, because the United States
again seeks to protect its rights under an agreement providing for
rights related to the conduct of air services, including, in this case,
the right of its airlines to be free from discrimination based upon
their State of registration; the right of its airlines to operate free
from unilateral noise standards that are inconsistent with the
requirements of the Convention and Annex 16; and the right to have its
aircraft noise certifications respected by all other parties to the
Convention. Unquestionably, Respondents' infringements of these rights
have caused economic harm to private U.S. companies; however, the U.S.
claim here is far broader than the interests of any particular U.S.
nationals. The present dispute effectively may be resolved only through
an interpretation of the Convention and its Annex 16 that will firmly
establish future international norms relating to unilateral State
actions in the area of aircraft noise standards, as well as other areas.

The Applicant is pursuing its rights in strict accordance with the
provisions of the Convention, which identifies the ICAO Council as the
forum with jurisdiction in the first instance over cases such as the
present. The United States is entitled to hold the Respondents to their
obligations under the Convention and its Annexes, vindicating the
relevant principles of international law through the present case,
without any obligation to pursue any local remedies. *See South West
Africa Cases*, 1966 I.C.J. 6 at 32-33; *see also Corfu Channel Case*,
1949 I.C.J. 4 at 36; *see generally*, Brownlie at 474-75. Litigation in
local courts in Europe, as suggested by the Respondents, would
constitute a piece-meal approach to interpreting the Convention and
could lead to its fragmentation, instead of its uniform enforcement, as
sought by the United States.

**2.3 The Respondents fail to prove the availability of effective
remedies.**

Even assuming *arguendo* that the U.S. claims were diplomatic protection
claims to which the local remedies rule applied, the Respondents still
would bear the burden of proving that effective remedies are available
in local courts in Europe. *See* *ELSI Case*, 1989 I.C.J. at ¶ 63;

Shaw at pp. 567-68; *Finnish Ships Arbitration*, 2 Rep. Int'l Arb.
Awards1479 (1934); 7 I.L.R. 231. This requires that local courts are
open to the aggrieved persons and offer effective redress. *See*
Brownlie at 499. Consequently, where the local legal system cannot
redress the wrong, the rule does not apply and there is no obligation to
turn to local courts. A. Trindade, *The Application of the Rule of
Exhaustion of Local Remedies in International Law* at 110 (and cases
cited therein).

By this action, the United States seeks to establish the inconsistency
of the Respondents' actions, as codified by the Regulation, with the
Convention and its Annex 16 and obtain effective relief. The United
States expects not merely to establish the unlawfulness of the
Regulation, but also to obtain interpretations of the Convention and
Annex 16 that will bind the Respondents and guide others in any future
attempts unilaterally to regulate international aircraft noise
standards. The result should benefit not only U.S. airlines and
manufacturers currently harmed by the Regulation, but all airlines that
operate air transport services into Europe and all manufacturers of
airframes, aircraft engines, and other aeronautical equipment affecting
the noise performance of aircraft. The Respondents have not even
attempted to argue that local courts in Europe could provide these
remedies to the Applicant or to private U.S. companies. They could not
possibly succeed in any attempt, because resolution of the dispute
requires a ruling on the interpretation and application of the
Convention that will have international standing adequate to ensure the
global uniformity of ICAO standards. Only ICAO can offer such relief.

To prove that effective remedies are available in local courts in
Europe, the Respondents reference EC Treaty provisions for challenging
the validity of regulations, concluding that the U.S. challenge to the
Regulation requires consideration of the relationship between the treaty
obligations of the EC Member States and EC law, and therefore, "is a
matter for interpretation by the European Court of Justice (or Court of
First Instance)." Preliminary Objections at ¶ 24. On this basis, the
Respondents would fail to carry their burden, because neither the EC
Treaty nor the relationship between Member States and EC law has any
relevance to the present dispute.

Clearly the courts in Europe could not provide an effective remedy. Even
beyond that, however, it is not clear, based on positions asserted by
Respondents in other legal challenges to the Regulation, that those
courts could provide any meaningful relief from the Regulation. To
begin, it seems that the European Court of Justice, which alone has
jurisdiction to overturn the Regulation under Article 234 (formerly 177)
of the EC Treaty,[^12] will not interpret the Convention, because the EU
is not a party thereto. *See* Attachment 9 hereto, Respondent U.K.'s
"Skeleton Argument" in *Regina v. Secretary of State for the
Environment, Transport and Regions, ex parte Omega Air Limited*
(hereinafter *\"Omega*\") at 32-33, ¶¶ 76-77, and cases cited therein.
Additionally, even if a court of the European Union were to consider the
matter and find that the Regulation were inconsistent with the
Convention, such a conflict would not render the Regulation invalid,
under well-established European Union law. *Id*., Attachment 9 at 32-33,
¶76. Furthermore, the national courts of the EU member States are
equally unable to offer any meaningful relief, as they lack authority to
determine the inconsistency of an EC Regulation with international law.
*See* EC Treaty Article 234 (formerly 177), discussed in *Omega,* Order
of the U.K. High Court of Justice (November 25, 1999), Attachment 11 to
the U.S. Memorial at 6.

Additionally, it seems that any action by an individual or company under
the Convention would appear futile, regardless of whether it were
brought in a national court in Europe or in the courts of the European
Union. As observed by the Respondent U.K., because the Convention
confers rights only between governments, individuals could not pursue
rights under the Convention in the local courts of Europe. U.K.
"Skeleton Argument," Attachment 9 at 35, ¶ 80. Even in the Omega Air
Limited litigation referenced in the Preliminary Objections as evidence
of available remedies in the courts of the Europe Union (*see*
Preliminary Objections at ¶¶ 24-26), Respondents, through the Council of
the European Union, argued that the Regulation was not subject to
challenge by individuals or companies. *See* Attachment 10 hereto at 7,
Plea of Inadmissibilty by the Council in Case T-165/99, *Omega Air
Limited and Seven Q Seven, Inc. V. Council of the European Union*.

In sum, the Respondents fail to prove the availability of effective
remedies.

3\. THE REQUESTED RELIEF

Following its clearly articulated legal claims under the Convention and
its Annex 16, the U.S. Memorial requests Council determinations that the
Respondents have violated their legal obligations and seeks Respondents'
cessation of their unlawful conduct and their compliance with their
legal obligations. In their Preliminary Objections, the Respondents
challenge the relief requested by the Applicant, arguing that while the
Council may determine whether a contracting party has violated the
Convention, the Council may not "create new obligations" beyond those
existing under the Convention and its Annexes (Preliminary Objection at
¶¶ 30, 34, and 45. Thus, it is the Respondents' position that the
Council lacks authority to enter rulings determining that the
Respondents have obligations to cease their unlawful conduct and to
comply with the provisions of the Convention and its Annex 16. This
position not only is unsubstantiated, but it would deprive the Council
of powers essential to perform its duties and is inconsistent with the
Convention and the Rules. Without doubt, the Council has the requisite
authority to grant appropriate relief in this case, such as that
requested in the U.S. Memorial.

3.1 The Respondents' argument is unsubstantiated.

The Respondents cite two sources of authority for their argument: (1)
ICAO Council precedent (Preliminary Objections at ¶ 38); and (2)
*Gabcikovo-Nagymaros Project,* 1997 I.C.J. at ¶¶133, 136. Preliminary
Objections at ¶¶ 39-40. These sources do not support the Respondents'
arguments.

To begin, there is no ICAO Council precedent relevant to determining the
scope of the Council's authority to order relief, because the Council
never has decided the merits of a case brought under Article 84.
Therefore, it is entirely unclear how the Respondents reach the
conclusion that the U.S. request deviates from the Council's past
practice. *See* Preliminary Objections at ¶ 42. In fact, the only
relevant "subsequent practice" would be the requests for relief of past
applicants under Article 84. On this basis, the Council would have to
determine that past practice supports the U.S. requests for relief,
because, for example, the Memorial filed under Article 84 in 1957 by the
Government of Pakistan requested the Council:

> \(5\) To direct the Government of India to immediately rescind their
> illegal decision aforesaid and not to impede in any manner the
> overflights of Pakistan aircraft over the territory of India. . . .
>
> \(7\) To direct that the Government of India should adequately
> compensate and indemnify Pakistan for the losses and injury suffered
> by it as a result of the arbitrary, unilateral and illegal decision of
> the Government of India in breach of its international obligations...
>
> \(8\) The Council may assess and award costs to Pakistan and direct
> Government of India to bear it and pay the same to Pakistan.

Memorial of the Government of Pakistan in *Pakistan v. India* (1971)
reprinted in 1971 I.C.J. Pleadings, Appeal Relating to the Jurisdiction
of the ICAO Council at 97. Thus, past practice under Article 84
undercuts, rather than supports, the Respondents' argument.

Neither does the referenced decision of the International Court of
Justice help the Respondents. The *Gabcikovo-Nagymaros Project* case did
involve a refusal of the Court to order performance of an agreement
relating to construction of a system of locks. Contrary to Respondents'
assertions, however, the Court's actions were not tied to any perceived
lack of authority to grant such relief, but rather, to the Court's
conclusion that specific performance was not appropriate, because the
parties to the treaty had not fully implemented it for years and the
need for the construction work may have been overtaken by events.
*Gabcikovo-Nagymaros Project*, 1997 I.C.J. 7, 76-77 at ¶¶ 133, 136.
Furthermore, the Respondents' quotation from, and discussion of, that
case suggests that parties to a dispute are obligated to negotiate over
how a disputed treaty should be implemented. Preliminary Objections at
¶¶ 39, 40. The quotation is misleading, because it was not a general
statement of law with any application to the present case, but rather
the Court's interpretation of a specific treaty provision, which was the
subject of a dispute between Hungary and Slovakia, requiring the parties
to the treaty to "enter into negotiations on the modalities for \[the\]
execution \[of a judgment of the Court\]." *See* *Gabcikovo-Nagymaros
Project,* 1997 I.C.J. at 12, ¶ 2, quoting the text of the agreement
between Hungary and Slovakia.

Finally, contrary to the Respondents' allegations, the Court in that
case did determine that the parties should: (1) take all necessary
measures to ensure achievement of the objectives of the disputed treaty;
(2) establish a "joint operational regime;" and (3) pay compensation for
damages sustained. *Gabcikovo-Nagymaros Project,* 1997 I.C.J. at 82-84,
¶ 155. Thus, the relief granted by the Court in that case reaffirms the
established law of reparation and suggests a scope of authority far
greater than that which the Applicant asks the ICAO Council to exercise
here.

**3.2 The Respondents would deprive the Council**

**of powers essential to perform its duties.**

The Convention empowers and authorizes the Council to decide
disagreements between contracting parties to the Convention through
binding and enforceable decisions subject to appeal, in certain
situations, to the International Court of Justice. If the Council,
nonetheless, were deprived of the power to grant appropriate relief,
then it could not, as a practical matter, resolve most disputes,
consistent with the intention of the Convention. Typically, a violation
of the Convention would be associated with harm to nationals of the
injured State. Absent Council authority to determine the obligations of
parties violating the Convention, States would be left to exercise their
rights under general principles of customary international law,
including taking countermeasures, thereby escalating, rather than
resolving, the dispute. *See,* *Change-of-Gauge* *Arbitration*, 54
I.L.R. at 337-38 (discussing the right to take countermeasures).
Certainly this was not the intention of the drafters of the Convention.
Requests for relief such as those sought by the Applicant in this action
(such as declaring a duty to cease unlawful action) are well precedented
in international tribunals.[^13] *See* Brownlie at 462 and n.163. For
example, in the *Case Concerning United States Diplomatic and Consular
Staff in Tehran*, 1980 I.C.J. 3, the judgment of the International Court
included several declaratory prescriptions involving the termination of
the unlawful acts identified by the Court. 1980 I.C.J. at 44-45.

The authority to "create new duties" applicable to States found in
violation of the Convention and its Annexes, including for example, the
duties to cease any unlawful behavior and comply with the provisions of
the Convention, is essential for the Council to fulfill its mandate to
resolve disputes, as anticipated by the Convention. Noting that the
relief requested in the U.S. Memorial is consistent with Article 82 of
the Convention, relating to abrogation of inconsistent
arrangements,[^14] and Article 83, which permits States party to the
Convention to enter only into those arrangements that are not
inconsistent with the provisions of the Convention, the Council should
determine that it has the power to grant the requested relief.

3.3 The Respondents' position is inconsistent

with the Convention and the Rules.

The Council's authority to grant appropriate relief under Article 84
flows from the language, purpose, structure, and spirit of the
Convention and the Rules for the Settlement of Differences promulgated
thereunder. This is evidenced by the language of Article 87, which
refers to airlines failing to conform to final decisions rendered by the
Council. This reference to conforming to a final decision indicates that
the Council's decision must entail some obligation beyond a mere finding
of treaty violation. Similarly, Article 88 of the Convention refers to
contracting States "found in default" under the provisions of the
Convention Chapter XVIII on Disputes and Default.[^15] Again, the
reference to "default" indicates an intention that the Council acting
under Article 84 could establish specific duties with which a party
found to have violated the Convention would be obligated to comply.

A review of the Rules for the Settlement of Differences also compels the
conclusion that the Council has authority to grant the requested relief.
Absent Council authority to grant appropriate relief where a State has
violated the Convention, it would be senseless to require applicants
under Article 84 to state "\[t\]he relief desired by action of Council
on the specific points submitted." Rules, Article 2(g). Similarly, it
would be pointless for the Rules to require a Committee, appointed by
the Council under Article 6 of the Rules to conduct a preliminary
examination, to prepare a report including "findings of facts and the
recommendations of the Committee." Rules, Article 13(2). In this
context, the reference to "recommendations" can only refer to
recommendations on appropriate corrective measures.

The American Law Institute has stated that, "\[u\]nder international
law, a state that has violated a legal obligation to another state is
required to terminate the violation and, ordinarily, to make reparation,
including in appropriate circumstances restitution or compensation for
loss or injury." Restatement (Third) of the Foreign Relations Law of the
United States § 901 (1987). This position is further bolstered by the
efforts of the International Law Commission (hereinafter "ILC"), which,
in its draft Articles on State Responsibility, provide that each State
injured by an internationally wrongful act is entitled to seek cessation
and reparation.[^16] The ILC's comments on the draft Articles conclude
that international bodies are normally able to determine that internal
legal acts violate international law and further to declare the duty of
making reparations, which may require invalidation or annulment of the
internal legal acts. *See* Third Report on State Responsibility, I.L.C.
(52^nd^ Sess.), U.N. Doc A/CN.4/507/Add.1 at 6, ¶ 127 (June 15, 2000).
The arbitral tribunal in the *Rainbow Warrior* *Arbitration* stated:

> The authority to issue an order for the cessation or discontinuance of
> a wrongful act or omission results from the inherent powers of a
> competent tribunal which is confronted with the continuous breach of
> an international obligation which is in force and continues to be in
> force. The delivery of such an order requires, therefore, two
> essential conditions intimately linked, namely that the wrongful act
> has a continuing character and that the violated rule is still in
> force at the time in which the order is issued.

*Rainbow Warrior Arbitration* (New Zealand v. France), 20 Rep. Int'l
Arb. Awards 217, 270, ¶114 (30 April 1990).

Accordingly, the authority to determine the existence of a duty to cease
unlawful behavior and comply with the Convention and its Annexes \--
powers that the Respondents would deny the Council \-- is essential to a
proper application of the Convention and the Rules. It would be
extraordinary for the ICAO Council, which is expressly authorized to
issue binding decisions on disagreements relating to the interpretation
and application of the Convention and its Annexes, to be denied
authority under the Convention to declare the duty of a State acting
unlawfully to cease its wrongful actions and comply with the Convention
and its Annexes. There is no basis for reaching such an extraordinary
conclusion.

III\. CONCLUSION

As detailed above, the Respondents' arguments are entirely lacking in
substance. The first argument, that the United States failed to detail
its claims in negotiations, is factually incorrect, as proven by
Attachments 2-6 hereto. In addition, the argument is misguided, because
there is no obligation on parties to engage in such detailed
discussions.

The Respondents' second argument \-- that the U.S. claims should first
have been litigated in local courts in Europe \-- is equally unavailing,
because the doctrine on which it relies, the "local remedies rule," does
not apply to cases, such as the present, where the primary purpose of
the legal action is to interpret and apply a State's rights under a
treaty. The local remedies rule applies only when a State is espousing
claims of its nationals.

The final argument made by Respondents, that the Council lacks authority
to determine that States violating the Convention and its Annexes have a
duty to cease their unlawful behavior and comply with their legal
obligations also is entirely unfounded in fact or law. The Convention
gives the Council a mandate to resolve inter-State disputes and the
language and context of the Convention and the Rules clearly provide the
Council authority to carry out its purpose, including the authority to
grant appropriate relief, such as that requested in the U.S. Memorial.

For the reasons set forth above, the Applicant respectfully requests
that the Council:

1.  Reject the propositions of the Respondents' Preliminary Objections
    and reaffirm the Council's competence to consider the Application
    and Memorial of the United States of America;

2.  Order that the period given to the Respondents for the filing of
    their counter-memorials, which was interrupted by the filing of the
    Preliminary Objections, shall begin to run again immediately
    following the Council's denial of the Preliminary Objections; and

3.  Deny any further requests of the Respondents for additional time to
    file their counter-memorials.

Respectfully submitted,

David S. Newman

Agent for the United States of America

September 15, 2000

LIST OF EXHIBITS

Attachment 1 -- Cover letter and example of demarche delivered to each
of the Respondents in May 1997 by U.S. Embassy Officials.

Attachment 2 -- Letter dated February 19, 1999, from U.S. Department of
Transportation Secretary Slater to the Honorable Neil Kinnock, Member of
the European Commission, detailing U.S. concerns with the Regulation.

Attachment 3 -- Copies of the letters delivered by U.S. Embassy
Officials in Berlin and Madrid as examples of letter from Secretary
Slater to officials of each of the Respondents delivered in February
1999, in accordance with instructions from the Department of State.

Attachment 4 -- Letter dated February 26, 1999, from Neil Kinnock,
Member of the European Commission, responding to Secretary Slater letter
of February 19, 1999.

Attachment 5 -- Example of demarche delivered by U.S. Embassy Officials
to Respondents in response to instructions from the Department of State
dated August 23, 1999.

Attachment 6 -- Letter dated September 3, 1999, from Neil Kinnock,
Member of the European Commission, to Secretary Slater.

Attachment 7 -- Copy of February 7, 2000 letter of Secretary Slater
declaring that the Respondents' refusal to consider indefinite
suspension of the Regulation compelled the United States to pursue
dispute-resolution procedures in ICAO under Article 84.

> Attachment 8 -- Extract of hushkits resolution adopted by the European
> Parliament.

Attachment 9 -- Respondent U.K.'s "Skeleton Argument" in *Regina v.
Secretary of State for the Environment, Transport and Regions, ex parte
Omega Air Limited*

Attachment 10 -- Plea of Inadmissibilty by the Council in Case T-165/99,
*Omega Air Limited and Seven Q Seven, Inc. V. Council of the European
Union*.

[^1]:
    > Mr. Kinnock's letter of September 3, 1999, stated, "\[t\]he
    > demarche will not help this process \[apparently referring to
    > joint efforts toward new noise standards\] and may even have a
    > counterproductive impact on the attitudes of the other European
    > institutions involved." Attachment 6 hereto.

[^2]: The text of the resolution was proposed in a Motion for a
    Resolution further to Oral Questions Pursuant to Rule 42(5) of the
    Rules of Procedure by Mrs. Jackson and Mr. Blokland on Behalf of the
    Committee on the Environment, Public Health and Consumer Policy on
    Hushkitted Aircraft B5-0289/2000.

[^3]:
    > Article 84 provides: "If any disagreement between two or more
    > contracting States relating to the interpretation or application
    > of this Convention and its Annexes cannot be settled by
    > negotiation, it shall, on the application of any State concerned
    > in the disagreement, be decided by the Council."

[^4]: Respondents suggest there is some deficiency in the U.S. Memorial
    relative to the requirement for pre-filing negotiations. Preliminary
    Objections at ¶ 14. In fact, Section (g) of the U.S. Memorial meets
    the applicable requirements in the Rules.

[^5]:
    > The bifurcation of standards between when a case may be initiated
    > and when the Council should agree to decide it is consistent with
    > the objective of the Convention to have the Council readily
    > available to facilitate resolution of a wide range of disputes
    > among contracting parties to the Convention, balanced with a
    > recognition that the 33 member Council is an unwieldy judicial
    > body. *See, e.g.,* Article 54 of the Convention, requiring the
    > Council to "consider any matter relating to the Convention which
    > any contracting State refers to it." Article 54(n). The Rules
    > reinforce the goal of informal resolution of disputes by
    > authorizing the Council to invite disputants in an Article 84
    > proceeding to engage in direct negotiations at any time in a
    > proceeding prior to rendering of a decision, if the Council
    > believes that negotiations have not been exhausted. Article 14(1).

[^6]: The relevant treaty provision interpreted by the Court stated that
    the disputants: "shall delimit the continental shelf in the North
    Sea as between their countries by agreement in pursuance of the
    decision requested from the International Court of Justice." *North
    Sea Continental Shelf*, 1969 I.C.J. at 4, 47 (referencing the
    obligations of the parties set forth at p. 6 of the decision,
    quoting Article 1, § 2 of the Special Agreement). Respondents also
    cite the *Fisheries Jurisdiction* cases, 1974 I.C.J. pp. 3, 32.
    Paragraph 32 of that case refers only to the disputants engaging in
    intermittent negotiations that "have not led to any agreement."

[^7]: In the *ELSI Case*, the I.C.J. articulated a test to determine the
    existence of a valid State claim for direct injury by inquiring into
    whether the damages claim of private persons "colours and pervades
    the State's claim as a whole." *ELSI Case* at 43. There, the Court
    looked for, but failed to find, a direct injury to the United States
    that was both distinct from and independent of the claims of two
    injured U.S. corporations. *ELSI Case* at 42-44.

[^8]: The Court in the *Interhandel Case* found the claims of the
    applicant, Switzerland, and those of its nationals to be largely
    indistinguishable and determined that the local remedies rule
    applied. The matter was dismissed for failure to exhaust local
    remedies, because the judgment in U.S. courts adverse to the Swiss
    nationals had been remanded by the U.S. Supreme Court to the court
    of first instance. Therefore, the judgment was not final.
    *Interhandel Case,* 1959 I.C.J. 6.

[^9]: The Respondents cite two additional cases as authority for the
    relevance of the local remedies rule. Preliminary Objections at 6
    n.12. They cite the *Ambatielos case*, 12 Rep. Int'l Arb. Awards at
    83 (1956), in which Greece espoused a claim by a Greek national
    against the United Kingdom Government for damages under a contract
    for purchase of nine steamships. Respondents also cite the *Claim of
    Finnish Shipowners* arbitration, 2 Rep. Int'l Arb. Awards 1479
    (1934), 7 I.L.R. 231, which involved claims of Finnish ship owners
    seeking compensation for alleged requisition of their ships by the
    U.K. during wartime. In both cases, the State's claim clearly
    derived from the rights of its national to recover for injuries
    caused by a foreign State. These scenarios are readily distinguished
    from the direct injury claim of the Applicant now before the
    Council.

[^10]: *See also* the *Case Concerning United States Diplomatic and
    Consular Staff in Tehran*, 1980 I.C.J. 3, 44-45, where the Court
    recognized the claim relating to the taking of diplomatic hostages
    as a claim for direct injury to the United States and made no
    reference to local remedies.

[^11]: ^?^ The *Heathrow* *Arbitration* tribunal also found that the
    conduct of HMG prior to the U.S. request for arbitration, including
    its express agreement to arbitration, provided an alternative basis
    for denying application of the rule. *Heathrow* *Arbitration,* 102
    I.L.R. at ch. 3 ¶¶ 6.20, 6.22.

[^12]: ^?^ Article 234 (formerly 177) of the EC Treaty reads, in
    pertinent part:

    > The Court of Justice shall have jurisdiction to give preliminary
    > rulings concerning...(b) The validity and interpretation of acts
    > of the institutions of the Community and of the ECB. Where such a
    > question is raised before any court or Tribunal of a Member State
    > that Court or Tribunal may if it considers that a decision on the
    > question is necessary to enable it to give judgement request the
    > Court of Justice to give a ruling thereon.

[^13]: Contrary to the implications of the Respondents\' arguments, the
    Applicant does not request "specific performance," an extraordinary
    form of relief. *See* Preliminary Objections at ¶¶ 39-40. An order
    of specific performance is an order requiring a party to a dispute
    to execute an unfulfilled contract, such as the building of a system
    of locks, as discussed in the context of the *Case Concerning the
    Gabcikovo-Nagymaros Project*. The Applicant also does not demand
    specific performance of any contract; rather, it asks the Council to
    determine that the Respondents have violated their legal obligations
    and must cease their unlawful behavior and comply with their legal
    obligations under the Convention and Annex 16. As discussed by
    Brownlie, declaratory judgments may include imposition of duties to
    terminate unlawful acts and cease and refrain from future breaches
    of the legal obligations at issue. *See* Brownlie at 462-64.

[^14]: Article 82 of the Convention requires a contracting State to
    "take immediate steps to procure its release" from obligations
    arising from prior agreements that are inconsistent with the terms
    of the Convention.

[^15]: Article 86 of the Convention provides that, in certain cases,
    appeals of Council decisions may be taken to the Permanent Court of
    International Justice (now the International Court of Justice),
    which unquestionably has authority to determine the existence of a
    party's duties to cease unlawful actions and comply with its legal
    obligations.

[^16]: ^?^ *See* draft Articles on State Responsibility, Articles 41,
    42. The text of the draft articles provisionally adopted by the
    Drafting Committee is found in U.N. doc. A/CN.4/L.569, and is
    discussed in the Third Report on State responsibility, I.L.C.
    Fifty-Second Session, U.N. Doc A/CN.4/507 at 42, ¶ 94 (March 15,
    2000) (available on U.N. web-site).