874

DISSENTING OPINION
OF VICE-PRESIDENT SCHWEBEL

While there is much with which I agree in the Court’s Judgment, I am
unable to accept its dispositive decision that it has jurisdiction to enter-
tain the claims made by the Islamic Republic of Iran under Article X,
paragraph 1, of the Treaty of Amity, Economic Relations, and Consular
Rights of 1955.

In interpreting the scope of a compromissory clause of a treaty accord-
ing the Court jurisdiction over any dispute between the parties “as to the
interpretation or application” of that treaty, the Court must, as with any
other treaty, establish the intention of the parties to it. It must consider
whether the parties to the treaty intended that claims of the character
advanced in a particular dispute were to be subject to the Court’s juris-
diction. It must consider whether the particular claims so advanced fail
within the terms of any provision of the treaty.

Neither the United States nor Iran, in concluding the Treaty of 1955,
in my view intended that claims of the character advanced by Iran in this
case would be subject to the Court’s jurisdiction. Nor do I find that the
particular claims advanced by Iran in this case fall within the terms of
any provision of the Treaty, including Article X, paragraph 1. Neither
the text nor the circumstances of the conclusion of the Treaty sustain
Jran’s contentions, even to the limited extent that the Court has found
those contentions to be sustainable.

In 1980, in construing this very Treaty, this Court held that:

“The very purpose of a treaty of amity, and indeed of a treaty of
establishment, is to promote friendly relations between the two
countries concerned, and between their two peoples, more espe-
cially by mutual undertakings to ensure the protection and security
of their nationals in each other’s territory.” (United States Diplo-
matic and Consular Staff in Tehran, I C.J. Reports 1980, p. 28,
para. 54.)

The Court thus drew a distinction between promotion of friendly rela-
tions (apparently a reference to Article I of the Treaty) and “mutual
undertakings” to ensure the protection and security of the nationals of
each party in the territory of the other. It is only the latter that is cast in
the terminology of legal obligation. That, in a nutshell, is the substance
of the 1955 Treaty, rightly stated and understood.

75
875 OIL PLATFORMS (DISS. OP. SCHWEBEL)
THE INTERNATIONAL USE OF ARMED FORCE

Iran’s complaints in this case turn on the attacks upon and destruction
of three offshore oil production complexes, owned by the National
Iranian Oil Company, which were situated on Iran’s continental shelf
and within its exclusive economic zone. Iran maintains that the attacks
were carried out by several warships of the United States Navy, during a
period when Iran was the victim of a war imposed upon it by Iraq, whose
forces subjected its oil installations and commercial shipping to eight
years of attacks. The United States acknowledges that the oil platforms
in question were destroyed by forces of the United States Navy, and
claims that they were bombarded to put out of action bases which were
used to support a long series of attacks by Iranian military and paramili-
tary forces on United States and other neutral vessels engaged in peaceful
commerce in the Persian Gulf. The United States claims that numerous
Iranian helicopter attacks against merchant shipping were launched from
oil platforms, and that small high-speed patrol boats were deployed from
oil platforms to attack shipping and lay naval mines. Those claims are
denied by Iran.

What is not denied, and cannot be denied, is that the attacks by the
United States Navy on the three Iranian oil platforms at issue constituted
a use by the United States of armed force against what it claims to have
seen as military objectives located within the jurisdiction of another
State, Iran.

The threshold question that the Court must resolve is, is a dispute over
attacks by United States Armed Forces against Iranian objectives in the
described circumstances a dispute that arises under the Treaty of Amity,
Economic Relations, and Consular Rights?

The answer to that question as I see it is, obviously not. It is obvious
from the title, preamble, and terms of the Treaty. It is obvious from the
circumstances of the conclusion as well as the text of the Treaty when
those circumstances are set out. And what the text and circumstances of
the Treaty demonstrate is sustained by such subsequent interpretation as
the parties have placed upon it.

The preamble of the Treaty provides:

“The United States of America and Iran, desirous of emphasizing
the friendly relations which have long prevailed between their
peoples, of reaffirming the high principles in the regulation of human
affairs to which they are committed, of encouraging mutually bene-
ficial trade and investments and closer economic intercourse gen-
erally between their peoples, and of regulating consular relations,

76
876 OIL PLATFORMS (DISS. OP. SCHWEBEL)

have resolved to conclude, on the basis of reciprocal equality of
treatment, a Treaty of Amity, Economic Relations, and Consular
Rights...”

It is plain that this is a Treaty which is essentially concerned with encour-
aging mutually beneficial trade and investments and closer economic
intercourse on the basis of reciprocal equality of treatment. There is no
suggestion of regulating the use of armed force by one party against the
other.

Article I of the Treaty provides that there shall be firm and enduring
peace and sincere friendship between the United States and Iran. The
Court has quite correctly held that this provision must merely be regarded
as fixing an objective, in the light of which other Treaty provisions are to
be interpreted and applied; of itself it imposes no obligations, including
obligations governing the use of force in international relations. Those
other Treaty provisions regulate the conditions of residence of nationals
of one party on the territory of the other, particularly for purposes of
trade and investment, and assure the nationals of one party the most con-
stant protection and security in the territory of the other (Art. II); treat
the juridical status of companies and access to courts and arbitration
(Art. HD); provide for fair and equitable treatment of the nationals and
companies of the other party and prescribe the most constant protection
and security for the property of nationals and companies of either party
in the territory of the other (Art. IV); provide for the leasing of real prop-
erty and the acquisition of other property and its disposition by sale or
testament or otherwise, as well as effective protection of intellectual
property (Art. V); govern taxation (Art. VI); regulate financial transfers
(Art. VID); regulate imports, exports and customs duties (Arts. VIII and
IX); treat freedom of commerce and navigation (Art. X) and economic
transactions by government agencies (Art. XI); and provide for the rights
and duties of consuls (Arts. XII-XTX). None of these core provisions of
the Treaty suggests that attacks by armed forces of one party against
what it treats as military objectives within the jurisdiction of the other
party are within the reach of the Treaty.

It is significant as well that the Treaty contains none of the treaty pro-
visions which typically do bear on the international use of force. There is
no pledge of non-aggression or alliance. There is no reference to military
assistance by one party in the event of armed attack upon or aggression
against the other. There is no reference to regional security arrangements,
to the provision of military equipment, to status of forces, to bases on the
territory of one party for the forces of the other. Also significant is the
fact, which the Court’s Judgment acknowledges, that the United States

77
877 OIL PLATFORMS (DISS. OP. SCHWEBEL)

and Iran concluded other treaty arrangements for such purposes, notably
the Agreement of Co-operation between the Government of the United
States of America and Imperial Government of Iran of 5 March 1959.
That Agreement affirms “their right to co-operate for their security and
defence in accordance with Article 51 of the Charter of the United
Nations” and declares that the United States “regards as vital to its
national interest and to world peace the preservation of the independence
and integrity of Iran”. It provides that, in case of aggression against Iran,
the United States will take appropriate action, including the use of armed
forces, in order to assist Iran at its request. It also provides for the con-
tinued furnishing to Iran of military and economic assistance, and for co-
operation with other Governments in mutually agreed defensive arrange-
ments (Treaties and Other International Acts Series 4189).

Moreover, Article XX of the Treaty of 1955 indicates that certain
international uses of armed force, far from being within the compass of
the Treaty, are excluded from it. Article XX — the sole reference in the
Treaty to such matters — provides that:

“|. The present Treaty shall not preclude the application of
measures:

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

Article XX is an exclusion clause. It excludes from the areas regulated
by the obligations of the Treaty the application of specified measures,
including measures of a party “necessary to protect its essential security
interests”. Such an exclusion can hardly entitle the Court to assume juris-
diction over a claim that engages the essential security interests of the
United States if not Iran as well. The object of Iran’s claims in this case
is the calculated application of armed force by the United States against
what it has treated as military objectives within the jurisdiction of Iran,
which objectives for its part Iran views as vital to its economic and stra-
tegic interests. It follows that, since the Treaty does not preclude the
application of such measures, they do not fall within its regulated reach
and hence do not fall within the scope of the compromissory clause sub-
mitting disputes “as to the interpretation or application of the present
Treaty” to the jurisdiction of the Court.

78
878 OIL PLATFORMS (DISS. OP. SCHWEBEL)

How does the Judgment of the Court affirming its jurisdiction deal
with Article XX?

It asserts that the Treaty of 1955 contains no provision expressly
excluding certain matters from the jurisdiction of the Court. It then
quotes Article XX, paragraph 1 (d}, and acknowledges that,

“This text could be interpreted as excluding certain measures from
the actual scope of the Treaty and, consequently, as excluding the
jurisdiction of the Court to test the lawfulness of such measures.”
(Para. 20.)

But it continues:

“It could also be understood as affording only a defence on the
merits. The Court, in its Judgment of 27 June 1986 in the case con-
cerning Military and Paramilitary Activities in and against Nicara-
gua (Nicaragua v. United States of America), adopted the latter
interpretation for the application of an identical clause included in
the Treaty of Friendship, Commerce and Navigation concluded
between the United States and Nicaragua on 21 January 1956 (.C_J.
Reports 1986, p. 116, para. 222, and p. 136, para. 271). Iran argues,
in this case, that the Court should give the same interpretation to
Article XX, paragraph 1 (d}. The United States, for its part, in the
most recent presentation of its arguments, stated that ‘consideration
of the interpretation and application of Article XX, paragraph 1 (d),
was a merits issue’. The Court sees no reason to vary the conclusions
it arrived at in 1986. It accordingly takes the view that Article XX,
paragraph 1 (d)}, does not restrict its jurisdiction in the present case,
but is confined to affording the Parties a possible defence on the
merits to be used should the occasion arise.” (Ibid. )

It is true that the Court in its 1986 Judgment on the merits in Military
and Paramilitary Activities in and against Nicaragua treated the corre-
sponding article of the Treaty of Friendship, Commerce and Navigation
between the United States and Nicaragua as a defence on the merits,
which in the particular circumstances it found to be unpersuasive. The
Court had failed to address the question at all in its 1984 Judgment on
jurisdiction, when it should naturally have done so; as a consequence, the
question fell to the merits if it was to be addressed at all. In my view, this
history leaves the Court free in the present proceedings objectively to
apply the terms of Article XX of the Treaty of 1955, unconstrained by
the 1986 holding. The reasoning belatedly expressed by the Court on the
matter in 1986 was in my view unpersuasive and remains so; and ques-
tion has been rightly raised about the “value as a precedent” of holdings
of the Court in the case (Shabtai Rosenne, The World Court, What It Is
and How It Works, 5th ed., rev., 1995, pp. 152-153).

The Court in this Judgment takes the position that Iran argued in these

79
879 OIL PLATFORMS {DISS. OP. SCHWEBEL)

proceedings that the Court should give the same interpretation to
Article XX, paragraph 1 (d), as it did in 1986, and that the United
States concluded that consideration of the interpretation and application
of Article XX, paragraph 1 (d), was an issue for the merits. The Court
declares that it sees no reason to vary the conclusions arrived at in 1986.
But I believe the position of the United States in this case, and the
responsibilities of the Court in this case, to be somewhat different.

In its Preliminary Objection, the United States maintained that:

“Section 4. Article XX Confirms that the 1955 Treaty Is Not
Intended to Address Questions Relating to the Use of Force by
the Parties During Armed Conflict

3.36. Any doubts as to the applicability of the 1955 Treaty to
Iran’s claims is dispelled by Article XX of the Treaty, paragraph (1),
which provides:

‘1. The present Treaty shall not preclude the application of
measures:

(d) necessary . . . to protect its [a party’s] essential security

interests.’

3.37. The intended relationship of this provision to the jurisdic-
tion of the Court was expressly addressed during the process of
obtaining ratification of other friendship treaties with the identical
provision. Thus, in connection with the ratification of the treaty with
China the Department of State submitted to the United States Sen-
ate a memorandum on the dispute settlement clause that addressed
the scope of the compromissory clause providing for the submission
of disputes under that treaty to this Court. That Memorandum pro-
vides:

‘The compromissory clause . . . is limited to questions of inter-
pretation or application of this treaty; Le., it is a special not a
general compromissory clause.

Furthermore, certain important subjects, notably immigration,
traffic in military supplies, and the “essential interests of the coun-
try in time of national emergency”, are specifically excepted from
the purview of the treaty. In view of the above, it is difficult to

conceive how Article XXVIII could result in this Government’s
being impleaded in a matter in which it might be embarrassed.’

A similar memorandum was later submitted to the Senate in regard
to FCN treaties with Belgium and Viet Nam. That memorandum
points out:

‘a number of the features which in its view make this provision
satisfactory . . . These include the fact that the provision is limited

80
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OIL PLATFORMS (DISS. OP. SCHWEBEL)

to differences arising immediately from the specific treaty con-
cerned, that such treaties deal with familiar subject matter and are
thoroughly documented in the records of the negotiation, that an
established body of interpretation already exists for much of the
subject matter of such treaties, and that such purely domestic
matters as immigration policy and military security are placed
outside the scope of such treaties by specific exceptions.’

This history demonstrates that the 1955 Treaty was not intended to
reach matters relating to the essential security interests of the parties.

3.40. In the Nicaragua case the Court held that US national secu-
rity interests were not threatened by the insurgent attacks against El
Salvador that had formed the basis of the US claim to have acted in
self-defense. In contrast, Iranian attacks on US and other neutral
vessels in the Persian Gulf clearly threatened US national security
interests. In the current case, the United States invokes the com-
parable article in the 1955 Treaty for the purpose of supporting its
argument that Articles I, IV and X of the 1955 Treaty relied upon by
Iran were never intended to address the use of force issues presented
by Iran’s claims in connection with the events of October 1987
and April 1988.”

The United States Preliminary Objection concluded that, in this case,
“Consequently, the Court is presented with exactly the type of situation
the 1955 Treaty does not cover.” (Pp. 50-53.)

At the stage of the oral proceedings, counsel of the United States
initially submitted:

81

“Article XX (1) (d) requires that the 1955 Treaty

‘shall not preclude the application of measures . . . necessary to
fulfill the obligations of a High Contracting Party for the mainte-
nance or restoration of international peace and security or neces-
sary to protect its essential security interests’.

Our preliminary objection suggested that, as a jurisdictional mat-
ter, this provision helped to show that Articles I, IV and X, those
invoked by Iran, were not designed or intended to govern Iran’s
claims regarding the use of force. This is because Article XX (1) (d)
manifested the parties’ intent to keep such matters outside the scope
of the Treaty. We believe that jurisdictional point remains valid.
However, the Islamic Republic of Iran’s Observations and Submis-
sions responded to it with several pages of animated arguments
881 OIL PLATFORMS (DISS. OP. SCHWEBEL)

essentially addressing how Article XX (1) (d) should be interpreted
and applied to the merits of this dispute.

With respect, I think this is not the point on which to join
issue on these particular arguments. We do not now, where the
issue is the Court’s lack of jurisdiction, raise Article XX (1) (d)
as a defence against the merits of Iran’s claims. The significance of
Article XX (1) (d) is not at the heart of our position concerning this
Court’s lack of jurisdiction. It should not be allowed to cloud the
issues that are before the Court. Thus, I suggest that it is not
necessary for the Court to address the specific arguments regarding
the construction and application of Article XX (1) (d), unless
there should be a future merits phase.” (CR 96/13, p. 33.)

Subsequently, United States counsel stated:

“that consideration of the interpretation and application of Ar-
ticle XX (1) (d) was a merits issue . . . The position of the United
States is that the 1955 Treaty does not regulate the conduct of mili-
tary hostilities, and therefore, that such conduct should never —
never — be the subject of any merits proceedings in this Court under
the Treaty. Article XX (1) (d) is not inconsistent with this position
... If the Court should rule that it does have jurisdiction to adjudi-
cate Iran’s claims regarding the military events at issue — then, of
course, the United States would demonstrate that its actions did not
violate the Treaty. In this regard, the United States would invoke
Article XX, paragraph 1, and show that the Treaty does not pre-
clude the Parties from taking actions consistent with the law govern-
ing the use of force and the exercise of self-defence.

Thus, the United States certainly does not concede that the 1955
Treaty regulates the conduct of armed conflict. However, should the
Court rule otherwise, there will be a need for the Parties and the
Court to examine with care the exceptions to the reach of the Treaty
that are expressly written into Article XX (1) (d).” (CR 96/16,
pp. 35-36.)

Therefore, in the end, as in the beginning, the United States treats
Article XX as specifying exceptions to the reach of the Treaty. As
I understand its position, it maintains that Article XX on its face places
the use of force in protection of a party’s essential security interests
beyond the reach of the Treaty, but if nevertheless the Court should
assume jurisdiction in the case, this provision will provide a defence on
the merits.

In my view, for the reasons stated, the Court should have passed upon
Article XX, paragraph 1 (d), at this stage of the proceedings and given

82
882 OIL PLATFORMS (DISS. OP. SCHWEBEL)

effect to it, whatever the equivocations in the construction of it advanced
in the oral argument.
Apart from Article XX, the Court more generally concludes:

“The Treaty of 1955 imposes on each of the Parties various obli-
gations on a variety of matters. Any action by one of the Parties that
is incompatible with those obligations is unlawful, regardless of the
means by which it is brought about. A violation of the rights of one
party under the Treaty by means of the use of force is as unlawful as
would be a violation by administrative decision or by any other
means. Matters relating to the use of force are therefore not per se
excluded from the reach of the Treaty of 1955.” (Para. 21.)

J agree with this reasoning in a measure. If Iran or the United States
were to expropriate property of a national of the other without compen-
sation and use force in the process, or if Iran or the United States were by
force to maltreat or imprison a consul of the other, the Treaty would be
violated. To this extent, the Court is right to say that a violation of the
rights of a party under the Treaty by means of the use of force is as much
a breach as would be a violation by administrative decision or other
means. In this sense, matters relating to the use of force are not as such
excluded from the purview of the Treaty.

But it does not follow that the use by one party to the Treaty of its
armed forces to attack what it treated as military objectives within the
jurisdiction of the other party is within the reach of the Treaty. The
Treaty simply does not deal with that kind of use of force, which is rather
governed by the Charter of the United Nations and other provisions of
international law relating to armed conflict between States.

This conclusion is sustained by papers submitted by the United States
Government to the United States Senate in connection with the ratifica-
tion of the Treaty of 1955 as well as other very similar treaties of friend-
ship, commerce and navigation. Not only did the United States cite and
rely upon these papers in these proceedings; it is significant that Iran
itself did so as well (see the Memorial submitted by the Islamic Republic
of Iran, Exhibit 98, which quotes from a statement on commercial trea-
ties with Iran, Nicaragua and the Netherlands submitted to the United
States Senate on 3 July 1956, and the Observations and Submissions on
the United States Preliminary Objection Submitted by the Islamic Repub-
lic of Iran, Exhibit 10, which quotes from a memorandum to the United
States Embassy at Chongqing of 2 February 1945 for use in negotiating
the Treaty of Friendship, Commerce and Navigation with China). These
papers may properly be weighed by the Court not as travaux prépara-
toires, but as part of the circumstances of the conclusion of the Treaty,
introduced by both of the Parties to the Treaty and to these proceedings,
as to the admissibility of which no question was raised by the Court.

83
883 OIL PLATFORMS (DISS. OP. SCHWEBEL)

Indeed in its Judgment the Court itself relies on these documents — and
the absence of divergent Iranian documents — to show the meaning
attached to provisions of the Treaty of 1955.

Iran invoked a memorandum concerning negotiation of the Treaty of
Friendship, Commerce and Navigation between the United States and
China. One of the papers of that negotiation is published in the pleadings
in the case concerning United States Diplomatic and Consular Staff in
Tehran, Annex 52, entitled, “Memorandum on Dispute Settlement Clause
in Treaty of Friendship, Commerce and Navigation with China”. It says
of a compromissory clause identical to that found in the Treaty of 1955:

“The compromissory clause (Article XXVIIT) of the treaty with
China, however, is limited to questions of the interpretation or
application of this treaty; i.e., it is a special not a general compro-
missory clause. It applies to a treaty on the negotiation of which
there is voluminous documentation indicating the intent of the
parties. This treaty deals with subjects which are common to a large
number of treaties, concluded over a long period of time by nearly
all nations. Much of the general subject-matter — and in some cases
almost identical language — has been adjudicated in the courts of
this and other countries. The authorities for the interpretation of this
treaty are, therefore, to a considerable extent established and well
known. Furthermore, certain important subjects, notably immigra-
tion, traffic in military supplies, and the ‘essential interests of the
country in time of national emergency’, are specifically excepted
from the purview of the treaty. In view of the above, it is difficult to
conceive how Article XXVIII could result in this Government’s
being impleaded in a matter in which it might be embarrassed.”

Annex 53 to the same pleadings refers to the foregoing paper in these
terms:

“This paper indicates that the provision in question is intended to
fill the need for an agreed method of settling differences arising out
of treaties of this type, that would be both sound and generally
acceptable. It points out a number of the features which in its view
make the provision satisfactory from this standpoint. These include
the fact that the provision is limited to differences arising immedi-
ately from the specific treaty concerned, that such treaties deal with
familiar subject-matter and are thoroughly documented in the
records of the negotiation, that an established body of interpretation
already exists for much of the subject-matter of such treaties, and
that such purely domestic matters as immigration policy and mili-
tary security are placed outside the scope of such treaties by specific

84
884 OIL PLATFORMS (DISS. OP. SCHWEBEL)

exceptions. The paper indicates the Department’s view not only that
such a treaty provision would not operate in a manner detrimental
to US interests but that it is in the interest of the United States to be
able to have recourse to the International Court of Justice in case of
treaty violation.” (C.J. Pleadings, United States Diplomatic and
Consular Staff in Tehran, pp. 235, 237.)

These quotations establish not only that treaties of friendship, com-
merce and navigation concluded by the United States, like a large number
of treaties concluded over a long period of time by almost all nations,
concern familiar commercial matters, as to which there is voluminous
documentation, the authorities for the interpretation of which are estab-
lished and well known and which are the subject of much national adju-
dication (unlike matters concerning the international use of force, which
are not). They establish as well that the compromissory clause is meant to
be “limited to differences arising immediately from the specific treaty
concerned”. Moreover, they reaffirm that essential security interests “are
specifically excepted from the purview of the treaty”. Military security “is
placed outside the scope of such treaties by specific exception[s]”.

Ail this demonstrates the intention of the United States in concluding
treaties of this content and character. It is significant not only that Iran
has itself introduced evidence of this very kind in these proceedings. It is
no less significant that Iran has not introduced any evidence showing that
its intentions in concluding the Treaty of 1955 differed from those of the
United States. By way of contrast, Iran introduced vital evidence of its
legislative intent “filed for the sole purpose of throwing light on a dis-
puted question of fact, namely, the intention of the Government of Iran”
at the time it adhered to the Court’s compulsory jurisdiction under the
Optional Clause (Anglo-Iranian Oil Co., I.C.J. Reports 1952, pp. 93,
107).

Finally, in construing the Treaty of 1955 before the Iran-United States
Claims Tribunal, that is, in interpreting the Treaty in practice, Iran
argued that the use of military force “was unforeseen by that Treaty and
cannot be regulated by it”. In Amoco International Finance Corp. v.
Islamic Republic of Iran, Tran contended:

“First, it is totally unrealistic to assume that at the time in ques-
tion, 1979/1980, the Treaty of Amity was operative in the relations
between the United States and Iran. The situation which existed
(and which included the sending of a US military expedition into
Iranian territory, as well as the seizure of Iranian assets) was not one
which could be said to be regulated by the terms of the 1955 Treaty

85
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5 OIL PLATFORMS (DISS. OP. SCHWEBEL)
of Amity. The situation was unforeseen by that Treaty and cannot
be regulated by it.’” (Defence and Counterclaim of the Islamic Repub-

lic of Iran et al., of 24 May 1984, as quoted in Preliminary Objection
of the United States of America, Exhibit 54.)

ARTICLE X OF THE TREATY OF 1955

The Court finds that it has jurisdiction, on the basis of Article XXI,

paragraph 2, of the Treaty, “to entertain the claims made by the Islamic
Republic of Iran under Article X, paragraph |” of the Treaty. In its
Application, Iran maintained that,

In

“By its actions in assisting the Government of Iraq in its war
efforts, in threatening and provoking the Islamic Republic with the
deployment of US forces in the region, and in attacking and destroy-
ing Iranian entities and the oil installations referred to here, the
United States has gravely interfered with the commerce and naviga-
tion of the Islamic Republic and had thus violated the provisions of
Article X (1) of the Treaty.”

its written and oral pleadings, Iran confined itself to the claim that

violation of Article X, paragraph 1, sprung from the attacks on and

de

86

struction of the oil platforms.
Article X of the Treaty provides:

“1. Between the territories of the two High Contracting Parties
there shall be freedom of commerce and navigation.

2. Vessels under the flag of either High Contracting Party, and
carrying the papers required by its law in proof of nationality, shall
be deemed to be vessels of that High Contracting Party both on the
high seas and within the ports, places and waters of the other High
Contracting Party.

3. Vessels of either High Contracting Party shall have liberty, on
equal terms with vessels of the other High Contracting Party and on
equal terms with vessels of any third country, to come with their car-
goes to all ports, places and waters of such other High Contracting
Party open to foreign commerce and navigation. Such vessels and
cargoes shall in all respects be accorded national treatment and
most-favored-nation treatment within the ports, places and waters
of such other High Contracting Party; but each High Contracting
Party may reserve exclusive rights and privileges to its own vessels
with respect to the coasting trade, inland navigation and national
fisheries.

4. Vessels of either High Contracting Party shall be accorded
national treatment and most-favored-nation treatment by the other
886 OIL PLATFORMS (DISS. OP. SCHWEBEL)

High Contracting Party with respect to the right to carry all
products that may be carried by vessel to or from the territories
of such other High Contracting Party; and such products shall be
accorded treatment no less favorable than that accorded like products
carried in vessels of such other High Contracting Party, with respect
to: (a) duties and charges of all kinds, (b) the administration of
the customs, and /c) bounties, drawbacks and other privileges
of this nature.

5. Vessels of either High Contracting Party that are in distress
shall be permitted to take refuge in the nearest port or haven of the
other High Contracting Party, and shall receive friendly treatment
and assistance.

6. The term ‘vessels’, as used herein, means all types of vessels,
whether privately owned or operated, or publicly owned or oper-
ated; but this term does not, except with reference to paragraphs 2
and 5 of the present Article, include fishing vessels or vessels of
war.”

Since every paragraph of Article X except the first refers expressly to
“vessels” and since stationary oil platforms are not vessels, neither Iran
nor the Court purport to found jurisdiction on paragraphs of Article X
other than paragraph 1, which refers to “freedom of commerce and navi-
gation”.

Evidence introduced before the Court treats the whole of Article X as
“a navigation article”. A principal United States negotiator of the series
of largely identical treaties of friendship, commerce and navigation
describes the standard article on these matters precisely as “a navigation
article” that

“reaffirms a liberal regime of treatment to be applied to interna-
tional shipping. The rules set forth reflect the practices which have
historically been developed by leading maritime nations . . .” (Her-
man Walker, “The Post-War Commercial Treaty Program of the
United States”, Political Science Quarterly, Vol. LXXIX, p. 73.)

Other commentators cited to the Court similarly interpret Article X.
Article X as a whole is concerned with shipping, not with commerce gen-
erally. The fact that every paragraph but the first refers to “vessels”
suggests that the purpose of paragraph 1 is not to deal with commerce
generally — for if that were its purpose it would appear as a separate
article of the Treaty — but to introduce and set the objective of the
remaining paragraphs of the article. (In reviewing those paragraphs, it is
worth noting that, in the last, “vessels of war” are excluded from the
reach of the article except in specified respects.) Moreover, specifics of
freedom of commerce are dealt with in detail in Articles VIIT and IX of
the Treaty. Accordingly when the Treaty means to address more than

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freedom of maritime commerce, it does so in other articles and in terms
that have no bearing on the dispute before the Court.

The Court nevertheless finds that Article X is not restricted to mari-
time commerce for the reasons set out in the Judgment.

Even if those reasons are thought to be tenable, where in my view the
Court’s conclusions are untenable is in its holding that “commerce” is
not restricted to acts of purchase and sale. It interprets “commerce” as
embracing “the ancillary activities related to commerce”. It thus appears
to conclude, although it does not state, that “commerce” includes “pro-
duction”. It offers quotations from the Oxford English Dictionary
and the Oscar Chinn case and a few other sources in support of this con-
clusion.

The difficulty with the reasoning of the Court is that production is not
ancillary to commerce. It is anterior to it, just as the existence of terri-
tory, people, rainfall, geological formations, growing of crops, generation
of capital, etc., is anterior to commerce which exchanges what may be
products of the productive conjunction of such resources. The quotation
from the Oxford English Dictionary defines commerce to include “the
whole of the transactions, arrangements, etc., therein involved”, and
“therein” refers to sale and purchase — which hardly implies that com-
merce extends to production. The Court’s reference to the Dictionnaire
de la terminologie du droit international and to a few other disparate
sources is no more probative; they make no reference to production
whatsoever. Black’s Law Dictionary on which Iran and the Court rely
contains no reference to or suggestion that commerce includes produc-
tion; it is confined to “the purchase, sale and exchange of commodities”
and the agencies and means of such exchange. At the same time, a review
of the dozen or more dictionaries in the Library of the Court, English
and multilingual, turns up none that define commerce to include produc-
tion. Rather, like David M. Walker’s The Oxford Companion to Law
(Oxford University Press, 1980), they define as “Commerce. The exchange
of commodities and all the arrangements involved in effecting such
exchanges.” (P. 247.)

The fact of the matter is that commerce in ordinary and in legal usage
is simply not understood to embrace production. Oscar Chinn gives the
Court more, but insufficient support, because the term there under con-
struction was “freedom of trade” not freedom of commerce, and “trade”
is widely interpreted as a broader term than commerce, and one which,
unlike commerce, may include “industry”. Moreover, the “trade” at issue

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888 OIL PLATFORMS (DISS. OP. SCHWEBEL)

in the Oscar Chinn case was not production but river transport; the
“industry” in question was “the transport business”. The Court’s holding
“that the fluvial transport industry is a branch of commerce” is of no
relevance or assistance to Iran’s position in these proceedings (Oscar
Chinn, P.C.ILJ., Series A/B, No. 63, pp. 65, 81, 85). In short, the growing
of pistachio nuts in Iran is not commerce within the meaning of Article X
of the Treaty; the feeding of sturgeon in the Caspian Sea is not commerce
within the meaning of Article X of the Treaty; and the production of
oil on Iran’s continental shelf is not commerce within the meaning of
Article X of the Treaty.

This being so, the Court’s reliance on “freedom” of commerce does not
strengthen its analysis. To be sure, if the wherewithal to exchange is lack-
ing or is destroyed, there can be no exchange; there can be no commerce
in non-existent goods. But on the Court’s reasoning, action that impairs
the life or health of the inhabitants of Iran, or that detracts from its
climate, environment, condition of its natural resources, generation of its
capital, etc., also prejudices its freedom of commerce in that such action
may affect the ability of Iran to produce the goods to exchange. It might
in this vein be argued that if pollution originating in country A wafts
onto the territory of country B, country A, assuming it to be bound to
freedom of commerce with country B, is in violation of its obligation.
I do not believe that a treaty provision that, “Between the territories of
the two High Contracting Parties there shall be freedom of commerce
and navigation” sustains so far-reaching — if not far-fetched — an inter-
pretation. Nor am I persuaded that freedom of commerce and navigation
within the meaning of the Treaty could be affected by the fact or allega-
tion that some or all of the destroyed oil platforms in question were con-
nected by a pipeline network to port facilities.

It may be added that the Court’s holdings in Military and Paramilitary
Activities in and against Nicaragua are consistent with the conclusion
that Article X, paragraph |, of the Treaty of 1955 is confined to com-
merce and does not include production or facilities for production. In
that case, the Court found that mining of the approaches to ports and
port installations impaired Nicaragua’s right to freedom of communica-
tions and maritime commerce (J. C.J. Reports 1986, pp. 111-112, 128-129,
139), as that right was protected by the corresponding article of the
Treaty of Friendship, Commerce and Navigation between Nicaragua and
the United States. It did not hold that attacks on oil pipelines and storage
tanks violated that article of the Treaty. On the contrary, while the
Court’s Judgment recites that Nicaragua argued that

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889 OIL PLATFORMS (DISS. OP. SCHWEBEL)

“Since the word ‘commerce’ in the 1956 Treaty must be under-
stood in its broadest sense, all of the activities by which the United
States has deliberately inflicted on Nicaragua physical damage and
economic losses of all types, violate the principle of freedom of com-
merce which the Treaty establishes in very general terms” (1CJ.
Reports 1986, p. 139),

the Court did not pass upon that contention (see ibid., pp. 139-140).
There is nothing in the Court’s holdings that suggests that that
article protected the production of oil or any other commodity in
Nicaragua.

For these reasons, I conclude that the Court’s reliance on Article X,
paragraph 1, of the Treaty of 1955 to found the jurisdiction of the Court
in this case is unfounded.

(Signed) Stephen M. SCHWEBEL.

90


51

SEPARATE OPINION OF
VICE-PRESIDENT WELLINGTON KOO

1. I am in complete agreement with the Court’s findings on the
first, second and fourth Preliminary Objections and with the general
line of reasoning which has led up to them, except on one point in
connection with the second Objection which calls for some elucidation
on my part. As regards the third Preliminary Objection, I regret to
be unable to concur in the Court’s conclusion in favour of a joinder to
the merits. It is my view that this objection should have been rejected.
Accordingly, I propose to state the reasons for my opinion in the two
respects.

I

2. The Judgment in referring to the reliance cf the Respondent
upon the decision of the Court in the /svael v. Bulgaria case in support
of the second Preliminary Objection points out a number of differences
between that case and the present one. In so far as this is done for the
purpose of making an independent approach to the instant case on
its merits, it can be easily understood. But, as I look at it, calling
attention to these differences does not imply, nor do they themselves
justify an implication of, any justification of the decision in the former
case, concerning which my views remain the same as stated in the
Joint Dissenting Opinion appended to the Judgment in that case.

3. The differences which have been noted in the present Judgment
on the second Preliminary Objection are, in my view, only of an inci-
dental character as regards the point in issue. The two situations
arising from Article 36 (5) of the Statute in relation to the Bulgarian
declaration of acceptance under Article 36 and from Article 17 (4) of
the Hispano-Belgian Treaty of 1927 in relation to Article 37 are basi-
cally similar, if not identical, so far as the question of the transfer of
the compulsory jurisdiction from the old Court to the new Court is
concerned. Both depend upon the factor of being “still in force”,
independently of the disappearance of the Permanent Court, which was
taken for granted. This term, which, as regards declarations of accept-
ance mentioned in Article 36 (5), was originally drafted in English and
rendered in French as “pour une durée qui n’est pas encore expirée”,
constitutes the requisite condition for the said transfer. As regards
Article 37, the condition is in fact the same for it calls for “a treaty or
convention in force [which] provides for reference of a matter to a
tribunal to have been instituted by the League of Nations, or to the

49
52 BARCELONA TRACTION (SEP. OP. WELLINGTON KOO)

Permanent Court of International Justice”. The dissolution of both
the League and the Court had been known and they were expected to
be on their way to disappearance. The purpose of Article 37 and
Article 36 (5) is the same: it is to preserve as far as possible the com-
pulsory jurisdiction arrangements in force apart from the expected
dissolution of the League and the Court. The form of the instrument
in which the compulsory jurisdiction provision is embodied is immaterial.
Whether this provision forms the whole subject-matter of a given instru-
ment or is only one of the provisions of a treaty or convention for
pacific settlement of disputes by specified bodies, or whether it consti-
tutes a special provision in a general treaty or convention on other
matters, is of no decisive importance as regards the transfer of the
jurisdiction under Article 37. What matters is that the treaty or
convention should in such case continue to be in force. This contin-
uation of validity refers to the instrument as a whole; so long as the
instrument itself remains in force, so long does the provision for com-
pulsory jurisdiction, just as under Article 36 (5) of the new Statute,
the declarations of acceptance made under Article 36 of the old Statute,
are considered to remain in force so long as the period for which they
were made has not expired. Article 17 (4) of the 1927 Treaty, like the
Bulgarian declaration of acceptance, may have been temporarily
inoperative due to the dissolution of the Permanent Court of Interna-
tional Justice, but this transient factor of inapplicability had been
taken for granted and had been the very reason for the provisions of
Article 37 just as it had been, in respect of declarations of acceptance
under Article 36, for those of Article 36 (5). In other words the whole
purpose of both provisions was intended to discount the effect of the
dissolution of the old Court and make possible the effective transfer of
its compulsory jurisdiction to the new Court.

4. Moreover, on closer examination it will be found that the argu-
ment of differentiation between the Aerial Incident case and the present
case does not explain away the former decision. From the juridical
point of view there is really no distinction as regards the principle of
transfer from the old Court to the new Court. Only the two sources
of the obligation to submit to compulsory jurisdiction are different.
In the case of the declarations of acceptance made under Article 36,
paragraph 2, of the old Statute, like similar declarations made under
the identically numbered provision of the new Statute, their effectiveness
depended upon the extent of concordance of the terms between any
two given acceptances, having due regard to the respective reservations
and limitations on the principle of reciprocity, whereas the jurisdictional
clauses, to which Article 37 is applicable, derive from the mutual con-
sent and agreement of the contracting parties in bilateral or multi-
lateral instruments. But the process of the transfer itself and the legal

50
53 BARCELONA TRACTION (SEP. OP. WELLINGTON KOO}

effect of the transfer once consummated, are the same in both situations,
just as the purpose of the two provisions in the Statute in question is
identical. Only, in the instant case, as the Judgment has rightly
pointed out, the basic obligation of submitting to compulsory adjudi-
cation is clearly stipulated in Articles 2 and 17 (1) of the 1927 Treaty
just as in Article 23 in respect of “any disputes arising as to the inter-
pretation of execution of the present Treaty”, while the provision of
Article 17 (4) is of a functional character as regards the tribunal for
such adjudication, as is also the case in respect of the tribunal mentioned
in Articles 21 and 22 for the determination of certain matters.

5. Such being the situation in the instant case, the difference in
legal effect, if any, is one of degree as regards the validity or strength
of the source of the obligation and not one of kind. For this reason
there is even greater justification to uphold the validity of the transfer
of the compulsory jurisdiction under Article 37 than under Article 36,
paragraph 5. It does not warrant any implication that the decision
in the Aerial Incident case was equally justifiable in law.

II

6. The third Preliminary Objection undoubtedly raises important
questions of law and fact. In principle I fully endorse judicial caution
as a sound policy in the interest of good administration of justice and
the Court certainly has full discretionary power to decide on a joinder
for good reasons, as the Court has affirmed in the present Judgment.

7. Inthe instant case I am, however, of the opinion that this objec-
tion could and should have been adjudicated upon. The elaborate
written pleadings and the lengthy oral hearing have brought out clearly
and almost exhaustively the various issues involved and the searching,
though conflicting, arguments of the two Parties. While the Applicant
has asked the Court, as the alternative to dismissal, to join the third
Preliminary Objection to the merits, the Respondent has urged that
the issue raised by it “is wholly ripe for decision” and that the alter-
native Belgian request for the joinder of this objection to the merits
cannot be justified.

8. In the light of the submissions of the Parties on the third Prelim-
inary Objection, two principal questions are involved at the outset :
(a) one of law and (8) one of fact, the other issues raised being sub-
ordinate to and dependent upon the answers to the two questions for
their solution. The question of law can be stated thus: does inter-
national law recognize the right of a State to protect its nationals,

51
54 BARCELONA TRACTION (SEP. OP. WELLINGTON KOO)

natural or juristic persons, being shareholders in a foreign company,
for damage or injury to them through an internationally illicit act
done to the company by a third State? And the question of fact centring
on two crucial points: are the shares in Barcelona Traction registered
on its books in the name of nominees of American nationality and claimed
by the Applicant as belonging to natural and juristic persons of Belgian
nationality found prima facie to be owned by them, and have these
persons sustained damage through damage caused to the said company
by internationally wrongful acts, measures or omissions of the organs
of the Respondent Government?

g. Ifthe answer to the question of law is found to be in the negative
and nevertheless the facts and circumstances of the case appear to be
weighty and serious, judicial caution and sound administration of
justice would dictate a joinder to the merits in order to make two deter-
minations at the second phase of the proceedings, if it should finally
take place. First, to determine whether the facts and circumstances
of the instant case are juridically adequate to constitute a valid ground
for recognizing the Applicant’s capacity or jus standi before the Court.
If they are found to be inadequate for the purpose, the claim of the
Applicant must be held to be inadmissible and the third Preliminary
Objection must be sustained. If they are found to be adequate, it
would then be in order to make the second determination, namely
whether the facts and circumstances of the instant case are of such a
particular character as to warrant the finding by the Court of another
exception to the existing recognized rule of protection of a company
only by its national State.

to. If, on the other hand, the answer to the same question of law
is found to be in the affirmative and the essential facts alleged by the
Applicant constitute prima facie a valid ground for recognizing its
capacity, a jus stand? in the instant case, the said objection must be
rejected at the present stage of the proceedings. Such a finding, how-
ever, would still leave it open to the Respondent at the later phase
of the proceedings on the merits, if it should finally take place, to refute
and disprove the alleged facts by counter-evidence. If the Respondent,
in the opinion of the Court, succeeds in the task, a finding will of course
be made to reject the Applicant’s claim on the merits.

11. In brief, the primary question of law raised by the third Pre-
liminary Objection consists in determining first of all whether under
modern international law there exists a general right on the part of a
State to protect its nationals, shareholders in a foreign company,
vis-a-vis a third State independently of the general rule of protection
by States of their national companies and of the recognized exception
to it as noted above. It centres on the point whether modern inter-

52
55 BARCELONA TRACTION (SEP. OP. WELLINGTON Koo)

national law sanctions such a general right of intervention as claimed
by the Applicant on behalf of Belgian shareholders. I propose now
to consider this question.

A

12. The introduction of the concept of private legal entities in
international law in the form of corporate bodies is a natural sequel to
its emergence in municipal law. Since there are almost as many dif-
ferent kinds of corporate entities as there are different systems of
municipal law under which they are constituted and since their activities
have been growing in complexity as well as in kind, the problem of
protecting their legitimate interests in international law has been
assuming increasing importance as well as endless complexity.

13. This idea of protection is fundamental and appears to be common
ground between the two schools of advocates on the subject. Their
difference of view relates to the manner and extent of its implementation
in international law. What is pertinent to the question under consider-
ation, however, is to determine which is the more reasonable and
practical view as regards protection of the shareholders by their national
State in a foreign company. Should this protection be confined to
the shareholders in a foreign company which is of the nationality of the
“offending State”? Should it be limited again to such a case where the
said foreign company has been dissolved or is practically defunct?
Should there be an additional requirement that the said shareholders
must be owners of a majority of the total number of shares of the
company or at least a substantial proportion of them? What is the
criterion for constituting a substantial proportion? Or what is the
bearing and effect of the attitude of the State, the nationality of which
is possessed by the company, upon the right of the national State of
its shareholders to protect their interests? Has it intervened or has
its intervention been energetic or not?

14. I am inclined to think that while the positive answers to them
may be interesting or useful, they do not constitute essential elements
to a general rule of protection of the national shareholders of the inter-
vening State (still less to the particular issue under consideration).

15. Foreign investments constitute one form of property, rights
or interests, and as such are in principle entitled to the protection of
international law. Since the kinds and methods of such investment
are numerous and varied, and since they are still in the process of
expansion and development, it is inevitable that at the present stage
of their evolution new circumstances and unfamiliar features will be
encountered in the protection of such rights and interests in the inter-

53
56 BARCELONA TRACTION (SEP. OP. WELLINGTON KOO)

national field. But in essence they all fall within the compass of the
general rule of diplomatic and judicial protection of international law.
What is really involved is the basic principle of protection, which has
been so clearly affirmed by the Permanent Court of International
Justice in the Mavrommatis casé when it declared :

“It is an elementary principle of international law that a State
is entitled to protect its subjects, when injured by acts contrary
to international law committed by another State, from whom
they have been unable to obtain satisfaction through the ordinary
channels 1.”

Moreover, international law, which is primarily founded on the
generally recognized principles of law and justice, attaches less impor-
tance to form and appearance than municipal law. Where it is a
question of protection of property, rights and interests, it is the proper
function of international law to ascertain where and to what extent they
exist, and to accord recognition to realities rather than to forms and
appearance. As stated by this Court in the Reparation for Injuries
Suffered in the Service of the United Nations, Advisory Opinion of
II April 1949 “throughout its history, the development of international
law has been influenced by the requirements of international life... 2”.
Max Huber, Rapporteur on British claims against Spain in the Spanish
Zone of Morocco, observed :

“... Malgré le fait que beaucoup de systèmes de droit admettent
l'existence indépendante de sociétés en nom collectif, la juris-
prudence prépondérante des tribunaux reconnaît la possibilité de
distinguer entre les parts contributives des sociétaires, d’un côté,
et la société même de l’autre. Le droit internationa: qui, dans ce
domaine, s'inspire essentiellement des principes de l'équité, n’a
établi aucun critère formel pour accorder ou refuser la protection
diplomatique à des intérêts appartenant à des personnes de natio-
nalité différente...”

16. The right of a State to protect a company which possesses its
nationality by diplomatic intervention or by recourse to international
judicial settlement against another State for wrongful acts toward
the company involving its international liability is generally recognized
by international law. This rule is evidently derived by analogy from
the principle that—

1 P.C.I.J., Series A, No. 2, p. 12.

2 1.C.]. Reports 1949, p. 178. |

3 Quoted by John Thomas Miller Jr., Du traitement par les gouvernements
des intérêts étrangers dits substantiels des -sociétés, 1950, p. 82.

54
57 BARCELONA TRACTION (SEP. OP, WELLINGTON KOO)

“By taking up the case of one of its subjects and by resorting
to diplomatic action or international judicial proceedings on his
behalf, a State is in reality asserting its own rights—its right to
ensure in the person of its subjects, respect for the rules of inter-
national law}.”

But this analogy, by the very nature of the corporate personality,
is only approximate and cannot be pushed too far. It has been gener-
ally accepted because it facilitates protection abroad by its so-called
national State. But it could not have been, and was obviously not
intended to be, an all-in-all prescription for the protection of the various
categories of rights and interests embodied in a corporate entity, the
owners of which often have several different nationalities. Moreover,
as a matter of fact, even in municipal law the shareholders are entitled,
in certain circumstances, to take action in their own names in respect
of injuries to a corporate entity. This principle is not only to be found
in the decisions of the English and United States courts but is also
recognized in the jurisprudence and law of associations under the
Continental system 2.

17. As the concept of corporate personality has become more com-
plex and the activities of modern private corporations of different
kinds have rapidly grown in variety and range, often extending to the
territories of many States with different municipal law systems, their
organization has taken on many forms of structure with an increasing
number of constituent and associated elements. They often have
subsidiaries with varying degrees of ownership and different classes
of shareholders with differentiated rights of voting and sharing in the
profits or dividends. Because of this fact of rapid growth and devel-
opment of modern joint stock companies and corporations, the problem
of their protection has likewise become more complex.

18. In my view the foregoing general considerations are useful to
keep in mind when examining the points at issue in respect of the third
Preliminary Objection.

19. It may be true, as contended by counsel for the Respondent,
that international jurisprudence provides no precedent to support the
Applicant’s claim of the right of protection of the interests of its na-
tionals, shareholders in a foreign company, against the wrongful acts of a
third State done to the company. But it is to be noted that the cases
of arbitral awards examined by the Parties were mostly decided several

1 P.C.I.J., Series A, No. 2, p. 12.
2 J. Mervyn Jones, “Claims on Behalf of Nationals who Are Shareholders in
Foreign Companies”, in British Yearbook of International Law, 1949, Vol. XXVI,

PP. 232-234.
55
58 BARCELONA TRACTION (SEP. OP. WELLINGTON KOO)

decades ago whereas the progress and development of corporate organi-
zation and activities in international commerce and finance have over-
taken their applicability and have created new and unprecedented
conditions which in turn constantly give rise to hitherto unknown
problems in international law for fair and equitable solution.

20. For this reason, the original simple rule of protection of a com-
pany by its national State has been found inadequate and State prac-
tice, treaty regulation and international arbitral decisions have come
to recognize the right of a State to intervene on behalf of its nationals,
shareholders of a company which has been injured by the State of its
own nationality, that is to say, a State where it has been incorporated
according to its laws and therefore is regarded as having assumed its
nationality.

21. Whether this recognition may be regarded as an exception to
the rule of protection of a company by its own national State or as a
supplementary rule of protection of the shareholders of a company
is immaterial ; nor, in my view, is it a point of great consequence that
this recognition is sometimes qualified by the requirement that such
protection must be conditioned by the extinction or the practically
defunct state of the company in question. The important point to
note is that the national State of the shareholders is recognized to
have the right to protect them irrespective of whether they are to be
regarded merely as beneficial owners of the rights, property and interests
of the company or as virtual successors to the defunct or practically
defunct company.

22. It is true, as has been contended by the Respondent, that this
right of protection has been recognized because the wrongdoing State
being the national State of the particular company, there would other-
wise be no possibility of redress under international law. But it is
equally true that the raison d’être of this recognition is to secure redress
for the damage caused to the shareholders, and the particular rule
allowing only the national State of the company to exercise its protection
is set aside, precisely for this predominant purpose of effective protec-
tion of the legitimate interests of the shareholders of the company
who are nationals of the intervening State. If this is true, it follows
that the original rule authorizing only the national State of the com-
pany to exercise diplomatic protection of its property, rights and
interests is more of the nature of a particular rule for the protection of
the company as such rather than a general rule to apply to the protec-
tion of all kinds of rights and interests, both individual and corporate,
grouped within the juridical entity of the company. This being so,

56
59 BARCELONA TRACTION (SEP. OP. WELLINGTON KOO)

the national State of the shareholders of a foreign company is a fortiori,
entitled to exercise protection on their behalf.

23. For convenience sake or as a matter of policy, the national
State of the shareholders of a foreign company may leave their protec-
tion to the national State of the foreign company to exercise the right
of protection on its behalf as a first step. But this right is neither an
exclusive right nor a preferential right. There is no fundamental
reason why the national State of the shareholders of the company
should be denied the right to undertake their protection vis-à-vis the
third State having caused damage to the company and consequently
to its shareholders. This protection may be undertaken, for the pur-
pose of obtaining redress, either jointly with the national State of the
company or simultaneously with and independently of it. It is for
the shareholders’ national State to determine as a matter of policy
what step is to be taken and when it is to be taken for the purpose.
It may well be that the action taken by the company’s own State is
effective in securing redress for the company and therefore also for
the shareholders from the State causing the damage to it ; and in that
event, the State of the shareholders will see no need to intervene on
their behalf. But if the action of the national State of the company is
fruitless or if it is disinclined to take steps to protect the company or
discontinues its intervention without securing the desired result, there
is no good reason why the national State of the shareholders should be
precluded from exercising its own right to intervene on their behalf for
effective protection.

24. Perhaps in one instance the interests of the shareholders may
not be protectable in international law; that is, if the wrongdoing
State is one of which the shareholders of a foreign company so injured
are nationals. In such a case it is not only impossible to conceive of
an international claim to protect the interests of the shareholders as
such against their own State, if they own all the shares of the company,
but the said State can also justifiably disclaim international respon-
sibility toward the national State of the injured company on the same
ground as that on which the national State of a company injured by
itself declines responsibility by affirming that under. international law
a State cannot, at least in theory, injure itself or claim against itszlf.
For possible protection, the interests of the shareholders would have
to depend upon the attitude and effort of the national State of the com-
pany in asserting its right of diplomatic intervention in favour of the
company as such. For, on the principle stated by the Court in the
Mavrommatis case in claiming for redress of an injury caused to its
nationals by a foreign State, a State is really asserting its own right
to ensure respect for international law by the foreign State in the person
of its nationals, the national State of the company in question could
perhaps insist upon redress being accorded to the injured company
so as to repair also the losses to the shareholders by the wrongdoing

57
60 BARCELONA TRACTION (SEP. OP. WELLINGTON KOO)

national State of the shareholders, but it would be confronted by the
argument of lack of genuine interests on its part, to which international
law attaches primary importance.

25. However, if there are other shareholders of a different national-
ity or nationalities from that of the shareholders of the wrongdoing
State, the claims of their national States obviously cannot be met with
the same refusal to acknowledge international responsibility for its
wrongful act.

26. What I have said above shows that the rule of protection of a
company by its national State and the rule of protection of its share-
holders by their national State are really not, and cannot be, exclusive
of each other. These two rights are based on different concepts ; they
are different and independent of each other. They co-exist. They
are complementary and equally necessary from the standpoint of inter-
national law, though the right of a State to protect a company incor-
porated under its laws is limited to the needs arising from the nature
of the corporate personality only?.

27. The so-called exception, mentioned above, in favour of protec-
tion of the shareholders by their national State, to the general rule of
protection of a company by its national State, in my view is not an
exception. On examination it will be found to be of the nature of a
separate rule for the protection of the interests of the shareholders in
a foreign company by their national State. It is independent of the
first rule and co-exists with it. It is only incidentally by circumstances
connected with it. It is different from the right of the national State
of the foreign company. Like the latter it flows indirectly from the
general right of a State to protect its nationals and their property,
rights and interests on the territory of a foreign State. It is a natural
corollary of the principles of international law regarding fair treatment
by a State of aliens on its territory and diplomatic protection by their
national State for redress of wrongful acts committed by the foreign
State in breach of its international obligations.

28. For if the rule of protection of a company only by its national
State even in respect of the interests of its shareholders were of the
nature of a general and absolute rule, then in the case of the injury to
a company with foreign shareholders having been caused by its own

1 See De Visscher (Ch.), “De la protection diplomatique des actionnaires d’une
société contre l'Etat sous la législation duquel cette société s'est constituée”, in
Revue de droit international et de législation comparée, 1934, pp. 641-642.

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61 BARCELONA TRACTION (SEP. OP. WELLINGTON KOO)

national State, that should be the end of the matter, since it is affirmed
that a State cannot incur international liability toward itself. Yet
the Respondent admits and agrees that in such a case international
liability attaches to the national State of the company for having caused
damage to its foreign shareholders through the corporate body, though
the wrongful act has been directed to the company only. This recog-
nition of the right of diplomatic protection of a State of its nationals,
shareholders in a foreign company, already sanctioned by State prac-
tice, international arbitral awards and treaty stipulations, constitutes
in fact a rule in application of the general principle of diplomatic pro-
tection of nationals by their own State in international law. In other
words, the interests of shareholders are recognized by international
law as entitled to protection by their national State in the same way
as the other property, rights and interests of its nationals are protected.

29. The Respondent has also argued that such dual or multiple
protection by the national State of the company and the national
State or States of the shareholders will cause inconvenience and even
confusion internationally. It is pertinent to cite as an appropriate
answer what this Court has stated in the Reparation for Injuries,
Advisory Opinion, of 1949 when referring to the possibility of competi-
tion between the State’s right of diplomatic protection and the Organ-
ization’s right of functional protection, as follows :

“In such a case, there is no rule of law which assigns priority
to the one or to the other, or which compels either the State or
the Organization to refrain from bringing an international claim.
The Court sees no reason why the parties concerned should not
find solutions inspired by goodwill and common sense. ...

Although the bases of the two claims are different, that does
not mean that the defendant State can be compelled to pay the
reparation due in respect of the damage twice over}.”

The argument of confusing multiple protection therefore has no merit.

30. In the present case it will also be relevant to recall that in the
early years following the declaration of bankruptcy of Barcelona Trac-
tion by the Reus court on 12 February 1948, Canada, the national
State of the company, intervened actively to protect its interests.
The efforts of the Canadian Government, however, showed a change

1 1.C.J. Reports 1949, pp. 185-186.
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62 BARCELONA TRACTION (SEP. OP. WELLINGTON KOO)

of attitude as time went on. By late 1951 the Canadian Secretary of
State for External Affairs told the Spanish Consul in Canada that
“Canadian interests in this case are so slight that it is of little interest
to us”!. In a letter of 19 July 1955 replying to Mr. Arthur Dean,
attorney for Sidro, who had urged that “a vigorous inquiry” from
several ambassadors in Madrid, including the Canadian Ambassador,
“would be most helpful in bringing about a favourable result”, the
Canadian Secretary of State for External Affairs declined to accept the
suggestion and stated: “The Canadian Government has not been pre-
pared actually to intervene in this matter to make representations to
the Spanish Government as to the measures which ought to be taken
toward a settlement ?.”

31. In connection with the issue of the right of a State under inter-
national law to protect its nationals, shareholders in a foreign com-
pany, against a third State, an incidental question of law has been
debated by the Parties in the present case as to whether this right, if
it exists, is not limited to legal shareholders but extends to beneficial
owners of shares. The question relates to the system of registering the
shares of a particular company in its books in the names of the nominees.
This is usually authorized by statutory law or sanctioned by commercial
practice in the economically more advanced countries where capital
for investment abroad as well as at home is more abundant. Techni-
cally the registered shareholders are legal owners of the shares so
registered, but it would be obviously unjust and incorrect, in the light
of the intent and purpose of the municipal law which provides for such
a system of registration, which recognizes the equitable title of the
beneficial owner, and which as a fact must be taken into consideration
by international law, to disregard the interests of the beneficial or
real owners, if in the event of the particular company having suffered
damage caused by the wrongful acts of a foreign State, the national
State of the real owners of the shares in question should be denied the
right of protecting them on the international plane, even if the national
State of the nominees, who are the registered owners, should decline,
for considerations of policy or expediency, to intervene with the wrong-
doing State to protect its own nationals, the registered owners of the
shares in a given case.

32. International law, being primarily based upon the general
principles of law and justice, is unfettered by technicalities and for-
malistic considerations which are often given importance in municipal

1 Letter, dated 12 February 1952 from the Belgian Ambassador in Madrid
to the Belgian Minister of External Trade, document filed by the Belgian Govern-
ment on 5 May 1964.

* Document filed by the Belgian Government on 5 May 1964.

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63 BARCELONA TRACTION (SEP. OP. WELLINGTON KOO)

law. As has already been stated above, the fundamental right of
diplomatic intervention of a State to protect its nationals against another
State and to seek redress for them for any wrongful act on its part aims
generally to protect the genuine interests of its nationals. It is the
reality which counts more than the appearance. It is the equitable
interest which matters rather than the legal interest. In other words
it is the substance which carried weight on the international plane
rather than the form.

33. The salient issue of the whole question, from the point of view
of international law, is the right of protection of a State of the legitimate
interests of its nationals, shareholders in a foreign company, against a
wrongdoing third State. In regard to the evolution of a rule of custom-
ary international law there always exists the possibility of a difference
of opinion as to the degree of uniformity of the facts and the regularity
of their occurrence necessary to warrant, on this basis of reasoning, an
affirmation of its existence. This is obviously. because, in the absence
of a generally accepted norm for evaluating the factors, it must depend,
to a certain extent, upon a subjective appreciation, both of the recurrence
of the same facts and of the rapid development of foreign investments
in the international community, in arriving at a conclusion’. In my
view the evidence placed before the Court has not established the exis-
tence of any rule denying recognition of the existence of the interests
of shareholders or beneficial owners of shares in a foreign company or
prohibiting their protection by their national State or States by diplo-
matic intervention or recourse to international adjudication. On the
contrary there is seen a substantial body of evidence of State practice ?,
treaty arrangements? and arbitral decisions‘ to warrant the affirmation
of the inexplicit existence of a rule under international law recognizing
such a right of protection on the part of any State of its nationals,
shareholders in a foreign company, against another wrongdoing State,
irrespective of whether that other State is the national State of the
company or not, for injury sustained by them through the injury it
has caused to the company.

1 See De Visscher, Interprétation judiciaire, pp. 219-251.

? For cases see Alexandre-Charles Kiss, “La protection diplomatique des
actionnaires dans la jurisprudence et la pratique internationales”, in Travaux et
Recherches de l'Institut de Droit comparé de l'Université de Paris, 1960, Vol. XVIII,
pp. 178-210. :

3 For treaty arrangements, see Daniel Vignes, “La protection des actionnaires
dans les conventions internationales bilatérales”, ibid., pp. 211-241.

4 For a review of cases see J. Mervyn Jones, “Claims on Behalf of Nationals
who Are Shareholders in Foreign Companies”, in British Yearbook of International
Law, 1949, Vol. XXVI, pp. 237-254.

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64 BARCELONA TRACTION (SEP. OP. WELLINGTON KOO)

B

34. Having determined the general question of law as above, it
remains now to consider the question of fact, namely whether the
evidence placed before the Court justifies a conclusion that the Applicant
has established its jus standi in the instant case. The main facts
alleged by the Applicant consist of the following: (1) ownership by
Belgian nationals of shares in Barcelona Traction and their holding of
the capital of the company amounting to 88 per cent., both on 12 Feb-
ruary 1948, the date on which Barcelona Traction was declared bankrupt,
and on 14 June 1962, the date of the Application filed on 19 June 1962
instituting the present proceedings ; (2) the order of the Reus court
of 12 February 1948 declaring Barcelona Traction bankrupt ; (3) the
seizure of the property and other assets of Ebro, Barcelonesa and other
subsidiaries of the company ; (4) the mediata y civilissima seizure of
the shares of the subsidiaries belonging to Barcelona Traction kept in
Toronto ; (5) the printing and issuance of new sharés in substitution
of them; (6) the holding of a general shareholders’ meeting on the
basis of their possession by the bankruptcy organs ; (7) the replacement
of the originally appointed legal representatives before the Spanish
courts ; (8) the appointment of new boards of directors for the subsi-
diaries ; (9) the holding of a private meeting of creditors and the appoint-
ment of the trustees for the liquidation of the capital of Barcelona
Traction ; and (10) the sale of the subsidiaries through the newly
created shares to Fecsa, belonging to the March group on 4 January 1952.

35. Whether the foregoing facts are all true as alleged; or what is
the precise character or actual amount or value of the interests owned
by Belgian nationals, both natural and juristic persons; or how. the
damage has been caused to them ; or to what extent it has been actually
sustained by them—these are all questions which essentially belong
to the merits. At the present stage of the proceedings it is sufficient,
in my view, to note that the facts alleged by the Applicant have not
been denied by the Respondent. This being so, and in the light of the
question of law determined above, it is proper to conclude that prima
facte the Applicant has established its jus stand: and that the third
Preliminary Objection should have been rejected.

(Signed) WELLINGTON Koo.

62


469

SEPARATE OPINION OF JUDGE RANJEVA
[Translation]

Undertaking by the Parties to comply with the Court's decision — Diplo-
matic declaration confirming prior consent to jurisdiction — Notion of “the law
at the time” — Pacta non servanda sunt — Rules of intertemporal law —
Notion of non-“civilized” “nations” — Unilateralism — International law —
National law —- Respective scope of international law and colonial law.

1. I subscribe both to the operative parts and the reasoning of the
present Judgment, which will, I trust, achieve a final settlement of the dis-
pute between the two Parties. I welcome the commitment made by the Presi-
dents of Cameroon and Nigeria before the United Nations Secretary-
General on 5 September last with a view to securing enforcement of the
decision to be handed down by the Court (United Nations News Centre,
12 September 2002). Once again, African States have been concerned
to reaffirm their faith in the law and in the judicial settlement of their
disputes. In legal terms, the significance of this commitment should be
viewed in light of the consensual basis of the Court’s jurisdiction. Prior
consent to jurisdiction is the basis of the parties’ undertaking to accept
without reservation any decision which the Court :s called upon to give in
disputes between them. Whether or not there is any specific diplomatic
commitment, the parties to a dispute are bound once they have expressed
their consent, and any objections regarding admissibility or jurisdiction
have been dismissed. The Judgment is binding without any other special
or additional condition. It follows that the declaration of 5 Septem-
ber 2002 merely constitutes a diplomatic démarche confirming the pre-
existing legal obligation represented by prior consent to jurisdiction.

2. My purpose in this opinion is to consider the interpretation which in
my view should be given to the notion of “the law at the time” (Judg-
ment, para. 209). To understand the scope of this notion, reference
should be made to the Arbitral Award of the President of the French
Republic between Great Britain and Portugal concerning Delagoa Bay of
24 July 1875 (H. La Fontaine, Pasicrisie internationale 1794-1900: his-
toire documentaire des arbitrages internationaux), to the text of
Article 38 of the Statute of the Court and to the silence of the Judgment
regarding the characterization of the treaties concluded by the Chiefs of
Old Calabar with the representative of Old Ca abar. The criterion of
“civilized nation” represented the qualifying condition in order to be
accorded the juridical status of international subject. Without formal
recognition of sovereignty on the part of the civilized nations, traditio-
nal indigenous societies, African societies in particular, did not have the

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LAND AND MARITIME BOUNDARY (SEP. OP. RANJEVA) 470

status of subjects of international law, even where their territory was not
necessarily res nullius, as was made clear in the Advisory Opinion on the
Western Sahara case U.C.J. Reports 1975, p. 12). But does the refusal to
accord any international status to such treaties justify reliance on the
simple generic concept of “the law at the time’ when characterizing
in strictly legal terms territorial situations obtaining during the colonial
period? The problem is whether, in this case, the rules of intertemporal
law are sufficient to explain and justify the disappearance from the inter-
national scene of this ancient entity, the Chiefs of Old Calabar.

3. Literal application of the principles of intertemporal law leads to a
surprising conclusion, which could be expressed in the following maxim:
“in treaty relations with indigenous chiefs, pactz non servanda sunt”.
Thus it is difficult, without recourse to legal artifice, to justify the idea
that a protected entity could consent to being dispossessed of its legal
personality or of its territory. In a civil contract, any unilateral dissolu-
tion of an entity recognized under the terms of the contract is regarded as
a breach of the contractual obligations and sanctions must follow. Can
the absence of the conditions required for a valid international treaty
render such surprising consequences acceptable? The inequality and denial
of rights inherent in colonial practice in relation to indigenous peoples
and to colonies is currently recognized as an elementary truth; there is a
resultant duty to memorialize these injustices and at the same time to
acknowledge an historical fact. The destruction of international personal-
ity is procured by an act of force: through debellutio or under an agree-
ment between equals. But to contend that an international personality
has disappeared by consent is verging on fraud. Application of the rules
of intertemporal law cannot justify conclusions so contrary to fundamen-
tal norms, not even on the basis of the special nature of relationships with
indigenous chiefs.

The International Court of Justice should be reluctant to accept that,
in the name of intertemporal law, the maxim pacta servanda sunt may be
circumvented. The Court’s decision must not be interpreted as encour-
aging any impugnment of the principle of the sanctity of contracts. If we
analyse the relationship between the various ncrms and principles of
international law, it is clear that the maxim pacta servanda sunt cannot
be treated on the same basis as the rules of intertemporal law, which
serve merely as auxiliary means of interpretation of the primary rule,
pacta servanda sunt. Any interpretation seeking to impugn that funda-
mental rule is misconceived. The main purpose of the rules of intertem-
poral law is to strengthen legal security in international relations. The
binding nature of international treaties derives not from the mechanical
or formal application of a principle but from the nature of commitments
freely undertaken, expressing the consent of States to be bound. Only
the impact of norms of jus cogens can justify any impugnment of the
consensus principle. Thus the legal framework provides a tool for

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LAND AND MARITIME BOUNDARY (SEP. OP. RANJEVA) 471

analysing the consent and intentions of States but cannot replace those
intentions.

4. In the present case, application of the rules of intertemporal law
raises the problem of the Judgment’s acceptance of the conduct of the
protecting Power, which proceeded to liquidate the entity of Old Cala-
bar. A distinction must be drawn between justification and acceptance of
a legal situation. Thus the situations which the law addresses may have
originated either in a legal instrument, that is to say a manifestation of
wills intended to produce legal effects, or in a legal fact, that is to say an
occurrence, a situation having taken place irrespective of any consent by
the States concerned and producing effects in law. It follows that the
instruments adopted by the colonial Power constituted legal facts, around
which evolved and developed régimes governing territorial rights, as well
as the personal rights of the populations concerned. This analysis is con-
firmed by the decision in the case concerning the Frontier Dispute
(Burkina FasolRepublic of Mali) U.C.J. Reports 1986, p. 554). The
Chamber directly applied French colonial law not qua colonial law but as
the normative reference source applicable, without passing any judgment
thereon or seeking to legitimize colonial law by reliance on the rules of
intertemporal law.

5. Criticism of the “unilateralism” of the colonial Powers in ultimately
treating agreements concluded with indigenous rulers as “scraps of paper”
is nothing new. I would cite here the thesis of Mr. Nazif, submitted to the
University of Batavia in 1928, on the disappearance of the Kingdom of
Madagascar in international law (De val van het Rijk Merina — La
chute du Royaume de Mérina). 1 would also recall the position taken by
the Malagasy plenipotentiaries in 1895 when they confronted France
with the argument that the independence of the Kingdom was an issue
distinct from its ability to repay its loan, the official pretext for the des-
patch of the expeditionary force. Conversely, the tabula rasa principle
has been invoked in order to refuse a right of State succession to treaties
concluded by the monarchy. This precedent was recalled at the time of
the annexation of Czechoslovakia by the Third Reich.

6. For these reasons, it would have been preferable to speak of inter-
national law when referring to the law governing relations between the
European Powers or with sovereigns recognized by the European
Powers, and of colonial law or acts, as appropriate, when addressing
the relationship between the European Powers and indigenous chiefs.
Such a distinction or classification permits a better understanding of the
legal framework of colonization.

(Signed) Raymond RANIEVA.

172