Correspondance

CORRESPONDENCE

CORRESPONDANCE 1. THE SECRETARYOF STATEOF THI! UNITED STATESOF AMERICA TO THE PRESIDENT
OF THE INTERNATIONAL COURT Of JUSTICE

6 February 1987.

1wish ta inform you that the Government of the United States is today filing
with the Court an Application' iri a case against the Republic of Italy. We are
coming hefore the Court to ask it ta resolve our longstanding dispute with the
Government of Italy regarding the interpretation and application of the Treaty
of Fnendship, Commerce and Navigation between the United States and the
Republic of Italy. The Government of the United States requests, pursuant ta
Article-26of the Statute of the Court, that this dispute he resolved by a chamber

of the Court.
1have designated the Legal Adviser of the United States Department of State,
the Honorable Abraham D. Sofaer, as Agent of the United States in this case.
He willbe happy to meet with you and the Agent designated by the Government
of Italy so that you may ascertain the views ofthe parties regarding the composi-
tion of the Chamber, as provided by Article 17(2) of the Rules of the Court.

JUSTICE,ACTING AS REGISTRAR

3. THE DEPUTY-REGISTR ACTIN(; ASREGISTRA R, THE AGENT OF THE UNITED
STATESOF AMERICA

6 February 1987

1 have the honour to acknowledge the receipt today of a letter of this same
date from MI. John P. Heimann, Charge d'affairesadinrerimof the United States
of Amenca to the Kingdom of the Netherlands, whereby the United States of

America has filed an Application instituting proceedings against the Republic of
ltaly and informing me of your appointment as Agent for the case, with the
Embassy of the United States to the Netherlands as address for service.
1 further acknowledge the receipt, with that letter, of the original of your
Government's Application, bearing your signature certified by His Excellency
MI. George P. Shultz, the Secretary of State, together with a copy thereof,
likewise certified hy the Secretary of State, and signed by yourself, and 55
uncertifiecicopies. The certified copy, together with a photocopy of MI. Hei-
mann's letter, was immediatelycommunicated to the Government of the Republic
of Italy.

' 1,pp. 3-40.392 ELETTRONICA SICULA

1 shall no1 fail to infonn you of the reaction of the Italian Government and
of such steps as the Court may subsequently take.

(Signed) Eduardo VALENCIA-OSPINA.

4. LE GREFFIERADJOINT, FAISANTFONCTION DEGREFFIER,
À L'AMBASSADEUR D'ITALIEAUX PAYS-BAS

6 février 1987.

J'ai l'honneur dc v,)us tuire pirvcnir ci-jointe. en \ou? pnani de bien vouloir
la faireachemineri dcsiination, une Icit'ca\ec annexes adresj2eiM. leministre
des affaires étrangères d'Italie.
A toutes fins utiles,je me permets de joindre pour vos dossiers copie de cette
communication.

5. LE GWPFlER ADJOINT, FAISANTFONCTIONDE GREFFIER,AU MINISTRE
DES AFFAIRESÉTRANGÈI~ DE L'ITALIE

6 février1987

J'ai I'honneur de vous faire connaître que le Gouvernement des Etats-Unis
d'Amérique adéposéce jour au Greffe de la Cour internationale de Justice une
requêteintroduisant une instance contre le Gouvernement de la République
italienne.
Je vous prie de bien vouloir trouver ci-joint, conformémentaux articles 40,
paragraphe 2, du Statut et 38, paragraphe 4, du Règlement de la Cour, copie
certifiéeconforme de ladite requête.Je vous feraiprochainement parvenir d'autres
exemplaires de la requête en question,dans l'éditionimprimée, établiepar les
soins du Greffe, qui en contiendra éralement la traduction en langue francaise.
Je joins égalementà la présentec6mmunication copie d'une lecre2 du chargé
d'affaires a.i. des Etats-Unis d'Amériqueaux Pays-Bas, datéedu 6 fhrier 1987
et transmettant la requêtesusvisée.
le saisis cette occasion pour attirer votre attention sur les articles 17et 40 du
Règlement dela Cour. Ce dernier article dispose, à son paragraphe 2, que dès la

réception de la copie certifiéeconforme dela requêteou le plus tôt possible après
le défendeurfait connaître à la Cour le nom de son agent. Le paragraphe 1 du
mêmearticle dispose que lesagents doivent avoir au siègede la Cour un domicile
élu auquelsont adresséestoutes les communications relatives à l'affaire.

6. THE DEPUTY-REOISTRAR,ACTING AS REGISTRAR,TO THE SECRETARY-GENERAL OF
THE UNITED NATIONS

6 February 1987.

1have the honour to infonn Your Excellencythat today, 6 Fehruary 1987,the
Government of the United States of America filed in the Registry of the Court

Voir ci-aprèsn"5.
Voirci-dessusna2. CORRESPONDENCE 393

an Application instituting proceedings against the Republic of Italy and to
communicate to you herewith the text of that Application.

The usual printed hilingual edition isin preparation, and copies willbe supplied
to you as soon as possible with a view to the notification contemplated by Article
40, paragraph 3, of the Statute of the Court.
1am also to draw your attention to the fact that the Government of the United
States of America, in a letter of transmittal, has requested that the case he dealt
with by a chamber of the Court.

7.LE MINISTRE DES AFFAIRES ÉTRANGÈRESDE L'ITALIB AU GREFFIER ADJOINT,
FAISANTFONCTION DE GREFFIER

(Télégramme)

13février1987.

Ayant été informé de la requêtecontre l'Italie introduite le 6 février dernier
par le Gouvernement des Etats-Unis concernant l'affaire de la compagnie Ray-
theon-ELSI, j'ai l'honneur de vous communiquer ce qui suit:

1. Par décret en date d'aujourd'hui j'ai nommé le professeur Luigi Ferrari
Bravo, ordinaire de droit international à l'Université de Rome,chef du service
du contentieux diplomatique, des traitéset des affaires législatives,comme agent
du Gouvernement italien dans ladite affaire. Toute corres~ondance avec I'ae-nt
du Gou\,erncmcnt iialicn de\.rï iirç adrçsste 1 I'anib:iss~dcd'Italie aupris du
Ro).iume de\ l.i).\-R~\2 La 1-1.1yA.t.xanJcriiri1.X, où l'ïgrniilison doni~:~lc.
2. 1.eGouvernement iiiiIi~.ndccel>t13 proposition du Gouvernement Jcs Etais-
IJnis visanti cc que ILIprésenteïfF;iiresi)ii]LI&&psr une chambre dont Iicom-
poiition ,erJ JI:icrminic pr la Cour en coniormiir: avec I'ïrtiil?h du Statut.

(Signé)Giulio ANDREOTTI.

8. THE PRESIDENT TO THE SECRETARYOF STATE OF THE UNITED STATESOF AMERICA

1have the honour to acknowledge the receipt of the letter of 6 February 1987,
wbereby Your Excellency was so good as to inform me of the imminent filing by
your Government of an Application instituting proceeding against the Republic
of ltaly and of its request that the case be dealt with by a chamber of the Court.
The Application has since been duly filed in the Registry of the Court.
Note has been taken of the appointment of Judge Abraham D. Sofaer as Agent
of the United States and of his readiness to meet me with the Aeent of Italv for
the purpose oiimplcmcniing Articlc 17.pïriigrdph 2, of the Rulei oiCourt. We
willgii,cfullcon<idcr~iion1,the \i,ishejuf the PiiriinrcgiirdIOthe somp<isiiiun
of the chamher.

(Signed) NAGENDRS AINGH394 ELETTRONICA SICULA

9. THE REGISTRAR TO THE AGENT OF TFE UNITED STATESOF AMERICA '

4 March 1987.

1have the honour to inform you that by an Order' dated 2 March 1987 the
Court decided to accede to the request of the Parties ta the case concerning
Elettronica Sicula S.P.A. (ELSI) for the formation of a chamber to deal with

that case. At an slection by secret ballot held on that day, the Court elected
President Nagendra Singh and Judges Oda, Aga, Schwebel and Sir Robert
Jennings ta form the Chamber. By the same Order the Court fixed 15 May 1987
as time-limit for the Memorial of the United States and 16 November 1987 as
time-limit for &eCounter-~emorial of Italy.
1enclose for your information a plain copy of the Order of 2 March 1987;the
officialsealed cbpy will be sent to you shortly.

(Signed) Eduardo VALENCIA-OSPINA

24 mars 1987.

Le 6 février 1987 a été déposéaeu Greffe de la Cour internationale de Jus-
tice une requêtepar laquelle les Etats-Unis d'Amérique ont introduit contre la
République italienne une instance en l'affaire de l'Elettronica Sicula S.P.A.
(ELSI).
Par ordonnance du 2 mars 1987la Cour, àla demande des Parties, a constitué
une chambre pour connaître de l'affaire et a fixe les délaispour le dépôt des
premièrespiècesde la procédureécrite.
J'ai l'honneur, à toutes fins utiles, de vous transmettre ci-joint des exemplaires
de la requête etde l'ordonnance en question.

11. THE AGENT OF 'IHEUNITED STATESOf AMERICA TO TEE REGISTRAR

15 May 1987.

Pursuant to Order of the Court dated 2 March 1987, 1 am enclosing the
Memoria14 of the United States of Amenca in the case concerning Elettronica
Sicula S.p.A

(Signed) Abraham D. SOFAER.

' A communication inthe same temî wassentto theAgent of ltaly.
I.C.JReports 1987,p. 3.
Cour.ne communication analogue a étéadresséeaux autres Etatsadmisàester devant la
1,pp.43-458. CORRESPONDENCE 395

12. THE REGISTRAR TO THE AGENT OF THE UNITED STATESOF AMERICA

15May 1987.

1have the honour to acknowledge the filingtoday, within the time-limit fixed
by the Court's Order of 2 March 1987,of the Memorial of your Government in
the case concerning ElettronicaSiculaS.P.A. (ELSI), referred to a Chamber of
the Court, and of two volumes of Annexes.

15May 1987.

1 have the honour, in accordance with Article 43 (4) of the Statute of the
Court, to communicate to you herewith a certified copy of the Memorial filed
today by the United States of America in the case concerning ElettronicaSicula
S.P.A. (ELSI), referred to a Chamher of the Court, and of the two volumes of
Annexes by which it was accompanied.
The Memorial was filedwithin the time-limit prescribed by the Court's Order
of 2 March 1987.
Additional, uncertified, copieswill also be provided for your use.

14. THE REGISTRAR TO THE AGENT OF THE UNITED STATESOF AMERICA

15May 1987.

Further to mv letter of todav's date. confimine the filine bv the Government
iilthc Cniicd ~rïicr of~nieri&of ils Jlemorial inthe i!c G~nccrnin~t:l~:lrun!<.u
Stculu rELSI,. 1haie the hunilur io Jraii your diieniion to the follo\iing.
The two volumes of Annexesto that Memorial contain a large number of co~v
docunicnti. hiii ihcse copier 3re noi çeriilicdicihc truc cop$i. tis rcquircd bj
Article 50. p3r;igraph 1, of ihc Rule$ ulCour1. Furihcrmorc, iinuniber of the
do~.unicnrsiinneied 3rc in faci tr.in~lÿiii~nsfrum Iiïliiin dr~ginals. 2nd the

translations are duly certified as such in accordance with ~rticle 51, paragraph
3, of the Rules of Court. However, that paragraph provides that "When a
document annexed to a pleading is not in one of the oficial languages of the
Court, it should be accompanied by a translation . . . ".The intention of the
Rules is thus that both the original document (or a copy thereof) and the
translation should be made available to the Court.
It would therefore he appreciated if, al your earliest convenience, you would
let mehave acertificate siened bv vou as Agent that the Annexesto the Memonal
are true copies of the original doiuments Tor of the original translations, as the
case may be), and in addition a set of certified copies ofthe original documents
of which translations are annexed to the Memorial.

The certifiedcooies of the Memorial and of the volumes of Annexes have heen
transmitied io ihc .Agent of Iialvin accordancc with Article 43. pliragrliph 4. or
the Statutc. and I am 3150iransniiiiing10 him a copy ui [hi, Icilcr CORRESPONDENCE 397

18. THE AGENT OF THE UNITED STATESOF AMERICA TO THE REGISTRAR

24 July 1987.

1have the honor to refer to your letters of 15May and 7 July 1987conceming
the certification of documents in the Annexes to the United States Memorial in
the ELSI case. We will provide these matenals very shortly.
We have been in regular contact with the ltalian Government in these matters
and, so far asweare aware, al1isproceeding toour mutual satisfaction. Regarding
the original officia1Italian documents, 1 note that at our meeting with the

President of the Court on 20 February 1987,the Agent of the Government of
ltaly kindly undertook to provide the necessary certification, since the originals
are in the oossession of ltalian authorities. The translations which we have
provided have been certified as to their accuracy; this certification appears on
each such document. Please advise us if you desire this certification to be in a
different fom.
1appreciate your continued assistance in the conduct of this case

19. THE REGISTRAR TO THE AGENT OF THE UNITED STATESOF AMERICA

12August 1987.

I ,ickn,wlcdgc rcccipt by the Kcgisir) of ihc 1niernaiion;ilCourt of Juitics of
cighi copies of the volumcentiilcd 'Copie, of SclcciedAnnc~cs t<iihc Mcmoriiil
Iilian 1.aneudec Dosuininis"' siihmiiied hv ihc Un~tedSt3ic, oi Am(.ric:î In
the case conce&ing ElerrronicaSiculaS.~.A..(ELSI) (United States of America
v Italy) as announced in your letter of 24 July 1987,receipt of which 1also wish
to acknowledge hereby. One of the eight copieshas been transmitted Io the Agent
of Italy.
The provision of copies of the ltalian original texts of the documents which,
translated into English, were filed in the two volumes of Annexes previously
deposited with the Court partly satisfiesthe requirement laid down in Article 51
(3) of the Rules of Court. As you state in your letter of 24 July, certification of
the accuracy of the translations was supplied when they were filed.However, in

some instances the certification is not by an organ of your Government, but hy
what appears to be a pnvate translation concern, and this does not sufficefor
the purposes of Article 51 (3).The documents whose translation inIo English still
require officialcertification by the United States are the following: Annexes Nos.
31, 32,46, 59, 60, 62 and 65. For al1of these seven documents, a single official
certification of the accuracy of the translation will suffice.With regard to Annex
No. 76 1 note that, as reproduced in the new volume of "Copies of Selected
Annexes to the Memorial" (No. 40), it contains one further Italian document,
untranslated. which was not included. either in Enelish or Italian. as Dart of
an ne^ 76 In ilie volunic of Anncw5 pretiou,ly d~osiicd. ~e\erthelc\\, ihai
iurther Ii~li~ndocument 3ppeari io bc idcnlicsl uiih the girlgindlIidliïn oi Anncx
33 2s subniiited under N<I.h in ihc nciv \oluine ol'"Copie~ oi Sclccied Annexes
to the Memorial", the English translation of which hadealready been certified as

accurate.398 ELETTRONICA SICULA

Quite apart from the certification of translations as accurate versions of the
original texts, there remains the question of certifying al1the documents annexed
to the Memorial in such a way as to fulfil the distinct requirement contained in
Article 50 (1) of the Rules of Court that "certified copiesof any relevant docu-

ments adduced in support of the contentions contained in the pleading" be
annexed 10the original of every pleading. What is required hy this provision of
the Rules is a certification, which can be global, that al1 the annexed texts are
true copies of the adduced original documents (or original translations, as the
case may be). Under the Rules of Court, it is the responsihility of the party which
filesdocuments in support of a pleading to itself certify that they are true copies
in the sense and not the responsihility of any other party, even if such party is
in acîual possession of the originals. However, as 1pointed ouf in my letters of

15May and 7July, the copy documents contained in the two volumes of Annexes
to the Memorial have not been certified to be true copies; such a certification
was and is still required.
1hope the above sufficientlyelucidates the points at issue, and look fonvard
to receivingthe missing certificationsat your earliest convenience.

20. THE AGENT OF THEUNITED STATESOF AMERICATO THE REGISTMR

29 September 1987.

1have the honor to refer to your letter of 12August 1987.
Enclosed please find a further certification1 which confirms that the original
certifications of certain translations which vou have id~nt~fied in the second
pîrîgrüph or your Iciier ucre done by an ofticililagent of ihc ~niied ~iates and
ihcreforc consiiiutc certificationsby the United Siaies I irusr ihisissatisfactory.

In response 10the third paragaph of your letter, 1 understand your concem
to be with the Government of Italy'scertifying certain officialltalian documents.
As 1 noted in my letter of 24 July, the respective Agents and President Singh
discussed and, 1understood, agreed to this at Our 20 February meeting. We had
considered this to be acceptable under the Rules of Court because Article 50
unlike, for example, Article 51 (2), does no1 explicitly require certification "by
the party suhmitting il". 1also note that Article 101 provides for modification
of certain of the rules by agreement, including Article 50. However, 1 would

appreciate your further views on this question. We will of course be happy 10
provide a further certification if required.

21. THE AGENT OF THE UNITED STATESOF AMERICA TO Tm PRINCIPAL LEGAL
SECRETARY

12October 1987.

This is in response to your letter of July 1, 1987,pursuant to Article 53 (1) of
the Rules of the Court, seeking the views of the United States on a request hy
the Government of the Republic of Nicaragua for copies of the pleadings and CORRESPONDENCE 399

documents annexed in the case concerning Elettronica Sicula S.P.A. (ELSI)
(United States of Amenca v. Italy).
In the view of the United States, it would not be desirable for Nicaragua to
be provided at this time with the pleadings in this case. The general practice of
confidentialitv of the oroceedines. as reflectedin Article 53, serves the im~ortant
f~nction of a;,oiding prcmaturc-argument of the ~.:jrein public debïtc ad othcr

unrelated contents, thus prcscrving the inrcgrity of the Court's oun dclikxrations
Such practice should be followed unlessspecial circumstances suggest departing
fr~m i~.~ ~t~ ~ r~~~nt case. there seems to be no s~ecialinterest of Nicaraeua
in the Jibpute hetween the United St;itc\ and Itiilynor u,ould the relc~seof the
plrrdingi to hiçaragua ar\i\t in the ju,t and c\pcditious rciolution of the c3sc
WC;ireïdvised that thc Go\crnnicnt of It.ilv consurs in the position of the United
States in this matter.
- - ... ....... ... -. .. .
Therefore, the United States believesthat, in the interest of the most eiiective
administration of international iuscice,the Dieadinasand documentation should
he keot confidential amone the Parties and ihe court in this case and should no1
be reieased in response toihe request from the Government of Nicaragua.

22. THE AGENT OF ITALY'T0 THZ PRINCIPAL LEGAL SECRETARY

12October 1987.

This is in response to your letter of July 1, 1987pursuant to Article 53 (1) of

the Rules of the Court, seekingthe views ofItaly on a request by the Government
of the Republic of Nicaragua for copies of the pleadings and documents annexed
in the caseconcerning ElettronicaSiculaSp. A. (ELSI) (United States of Amenca
v. Italy).
In the viewof the Government of Italy, it would not be desirable for Nicaragua
to he provided at this time with the pleadings in this case. The general practice

of confidentiality of proceedings, as reflected in Article 53, serves the important
function of avoiding premature argument of the case in public dehate and other
unrelated contexts, thus preserving the integrity of the Court's own deliberations.
Such practice should be followed unlessspecial circumstances suggest departing
therefrom.
In the present proceedings, there seems to he no special interest of Nicaragua

in the dispute hetween the United States and Italy nor would the release of the
pleadings to Nicaragua assist in the just and expeditious resolution of this case.
Therefore, the Government of ltaly helieves that, in the interest of the most
effectiveadministration of international justice, the pleadings and documentation
should be kept confidential among the Parties and the Court in this case and
should not be released in response to the request from the Government of

Nicaragua.

(Signed) Luigi FERRARI BRAVO.

23. THE REGISTRARTO THE AGENT OF THE UNITED STATESOF AMERICA

26 October 1987

1have the honour to refer to your letter of 29 September 1987, receivedin the
Registry on 12 October 1987,and to acknowledge receipt with thanks of your400 ELETTRONICA SICULA

certification of the English translations of documents in Italian annexed to the

Memorial of the United States in the case concerning ElettronicaSicula S.P.A.
(ELSI), a copy of which has heen transmitted to the other Party
So far as concerns the question of the pending certification ofthe Annexes to
the Memorial under Article 50. oarapra~h 1, of the Rules of Court. the solution
u,ould be for )ou IO let iiie ha;; a flrther certificans.you ,!ers good enuugh
IO otkr Io do 111Sour leiter under rtpl). This could he ver) hricl: simpl) Io the
ell'ctèichtar the i..iriou.;nhoiocnnici of doïumenr.; tiled a, Annexe5in the United
States Memorial are c&tified bi you to be tme copies of the originals.
The certification required by Article 50, paragraph 1, of the Rules might be
regarded as king something of a formality, since it is to be presumed that a
State which su~olies coov documents as annexes to a ~leadine will no1 do so
uithoui carcfiilj( checkihi the accuracy of copier. ~evc~theless.~thcrequirernent
does cxist in the Rulzs. and 1h3vc IOpoint out that more thmi fivernonihs after
the tilinc bv the Cnited Silites oit3 Mcniori~land sliortly bciors the date Lxcd
for the filing by Italy of its Counter-Memorial, none of ihe copies (whether or
not from Italian originals) of documents annexed to its Memorial by the United
States have yet been certified as heing true copies despite the clear provision of
Article 50 (1) of the Rules. It is also a fact that many of the Annexes to the
United States Memorial reproduce documents the originals of which are clearly
in the possession of the United States and not of Italy: sufficeit to mention,
among others, Annexes 86.87, 91,92,93 and 94.

In concluding, may 1 draw your attention to the fact that the Agent of Italy,
to whom 1 transmitted a copy of your letter of 24 July 1987,has not given me
any forma1indication of his understanding of the outcome of the meeting of 20
Februarv 1987on this ooint. i.e.. whether it was or is his intention to suo~lv to
you cerbfied copies of such dociments as are found to be in the posse&ifonof
the ltalian authorities.

24. THE REGISTRARTO THE AGENT OF THE UNITED STATESOF AMERICA '

26 October 1987.

1have the honour to refer to the Order made by the Court on 2 March 1987
in the case concerning ElettronicaSicula S.P.A. (ELSI), whereby (inter alia) it
ked 16Novemher 1987as the lime-limit for the filingof the Counter-Memorial
of the Repuhlic of Italy, and reserved the suhsequent procedure for further
decision. Oncethe Counter-Memorial has been filed, il will thus be necessaryfor
the Chamber to consider the further procedure, and it will be the duty of the
President of the Chamber to summon the Agents of the Parties for a meeting, in
order to ascertain their view...oursuant to Article 31 of the Rules of Court.
In tirder io .i\<iidJclayb. ihc Pre\ideni cunsidcrr ihlii the rimple~tcourse would
he IO hold iuch a rncciing immediatcly afitr the filingof the C'nunicr-Mcmori;il.
On the ;ii~um~tionthat this will bceRected on Mondw, 16Uoieniber lYb7.rnav
1therefore ask you to hold yourself in readinessto atiend such a meeting in thé
afternoon of that day.

' Acommunicationin the same terniswas sentto the Agentof Italy. CORRESPONDENCE 401

25. ïHE REGISTRARTO THEAGENTOF lTALY1

27 October 1987.

1have the honour to inform Your Excellencythat the Chamber formed hy the
Court to deal with the case conceming EletlronicaSiculaS.P.A. (ELSI) willhold
an inaugural public Sitting on Tuesday 17 Novemher 1987 al 12 noon in the
Great Hall of Justice of the Peace Palace, The Hague.

9 Novemher 1987.

Thank you for your letter of October 26, 1987regarding the desire of the
President to meet with the Agents of the Parties in the case concerning Eletrronica
Sicula S.P.A. (ELSI).
1regret that 1will be unable to attend the meeting on November 16.However,

Timothy Ramish, currently OurAgent al the Iran-U.S. Claims Tribunal, has heen
designated as our Deputy Agent in this case. Mr. Ramish is prepared to meet
with the President on this case on the afternoon of Novemher 16, as well as to
attend the inaueural nublic sittine of the Chamber on November 17.
Iplan IO mccïuiih'ihc Ii;ilim ~~cni. Professor Fcrr~ri Ur3\0. during ihc ueek
prc-cding the Novembsr 16mcctlng io discuss ouisi~nding issuesand the rchcdul-
iiir of further nriicecdin~s Mr. Ramiih ii.1bc ~reci~rcdio 'idvise vou on hou
wepropose t~.~roceed on these matters. . .

16November 1987.

1have the honour to inform you that in the case concerning Elertronica Sicula
S.B.A. IELSII il is the intention of mv Government to raise in ils Counter-
~ ~ ,---~, ~ ~~
Memorial an objection to the admissibiliiy of the Application filed hy the United
States of America on the grounds that local remedies have no1 heen exhausted.
However. the Italian ~ivernment. in order not 10hinder the raoid administra-
lion ,>fintcr"ational jusiicc. would i.ivour ihcconsluiion of an a$réeriicntbeiuccn
ihc Pdrttcs ih;ii ihis 0bjc;tion should hc heard and deizrrnincd within the irÿmr-
work of the Merits.
It is our understanding that the Applicant is in agreement with this point of

view.

28. THE AGENT OFlTALYTO THEREGISTRAR

16Novemher 1987.

1 have the honour, in accordance with Article 43, paragraphs 2 and 4, of the

Statute of the Court, to communicate to you herewith:

' A communication in the sametenns was sent to the Agentof the UnitedStates of
America.402 ELETTRONICA SICULA

- the original Counter-Memonal' submitted hy Italy in the case concerning
EleitronicaSiculaS.P.A. (ELSI) referred ta a Chamher of the Court and the
four volumes of ~ocuments hy which it is accompanied;
- a certified copy of the ahove-mentioned Counter-Memorial and of the said
volumes of Documents;
- one hundred and twenty-five uncertifiedcopies of the above-mentioned pro-
duction.

16November 1987.

I have the honour to acknowledge the receipt of the original and one certified
copy of the Couiiter-Memorial of the Republic of ltaly in the case concerning
Elerironica Sicula S.P.A. (ELSI) which was duly filed in the Registry of the

Court todav.
The certked copy was immediately transmitted to the Deputy-Agent of the
United States of America.
1 further acknowledge the receipt of 125 unsigned copies of the Counter-
Memorial.

16November 1987.

1 have the honour to transmit herewith a certified copy of the Counter-
Memorial of the Republic of Italy in the caseconcerning EletrronicaSiculaS.P.A.
(ELSI), together with the Annexes thereto.
The Counter-Memorial was filed today in the Registry of the Court by the
Ae---~~--~Ttal,.
Further, unsigned copies of the Counter-Memorial are also king provided ta
the Government of the United States of America.

31. THE AGENT OF ITALYTO THE REGISTRAR

16November 1987.

1certify that al1the documents contained in the four volumes of Annexes to
the Counter-Memonal filed bv the Government of ltalv in the case concernine
EleirronicuSii.uluS.p.A. (t;l.~l,. as filed today by rn~~o\ernmenr, constitut~
truc copies oi'documents adduccd in support of the conienti<inscontaincd in the
pleading.

' II, pp. 3-360 CORRESPONDENCE 403

32. THE AGENT OF ITALYTO THE REGISTRAR

16November 1987.

1hcrcby coniirm thxi ihr ph<)ioropie. supp11r.Jby ihc Uniicd Siaics of Anicr-
Ica, the Joiumcni~ listcd bclow. trmsl~iions of iihicli ucre filcd ar Annexes
io the Memorial of ihc CniicJ St:itr.>.iunjiiiutc truc co~ics oi the -ririndls in
the possession of the Government of ltaly.
These documents, in the numbering used in Volumes1and II of the Annexes
to the Memonal of the United States, are Nos. 3, 4, 33, 34, 35, 41, 44, 46, 64,
76, 77, 78, 80,81, 82, 85, 89,90, 95.

33. THE DEPUTY-AGENT OF THE Uh'lTED STATESOF AMERICA TO TEE REGISTRAR

16November 1987.

I acknowledge receiptof a copy of the Counter-Memorial of the Government
of Italy in the case concerning Elettronica Sicula S.P.A. (ELSI), together with
four volumes of Annexesthereto.
1note that an objection to the admissihility ofthe Application is contained in
pages 2-3 of the Counter-Memorial' and is also presented as the first submission
of the ltalian Government on page 123'.

1 am in a position to inform the Chamber dealing with the case that my
Government is willing for this objection to be heard and detemined within the
framework of the merits of the case, as has been proposed by the ltalian Gov-
ernment.

(Signed) Timothy E. RAMISH.

34. THE REGISTRAR TO THE AGENT OF THE UNITED STAIE.O5F AMERICA

17November 1987

1have the honour to transmit to you herewith a copy of a letter addressed to
meyesterday in whichthe Agent of Italy in the case concerning ElertronicaSicula
S.P.A. (ELSI) advises me of his Government's intention to raise in its Counter-
Memorial an objection to the admissibility of the Application.
You are apprised of the contents of the Counter-Mernorial, of which1transmit-
ted to you a certified copy immediately upon its filing.

35. THE REGISTRAR TO THE AGENT OF ITALY

18November 1987.

1 have the honour to acknowledge receiptof two letters dated 16 November
1987 whereby you have, respectively, certified that al1 the documents in the

' II, p. 3 and p. respectivel)404 ELETTRONICA SICULA

Annexesto the Counter-Memorial in thecaseconcerning ElerrronicaSiculaS.P.A.
(ELSI) constitute true copiesofdocuments adduced in support of thecontentions
contained in the pleading and confirmed that the photocopies supplied by the

Applicant of certain enumerated documents annexed to the Memorial constitute
true copies of originals in the possession of your Government.
A copy of each of these letters has been transmitted for information to the
Agent of the United States.

36, THE REGISTRAR TO THE AGENT OF TH8 UNITED STATESOF AMERICA '

18November 1987.

1have the honour to inform you that by an Order2 dated 17November 1987,
the officialsealed copy of which is enclosed, the Chamber formed to deal with
the case concerning ElerrronicaSicula S.P.A. (ELSI) decided to authorize the
filingofa Reply bythe United States ofAmerica and a Rejoinder by the Republic
of ltaly in this case, and fixed time-limits of 18 March 1988 and 18 July 1988
respectivelyfor these pleadings.

19novembre 1987.

Me référantau paragraphe V des principes générauxde l'accord du 26 juin
1946entre le Gouvernement des Pays-Bas et la Cour internationale de Justice,
j'ai l'honneur de porter àvotre connaissance qu'enl'affairede 1'ElerironicaSicula
S.P.A. (ELSI) le Gouvernement des Etats-Unis a désignéM. Timothy Ramish
comme agent adjoint.

26 November 1987.

With reference Io Your Excellency'sletter of 12October 1987giving the views
of the Government of Italy on the request by the Government of Nicaragua to

be furnished with copies of the pleadings and annexed documents in the case
concerning Eleiironica SiculaS.P.A. (ELSI), pursuant to Article 53, paragraph
1, of the Rules of Court, 1 have the honour to inform you that the Chamber,
having considered the views expressed by the Parties, has decided not to make
available the pleadingsand annexed documents to the Government of Nicaragua.

' Acommunicaiionin thesamelems wassentIo theAgent ofItaly.
' I.C.JReporls 1987,p. 185.
A communicaiion inthe sametems wassent to the Agent ofthe UnitedStates of
America. CORRESPONDENCE 405

39. 'THEREGISTRARTO nIE AÜliZT OF SICARAiiIIi1S 11IbCASt ÇOSCERlilSG
.WlLIIAXYA.SUI'AAHAhiII.IT ACTYl'lTII;-i 1.V A(iAl.V..TICAKACiUA (.\ICAXA<;UA

1 December 1987.

1 have the honour to refer to Your Excellency'sletter of 29June 1987whereby,
in your capacity as Agent of Nicaragua in the case concerning Milirory and
Puramilitary Acriviiiesin and againsr Nicorugua (Nicarogua v. United Siares of
America), you requested that your Government he provided with copies of the
pleadings and annexed documents presented in the case concerning Elerfronico
Sicula S.p.A. (ELSI).
In accordance with Article 53, parag~aph 1, of the Rules of Court, the views
of the Parties to the latter case were requested; both Parties stated that it was
their heliefthat, in the interest ofthe most effectiveadministration of international

justice, the pleadings and documentation should be kept confidential among the
Parties and the Court in this case. Taking these viewsinto account, the Chamher
has, after careful consideration, decided not to accede to the request of the
Government of Nicaragua for copies of the pleadings and annexed docun~ents.

40. THE DEPUTY-AGENTOF THE UNITED STATESOF AMERICA TO THE REGISTRAR

13January 1988.

Pursuant ro your rcquesi, I ceriif) thai ail the documents conlaincd in thc 1u.o
\olumcs of Annexes iu ihc Memorial filcd by ihc Govcrnmcni of the United
Siaies in the case conccrning Eli,rrro»iroSio<luSp.A [ELSI). as filcd Ma) 15,

1987by my Go~crnmcni, consiiiuie truc copies uidosumcnts adduccd in suppori
of ihc conicntions coniaincd in the pleadinp.

13January 1988.

In the ciiw concernin8Elrrrr(i,ri<.uSi~.uliiAp 1£/.SI,. the C>~ivr.rnmenotf
Irdlyüjcrts on p;iq ?Ok.uiII<Counicr-Mernorial ihat one oiihe exhibit, tu the
Memorixl iiithe Lniicd Staics G<ii.ernmcnthas heen dltcred". As this lcttcr
dcmon\tr~ier. Itxly's xccusJiion is unfounded. Rewulr ol the gravit) of the

accui;ition. the Cni1r.dSidies uould Iikcto dispoïe of the i..ur. prinr io thç liling
of its Reply.
Exhibit Bto Annex 15of the United States Memorial consists of typed minutes
of a meeting held on Februnry 20, 1968,hetween several Raytheon officialsand
the President of the Sicilian Regional Government. These typed minutes were
prepared the day following the meeting, utilizing the handwritten notes of one
of the Raytheon officialspresent at the meeting. The typed minutes summarize,
rather than literally transcribe, the handwritten notes in a limited numher of
instances. The United States has certified that Annex 15,Exhibit Bis a true copy406 ELETTRONICA SICULA

of the document adduced in supportof the contentions contained in ils Memorial,
and hereby confirms that certification.
When Raylheon assisted in the preparation of its original claim presented to
the Government of Italy in 1974,the Raytheon personnel working on the claim,
being unaware of the previously typed minutes of the meeting, had the handwrit-
ten notes of the meeting retyped. The retyped version is attached as Exhibit II-
15to the original claim. These minutes contain substantial typographical errors
due to the inability of the typist to interpret the handwriting and abbreviations
of the original notes.
Thus, no document has been altered. Twa typed summaries of the samemeeting
exist. That the summary typed in 1968was no1submitted in 1974was merelyan
oversight in the preparation of the original claim. For the Court's reference, a
copy of the original handwritten notes' is attached to this letter. The United
States will respond Io the merits of Italy's argument with respect to this meeting
in ils Reply.

42. THE DEPUTY-REGISTRAR TO THE DEPUN-AGENT OF THE UNITED STATESOF
AMERICA

13January 1988.

I have the honour to acknowledge receipt of your letter of 13 January 1988
concerning a statement made on page 20' of the Counter-Memonal of ltaly in
the case concerning EleitronicuSiculuS.P.A. (ELSI) and Exhibit B to Annex 15
to the United States Memorial, and enclosinga copy of four pages of handwritten
notes' of a meeting held on 20 February 1968. A copy of your letter and of its
enclosure has been transmitted to the Agent of Italy.
Due note has been taken of the fact that the United States will respond Io the
merits of Italy's argument with respect to the meeting of20 February 1968in its
Reply. Should the exact wording, or the authenticity, of the handwritten notes

of the meeting be likely Io be in issue, you maywish al that stage to deposit the
original notes in the Registry for consultation, sincethe photocopy enclosedwiih
your letter is not easily legible.

(Signed) Bernard NOBLE.

43. THE AGENT OF THE UNITED STATESOF AMERICA TO THE REGISTRAR

17March 1988.

Pursuant to the Order of the Court dated 17November 1987,1am enclosing
the Reply of the United States of Amenca in the case concerning Elettronica
SiculuS.P.A.

' Not reproduced
IIp. 9.
' IIpp. 363-414. CORRESPONDENCE 407

I ccrtify thai al1rhc document, iinncxcd tu this Replyconsiitutc truc copie, of
docunicnir adduccd in juppurt of ihc conicniion>containcd in the ple3ding

44.THE REGtSTRARTO THEAGENTOF THE UNITEDSTATESOF AMERICA

18March 1988.

1have the honour to acknowledge receipt ofyour letter of 17 March 1988
enclosing the Reply of the United States of America in the case concerning

Elettronica Sicula S.P.A. (ELSI), and certifying that the documents annexed
thereto are true conies of the dociiments adduced in sunnort of the contentions
containcd in the pir~ding. 1h3,r thc honour furthrr 1,>onfim ihat thc Heplg
kas beetiduly filcdwithin thc iimc-liniiifixedbythe Ordcr madc on 17Novcnibcr
1987b) ihc Chttrnhcr iormed to dcal with ihircase

45. THE REGtSTRARTO THE AGENTOF ITALY

18March 1988.

1have the honour to transmit to Your Excellencyherewith a certified copy of
the Reply filedby the United States of America inthe caseconcerning Elettronica

SiculaS.P.A. (ELSI). This pleading was filedwithin the time-limit prescrihed hy
the Order made on 17November 1987by the Chamber fonned to deal with this
case.
Additional, uncertified, copieswill alsbe provided for your use.

46. TH@REGISTRARTO THE AGENT OF THEUNITED STATESOF AMERICA'

14June 1988.

1 have the honour Io inform you that, pursuant to Article 18, paragraph 3,
and Article 54,paragraphs I and 3, of the Rules of Court, the President of the
Chamber fonned to deal with the case concerning Elettronica Sicula S.P.A.

(ELSI) has fixed Monday, 13Fehruary 1989,as the date for the opening of the
oral proceedings inthat case.

47. THE DEPUTY-REGISTRARTO THEAGENTOF ITALY

18July 1988.

1 have the honour to acknowledge receipt ofthe Rejoinder2 of the Government
of Italy in the case concerning ElettronicaSiculaS.P.A. (ELSI), and the volume

' A c<irnrnunicatin thesameterins was sent tothe Agenof ltaly
II, pp.417-509.408 ELETTRONICA SICULA

of documents annexed thereto, filed in the Registry today, together with the
certified copy for communication to the other Party in accordance with Article
52, paragraph 1, oi the Rules of Court, and 125 iurther plain copies. The
Reioinder has thus been filed within the time-lirnit fixed therefor bv the Order
made on 17November 1987by the Chamber formed to deal with the case.
The certified copy of the Rejoinder and Annexes is today being fonvarded to
the Agent of the United States of America.

18July 1988

1have the honour to transmit to you herewith the certified copy, required by
Article 52 of the Rules of Court, of the Rejoinder of the Govemment of ltaly in
the case conceming Elerironica Sicula S.P.A. (ELSI), and of the volume of

documents annexed to that pleading. The Rejoinder and Annexes were filed in
the Registry today, within the time-lirnit fixed therefor by the Order made on
17November 1987by the Chamber formed to deal with the case.
Further plain copies of the Rejoinder and Annexes are being sent to you under
separate cover.

49. THE AGENT OF lTALY TO THE REGISTRAR

18July 1988

1the undersigned, Prof. Luigi Ferrari Bravo, Agent of the ltalian Government
in the case Elerrronica Sicula S.P.A. (ELSI) (United States v.Italy) do hereby
appoint as Depuly-Agent for ltaly in the above-mentioned case, Mr. Ruggero
Vozzi, First Counsellor of the ltalian Embassy in The Hague.

50. LE GREFFIER À L'AGENT DE L'ITAL~~'
(Télex)

7 décembre1988.

Me référantnotamment aux articles 18, paragraphe 3, et 31 du Règlementde
la Cour, j'ai l'honneur de vous faire connaître que le president de la Chambre
saisie de I'aKairede I'ElerrronicaSicula S.P.A. (ELSI) recevra les agents des
narties le mercredi 14decembre 1988 à 17heures aux finsde se rensei-ner au.rès
d'sux sur des qucsiions de procCdureen I'alhire et. en particuli~r.sur l'organisa-
tion Jc13 prosCdure orale qui s'ouvrir~Iclundi 1.1févner 1989.

- ~
'La même communicalion a étéadresséeàl'agentdesEtats-Unisd'Aménquc CORRESPONDENCE 409

51. THE REGISTRAR TO THE AGENT OF THE UNITED STATESOF AMERICA '

21 December 1988.

1have the honour to confirm the information already conveyed to the Deputy-
Agent by telephone, that the Court yesterday elected itsPresident, Judge Ruda,
to fiIl the vacancy in the Chamher formed to deal with the case concerning

ElettronicaSicula S.P.A. (ELSI), resulting from the death of Judge Nagendra
Sineh. In accordance with Article 18. oaraeranh 2. of the Rules of Court.
~rejideni Ruda ~uiainiaiic~llyhe~ome. ~residc~t oi the Chamher. The rcalc<l
inpy of the OrJer2 made hy the C'otirtrccording the cleciion isenclosed, topciher
with three plain copies theieof.
1 have the honour further to inform you that al a meeting of the Chamber
held today, it was decided that the date for the opening of the oral proceedings
should he Monday, 13February 1989,at 10am., as already provisionally fixed.
For reasons already explained to you, the heanngs will have to be concluded not
later than Friday, 3 March 1989.

19January 1989.

In the course of preparing for the oral arguments in the case concerning
ElettronicaSicula Sq.A. (ELSI) (United States v. Italy), two additional major
discrepancies in the accuracy of critically important evidence introduced hy the

United States in this case have coine to the attention of Italy. Inasmuch as these
oroceedine- have heen broueht without the aereement of Italv. the United States
king the ,\pplic~nt in proçeeding, iiistituicthy applicdiion .ind no1mercl? une
pdriy tu a special iigrcemenr. ii1s Iiighl) iipprupriate it~rthe Kcspondeni to
~uestion rhc.c rli\srenancicj in th: cvidznce ~d\,iinccdhv Applic;indi ~runiptlv
as possible after thei have corne to its attention, and io dÏaw the atténtion of
the Registrar and the Chamber to them, in order that the matter be resolved or
clarified, if possible, prior to the commencement of oral proceedings in the case.

Background

It willhe convenientand perhaps helpfulhere to reviewthe relevant background
facts and the history of the earlier dispute concerning a portion of this evidence.
At n.eL 20' of the Counter-Memorial of ltalv the statement was made that
rhe rcxrdf ilte niiriute5of flic20 tcbruxr1969 nteciing.imdn,: Prr.cidziitCarollo
and Mcsrr;. Adams, ClJre, HiIly~.rand Profumn. iranisribcd in 1yp:scripi and
subniiitcd as Exhihit U IO Annc~ 15 oi the L'nitcd St:itei hlemori31. hiid bccn
"altered" from the original tent and that significant words that appeared in the
original tex1 (as well as in another typed transcript of those same minutes
suhmitted with the original claim in 1974)had been replaced hy "insignificant
words". (The words that wereomitred,and the words that replacedthem,are set

--
' A sirnilarcornmunicatiawas sentta the Agent ofItaly.
I.C.J.Reporrs1988, p.158.
' II,p.9.410 ELETTRONICA SICULA

forrh in section (A) below; thesubstanceof the replacementwill be consideredin
that section,attentionbeinggivenonly to thedevelopmena t nd backgroundof rhe
controversy.)
On 13 January 1988 the Deputy-Agent of the United States responded by a
letter stating that "ltaly's accusation is unfounded", adding that "(b)ecause of
the gravity of the accusation, the United States would like to dispose of the issue
pnor to the filing of its Reply". The letter pointed out that Exhihit B to Annex
15of the United States Memonal consisted of typed minutes of the 20 February
1968meeting that were "prepared (on) the day following the meeting, utilizing
the handwritten notes of one of the Raytheon officiaispresent at the meeting".
The letter asserted that "The typed minutes summarize,rafher than literally

transcribe,the handwritten notes in a limited number of instances" (emphasis
added).
The letter also explained that a dilïerent "retyped version" of the original
handwritten notes of the meeting had heen prepared in 1974,without knowledge
that there already existed a typewritten transcription of the handwritten notes
made in 1968; the later version had been prepared for, and attached as, Exhihit
11-15to the original claim. The letter from the Deputy-Agent concluded that:

"Thus, no documenb t asbeenaltered. Two fypedsummariesof lhe same
meetingexisr. That the summary typed in 1968 was not submitted in 1974
was merely an oversight in the preparation of the original claim. For the
Court's reference, a copy of the original handwritten notes is attached to
this letter." (Emphasis added.)

The letter from the Deputy-Agent then stated Ratly that "The United States
will respond to the ments of Italy's argument with respect to this meeting in its
Reply." Yet the only argumentation in the Re Py on this subject is a parenthetical
statement in a footnote (note 15, page 13 ) of the Reply that "(the alleged
discreoancies in the minutes to /sicithis meetine are refuted in the letter from
Timo;hy E. Ramish, ~e~ut~-~gent'of the ~nitedstates, to the Registrar of the
Court, dated 13Jan. 1988)".
On its part, Italy in its Rejoinder noted in footnote 56, on pages 59-60: that

"The ltalian Government prefers to refrain from making any comment
on this exnlanation (eiven in the letter of 13Januarv 1988).but wishes to
point out ihxi the ph%oc<>py of ihr manuscripi ver%ioA toi the iiiinutes) full"
confirmi the accuraï) of the quoted pas,agc The pre\idcnt of ELSl really
drcw hi, 'prccisetimc chart' otlcr a monih hcfore the requisition Jeïrec. II'
this T.iu35 suppr~\scd in a 11iicrvcrsioof the minuit,$the onl) concei~shlr
rcrwn ir thai whocver a1iercJ the tet of the minutci .thought that ii
could be embarrassing for Raytheon."

New Developments

This is where matters stood asat the close of the written pleadings in this case.
Dunng preparation for oral argument, however, members of the Italian team
have had occasion to review further the two typewritten versions of the minutes
of the meeting of 20 February 1968 against the handwritten notes upon which
such typewritten versions were ostensibly based and which weresupplied with

' II,p.367, fn.1.
II,p.436,In. 1. CORRESPONDENCE 411

the Deputy-Agent's letter of 13January 1988.In addition, further consideration
has heen given to the substance of the letter of 13January in the context of such
further review.
Twomore deletions or discrepancieshavenowbeenfoundin the 1968typescript

submittedas Exhibil B Io Annex I5 of the UnitedStatesMemorial. One of these
also relates to the 1974typescript.
The letter of the Deputy-Agent contained a statement that "the United States
has certified that Annex 15, Exhihit B is a true copy of the document adduced
in support of the contentions contained in its Memorial, and hereby confims
that certification". In the Affidavit of John D. Clare (Annex 15 to the Memorial
of the United States) at paragraph 27, page 8', the statement is also made
that:

"minutes of two of Our meetings with the President of the Sicilian Region
are a..ended to this affidavit as exhihits A and B. I havereviewrd these
minutes andtheyare an accuratestatementof the eventswhich transpired at
themeetings" (emphasis added).
In the light of this certification and representation, an explanation or clanfica-

tion as to the veracity and correctness of the 1968version submitted as Exhihit
Bto Annex 15of the United States Memorial is aoo..ori.te and necessarv before
ihs summcncemcni <>i'orxp l r<>cr.ci]ingi.n [hi, c.iie, p~riicul:irl) bc~xiiscthe issue
ur :I~L.UTUL.ind ~~~mplctr.ncsrscletcs ta doc~nicnt and staiemenis <ifpcculi~r
sienifi-lincicithc il.iim <>fihc Ilniied Srair.. and Iir.idu>cthc .iiiemoi io cxolain
the one discrepancy heretofore noted in the letter from the ~e~ut~-.~~entdated
13January 1988 is ohviously incomplete on its face, as will be shown helow.
Specifically,we have noted the following from a careful study of the handwrit-
ten notes (including verification in the Registry of words that were difficult to
read).

The OriginalDeletion

(A) The first deletion of material passages from the handwritten notes had
heen the point originally noted in the Italian Counter-Memorial at page 202-. As
you will recall, the deletion was present in the version submitted as Exhibit B to
Annex 15 to the United States Memorial (the "1968 typescript"), but was not
present in the version submitted with the claim in 1974("the 1974typescript").
It was the following language that was wholly omitted:

"CFA stressedthatELSIcannot survivewithoutimmediatecashhelp,which
Ravtheoncannotorovide. JDC drewa ureciselime chartshowine:-
(a) Feb.23 - BoardMeeting
(b) Feb.26 to 29 - inevitablebank crisis
(c) Mar. 8 - we run ouf ofnzoneyandshuttheplant." (Emphasis added.)

This passage was deleted in its entirety from the version submitted with the
United States Memorial and replaced without other signification hy a sentence
reading, "Bath C.EA. and J.D.C. stressedagain the urgencyof the situation.''
(Emphasis added.) In an attempt to explain this original discrepancy, the letter
of the Deputy-Agent of 13January 1988stated that "the typed minutes summo-
rire,rather than literally transcribthe handwritten notes in a limited number
of instances". (Emphasis added.) Hou.ci,crihc languagethat was insertcdcan in no wayproperly hr.çhar~ctcni.ed
as a "runimsri~3tiun" of the language ihat $vasdclctcd. The Iialian Cio\,ernment
therefure iinds the exnl;inîtion hv the Dcouiv-Aeeni of the United States Io be
inadequatc snd inro~pletc. and ~equestsiha; funhcr clarific'ition bcgiven cun-
ccrning th's signilisÿntemcndation of a document supporting an 3ffidavitsuhmit-
ted asevidence. This is particularlv aoorooriate because of the critical nature of
these discrepancies in respect of the &jde;cé now before the Chamber and their
importance to the case advanced by the United States.

The Tu30AddirionolDelerions
The two additional points that have no1 ken noted before also require a
straightfonvard explanation. They have not been previouslynoted in the wntten
pleadings nor discussed in the letter from the Deputy-Agent dated 13 January
1988.
They are as follows:

(B) On the third age of the handwritten minutes (XIX, 7), and on page 3 of
the 1974typescript P,before the fivequestions posed by Mr. Clare, there is also
reported the statement hy Mr. c da m that:
"While we can continue to provide ELSl with management and technol-

ogy, ive cannorprovidemoney.wirhouiwhich ELSI will shortlydisappear."
(Emphasis added.)
In the 1968typescriptsubmilted as Exhihit Bto Annex 15of the United States
Memorial, the words italicizedahove are also completelyomitted and the relevant
sentence merely reads:

"While we can continue to provide ELSI with the management and
technology, hereafirmed rheRayrheonirlienrionofnor invesringfirher money
in Rayrheon ELSI." (Emphasis added.)
This is obviously a "summarization" of the original expression, "we cannot
provide money", but surely it cannot be a summarization of the statement of
opinion that "ELSI will shortly disappear" unless such money is provided.
Moreover, the omission of this language has no1 been flagged hy ellipsis or
othenvise.

(C) Another material passage from the original handwritten minutes is also
missing from the 1968 typescript suhmitted as Exhibit B to Annex 15 of the
United States Memorial. This has also not ken previously noted in the written
pleadings, nor discussed in the letter fromthe Deputy-Agent dated 13January
1988. Moreover, this omission was made in both typescript versions: the 1974
version as well as the 1968 version. The omission has not been Ragged by an
ellipsis or othenvise.
The language is contained in a parenthetical sentencethat follows immediately
after the third element of Mr. Clare's timetable "(c) Mar. 8 - we run our of
moneyandshurtheplant". It can be found toward the bottom of page 3 VIX,
6)of the handwritten minutes' and reads: "(This date of Mar. 8 was stressed
repeatedly as the absolute limit for a shutdown due to total financial crisis.)."
(Emphasis added.)

'See Il, p. 49Doc. 19 CORRESPONDENCE 413

Conclusion
Both typewritten versions - and in particular the 1968typescript submitted
as Exhibit B to Annex 15of the United States Memorial - contained omissions
of material facts that were set forth clearly in the handwritten minutes of the

meeting. Neither version can remotely be characterized as a "summary", since
the balance of each version is in facl a word for word, slavish, transcription, of
the handwritten minutes. The omissions in each document were neither summa-
nzed nor flaggedhy asterisk or ellipsis.
The explanation offered in the letter of the United States Deputy-Agent is
therefore inadeauate. The kev issue is not whether "the summarv tvued in 1968
was not submiked in 1974 was . . .an oversight", nor is it whethérthe 1968
version is preferable to or more accurate than the 1974version; nor is it whether
there exist two typewritten transcnpts rather than one: the issue is why the
language omitted from either or hoth of the typed versions of 1968 and 1974
fails to reflect in significant and highly material respects the actual content and

tenor of the meeting of 20 February 1968,and in particular the discussion that
took place amongst the most senior officers of Raytheon responsible for the
~----~ ~~- ~d f-~~~~~.~. ELSI.
It is doubtless the case that the answer to this question lieswith Raytheon, but
it is considered essential to the orderly conduct of oral vresentation of Respon-
dent's case that the United States-eivethe Chamher a fufivsatisfvine exolanation
as io uhy the ducumrni> h:ii,c ken iuhmiiieil b) or for R3)iheon thai (<>niain
significaniand iinm;irksddelcii.inroi highl) nidieridlinforniniion uiihuui ~iro\.iJ-
ing any indication that such deletion has been made, or any summanzation or
.araohra.e of the matenal that was deleted.
In the absencc oi an) sucli explan~iion, Respondcnt \vil1h~\c no choi:: othcr
ihln IO dtsrcg.irJ the probliti\c \:iluof an) e\iJcnïe produccd in contirciion
uiih Mr Cidre'snttidnv~iand rhr c\hihit.: ihcreio !Anne\ 152nd Ehhihiis 10ihc
United States Memorial), and construe such a lack of explanalion asan admission

by the United States that the state of mind of those participating in the 20 Feb-
mary 1968 meeting, and other facts not accurately reflected in the typescnpt
version of those minutes submitted with Mr. Clare's affidavit, were correctly
reflectedin the handwritten minutes supplied with the letter of the Deputy-Agent
on 13January 1988.

53. TEE DEPUTY-AGEN OFTTHE UNITED STATESOF AMERICA IO THE REGISTRAR

20 January 1989.

Pursuant to Article 56 of the Rules of the Court, the United States submits
the attached certified copies of four documents so that they may be referred to
at the hearing in the case concerning ElerironS iicaulSo.P.A. (ELSI)S .ince two
of these documents are not in one of the officiallanguages of the Court, they are
accompanied by translations into English certified as accurate by the United
States. Nineteen copies of each document, as well as nineteen copies of the two
translations, are enclosed.Enclosures:

1. Certification of the documents'.
2. Italian aide-mémoireNo. 1411696of June 13, 1978' (certified translation
attached).
3. US diplomatic note No. 194of April 18, 1979.
4. US letter of December 6, 1979.
5. Government of Italy letter of April 18, 1980'(certifiedtranslation attached).

(Translarion)

MINISTRYOF FOREIGNAFFAIRS Rome.
No. 1411696 June 13, 1978.

The purpose of the claim filedby the Embassy of the United States of America
in connection with the case of the ltalian ioint-stock comoanv Ravtheon-Elsi is
to protect. through diploniatic action, the inierrst~,>l'the~merica; <hareholders
of the Company and the claim is basrd on the asseriion ihai ihc damages ihey
have suKeredare ascnbable IOthe behaviour of Itslian governmcntal bodies.
1. The facts mav be assumed as thev have been expounded bv claimant. Since
iiwas founded in i956. ~a~theon-~lsi aitained 3 progressi\,e&ie\elopmentuniil
1967,u,ilh continuous increajes of capital alu,ïys furnished by Anierican share-
holders. In 1967,a plan was launchcd for the reorpanization of activitiesand this
dan orovided. inier~alio.for a substantial reduction oflabor. For various reasons.
ihe iforesaid reorgïni7ition could not be implemented and, around the first
monihs of 1968.ihc impossibility of siopping the continuous impairment of ihe
Company's financial situation u,as asceriained: the hoard of direciors therefore
decided (on March 16, 1968)that "there was no other alternative than Io discon-
tinue the Company's activity". (See documents 11-18and 11-19attached to the
claim.)
As a result of the Company's decision to close the factory, the Mayor of
Palermo, by decision of April 1, 1968,ordered the seizure of the factory and

related equipment belonging 10Raytheon-Elsi. Subsequently,on April 26, 1968,
the board of directors filed a petition in bankruptcy (enclosure 111-1610claim),
and the Tribunal of Palermo adjudged Raytheon-Elsi bankrupt by judgment of
May 16, 1968(enclosure 111-17).The order of seizure issuedby the Mayor was
recognized as being unlawful by the competent Italian Authorities.
In this connection one should onlv add that the cornuetent authorities havina
~unsdiciion in the b~nkruptcy inst;tuted proccedings 'againsi ihe Ministry O?
Inieriur in order Io a~certainthe Iiabiliticsderiving froni the aforesaid unlauful
üct. Hs decision of thc Court of ,\ppeal of I'<ilermo,confirmed hy the Court of
cassaiion, although rejecting

'No1reproduced.
Italiantex1not reproduced. CORRESPONDENCE 415

"the relation of cause and effect hetween the order of seizure and the
Company's hankruptcy, sincc it has heen established with certainty that the
state of insolvency can be traced hack with certainty to a date preceding
that of the seizure",

the areument of the trustee in bankru~tcv. accordine to which the unavailahilitv
ofthç~~ctory resuliing from the seilu;c hÛdcaused &mage IO ihs 3dminirtraiio"
of ihs sstatc in h-inkruptcy. uas accïpird. 2nd the ddrnagcs u,erc Iiquidïied in
the amount of Lire 114-million.
2. This having heen stated, it should be pointed out that the US claim, even
though dwelling on various ways in which hoth the Italian Government and the
Regional Government behaved, which, in the United States' opinion, lay open
much criticism, uses as a legal hasis of the claim for compensation the order of
seizure of equipment issued on April 1, 1968,by the Mayor of Palermo. In the
claim filed hy the American Emhassy, the fact that the American companies,
Raytheon and Machlett, are "shareholders of the Italian Elsi Company" is
invoked (page 301*, par. B) in support of the diplomatic action taken against
the Italian Government. According to the exact words used in the United States'
note (page 53'), the claim is filed "in their interest owing to their shareholdings
in Elsi'scapital".

Lastly, from the United States' side it is assumed that the damage suffered hy
the aforesaid shareholders allegedly derived from the fact that it had not heen
possible, owing to the seizure and consequent hankruptcy, to proceed with an
orderlv liauidation of the Comoanv's assets that had alreadv heen scheduled. but
could kot'be carried out by thécompany2s administrativebodies.
3. The claim for damages seems to he groundless inasmuch as the records
show that the order of seGure, even though unlawful, did not cause damage to
the shareholders. At the time of the seizure, they had already completely lost the
Company's capital stock, and actually, the Company's indebtedness was by far
in excess of its total assets. This situation, according Io Italy's bankruptcy law,
not only brought about the obligation to declare the Company's hankruptcy, but
entailed as a consequence forfeiture of the directors' capacity to continue to
exercisemanagerial functions and their replacement hy the trustee in hankruptcy,
in the first place for the protection of the creditors.
The trustee in bankruptcy is required to distrihute amongthem3, in accordance
with the principle of par condicito ha,t is, in an amount proportionate to the
respective credit claims, theassets remaining as a result of liquidation. When the
indebtedness exceedsthe proceeds deriving from the liquidation of the Company's
property to the extent that it does in this case, shareholders are not entitled to
receive anything; nor, ohviously, can the damage affect them" as such, to an
extent greater than the loss of the Company's capital stock.
4. The situation does not change if one considers the claim put forth by the
American Companies, i.e., owners of shares in Raytheon-Elsi, from the point of
view of the damage they allegedly suffered as a result of the seizure, as creditors
of the Italian Company in connection with direct financing or as guarantors.
Without dwelling too long on the fact that the claim would thus he groundless

since it is based on the protection of shareholders as such, it should he noted
that a shareholder, in his capacity as financing party or guarantor of financing,
cannot demand, in a bankruptcy proceeding, a greater protection than that to

' II, p. 264.
' Footnote added in translation: '.themmin the first caserefersto creditors;in the
secondcase, to shareholders.which al1the other creditors of the Comuanv are entitled. As it has alreadv heen
s3id. the damage sulkrcrl hy the crcilitok ufihe Compdn!. (not by the sharéliold-
erhj ouing io the undvail~bility of the iactor) ' h.15.ilr~.ad) hccn Iiquiil~ted b)
rhe tudicial authorii~csin favor of the trusiee ln bankruiitcy. r.c. in [rut TorXII
the creditors, so that no special claim can he asserted in this connection by the
foreign creditor. He, in accordance with domestic law, to which no exception is
made under international law, is subject to the bankruptcy rule of "participation
of claimants" in the sense that al1creditors must oarticioate. within the limits
prrmitt~,d hg thr hlinkruplc) ass~is. in the seiileiiicnt of thcir rr,.\pc~.ii\r.claimi.
In othcr u,rird., niçh one of [hem' niusi bear a losscoiiimeiisurdtr uith the libeis
remaining as a result of the hankruptcy liquidation (par condiciocreditorum).
5. In conclusion, the claim isjundically groundless, both fromthe international
and domestic point of view. Nor is there a possibility of reaching an agreement
which, apart from juridical reasons, would take into account the financial and
nolitical asoects set forth in the claim. inasmuch as anv aereement for an amicable
Settlement'would not be valid unleis it is ratified by an act of Parliament in
accordance with Art. 80 of the Constitution. And it is unlikely that Parliament
willapprove any agreement which, being an exception to the par condicio credito-
rum rule, would run contrary to the constitutional pnnciple (Art. 3) of equal
treatment, to the prejudice of ltalian creditors who would continue, instead, to
besubject to the losses involved in the bankruptcy.

No. 194

The Emhassy of the United States of America presents its compliments to the
Ministry of Foreign Affairs of the ltalian Repuhlic and has the honor to refer to
the Ministry's aide-mémoireof June, 13, 1978,in reply to the espoused claim of
the Government of the United States of Amenca on hehalf of Raytheon Company
and Machlett Laboratories. Inc
Altbough the Ministry's aide-mémoireassumes agreement with the facts in the
esooused claim, the Government of the United States believesthat it is desirable
to review the salient points of the espoused claim:

fol In the view of the United States. the reauisition of the ELSI assets by the
Co\crnmcnt oi Iialy on April 1, 1968.\vds suntr;ir) IO interiiütionnl la\\<.
Ii vi,~laiedspedilic trcliiy pro\isions.Ilalso ~iolatcd applic:ible provisions
of customary international law.
(b) The requisition has been held illegalunder the law of Italy by the Consiglio
di Stato.
(c) The unlawful requisition prevented ELSl stockholders from effecting an
orderly liquidation of the corporation and precipitated its hankruptcy.
(d) The Government of ltaly has controlled the ELSI assets from the date of
the requisition as set forth at pages 35 through 60' of Volume 1 of the
espoused claim.
(e) The unlawful requisition and other breaches of international law directly
caused the damage set forth in the espoused claim (Volume1,pages 61-6g3).

' Footnote added in translation:Thisrefersto unavailabilityfollowingtheseizure
' Footnote added in translation:"them" referto the creditors.
' Not reproduced.418 ELETTRONICA SICULA

espoused claim states, hased upon a value premisedupon an orderly liquidation,
and not the value resulting from bankruptcy.

III. A Denialof the EspousedClaimIs Justifiedby the ltalian Municipal
BankrtrptcyProceeding, Provisionsof the Italian Constitutionand MunicipalLaw
Relating to Equal Treatment
The United States cannot acceDtthe arguments that Italian bankmvtcv ~r. ..
ceedings, the Italian ~onstitution'or ltalian municipal law prevent a recognition
of the validity of the claim. Under clearly settled principlesof international law,
local Ipw does not prevail over international law. Italy may not defend against
an i~ ~ ~ ~ional claim bv showine that its courts and laws aiïorded aliens the
same treatment as ltalian nationals.
It is wellestahlished and universally recognizedhy eminent Italian authorities
in international law that a state mav not setUD its constitution or other domestic

law to justify its failure to carry oit its obligations under international law.
Professor Giuliano writes in his Diritto internazionale,Vol. 1 (1974), pp. 284
and 285:
". :.[Ulno Stato non puo invocare ilproprio dintto interno per giustificare
l'inadempimento di un proprio obbligo internazionale .. .'[Ulno Stato non
puo invocare nei confronti di un altro Stato la propria costituzione per
sottrarsi agli ohhlighi che per esso discendono da1 diritto internazionale O
dai trattati in vigore."' (Citing the Advisory Opinion of the Permanent Court
of International Justice on Treatment of Polish Nationals in Danzig (1932)
P.C.I.J., Ser. AIB, No. 44, p. 24.)

Such quotation, in translation, states as follows:

"[A]Statecannot invokeitsown interna1lawtojustify the nonperformance
of ils international obligation. '[A]State cannot adduce as against another
State its own Constitution with a view to evading obligations incumbent
upon it under international law or treaties in force."'
This pnnciple is universallyconfirmed by other writers, including other ltalian
authorities on international law. Among others coofirming this well-known prin-
ciple are: (1) Professor Monaco in Manuale di diritto internazionalepubblico
(1960), p. 129; (2) Judge Anzilotti (Opere di Dionisio Anzilotfi, Vol. 1 (1955),
p. 56); and (3) Professor Perassi in "La Costituzione italiana e I'ordinamento
internazionale" in his Scritti giuridici,Vol. 1(1958), p. 447.
It is equally wellestablished that a state may not invoke equality of treatment
in its law or constitution as a reason to avoid its international obligations. As
long ago as 1930,the Italian and United States delegations to the Hague Codifica-

tion of 1930joined with others to vote down a Chinese proposal to limit the
standard of treatment of foreigners to the standard accorded hy a state to its
own nationals.
Again, Italian authoritieshave uniformly recognizedthis pnnciple which forms
the very hasis of the international law relating to treatment to he accorded to
foreign citizens,as follows:
". ..[GlliStati sono internazionalmente ohbligati a garantire agli stranien
un certo insiemedi diritti e auindi sono tenuti a concedere aeli stranieri tali
diritti minimi, ne1 caso eccezionale in cui il loro ordinamento faccia ai
cittadini un trattamento che rimanga al disotto di tale minimo."

Such quotation, in translation, states as follows: CORRESPONDENCE 419

". . .States are internationally obliged to guarantee to foreign citizens a
certain quantity of rights and are therefore required to accord to foreigners
these minimum rights even in the exceptional case in which their system
would treat their own citizens belowthat minimum." (R. Monaco, Manuale
di diritto inrernazionalepubblic(1960), p. 308. Also see R. Quadri, Dirirto
internazionalepubblico (5th ed. 1968),at p.757.)
The International Law Commission has approved the following Article 4,
entitled "Characterization of an act of a State as internationally wrongful" as

one of its "Draft articles on State responsibility":
"An act of a State may only be characterized as internationally wrongful
by international law. Such characterization cannot be afiected by the charac-
terization of the same act as lawful by interna1 law." (Report of the Inter-
national Law Commission on the Work of its Twenty-Seventh Session
(5 May-25 July 1975),al 28, UN Doc. A/10010 (1975))

The article was basedon a tex1presented by Professor Roberto Ago, a represen-
tative ofthe Government of Italy, an Italian national, and the SpecialRapporteur
on the subject.
In conclusion, the United States submits that the Ministry's aide-mémoireof
June 13, 1978, is not consistent with well-recognized principles of international
law and is not responsive Io the espoused claim of the Government of the United
States.
The Embassy of the United States of America is prepared to enter in10negotia-
tions with the Ministry of Foreign Afiairs of the Government of ltaly with a
view to concluding an expeditious and equitable settlement of the claim al a
mutually convenient time.
The Embassy of the United States takes this opporlunity Io renew to the
Ministry of Foreign Afiairs the assurances of its highest consideration.

EMBASSYOF THE UNITED STATESOF AMERICA,
Rome, Apnl 18, 1979.

Rome, 6 December 1979.

Dear MI. Ambassador:

1 very much enjoyed our talk las1 Fnday and the opportunity it gave me 10
have your views on subjects of mutual interest. 1 hope there will be frequent
occasions for similar informal meetings.
When we discussed the long-standing Raytheon-Elsi case, you suggested that
I send you a note outlining our proposal which may be considered as a follow-
up to Foreign Minister Forlani's comment on May 28 10 Secretary Vance that
legal experts get together to study the case. In brief, we would propose to have
the record of the case examined by three international legal experts, chosen by
the parties, with authority to make a recommendation for settlement. One expert
would be chosen by each side with the third chosen by the first two. We have
consulted the Raytheon Co. and it is in full agreement with this proposed
approach. 1 am hopeful that this initiative will serve ta overcome the impasse in which
we now find ourselves and will lead to a mutually satisfactory settlement. 1look
fonvard to hearing from you on this matter.
Sincerely,

(Signed) RICHARD N. GARDNER.

Ambassador Francesca Malfatti di Montetretto,
Secretary General,
Italian Ministry of Foreign Affairs,
"La Farnesina", 00100 Rome.

(Translation)

MINIS'IRY OF FOREIGNAFFAIRS Rome, April 18, 1980.
The Secretary General

Dear Ambassador:

With reference ta your letter of December 6, 1979, concerning the firm of
Raytheon-Elsi, 1wish to assure you that our Foreign Affairs Legal Department
has carefullv reexamined al1 the asnects of the auestion in order ta be able to
giveyour p;oposal a positive answer.
Unfortunately, 1have to infom you that the result of this reexamination does
not fulfill our common hopes.
As the confidential juridical memorandum delivered ta the US Embassy on
August 3, 1978,already pointed out, and according ta the conclusions confirmed
during the meeting between Secretary of State Vance and Minister Forlani on
May 28, 1979, it is juridically impossible for the Italian Government ta grant
Raytheon-Elsi a compensation, since it would not be justified hy and would in
fact be at odds with specificprovisions of law.
Therefore, Minister Forlani's willingness to accept the proposal of a meeting
between experts of bath parties in order ta investigate the question thoroughly
mus1be considered as acceptance of a meeting of legal experts solely in order ta
make it clear that for the Italian Government it is impossible a priori to open
actual negotiations. Therefore, the board of experts would have no arbitral
character and no power to make recornmendations for the solution of the matter.
However, 1 have asked the Chief of the Foreign Affairs Legal Department,
State Councillor Arnaldo Squillante, ta be at your disposal for any further
detailed information on the matter.

Sincerely,
[Signature illegible]

His Excellency Richard N. Gardner,
Ambassador of the United States,
Via V. Veneto 119, Rome. CORRESPONDENCE 421

54. THE DEPUTY-AGENTOF THE UNITED STATESOF AMERICATO THE REGISTRAR

30 January 1989.

1am in receipt of the copy of the letter dated 19January 1989from the Agent
of Italy in the case concerning EleitronicaSiculaS.P.A. (ELSI).
In my letter of 13 lanuary 1988,the United States explained that there had
been no alteration of any documents suhmitted ta the Chamber. Attached Io that
letter are the handwritten notes taken during the meeting of 20 February 1968
between several Raytheon officiais and the President of the Sicilian Regional
Government. A typed version of these minutes prepared the day following the
meeting appears as Exhibit B Io Annex 15of the Memorial. A typed version of
these minutes prepared for use in the 1974diplomatic claim appears as Exhibit
11-15ta that diplomatic claim, and was suhmitted hy the Respondent in ils

Unnumbered Documents attached to the Counter-Memorial.
Any difierences among these documents were fully explained in my letter of
13January 1988.The documents speak for themselves and may al1be referred
ta by either party and the Chamber in determining the discussion that occurred
at the 20 February 1968 meeting. Additional explanation is no1 necessary to
establish the credibility of this or any other evidence introduced by the United
-~~~~~~
F~rihcr, ihc Rcsp<indcnt'\siaicmïni thdi thesï procerdings have hrrn hrought
iriihuut ihç ügrecmcni of ihc Kc,pondcni isincorrcci Whilc ihcsc procccdingj
ucrc insiii~icd h\ insans <ifa unilateral annlication hv ihc I!niicd Siciter. ihis
was done pursuant to agreement reached béiweenthe iwo parties.

55. THE DEPUTY-AGEN OFTTHE UNITED STAm OF AMERICA TO THE REGISTRAR

2 February 1989

Pursuant ta Article 57 of the Rules of the Court, the following is a lis1of
witnesses and experts whom the United States may cal1in the case concerning
ElertronicaSiculaS.P.A. (ELSI), with indications in general tenns of the points
to which their evidence would be directed. A copy of this communication is
furnished for transmission Io the Respondent.

Wirnesses

MI. Charles Adams, a United States citizen residingin the Commonwealth of
Massachusetts. MI. Adams' evidence will concem Ravtheon and Machlett's
in\çstmcni in kI.SI .ind thedecisiIO place ELSI ~hrou~hanordcrly Iiq~idation.
Ur. John <:lare,a [.'nitcdKingdom ciii/cn rc3idingncar Gcncvÿ, Suit/crland
Mr. Clare'\ evidencc willc.>nccrnihc deiailr of the ElSl ordcrly Iiquiddtionpllin

Experr
Mr. Timothy Lawrence, a United Kingdom citizen residing in London. MI.
Lawrence's evidencewill concern the value of ELSl's assets at the time of the

requisition of April 1, 1968.422 ELETTRONICA SICULA

56. THE DEPUTY FLEGISTRAT RO THE DEPWY-AGENT OF THE
UNITEDSTATESOF AMERlCA

2 February 1989.

1 have the honour to acknowledee recei~t of vour letter of 2 Februar~ 1989
listing the uirncsscs and chpzri uhiim ihc United Statc, ol am cric^ niay cal1in
the i~scsonçcrning i?/t,rrro,ii.Sti.u/Sp.4 iELSI,. Thc sup) of your conlmuni-

cation sutcd 10 he iurni5hr.d. pursu.int to Ariiçlc 57 of the Rules of (:ourt, ior
transmission to the other ~a;ty was not in fact enclosed; to avoid delay, 1have
today sent the Agent of Italy a photocopy of your letter.

57. THE DEPUTY-REGISTRAR10 THE AGENTOF ITALY'

6 Febmary 1989.

1have the honour to draw Your Excellency'sattention to Article 53,paragraph
2, of the Rules of Court, which provides that "The Court may, after ascertaining
the views of the parties, decide that copies of the pleadings and documents

annexed shall be made accessibleto the public on or after the opening of the oral
proceedings".
In order that the Chamber formed to deal with the case concerning Elettronica
Sicula S.P.A. (ELSI), may be able to consider whether to take such a decision
in that case, 1 shall be obliged if Your Excellency would inform me as soon as
possible of the views of the Govemment of Italy in that respect.

6 February 1989.

1 wish to inform you that in the case of the United States against Italy

concerning Elettronico Sicula S.p.A., MI. Michael Matheson, Deputy Legal
Adviser of the United States Department of State, will serve as co-agent.

59. THE AGENTOf ITALYTO THEREGISTRAR

6 February 1989.

1 have the honour to inform you that the ltalian delegation for the oral
pleadings in the case concerning Elettronica SiculaS.P.A. (ELSI) will be com-
posed as Follows:

[See I.C.J. Reports 1989,pp. 16-17, and Nos. 63 and65, infra.]

' A communicationin the sameternis was sent tothe Agent of the United Stateol
America. CORRESPONDENCE 423

60. THE DEPUTY-AGENTOF THE UNITED STATESOF AMERICA TO THE REGISTRAR

7 February 1989.

The United States delegation in the case concerning ElettronicaSieulaS.P.A.
(ELSI) will consist of the followiiigindividuals:

[See I.C.J. Reports 1989,p. 16.1

61. THE DEPUTY-REGISTRAR TO THE AGENT OF THE UNITED STAm OF AMERICA '

8 February 1989.

1have the honour to draw your attention to the followingprovisions of Article
71 of the Rules of Court:

"1. A verbatim record shall bemade by the Registrar of everyheanng, in
the officiallaneuaee of the Court which has been used . .."
3 Copies or'thLrran>cript \hall be (irculaied io ludges siiiing in tlicL'J~C.
:indIO the pÿrtics. Thc Ihttcrnici).unilcr the super\ision oithr <:ourt,correct
the transcrint, i)irriccchrs and siaienlents made on ihcir bchxlf. but in no
case may sÛchcorréctionsaffect the sense and bearing thereof . . ."

The transcript of the oral proceedings inthe case concerning Elerrronica Sicula
S.P.A. (ELSI), opening on Monkiy, 13February 1989,will be circulated to the
Parties as follows: the transcript of a hearing held from 10a.m. to 1p.m. will be
available in the evening of the same day, and tbat of a hearing held from 3 Io
6 p.m. will be availahle during the morning of the following day.
In order to facilitate any supervision which the Chamber may feelit proper Io
exercise, 1 shall he obliged if you will hand your corrections Io the Registrar's
secretary as soon as possible after the circulation of each transcript, and in any
event not later than 6 p.m. on the day following such circulation.

62. THE AGENT OF ITALY TO THE DEPUTY-REGISTRAR

8 February 1989.

With reference to vour letter of 6 Fehruarv last. 1have the honour to inform
you that, as to the application of Article 5j, paragraph 2, of the Rules of the
Court, the Government of Italy kas no objections to the fact that copies of the
pleadingsand documents annexed by the Parties in thecaseconceming Elerrronica
Sicula S.P.A. (ELSI) be made accessible to the public on the very opening of
the oral proceedings.

' A communication inthe sameterlns was sent to the Agent of Italy. ELETTRONICA SICULA

63. THE AGENT OF ITALY TO THE REGISTRAR

8 February 1989

With reference to my letter of 6 Febmary last, 1have the honour to inform
you that the Italian delegation for the oral pleadings in the case concerning
ElettronicaSiculaS.P.A. (ELSI) has been integrated as follows:

Mr. Pier Giusto Jaeger, Professor of Commercial Law at the University of
Milan,
as Adviser.

64. THE OEPUW-AGEN OTF THE UNITED STATESOF AhERICA TO THE REGISTRAR

9 February 1989.

1 have the honorto refer to your letter of6 February 1989in the caseconcerning
EletfronicaSiculaS.P.A. (ELSI). The United States accepts any decision by the

Court as to when the copies of the pleadings and annexed documents shall be
made accessibleto the public.

14 February 1989.

With reference to my letter of 6 Febmary last, 1 have the honour to inform
you that the following name is to be added to the list of the Italian delegation
for the oral pleadings in the case concerning ElettronicaSiculoS.P.A. (ELSI) :
Mr. Alan Derek Hayward, Fellow of the Institute of Chartered Accountants

in England and Wales,
as Adviser.

66. THE CO-AGEN OTF THEm~mo STA~ OF AMERICATO THE REGISTRAR

15February 1989.

Pursuant to the agreement of the parties of yesterday, the United Statessubmits
the attached copies of two documents in the case concerning Elettronico Siculo
S.P.A. (ELSI). 1certify that thesedocuments are true copies of the original docu-
ments. These documents are not in one of the official languages of the Court.
Therefore the final hrief of the Solicitor General is accompanied by a translation
into Enelish of the oaraeraohs referred to hv the United States. The decision of
th: court of Rumï . 15accump~nied by 3" un~ertili~dtr~nrldtion, a ccrtilied

ir~nslation wiIIhr.provide2s soon as p<i\ihlcl. Copies have hccn proi,iJcJ tu
the Respondent.

(Signed) Michael J. MATHESON.
'For thecertifiedtranslatiseeNo. 73, infia. CORRESPONDENCE 425

Enclosures:

1. Final Bnef, Officeof the Solicitor General, in Case No. 32266183before the
Court of Rome'.
2. Certified English translation of paragraphs 5 and 6 of (1).
3. Decision, Civil Court of Rome, certified February 19, 19'.
4. English translation o(3)'.

(Translarion)

Cont. [Ref. No.] 9269183

OFFICE OF THE SOLlClTOR GENERAL
COURT OF ROME

R.G. [Commilral] No. 32266183 - Hearingen Banc, November20, 1987

FINALSTATEMEN OTF THECASE
for

the OFFICEOF THE CHAIRMA ONFTHECOUNCIL OF MINISTERiS n, the person of the
Chairman pro tempore, and for the MINISTRIFo Sf FINAXCEo,f the T~aunu,
and of FOREIGN AFFAIRS i, the persons of the Ministers pro tempore, defended
and represented by the Officeof the Solicitor General,

Pier Francesco Talenti, engineer; defended and represented by Mario Savoldi,
attorney,

and involving

the MUNICIPALIT O F ROME,in the person of the Mayor pro tempore, defended
and represented by Attorney Lo Mastro

5
I'lainiifcitcs ihree spxiiis inicriiaiion;il iredi). provisions (and this 1sthe only
spccificpxt of the somplaint): namcly, ArticlV, pïragraph 2 oi ihc Treaty of
Fncnrlrhin. Commerce. 2nd Navieiiion hciwecn the United States OCAmcnia
and 1taly';f ~ebruar~'2, 1948, and paragraph 1 of the associated protocol of
signature, which Treaty and Protocol wereput into force in ltaly by Law No. 385
of June 18,1949(inLex, 1949,1039).and Article I of the Agreement of September
25, 1981,Supplementing the aforesaid Treaty, which was put into force in ltaly

by Law No. 910 of August 1, 1960 (in Lex, 1960, 1225).

' Not reproduced.
Uncertifiedtranslationnot reprod(seefootnote1.p.424, supra).426 ELETTRONICA SICULA

The cited Art. V. nar. 2 contains nrovisions relatine to the settine Yiust and
effectivepayment [i:;., ~om~ensationj") and the paym&t ("prompt"~oi'~ompen-

sation for the expropriation of "property of nationals, corporations, and associa-
tions of either Hieh Contractine Partv". and to the conversion of the available
currency resultingtherefrom. A; has al;eady been concluded in the Reply, the
state agencies in question assuredly have no1expropriared any of PlaintiffS pro-
perty. In any case, Plaintiff does not indicate specificfacts of expropriation, nor
does he cite identifiable violations of the principles of "due process of law" and
of "prompt payment of just and effective compensation", hrought about by
Italian authorities; this deiense is therefore unable to perfom its mandate (Art.
24 of the [Italian] Constitution), because the causa petendi [cause of action] -
~.~.. the concrete and soecific facts - has remained undefined. The ~nus of
..~lleging" ihefore pro\.&) the hct, ,r nn Pld!»rfi Tnlenti ho., m.r olhycJ the
specificjundicllly relevant Ijct\; rhiculon,.suflii.fi.r<I~.,,>zi<<>ritlhe c.impl<iint.
Wiih [hi. blirkground. WC nccd no1add thai ihr .taicagcn,,ic> in qiic~tionh3sc
noi rien eipropnliied linything from comp3nies - iikrch;~i~.hi~~nroillr)c3ri,rn
nu»redln rh<,cnmpluinr - in nhich Talcnti claimr ha\e home inter:st: in an)
CJW. :is,laicd aboie. ne Jre dralinp uith Italian land ndt US)comviiiics. \$hich
as such are not covered at al1by the Treaty in question. WC pint out in this
connection that Article II, paragraph 2 of the same Treaty, in defining the
nationality of corporations, implicitly invokes the criterion (cf. also Arts. 2505
and following of the Civil Code) of the legal system under which they were
constituted ("created or organized under the applicable laws and regulations
within the territories of either High Contracting Party").
Therefore, since in fact there were no expropriations or violations of the
nrincinles of Art. V. Dar. 2. the reference to said ~rovision is eroundless. Nor
cm~ 11he m3int;iined lh31 changer in /uning Jeiignütionr th,it 3rc a Iegiiimatc
reault ni plnnning ordcrs ("piani rsgolatori") c3n hr dcrcribed :Irexpropriaiiuns:
the eeneral rule 7s that thei are not. and this rule cannot suffer excevtion onlv
uhen CS nationdls are alf&tcd hy the chxngcs The Itali311lega1syitim c~nno~t
admit tuo ditkrcni conccpis of expropriation (ior the public good) Furthermors.
the Treatv in auestion draws continual inspiration from the criterion of equality
of treatment between nationals of one countrv and those of the Othe; ~ieh

Contracting Party: the preamhle says, ". . .based . .. upon the principles of
national .. .treatment"; Art. 1, par. 2 establishes that "in conformity with the
applicable laws and regulations, .. .upon terms no less favorable than those . . .
accorded to nationals of such other High Contracting Party", the nationals of
the one and the other Contracting Parties may "acquire, own, erect . . appro-
priate buildings"; Art. II,par. 3states that corporations of oneParty may operate
in the other "in conformitv with the ao~licahlelaws and reeulations" and "upon
tenns no less favorable than those . . accorded 10nationas of such other ~igh
Contracting Party".
Paragraph I of the protocol of signature (Lex, 1949, 1061) adds a simple
clarification to Art. V. Dar. 2. examined ahove. ~uttin~ the exnro~riation of
"interests . . . in pro~érty" on an equal footing witK the expropriation of
"property". The clarification might even seem superfluous, al least according to
OUI customary hermeneutic criteria.
The Snpplementing Agreement of Septemher 26, 1951, contains a group of
provisions intended to favor and protect capital investments in enterprises, with
capital originating in one High Contracting Party and invested in the other High
Contractine Partv iat the time. in ~ractice. the US investments in Italv were
undcr con<dcrdii;>n: uhile nowdd3); resiprosity 1%in elfeci) The prc~mhcc~3)s.
in P~ci."desirous of gi\.ing addrd encouragement to in\csinienis . . in ujeful CORRESPONDENCE 427

undertakings". It is clear, then, that the case of Talenti, who did not make any
investment from the USA in ltaly (the contrary, if anything), does not come
under the purview of said Agreement.
This is confimed if we read Article 1 of the Agreement, an article cited by

Plaintiff. It speaks of "enterprises which the (for example US nationals) have
been permitted to establishor acquire"(for example, in Italy) and of "investments
which they have made . . .in theform offunds . . .maferials,equipment . . .".
The meaning of the provision isunequivocal: it callsfor a flowacross the Atlantic
of capital intended for use in enterprises to be "estahlished" (the term is also
used in the EEC Treaty when it calls for the "right to establish") or "acquired"
or expanded and strengthened by means of "contributions". In the case at hand,
nothing of the kind has occurred. Plaintiff Talenti inherited property in Italy as
an Italian national and has not sent anything to Italy from the USA since his
change of citizenship. Therefore, he cannot invoke the Agreement of September

26, 1951,and incidentally could not even invoke - and in fact does not men-
tion - the Italian Law No. 43 of Fehruary 7, 1956,on foreign investments in
Italy.
Onlv adabundanriam[for the sake of com~letenessldo we add that in the case
at haid there has not hien anv "ar,itrar~ Ôr~~,criniinatorv" measu,e ta~en~ ~ ~~ ~ ~ ~ ~ ~ ~ ~
authoritics oiihc Itxlian staic IO Talcnii'sdctrirnent, and still lcsshas any mcïbure
ken takcn intcndcd io "pre\.cnt" ihc cffcciivccontrol and administriiion of the
enterprises or to "impair" rights or interests helonging to Talenti. Once more, it
can be seen that Plaintiff is simply copying the text of the aforesaid Art. 1, but

does not indicate specificfacts (aside from a newspaper clipping, which assuredly
was not made by a public authority), nor does he demonstrate causal connections.
Once more, we observe that if Talenti considered it pmdent to stay away from
ltaly in 1975(a circumstance - we repeat - neither demonstrated nor demon-
strable), this was the "consequence" of his personal judgments (he knows himself
and his own hehavior hetter than anv Criminal Judre could) and not the "conse-
quence" of "measures" that were névertaken, and-even le& so of "arbitrary or
discriminatory measures".
The wnt of complaint also mentions, "insofar as they may be necessary" (but

even here Plaintiff would have the onus of makine a soecific alleaation). the
Convention for the Protection of Human Rights of kovember 4, 1950,puïinto
forceby Law No. 848of August 4,1955 (inLex, 1955,1450),and the International
Pact of December 16, 1966,on Econornic, Social, and Cultural Rights, put into
force by Law No. 881 of October 25, 1977 (in Raccolta uficiale Ieggie decreti
["OfficialCollection of Laws and Decrees"], 1977, 1895).
With regard to the Convention of November 4, 1950,it sufficesto observe that
it has been agreed upon among the memkrs of the Council of Europe, and not
with the USA. Talenti, because he proclaims himself a US citizen, has no right

to invoke it (except as it relates to issuesof procedure in the present civilhearing).
As to the Pact of Decemher 16, 1966, which for its part was adopted within
the UN, we observe first that it was put into force in Italy three years after the
allegedlyinjurious eventsoccurred, and that as of late 1977it had not been signed
by the USA (we have doubts as to whether it was ever signed subsequently by
the USA). In any case, none of the provisions of this Pact can affect the present
case.
Beforeconcluding this overviewof international treaty noms, wewish to point
out that both Article XXVI of the Treaty of Fnendship, Commerce, and Naviga-
tion and Article VI11 of the Suonlementine Aereement cal1 for orocedures of
- -
internlitional law for the settlc&nt of disputes hetucen the ~i& Coniracting
Parties as ro the interprctation ur applicaiion oi the terms of ihosc docunients.428 BLETTRONICA SICULA

Talenti, who has proclaimed himself in writing an "indefatigable supporter" of
the Republican Party of the United States of America, has attempted to involve

the governmental authorities of the two Contracting Parties in support of his
peculiar and enomous claims. The frailty, or more nghtly inconsistency,of these
claims,however, is so obvious that the governmental authonties acted responsibly
in giving them their just dimensions (as confimed hy the note of Marcb 7, 1983,
attached by Plaintiff), placing full faith in the impartial justice of this most
Illustrious Court.
6. Plaintiffhas proposed an action he himself qualifies as "ex art. 2043 Civil
Code" Le., for compensation of the damages from a "tortious act". A complaint
thus fomulated undoubtedly introduces a dispute over an "alleged" personal

rieht (over iurisdiction and other thines): this. however. ~~es~~o~ ~e~n that the
"~lleied" hght actually exists. A pe%ial ribht ex art. 2043 CC presupposes
violation of a previous and different personal nght -.he "iust.ce" of the dama~e), -
e.g., of a nghi to property.
Plaintiff Talenti leaves this point nehulous in the complaint; he even tries to
introduce elements of confusion asserting that "inviolable personal rights . . .
receiveiuridic ~rotection hv the noms. .." of the international accords examined
in the prcccJing pürdgraph. The nom, oithe,e ïgrssmcnts, hou.ever. arc ai hcst

ïn indirrci and additional guar~ntcc of the internïtionïl relaiionships hetueen
nations, a iuridic situation which, accordinr to the interna1 leral svstem of the
one of the'two Contractine Parties. is Der Se alreadv endowed wiih the nature
and consirtcncy of a p:rs&al right; it'cannot ht u;ed IO confer the qualit) of
personïl nght, iin situatiuns thai 3re no1such in the senrc of the aforcnientioncd
iegal system.
In this case Talenti alleges, albeit quite vaguely, to have suffered losses to
certain practical interests (unclear as to whether "his" or of otber companies),

which (interests), however, do not have the quality of a personal nght within the
Italian le-.l svstem. This is not true for the interest a nrooertv owner mieht have
in a .'more protiiablc" urbün ~iming; ihi, lype oi intbresi wi;uld have l&iiiniüic
recoursc onl) 10 the conipcicni 3dniinisrrïtiie coiiri çontesting a u.ri>ngful/uning,
and ir q~ülifiable as ï "legal inierehi", if and ii,hcn ihr tort h:is been eiTsctii.r.lv
recoenized bv the administrative court (converselv. if ,,d when the tort fails t6
advance, neiiher is there a legal interestj.
There are only two possibilities: either the authonties have issued a legal urhan
zonine vlan and thus no recoenized iuridic situation has been iniured: or the

auiho~iics havc issucd an urbrin zontng plan thüi wüs found illsg~land siruck
doun b) the adniinisir3tive court. but cvcn in Thiscase no juridic siruaiion hdi
been injured; therefore, our code justly excludes compensation for damages tu a
legal interest, rectius the injury of a legal interest. In neither case can there be
the injury of a personal nght, nor can there be "injustice" of the damage, nor
can there he personal right with subsequent compensation ex art. 2043 CC.
There is no third possihility, e.g., a purely practical interest, perhaps protected
as legal interest and then promoted to personal right hy effect of the noms of

the international agreements examined above. Nor do we believe in a "juridic
short circuit", whereby the general nght of landed property, if owned by a US
national or Company, is upgraded by said nom - discriminating in favor of
said national or cornpany and to the detriment of ltalian nationals or compa-
nies - so that there are now two different rights of landed property, the one
normally in cornpliance with (or subject to) the urhan planning authority, and
the other instead "sovereign" or supenor to it.
All this has been pointed out by adversary's counsel (in the US the urban
planning authority operates as it does here, perhaps with even more powers of CORRESPONDENCE 429

discretion and with less incisive juridic control); adversary counsel has, in
efïect, attempted to "leap" al1the obstacles using the enpedient of an undefined
and magmatic causa pelendi. However, the "leap" is disallowed hy the very
existence of the fundamental principles set forth in Articles 3, 24 and 42 of our
Constitution.

15 Fehruary 1989.

1have the honor to infom Your Excellency that the Co-Agent of the United
States in the case concerning Elettronica Sicula S.P.A. (ELSI) has this morning
supplied the Chamber with copies of the following documents, referred to at
yesterday's hearing (pp. 75 and 76-79,supra):

1. Final Brief, Officeof the Solicitor General, in Case No. 32266183hefore the
Court of Rome;
2. Certified English translation of paragraphs 5 and 6 of (1);
3. Decision, Civil Court of Rome, certified February 19, 1988;
4. English translation of (3).

The Co-Agent infoms me that a certified translation of document numher 3 will
he provided as soon as possible; and that he has also supplied you with copies
of these documents.
It is my understanding from what was said by Your Excellency in Court
yesterday that the ltalian Government does not ohject to the suhmission of these
documents under Article 56 of the Rules of Court.

68. TABLES ILLUSTRATING MR. LAWRENCE'S EVIDENCE GIVEN ON 16 FEBRUARY
1989',AS COMMUNICATED BY THE DELEGATION OF THE UNITED STATES OF AMERICA
TO THE REGISTRY ON THE SAMEDAY

ELSI: ASSETS AT 31 MARCH 1968

Book value

Tangible assets
Fixed assets 5,764.4
Inventories 6,534.6
Accounts receivable 2,412.4
Other assets 621.0
-
15,332.4
Intangible assets - 1,721.1
17,053.5

' Seep. 122,supra. ELETTRONICA SICULA

ELSI: FIXED ASSETS

Puglisi
Book value valuarion

Land and buildings 962.5
Machinery and equipment 4,154.2
-
5,116.7
Constmction in process - 184.1

Taxed reserve

ELSI: INVENTORIES OF MATERIALS
AND WORK IN PROCESS

Book value 6,534.6

Less:Taxed reserve

ELSI: ACCOUNTS RECEIVABLE

Realizable
Book value value

Customers 2,150.8
Less: Reservefor bad debts

Affiliates
Other

ELSI: OTHER ASSETS

Book Realizable
value
value

Investments 119.2
Cash and bank balances 21.3
Notes receivable 128.1
Accmed receivablesand prepayables 352.4
-01.8
621.0
Mezzogiorno grants CORRESPONDENCE 431

ELSI: ASSETS AT 31 MARCH 1968
Realizable

Book value value

Tangible assets
Fixed assets
Inventories
Accounts receivable
Other assets

Intangible assets

17February 1989.

Enclosed is the answer to a question posed by Judge Schwebel to the United
States during the February 16 session of the Court' in the case concerning
ElettronicaSicula S.P.A. (ELSI). A copy of this letter and attachment has been
provided to the Respondent.

The United States case is based solelv and exclusivelv unon violations of the
Treaty of Friendship, Commerce, and Navigation, and its f'rotocol and Supple-

ment. The United States has never argued and does not now argue that the acts
and omissions of the Resoondent thatviolated the Treatv amoint to a "cons~i-
rasy". Thar characieriraijon is noi ljund in an? of the u~rittenor oral plelirli&ç
of the Uniicd Siaies Ilis ihc Kezpondcnt that de~crihesihe US claimî 3s bascd
-po22% "d~ab~~l~cp lillot hatihzd b) the IisIi3n puhlic auihonii.. .(Kcjoinder.
Pd 1.
The relief sought in this case is based on the acts and omissions of the
Respondent's agentsand officialsat the federal and local levels(including IRI),
without any allegation that theseofficialswereworking in conspiracy. The United
States does no1speculate as to why these agents and officialsof the Respondent
acted in the manner they did.

70. TW REGIS~R TO THE AGENT OF ITALY

17February 1989.

1 have the honour to transmit to Your Excellency herewith a copy of a letter
of today's date from the Agent of the United States in the case concerning

' II,p. 417.supra432 ELETTRONICA SICULA

ElettronicaSiculaS.P.A. (ELSI), enclosing the reply of the United States to the
question put by ludge Schwebelat the hearing of 16February 1989.

71. THE CO-AGENT OF THE UNITED STATES OF AMERICA
70 THE REGISTRAR

17February 1989.

As requested by the Court at yesterday's session' in the case conceming

EfettronicaSicu1aS.p.A.(ELSI), enclosedisa copy of theReport on the Financial
Statements of Raytheon-ELSI, S.P.A. of September 30, 1967.This Report was
prepared by Raytheon Company's Italian auditors, Fidital-Istituto Fiduciaro
Italiano S.P.A. of Milan, Italy, an affiliate of Coopers & Lybrand. This report

reflects the balance sheet values on both an Italian hasis and a Raytheon-US
basis.
For the convenience of the Court, also enclosed is a copy of Raytheon Com-
pany's Financial Accounting PolicyD-3031applicable in 1968whichexplains the
. .
Purpose of the separate valüations.
The major difference between the Italian and Raytheon US bases is the item
of Deferred Charges, which for the most part represented the cost of developing
new lines and improvina producl aualitv. This asset is carried on the Italian

b~ ~ ~but is rout~nelvwSGen off b~ ~a~ ~,~~.omoanv,~ ~ . ,
I ccrtify ihat ihcse dosumcnis constiiutc truc copier ol'documsiits adduccd in
support of the conrcniioni cuntained in ihc US plcadings. Copies oithebc docu-

ments have been provided to the Respondent. CORRESPONDENCE

Repori on the FinancialStalementsaf September 30, 1967

Coopers & Lyhrand A.G.
Rappresentata da
Fidital-Istituto Fiduciano Italiano S.P.A.

To: Coopers & Lyhrand
Boston, Massachusetts, USA.

March 22, 1968

Raytheon-Elsi S.P.A.

Wehave examined the balance sheet of Raytheon-Elsi S.P.A. ("the company")
al Septemher 30, 1967and the related statement of income and accumulated
losses for the year then ended which have been adjusted from the hooks of
account and are set out on Daaes3 to 5'.
2 Our enmination uxr hii>e in accordance u,ith gener~llyacceptcd xudiiing
stiindÿrds and accordingl) includcd such ieufsihc 3ccoJiiting re~.urdjand such

the following exceptions: as we coiisidered necessary in the circumstances with

(a) No evidencewas availahle in support of an agreement which,weunderstand,
has heen reached hetween the company and the relevant Military Authorities
on the hasis of which the company has accrued a credit of Lit. 251.6million
(US$405.8 thousand) for price adjustments on the supply of Klystrons.
(b) In the absence of the final results of a physical inventory of fixedassets we
were not able to determine whether amounts appearing as fixedassets in the
company's hooks are (apart from the matter mentioned helow) fully repre-
sented by specificitems of physical property.

3. The adjustments made by the company in preparing the ahove-mentioned
balance sheet and statement of income and accumulated losses have not, at the
date of this report, heen recorded in the books, essentially for tax reasons.
Accordingly, the accompanying financial statements are not in agreement with
the com~anv'shooks of account.
4 lnïcntorics appcÿring in thc accompm)ing hal;incc shcci a1 Lit 5,45 5
niillion(USSR.7997thousdndl, nci oi~ rc\er\cofIli.1.7172 milliiin(USS?,7697
ihousandj, arc inour opinion st~tcdai appr<)ximatclv1.11$533millionilJS6731.I
thousand) in excess of net realizahle Galue. ~ixed-assets stated in the balance
shcci at Lit. 5,954.1 million (CSS9.f>03.3thouband), net oidcprc;i.iiion. include
amounis totülling appro~imaiely I.it 463.6 inilli(CSS737 7 thousand) iihich
do not relate to soecificfixedassets but consist of revenue exoenditure disallowed
hy the Italian venu A uthorities l'ortax purposes and rehstated by the com-
pany in the books.
5. In our opinion, suhject to the matters mentioned ahove in paragraph 2
under ooints lai and Ib) and with the exce~tion of the matters mentioned in
paragaph 4, 'the acc~~~an~in~balance sh&t and statement of income and
accumulated losses,in their adjusted form, present fairly the financial position of
the company at Septemher 30, 1967and the results of its operations for the year
then ended, in conformity with generally accepted accounting pnnciples applied
on a hasis consistent with that of the preceding year.

' Pp.433-43U 8i/ra. BALANC SEH~ AT SEPTEMBE 30, 1987
(Eipressein millionofltalian land thousandof US dollars)

Company S A&sted
Bookfigures adjuslmenrs figures
Lit. Lit. Lit. 16

CURRENA TSSETS
Cash
Notes and accounts receivable:
Notes
Trade
Subsidiary companies (Note 1)
Accrued

Other

Less: Resewe for douhtful accounts

Inventories (Notes 2 and 3)
Less: Resewe for inventories

Prepaid expenses
Total Current Assets

INVESTMEN INTSSUBSIDIAR COMPANIE (Sote 4)
Fimo Assms, at cost (Note 5)
Las: Reserve for depreciation

1,653.0 (1,653.0) --
Lit.-17,956.3 Lit.(3,0624) LitP 14,893.9 $-4,022.4CURRENT LIABILITIB
Bank overdrafts
Notes and accounts payable:
Notes
Trade
Raytheon Company and affiliates(Note 6)
Other

Accrued liabilities
Total Current Liahilities
RESERV EORSEVERANC PEY

SECURED LONGTERMLOANS (Note 7)
TAXED RKYERVE
STOCKHOLDEE RS'UITY(DEFICIT()Notes 8 to 10)
Capital stock, authorized, issued and pai- 1,500,000
registered shares of Lit. 1,000each
Capital reserve
Stockholders subscnption account 2,500.0 - 2,500.0
Less: Accumulated (losses) -2,682.8) (2,200.0) (4,882.8)
-1,318.7 (2,200.0) (881.3)
Lit. 17,956.3 Lit. (3,062.4)Lit. 14,893.9
- -436 ELETTRONICA SICULA

STATEMEN OTINCOME AND ACCUMULAT(E LDOSSESFOR THE YEARENDED
SEPTEMBE 30, 1967
(As prepared by the Company and expressed in millions of Italian lire and
thousands of US dollars)

Lit. $
NETSALES 7,263.2 11,714.8
VARIABLC EOSTS 4,903.8 7 909.3
VARIABLE MARGM
2,359.4 3,805.5
ASSIGNABL COSTS -3,335.7 >5 380.1
PRODUCT LINECONTRIBUTION (976.3) (1,574.6)
Less:

OTHERDEDUCTIONS
Other manufacturingexpenses 241.1 388.8
General engineering 73.6 118.7
Other marketing expenses 251.0 404.8
Administration expenses 508.5 820.2
Interest expenses 960.9 1,549.8
Taxes 6.7 10.8
Other

Plus:
OTHERINCOME

Interest
Other

Less:

ADJUSTMEN FTOM STANDARC DOSTTO ACTUAL
(Loss) for the year ended Septemher 30, 1967
as per books
COMPANY'S ADIUSTMENTS
ADJUSTED ACCUMULATE (DOSSESa)t Septem-
ber 30. 1967
LOSSEaSt October 1, 1966,brought fonvard
Deduct:

Written off against capital stock (Note 8)

ADJUSTED ACCUMULATE (DOSSESa)t Septem-
ber 30, 1967 Lit.(4,882.8)

Nom TO FINANCIAS LTATEMENTS

AccountsReceivable- SubsidiaryCampanies
1. The balance of Lit. 106.2million is made up as follows:

Lit.
Raytheon-Elsi AG, Zurich 65.0
Raytheon-Elsi AB, Stockholm -41.2

Lit.-106.2 million CORRBSPONDENCE

Invenrories

2. The inventories are as follows:
Arnounrs Basirofvaluorion

Lit.
Raw matenal 950.4 At most recent cos1 of
Matenal in transit 113.0 acquisition
Repair matenal 131.1
Semifinishedparts 838.6 Standard cost, made up
Work in process 408.1 ofmaterials and labour
Finished goods 2,145.6i O~IY
Matenal to k recovered 35.6 Estimated realizable value
Deferred development costs
of "NADGE" program 73.0 Standard cost, made up of
labour only
Fixed overheads -2,477.7
7,173.0
Less: Reserve for obsolete
and slow-moving items 1,717.2
Total inventories Lit.5,455.m8illion

3. The fixed overheads consist of overhead expenses calculated in respect of
each product line, taking into account the overheads included in the opening
30, 1966.es. The basis of calculation is consistent with that adopted al September

Investmentsin Subsidiary Companies
4. Investments consist of the following:
Lit.
48.0
Raytheon-Elsi AB, Stockholm
Raytheon-Elsi AG, Zurich
.
Less: Adjustments in consideration of losses sustained
by subsidiary companies 100.0
Lit19. 2illion

Fixed Assers

alter depreciation to Lit. 126.6million(US$204.2thousand). This equipment has
ken idle for approximately two years but is considered disposable at amounts
greater than current book value.

AccounrsPayable- RayrheonCompanyand Affiliares
6. The balance of Lit. 960.0 million isdue to Raytheon Company, Lexington.438 ELETTRONICA SICULA

SecuredLong-Term Loans
7. These are as follows:

Amounrs Final
oursranding repoymenrdore

Lit.
IRFIS, 5.5% 44.7 December '
IRFIS, 4% 178.1 December '
IRFIS, 4% 118.8 December '
-.~--- 4% 1.000.0 June 1977
IRFIS: 4% June 1977
IRFIS, 4% June 1977
The Chase Manhattan Bank. 5 December '
Banco di Sicilia,4% December '
Banco di Sicilia,4% i,soo.o December '
Lit,4,915.5 million
-
With the exception of the Chase Manhattan Bank, al1the above loans are secured
hy charges on the company's fixed assets.

AccumulatedLossesai Seprember30, 1966

8. The accumulated book losses at September 30, 1966 amounting to Lit.
2,500.0million (USU,032.2 thousand) were wntten off against the capital stock
in accordance with a Stockholders' resolution passed at a meeting held on
Lit. 4,000.0 million (US$6,451.5 thousand) to Lit. 1,500.0 million (US$2,419.3m

thousand).

Stockholders SubscriptionAccount
9. It was resolved inthe Stockholders'meetingreferred to in Note 8 to increase
the capital stock from Lit. 1,500.0million(US$2,419.3thousand) to Lit. 4,000.0
million (US$6,451.5thousand). Although the necessaryamounts have been paid
in, the increase cannot become legally effectiveuntil the necessary government
consent hasbeenobtained. Accordingly,sincesuchconsent had no1beenobtained
at Septemher 30, 1967, the amounts paid in were credited temporanly to a
Sth-kholders subscnption account.

Srockholders'DeJicilar September30. 1967
10. The adjusted accumulated lossesal September 30, 1967exceededthe total
of the paid up capital stock, capital reserve and Stockholders' suhscnption
account by an amount of Lit. 881.3 million. Should this become "officially" the
case (e.g. should the adjustments made in arnving at this total of accumulated
losses be entered in the company's books of account), under Articles 2447 and
2448 of the ltalian Civil Code the directors would he obliged to convene a
Stockholders' Meeting forthwith totake measures either to cover the losses by
providing new capital or to put theompanyin10liquidation.

'Yearillegible[Noieby rheRegisrry.] CORRESPONDENCE 439

ContingentLiabilities

11. At September 30, 1967there were contingent liabilitiesas follows:
(a) for notes receivable amounting to Lit. 630.3 million (USS1,016.6thousand)
discounted with banks and not yet matured;
(b) for Italian income taxes which may be assessed by the Revenue Authorities

on the results of accounting periods no1yet agreed. The possible amount of
any such taxes cannot at present be determined.

Currency Conversion

12. In the accompanying financial statements Italian lire have been converted
into US dollars at the rate of Lit. 620 to the %.

To: 1. H. Creamer. Classification
From: A. V. Schene. Memo No. :384-AVS-63.
Subject: Raytheon-Elsi. Date: April 17, 1963.

Af~ ~ ~~~ ~iew of~ ~e circumstarices surroundine Our recent additional invest-
mcni in Raythcon-Elsi, il u.as agreed ihat iie haJ no1 dcquircd control of ihis

L.ornpanyai Scptrmher 30, 1962 Thcrcfore, the opcrdting results for Ra)thcon-
Elsiand Subsidiancs for the auartcr endcd k~emkr 31. 19h2nere noi rr+lzcled
in the reported results for ~à~theon Company for the first quarter of 1963.
Wenow feelthat control of Raytheon-Elsi was acquired at the end ofDecemher,
1962,and it is essential that we have a satisfactorily adjusted balance sheet for
Ravtheon-Elsi and Subsidiariesat December 31. 1962.Wemust cornDuteeoodwill
ba&d on Raytheon accounting standards as of that date. It willalso'be kcessary
that we have a March 31, 1963balance sheet adjusted to Raytheon standards. If
there has been no chance in the caoital structure of the comDanv. the difference

in equity between the Go balancésheets sbould reflect the'opérating profit or
loss on Raytheon standards for the first quarter of 1963, whichwe will report in
the second quarter of 1963. In addition to providing us with adjusted balance
sheets, we would also like to receivean adjusted condensed income statement for
the first quarter of 1963.
Weare attaching a copy of Finance Manual Policy D-3031in which the format
of the statements and the valuation principles are described. If there are any
oints which reouire further clarification. ~leaselet us know.
The changes h valuation of assets at Gptember 30, 1962which you covered

in your letter of Apnl 4, 1963should be discussed with Coopers & Lyhrand so
that thev can confifiÏmthe adiusted balances at either date ifieauested to do so
by ~~brind, Ross Bros. & ~ont~omery.
The enclosed accounting policy indicates that the adjusted balance sheets and
income statement should he forwarded to us within sixty days of the close of the
oeriod. If there is anv reason whv vou feel that we will not have the necessarv
hata on or ahout~uné 1,please advi'seus promptiy. It is essential that we receivi
this data in ample time to enable us to review it adequately before the second

quarter closing

(Signed) Arthur V. SCHENE

Attachment
cc: C. A. Calosi, G. Ingram, Jr., R. L. Seaman RAYTHEON: FINANCEPOLIC~EA SNDPROCEDURES

Foreign Financial Policies, D-3031

1. General

A. Raytheon Company is required to furnish its stockholders with financial
reoorts everv three months. These reports include the financial status and results
frhm investkents in foreien and US comnanies. Ooeratine losses from foreien

compünics in uhich ~a~lcei>nhar a malo;ity inter&i are included by ~a)theon
ai full value uhilc profiis from theseforeign compünics arc reflzcied in Raytheon',
statements after reduction for US lnco6 Tax impact
H In order ii>assurecomp~rühiliry of ihe finsnîial infiinnation reportrd from
abroiid. sri forih belou arc guide>to assist foreign rubsidiary compüny Conlrol-
lers in the de\eloDmcni of financial position information u,hich is reauircd at the
end of each caleidar quarter by ~aytheon US. It is emphasized that'no implica-

tions need be drawn relative to the modification of, or revision 10, accounting
practices that are normal and acceptable to the country in which the foreign
subsidiary or affiliate operates, either for financial or tax purposes. Rather, these
guides are for use when transforming such initial financial information into a
reporting structureuseablehy Raytheon US. It should be noted, however, that
the ~rinci~les discussed hereare entirelv consistent with the develonment of (al
reliahle &nagement control information, and (b) foundation daia for overail

businessand economic evaluation.
C. The financial statements from foreign Companies in which Raytheon has
invested are due 60 calendar davs after the closef each calendar auarter.
D. The format of balance sheetsor statementsof financial positi<n is arranged
to report assets,liabilities and netrth in columns, as follows:

As Recorded Americon
on the Books Accounring
O/ Accounrs Adjurrmenrs Basü

E. The format for income or operating statements from foreign companies is
similar to the balance sheet nresentation exceut that it includes columns for the
reversal of prior period adjuitments, as follows:

As Recorded Americon
on the Books Accounring
ofAccounrs Reversais Adjusrmenrs Basis

F. Foreien subsidiarv or affiliated comoanies mav usethe oercentaeeof com-
pletion ba& of accounting on fixed priie contracis where iiprovides a better
measure of operations than shipment basis accounting would afford. Under the

oercentae- of com~lelion method. costs and estimacd orofits are included in
salesas uork is pcrfonned. If csiimïics of total soniraci costs indi~iie a Io%.
pro\ision 1smade for ihc ioial lors aniicipated on the contract.

II. Applicabiliryand Responsibiliry

This uolicv anolies to al1 comoanies. situated outside the United States. in
which ~~~ihéonCom~an~mainiGns xninvesimcni. The ~uhsidi~ry,affiliaie ("m.
pany Coniroller or othcr cognizant Conirollzribrcsponsible for assuring cornpli-
ance with the provisions ofihis policy CORRESPONDENCE 441

In reporting fianncial results to Raytheon Company, uniformity in the basis
of valuing assets and liabilities is required. Some major guidelines are provided
klow by type of account.

A. Accountsreceivoble

1. It is the policy of the Company 10 employ a reserve account for doubtful
accounts and to apply specific writedffs to the reserve at the tirne that the asset
is determined 10 have no value. The reserve must be adequate to cover al1
anticinated lossesand should be based on a thoroueh review (al least everv three
months) of the accounts receivable with particuÏar emphasis on old, .slowly
liquidating accounts. The evaluation should include consideration of that Com-
pany's experiencewith similar accounts over the las1three years.
2. No reserves would normally be established for amounts receivable from
Government agencies under bona lide contracts. However, invoices over one year
in age, that do no1 have a confirmation by the Government agency as to the
estimated nav date. willbe reserved for either in the fullamount of the receivable.
or for the'portion that is assumed to be under disagreement.
3. Receivable balances are adjusted for any significant decline in value due to
returns and allowances or losseson foreim -xcbanre t-at have occurred or mav
k expected to occur in the near future.
4. Receivahles normally collectible within one year, are reported as Current
Assets. Longer term receivables are reported as Non-Current Assets.
5. Inter-company notes and advances are stated separately on the balance
sheet.

B. Inventories
1. Inventories are reported at the lower of cost or market value. Cost isdefined
as direct material. direct labor. and aoolicahle total manufacturine overhead. and
market is defined as expected reven& less the selling costs ass&iated with the
generation of the revenue. Costs are developed on a first in, first out, or average
iost basis
? î.ccurate reporting of in\cniorics requircs ihçphysical i.crific<itionof ini,cn-
tories ai leas1oncca )car ~Idjustnicnt~beluccn hook in\sntor) and the ph!sicil
counts are developed and recorded promptly after completion of the physical
. . . .
inventory.
3. Raw material items on hand for more tban one year, or that have had no
use for the past year, should be reported at minimum scrap value except for
standard items with ready rnarketability as raw material.
4. Finished eoods or work in nro.ess ~ ~entorv items on hand. in excess of
expected iequi;ements for the next twelve months based on consirvative sales
forecasts, are reduced to minimum scrap values. Excepted are items for use under
firm Ionp.term contracts which mav becontinued atfull cost
5. O& the value of an inventoj item or group of items has heen reduced to
a market value klow cost, it is not revalued upward until it is withdrawn from
stores for production use or for sale

C. .ri.xedossets

1. Fixed or capital assets or facilities are reported al cost, reduced by appro-
priate reserves for depreciation.442 ELETTRONICA SICULA

2. No item that costs less than the approximate equivalent of $100 in US
currency is to be capitalized.
3. Jigs, fixtures, and special tooling are reported by either of these methods:

(a) Charge directly to expense.
(b) Charge to a capital account and amortize over the life of the product line
or 24 months, whichever is the lesser penod.
4. The cost of a fixed or capital asset is its purchase or manufactured cost
together with any expenditures necessary to make the asset usable. These associ-
ated expenditures include transportation and installation costs, costs of establish-
ing title, etc. Land costs are capitalized. The cost of fixed or capital assets
fabricated hy the Company includes charges for labor, material and overhead,
but does not include general and administrative expense.

5.Depreciation will be charged to operationsin each accounting period on at
least a straight-line basis.
6. The maximum economically useful lives for accounting depreciation
purposes are as follows:
Livesfor
Depreciotion
CotrgoryofAsset inYeors
-
Land
Land improvements 20
Brick Buildings 40
Frame Buildings 20
Building Improvements Remaining lire of
building or life of
asset,
whichever is less.
Machinery and Equipment 10
Semiconductor Machinery 4
OfficeEquipment 10
Aircraft 6
Automobiles 3
Light Trucks (Under 13,000Ihs.) 4
Heavy Trucks (13,000Ihs. and over) 6
Vessels 18

These are the maximum lives to be used for depreciation - special
circumstances may require lesser lives. Particular attention should he
accorded useful lives ofbuildings.

D. Intangibles

Costs associated with (but not limited to) the following types of items will not
be capitalized.
General research
Product or process development
Trademarks
Patents
Start-up or launching costs
Planning expansion of business
Formation costs
Goodwill CORRESPONDENCE 443

When recovery of these costs are specificallyprovided for in contracts, they
may he included in work-in-process inventory.

E. Currenrliabilities
An up-to-date reflection is required of trade accounts payable, short-term
loans, bank overdrafts, advances, and like current liabilities. This requirement is

effectiveon a monthly accounting basis.

E Provisionfor leavingindemniry

It is the policy of the Company to handle social costs of this type on a current
hasis. Procedures should, therefore, be estahlished to he assured that proper
liabilities are expressed no less often than each quarter.

72. THE REGlSTRAR TO THE CO-AGENT OF THE UNITED STATES
OF AMERlCA

17February 1989.

1have the honour to acknowledge receipt of your two letters of today's date
enclosing, respectively, the wtitten reply of the United States of America to the
question put hy Judge Schwebel at the sitting of 16 February 1989in the case
concernine Eletlronica Sicula S.D.A. (ELSI). and the Re~ort on the Financial

~tatemenc of Raytheon-Elsi s.6.~. of 30 seitember 1967;together with a copy
of Raytheon Company's Financial Accounting Policy D-3031, supplied in re-
sponse to the request made by the Chamber ai that sitting.
1note that copies of these letters and attachments have been provided hy you
to the Agent of Italy.

73. THE CO-AGENT OF THE UNITED STATESOF AMERlCA
TO THE REGISTRAR

17Fehruary 1989.

Enclosed are two certified translations of a decision of the Court of Rome
in the case of Talenti v. Rome Ciry Government,No. 32266 of February 19,
1988 for filing in the case concerning Eletlronica Sicula Sp.A. (ELSI). The
original ltalian language documents were filed with the Registry by letter of
February 15, 1989.Copies of this certified translation have been provided to the
Respondent.

Enclosures:As stated ELETTRONICA SICULA

ITALIAN REPUBLIC
IN THE NAME OF THE ITALIANPEOPLE

THE CIVIL COURT Of ROME
FlRST SECTION

thus composed:

Dr. Filippo Verde presidenr
Dr. Paolo Zucchini judge
Dr. Aida Campolongo judge
convened in council chambers, has delivered the following

DECISION

in the civillawsuit, first instance, registered under nr. 32266of the general register
for the legal matters for the year 1988 otTeredfor deliberation at the collegial
hearings of Nov. 20, 1987

berween
Talenti, Pier Francesco,

res. in Rome, v. Cola di Rienzo II
care of attorney Mario Savoldi who. together with attorney R. Gamberini
Mongenet represents and defends him by power of attorney and annotation of
the summons:
PLAINTIFF

and
Rome City Government, represented by the Mayor pro tem.
resident in Rome, v. del Tempio di Giove 21
care of the office of attorney G. Marchetti who represents and defends it
hy the power of attorney [registered with] Notary Sirolli Mendaro of 9/10/82

lis171098
DEFENDANT
and

The Prime Minisrer'sOjice rep. by the Prime Minister in officas wellos rhe
Minisrry of Finances,Minisrry of rhe Treasury andMinisrry of ForeignAffairs
rep. hy the respectiveMinisters in Counsel's,res. inoffice,Rome, v. dei Fortoghesi
12,care of the State's General Counsel'sMATTER ATSUIT:

Compensation for damages.

CONCLUSIONS

At the clarification hearings of 10/22/1986.
The attorneys of the parties concluded thus:
For theplaintiii: asper briefattached to theminutes of the hearingof 10/22/1986.
For the City Govemment; as per the minutes of the hearing of 10/22/1986.
For the other defendants; as per answering brief and the minutes of the hearing
of 10/22/1986.

With a Summons sewed on 9/22/83, Pier Francesco Talenti sued the Rome
City Govemment, the Prime Minister's Office, the Ministry of Finances, the CORRESPONDENCE 445

Ministry of Treasury and the Ministry of Foreign Affairs and, stating that he
wasa UScitizenand that he residedin the US, hereuuested the genenccondemna-
tion after reauestinW . orovisional . .ment offiftvbjllion lireofall the defendants.
jointl) resp;nsiblc, Io sompenblilion for ail the propcriy 2nd emotiunal clamagcs
sulTcrcdby him ihrouyh the disiriminaiory and pcrbeiuior) actions of the Iialilin
State and Public ~dministration in his reeard! these actions. in violation no1
onlyof art ?O43 of the CivilCode. hut al'o of the Italg-USAïreïi) of Fncndship
and of the asso~~ia~cpdrotocolr atiilcxchangcs of noies. abscll 3sthe Inicrnaiion~1

Pliciof New Yorkand thc Eurooc3n Con\eniion on 1ium:tn Richts. h;isdepntcd
him of huge assets owned by .him and companies belongingto him, without
paying thejust and effectivecompensation corresponding to the above-mentioned
property losses.
In their argument, the defendants challenged the claim, stating that it was
unpropoundable, inadmissibleand, in secondary order, unfounded. With its order
of 5/2/86, the lnvestigating Magistrale decided to forward the lawsuit to the
Panel of Judges in order to reach a decision on the objections raised by the
defendants.
Then, after the clarification of the conclusions as attached, the lawsuit was
accepted ror decision at the collegial hearing on 11/20/87.

The Court begins hy observing that the plaintiff, both in his introductory
action, in the following pleadings, and in the final conclusions expresslyspecified
durina the hearinas in the case,has reuuested thedetermination of the resuonsibil-
itv forillicit action committed to hisdétrime~tan~ ~ ~ ~ ~ ~triment of Comoanies
with assets "owned" hy him - alme also indirectly - by the ltalian %aie, the
Public Administration and the Rome City governinent, with resulting condemna-
tion of the above-mentioned parties,jointiy responsible, to make compensation

for the damages caused to him.
Now, according to the principles ruling the ltalian juridical order, legal action
for com~ensation for damaaes as DerAuuilian resoonsibilitv - as sousht by the
postulates as a necessàry assumption ihat the sbhjects bound to pay
the compensation have committed, intentionally or not, specific illicitacts that
iniure an interesi of the Drivate citizen and, as such, are the cause of unjust
damage.
But, in this case the plaintiff has in no way specified, in any of his plead-
ings, the individual and specific illicit acts committed by each of the accused
Authorities, limiting himself to generic complaints and complaining about
equally vague persecutory actions to his detriment on the part of the ltalian
State

Consequently, as the individual defendants have been charged with no speci-
fic and clearly discernible illicit acts injuring valid interests, and as Our
juridical order does no1contemplate a responsibility of the State per se, since il
operates through the various individual Administrations [involved], the request
is rejected.
The cost is borne by the losing Party.

THEREFORE:
The Court, passing conclusivejudgment, in the litigation of the parties, rejects
the claim filedby Pier Francesco Talenti against the City Government of Rome,
the Office of the Prime Minister, the Ministry of Finances, the Ministry of446 ELETTRONICA SICULA

Treasury and the Ministry of Foreign Aiïairs; sentences the plaintiiï to the
repayment of the expenses sustained by the defendants for this judgment, as
follows: (a) for the City of Rome government; Lire 25,000,000 of which
L. 200,000 for expenses and L. 1,377,000for fees; (b) for the other defending

administrations L. 45,000,000,of which L. 250,000for expensesand L. 1,093,000
for fees, in addition to previously charged expenses.

Thus decided in Rome, in the council chamber of the first civil section of the
Court, 12/11/1987.

(Signed) Filippo Verde
Aida Campolongo

Section Director,

(Signed) Paola Podrini Registered in Clerk of Court's Office,
Rome, Feb. 3, 1988.

The Section Director,

(Signed) Paola Podrini

Certified Copy,
Feb. 19, 1988.

[Translated and reviewedby Department of State Language Services.]

74. THE REGISTRAR TO THE CO-AGENT
OF THE üNITED STATESOF AMERICA

20 Fehmary 1989

1have the honour to acknowledge receipt of your letter of 17 February 1989
enclosing certified translations of a decision of the Court of Rome in the case
concerning Talenti v. Rome Ciry Covernmenl, referred to by counsel for the
United States during the oral proceedings in the case concerning Eletrronica
Sicula S.P.A. (ELSI), the original and uncertified translation of which were
submitted to the Court with your letter of 15 February 1989.

75. THE REGISTRAR TO THE AGENT OF ITALY

20 February 1989.

1have the honour to transmit to Your Excellencyherewith a copy of a certified
translation of a decision of the Court of Rome in the case concerning Talenriv.

Rome City Government,referred to by counsel for the United States dunng the
oral proceedings in the case concerning ElerrronicaSiculaS.P.A. (ELSI), which
was transmitted to the Court bv the Co-Aeent of the United States hv a ,e~te~ ~ ~ ~ ~
dated 17IYebrusry 19dY The onginal 3nd 3; unceriilied trdnslation were submii-
ted to the Court, and copy supplicd to you, on 15th February 1989. 76. THE REGISTRARTO THE CO-AGENTOF THE UNITEDSTATESOF AMERICA

21 February 1989.

1 have the honour to transmit to you herewith copies of the following docu-
ments', supplied to me by the Agent of Italy in the case concerning Elertronica
SiculaS.P.A.(ELSI), to which referencewasmadeinthe course of oral arguments
at yesterday's Sittingz of the Chamber.
1. Italian Corte di Cassaiione, decision of 28 July 1986,No. 4811(in Italian).
2. Certified Enalish translation of No. 1.
3 Trcaiy oi ~icndship. Commerce and Na\igsiion bctu.eenthe liaInn K~public
and the t'cdcr31Republic of Gzrmxn). signed in Rome on 21 'lo\cmber 1957

(in Italian and German).
4. Certified English translation of Article 6 of No. 3

77. SUPPLEMENTTO THE ORAL REPLYGlYEN BY PROFESSORBONELLTO A OUESTION

The Italian Delegation is honoured to state the following:
1. In July 1967ELSI took the decision to dismiss 300 workers.

2. To avoid those dismissals, the Regional Government entrusted ESPI (Ente
Siciliano per la Promozione Industriale) with the task of finding a solution.
3. As a result, an agreement was reached, in terms of which ELSI's workers
were merely suspended, and not dismissed, and in August 1967 they began a
retraining programme, their payment taking the form of a daily allowance, made
by the Region (cf. Unnumbered Document annexed to Counter-Memorial, Vol.1,
p. 20121').
4. In March 1968the situation became critical. ELSI decided to closethe plant
and dismiss the major part of its workforce. The ltalian Government - meeting
of 29 March 1968(cf. Memorial, Annex 15, Exhibit G) - offered to have the
Region pay the salaries (by means of ad hoc regional legislation) if the dismissal
letters were not sent out.
Requisition was no! a formal condition for the assumption of the payment of
wages by the Region.
The requisition kept the factory open.
For the payment of salaries the Region enacted regional legislation.
By Regional Lawsn. 12of 13May 1968(cf.Document 37annexed to Counter-
Memorial), n. 23 of 6 August 1968 (cf. Document 38 annexed to Counter-
Memorial) and n. 31of 23November 1968(cf. Document 39annexed to Counter-
Memorial), the payment of entraordinary monthly allowancesequal to the actual
monthly wages was borne by the Region until 15October 1968.
Law n. 12 of 13 May 1968(quoted above) also covered the wages of March

1968which had not been paid by ELSI.

' Nol reproduced.
See p.163,supro.448 ELETTRONICA SICULA

78. TABLES ILLUSTRATING MR. HAYWARD'SEVlDENCE GlVEN ON 22 FEBRUARY
1989', AS COMMUNICATEDBY THE DELECATIONOF ITALYTO THE REGlSTRY ON THE
SAMEDAY

ExplonotoryKey ro Exhibits

Exhibit A: Copy of chart appearing on page 151 'of the Memorial.

Exhibir B: Copy of Schedule BI of Mr. A. Schene's Affidavit appearing as
Annex 13' to the Memorial.
Exhibir C: Copy of the Assets4 side of the audited Balance Sheet of ELSl as al
September 30, 1967.

Exhibit D: Originally prepared Summary of Adjustments.
Exhibir E: Copy of page 9' of the audited accounts of ELSl as al September
30, 1967.

Adjustmentsto the Book Value
oj ELSI osoi Morch 31, 1968

Millions of Lire

Book value of assets claimed hv United States
Delegation 17,053.5

Adjustments arising from audit ofSeptember 30,
1967 and also applying to March 31, 1968
financial position 3,062.4
Qualifications of the auditors:
reInventories
reFixed assets

Doubts expressed by the auditors:
rePrice adjustments

Adjusted book value 12,822.6

79. FINAL SUBMISSIONSOF ITALY DATED 23 FEBRUARY 1989, COMMUNICATED BY
THE AGENT OF ITALY TO THE REGlSTRAR

[See pp. 275 und381-382, supra.]

' Seep. 239,supro.
' 1,p. 108.
1,pp.135-136.
' SecNo. 71,supra.
' Ibid. CORRESPONDENCE 449

80. TEE CO-AGENT OF TEE UNITED STAm OF AMERlCATO THEREGlSTRAR

27 February 1989.

Pursuant to Article 56 of the Rules of the Court, the United States submits
the attached document' so that it may be referred to by Mr. Lawrence this
afternoon at the hearing in the case concerning ElerrronicaSiculaS.P.A. (ELSI).
The document is a set of 19 pages comprising a list of the accounts receivahle
from customers of ELSl at 22 April 1968.The English translation of the title
appearing on the first page is: "List of Customers and their RespectiveAmounts
Due as of 22 April 1968."
1certify that the attached constitutes a true coov of a document adduced in
support of the contentions contained in the US pkadings.
Copies of this document have been provided to the Respondent

81. THE CO-AGENT OF THE UNITED STATESOF AMERlCA TO THE REGISTRAR

27 February 1989

Enclosed are the written answers to the questions posed by the Court to the
United States this moroing and on 23 February in the case concerning Eletfronica
SiculaSq. A. (ELSI).

Enclosure:As stated

Applicant'sAnswers ro Questions of27 February1989

Questionof Judge Schu,ebelz

In the process of the exhaustion of local remedies, did ELSI rely on the Treaty
and Supplement at any point? If not, why not? And, in so far as this is within
the knowledgeof the Applicant, did the trustee in bankruptcy, in his legalactions,
invoke the Treaty and Supplemeiit? If, as far as can be ascertained, the Treaty
and Supplement were not invoked before ltalian jurisdictions, what follows, if
anything?

Questionof Judge Oda3
1would like to add iust a suoolementarv auestion Io the United States for
clarification. The questioiis wheth& the attomey of Raytheon-ELSI, before the
District Court of Palermo in 1969,the Court of Appeals of Palermo in 1973,and

' No1 reproduced.
See p. 291supra.
See p. 312supra. CORRESPONDENCE 451

payment by ELSI's stockholders on those loans pending settlement - is that a
correct formulation of what the United States is contending on this point?

Answer

It is our contention that buyers could have heen found on the hasis indicated.
Under the orderly liquidation plan, ELSI's business would havebeen disposed
of either as a singleoperation or as a series of product lines. A purchaser would
have acquired only ELSl's assets, including its goodwill, leaving the liabilities
behind. This would havegreatly increased the attractiveness of the purchase from
the point of viewof the purchaser. The proceeds of the disposal would have been
available to pay of the liabilities.

QuestionofJudge Schwebel'

1would liketo ask you, as counsel, the following: it was stated that ELSI had
in fact applied for Mezzogiorno benefits.Can the Applicant provide documentary
support for this statement?

Answer
The fact of ELSi's claim, and resuhmission of its claim, for reimbursement of
300 million lireunder the ltalian "Mezzogiorno Investment Plan" is referred to
in to the affidavitof Joseph A. Scopelliti, Memorial, Annex 17,Exhibit A, p. IO2.
MI. Clare also attested to the efforts of ELSI's counsel,MI. Bianchi, to secure
the Mezzogiorno benefits to which ELSl was entitled (pp. 58-59,supra).
Raytbeon and Machlett do not have possession of the administrative claim for
Mezzogiorno benefits.The documentation of this claim was most likelywith the

other ELSl records that were seized bythe Respondent when it requisitioned the
plant.

QuestionofJudge Schwebe13

Could the Applicant tell the Court, or supply to the Court, figureson the total
sales and profits of Raytheon and its subsidiaries worldwide for the years 1967
and 1968? And in that regard it would be helpful, if it is feasible, to indicate
where among the electronic manufacturers of the world in those years Raytheon
ranked.

Answer

According to information filed with the Secunties and Exchange Commission
by Raytheon in respect of the year ended 31 December 1968,the consolidated
sales of Raytheon for the years 1967 and 1968 were $1,106,049,000 and
$1,157,963,000respectively.Net income was $28,602,000and $29,569,000,respec-
tively.
This information is found at Rejoinder, Annex 244, pp. 12 (1968) and 43
(1967).

' See p.299,supra.
1,pp. 193-194.
' Sec p.299,supra.
Not reproduced.452 ELETTRONICA SlCULA

In 1968Raytheon would probably have been among the top ten US companies
in the electronics sector, worldwide.

Questionof Judge Ruda'

In the course of the pleading of the ltalian delegation, they have maintained
that Raytheon charged ELSl for the patents, licences, and technical assistance
given; and they Saythat ELSl had to pay a lot of money to Raytheon for this
assistance. In your statement, Ms Chandler, you said that Raytheon had decided,
in the liquidation, to provide these licences, these patents, and this technical
assistance to the new buyer of the whole business or the buyer of the product
lines. My question is: was Raytheon going to charge the new buyers the same
amount as they had previously charged ELSI?

Answer
Raytheon and Machlett had set relatively low technical assistance and royalty
rates for ELSI in order to be heloful to ELSI. In the case of oros~ectivebuvers.
R~ytheon uould have rxpected io negotiatc a iolal parkagc',ncluding roy3lrics
and iechniial assistance iogethçr with the harc pnu on icrms agrceable IO both
buyer and seller

Questionof Judge Ruda2

On 28 March dismissal letters were sent to some 800 workers. if 1remember
si,rrcstly. H<iwmuch wÿs the amount or moncy. In Iialian lm. ihat ELSl uould
haie ha3 10 piiy.according io the labour law ofIiÿly, for the dismissal of rhesc
workers?

The balance sheet at 31 March 1968shows a reserve for severancepay of 584.9
million lire. Webelievethat this reserve wasadequate to cover al1of the workers.
We believe that 510 million lire would have been adequate to cover the 800
workers who were dismissed.
If the 510million lire. for anv reason. oroved inadeauate to fullv satisfv ltalian
lahor law requirements,'~aythéonwoul'd'haveincrease'dits fundini of théliquida-
tion program to take care of any shortfall.

Questionof JudgeJennings3
1 have a simple question of fact - 1 am no1 sure whether it is addressed to
Professor Bisconti or to the United States delegation, probably the United States

delegation willdecide how the question should be answered and when. It is simply
this: did ELSI sueceed in selling any of ils assets in pursuance of the orderly
liquidation before the requisition intervened in the process, or, indeed, did it
manage to seIlany of ils assets after the requisition, and before the bankruptcy?

' Seep. 299,supro.
' Ibid.
' See p. 304supra. CORRESPONDENCE 453

Answer

Except for sales of products to customers in the ordinary course of business,
ELSl did not seIlanv of its assets in pursuance of orderly liquidation hefore the
requisition intervened in the process; since the requisition occurred only three
days after the vote of the ELSl's shareholders on 28 March 1968, to proceed
with liquidation. ELSI did no1sel1any of its assets in Palemo after the requisition
and hefore the hankruptcy, hecause under the requisition order the assets could
not be transferred to a buyer, nor even he shown to prospective buyers.

Questionof Judge Schwebel'
Did 1understand Mr. Bisconti to sav that ELSI'svlan to uav offsmallcreditors
in full was lawful under ltalian law, aid that there ;as no me& to the contention
that such payment would have been an unlawful preference?

Answer
Within the framework of an orderly liquidation, such payments, ifmade, would
not have constituted a "preference". Technically, a "preference" is such only in

a hankruptcy situation. The stockholders planned on an orderly liquidation of
ELSI. One step in such plan would have heen the payment of the small creditors.
The stockholders met with the creditor banks on 1 April 1968 to seek their
understanding on the manner and timing of the orderly liquidation, including
the proposed payment to the small creditors. Without the banks' agreement on
the plan of orderly liquidation, there would have heen no payment to the small
creditors.

Questionof JudgeSchwebel'

1 understood Mr. Bisconti to maintain that the fact than an instalment on a
hank loan was due in late April of some 800million lire, 1believethe figurewas,
did not of itself indicate that hankruptcy at that juncture was inevitable, hecause
the stockholders of ELSI were prepared to meet such a loan if doing so was
pursuant to the sale of assets which would have realized, by the proceeds of the
sale, funds which presumably would have repaid the stockholders for advancing
funds to meet the loan payment. Now 1had earlier understood, from argument
of the Applicant, that the stockholders had transferred a sum of money sufficient
to pay small creditors. Had any steps been taken by the stockholders, which
evidenced the further intention of the stockholders to act in the fashion 1 have
just referred to with respect to the loan payment due in late Apnl?

Answer

After Raytheon and Machlett voted to proceed with the orderly liquidation
on 28 March 1968, Raytheon transferred 150million lire to Citihank Milan to
begin paying the small creditors. The Respondent requisitioned ELSI's plant and
assets only three days later; and did not take any actions to repeal it, in spite of
ELSI's protests, petitions, etc. At that point, Raytheon and Machlett did not
advance any other funds to ELSl as they had othenvise planned to do.

'Seep. 304,supra.
'Ibid.454 ELETTRONICA SICULA

Applicant'sAnswersto Questionsof 23 February1989

Questionfrom Judge Oda '
Suppose that the decision of the Prefect of Palermo (which was actually given
on 22 August 1969)had heen givenone year earlier, say in August 1968.Could
the trustee of ELSI, under ltalian law, have withdrawn the previous petition to
hankruptcy which had once heen filedon 9 April 1968and have proceeded to
liquidate in spite of the judgment of haukmptcy hy the Tribunal of Palemo,

which was delivered on 7 May 1968?

Answer
Since it is ELSI that filed the petition in hankruptcy, it would have been for

ELSI to withdraw the petition. By August of 1968ELSI could not have heen
hrought out of hankruptcy.
A lifting of the requisition order in August, however, would have allowed the
trustee to pursue liquidation of ELSI's plant and assets heginning in August,
rather than in Octoher of 1968.The trustee would have heen ohlieated to end
the occupation of the plant hy former ELSI workers and to take ste& to preserve
the condition of the plant and assets. The failure to overturn the requisition
resulted in the inabilitv of the trustee to sel1off ELSI's dant and assets until it
was clear that the reiuisition had ended, which thus delayed the first auction
until January 1969.

Questionfrom JudgeSchwebelz

Let us assume, arguendo,that it has not heen proved that the requisition was
the cause of the hankruptcy. Does it follow that ELSI and its stockholders
sustained no damage hy reason of the requisition?

Answer

Assuming. iiryue~idnthai bankruptcy would have still occurrcd ai a somc point
afier th? commenscmcni of the ordcrly Iiquidiiiion on 1 April 1968, Rdyihcon
and Machlett wt~uldstill have suffered suhitantial damaec from the cxisicnceof
the requisition. The orderly liquidation team planned toSecure commitments to
purchase ELSI's product lines within no more than two or three months. Thus,
by the time bankruptcy hypothetically would have occurred anyway, Raytheon
and Machlett probably would have sold off most, if not all, of ELSI's product
lines.
Yet with the requisition in place, there was no opportunity to show the plant
to prospective buyers after I April and no ahility to negotiate any deals for the
immediate disposition of the plant and assets. Under this hypothetical scenario,
compensation would have to he hased on the extent to which Raytheon and
Machlett would have heen able to seIlELSl's assets in the time availahle to them
before the bankru~tcv occurred. In so far as Ravtheon had made the conmitnent
to advance al1fukds Aecessaryto maintain ELSI'Sliquidity, this would have been
a suhstantial amount of time and might have resulted in a recovery close to
ELSl's book value.

' Seep. 276, supro.
'Ibid. CORRESPONDENCE 455

Further, after the bankruptcy had in Tactoccurred, the existence ofthe requisi-
lion prevented the prompt disposition of ELSI's plant and assets through the
bankruptcy proceedings. Onlyafter the six-month requisition ended on 30 Sep-

temher 1968could the bankmptcy court and the Trustee begin the process of
disposing of ELSI's assets,so that the first auction was only held in January of
1969.Obviously the saleahility of ELSl's plant and assets diminished significantly
the longer they lay idle and the longer former ELSl employees werepermitted
~ ~o~ ~ r,~ -~~lr~~~ ~ ~
The Respondent iook the opporiuniiy during the requisiiion IO announce in
11sParlixnrnt zhnt itintended IOiakc over ELSl's pl~nt ihrough one of the IRl's
subsidi;irics(Annex 46). Shoril! df1r.rihc reuuisiiion neriod ended. thc Reinon-

dent annoünced in ~ovember-that IRI-STET wouli intervene and take ;ver
ELSl's plant, and the former EISI employees were allowedto take down the
sign over the plant's entrance that said "ELSI" and put up a new sign that said
"STET". By December ELTEL had been formed to take over ELSI's plant and
assets. Regardless of whetherit was planned this way, the requisition provided
the Respondent ample time to determine how it wished Io proceed, with the
ultimate result that il obtained ELSl in 1969 for far less than il was wonh in
mid-1968.

Questionfiom Presideni Ruda '

If il was decided not to orovide new canital but to out the comoanv into
liquidaiion. would iibe possi'blein Iidltdn lai, toconduci ihe liquidati<n wiihoui
becomingbnnkrupi, 2nd. ifso. under preciselywh3i condiiions could bankrupicy
be avoided?

Answer
It would be possibleto conduct an orderly liquidation under ltalian lawwithout
going bankrupt even if it was decided no1 10 provide new capital in10 the

company. Raytheon and Machlett in fact had decided not Io provide new capital
for ELSl'soperations, but werecommitted to providing sufficientfunds necessary
for ELSI to meet its obligations during the orderly liquidation. Even if Raytbeon
and Machlett had been unwilling to contribute any funds Io ELSI, an orderly
liquidation would still have been possible through settlements with creditors
pursuant to procedures of Articles 160 et seq. of the Italian bankruptcy law.
Professor Bonellidiscussed in detail (pp. 65-71, supra) why it would no1 have
been necessary under ltalian law to place ELSI in hankmptcy during the orderly
liquidation process. Under Anicle 5 of the ltalian Bankruptcy Law, a company

is ohligated to file for bankruptcy if il is in default of payments due or if there
are other external acts which would demonstrate that the company is no loneer
in a position to satisfy ils own obligations in a regular mariner.-~h buasknipïcy
can be avoided if the company avoids default on payments due and othenvise is
capable of satisfying its obligations in a regular manner.
At al1times pnor to the requisition ELSl paid ils obligations as they became
due. Raytheon and Machlett were committed 10 supplying necessary funds io
accomplish the orderly liquidation without the necessity of placing ELSl in
bankruptcy. Consequently ELSI would have remained capable of satisfying its

obligations in a regular manner.

'See p. 278.supra.456 ELETTRONICA SICULA

Question/rom Judge Ruda '

For the purpose of determining whether the requirements of Italian law as to
the impact of losses on the capital of the company were satisfied, was the
management of ELSI entitled, as a matter of Italian law or of sound accounting
practice, to base itself on the book values in the September 1967balance sheet
(first column\ so lone as the adiustments (second column) had not been made in
ihe compan;'s book;, or was ;t ohliged for that purpose either to make those
adiustments forthwith in the company's books or to use the adjusted figures
(third column) to determine the company's financial and legal position?

Answer

The book valuesthat appear inthefirst column of page three2 of the September
1967 balance sheet reflect the amounts appearing in the company's records
prepared in accordance with Italian legal requirements. The values that appear
in the third column of that balance sheet reflect adjusted values arrived at by
using US accounting principles, as required by ELSI's US parent companies.
There was no obligation under Italian law or accounting practice to make these
adjustments in the company's statutory accounting records prepared in accor-
dance with ltalian legal requirements.

Whether the capital of an Italian company fell below the legal minimum
provided by Articles 2447 and 2448 of the Italian Civil Code was a matter to be
determined by reference to the statutory accounts of the company drawn up in
accordance with Italian legal requirements.

27 February 1989

1 have the honour to transmit to Yonr Excellencv herewith the text of the
wriiien repliesoiihe Uniicd Siaies 10 quçsiions put h<Menikrs olihe Chiirnher
in ihe s;i,c conccrning ~I~~llronS~culu 5.p.A ELSI,. rcferred IO hv the United
States Agent during the hearing this afternoon

83. THE CO-AGENTOF THE UNITED STATESOF AMERICATO TlE REGISTRAR

27 Fehruary 1989.

Pursuant to Article 60. naraeranh 2. of the Rules of the Court. 1 have the
honor to enclose a signed Cop;of' the final submissions of the ~overnment of
the United States of Amenca in the case concerning Elettronica Sicula S.P.A.
(ELSI).

Enclosure:As stated.
-
. ,

' See p. 278, supra.
' P.434, suprn. CORRESPONDENCE 457

Final Submissions of rheGovernmeniof the UnitedSraresin rhecme concerning
Elettronica Sicula S.P.A.

The United States requests that the objection of the Respondent be dismissed
and submits to the Court that it is entitled to a declaration and judgment that:

(1) the Respondent violated theinternational legalobligations whichil undertook
by the Treaty of Friendship, Commerce and Navigation between the two
countries, and the Supplement thereto, and in particular, violated Articles
III, V, VI1of the Treaty and Article 1of the Supplement; and
(2) that, owing to these violations of the Treaty and Supplement, singly and in
combination, the United States isentitled to reparation in an amount equal
10 the full amount of the damage suffered by Raytheon and Machlett as a
consequence,includingtbeir losseson investment, guaranteed loans, and open
accounts, the legal expenses incurred by Raytheon in connection with the

bankruptcy, in defending against related litigation and in pursuing ils claim,
and interest on such amounts computed al the United States prime rate from
the date of loss to the date of payment of the award, compounded on an
annual basis; and
(3) that Italy accordingly should pay to the United States the amount of
US$12,679,000plus interest.

(Signed) Michael J. MATHFSON

84. lWE REGISl'RAR TO THE AGENT OF ITALY

27 February 1989

1have the honour to transmit to Your Excellencvherewith a coov of the final
submissions of ihc Umtrd Statcs of Amcrica in thécase conccrning f:l?irr~inic<i
SiculuS.pA IELSli, communiiïiîd Io the Court today by the Cnitcd Sidir.,
Ageni pursu2nt to Article ho, p~cigraph 2. of the Rules of Couri.

85. THE AGENT'OF ITALY TO THE REGISTRAR

2 March 1989

1 have the honour to transmit to you the text of the written replies' of
the ltalian Government to the questions put by Members of the Chamber on
23 February 1989in the case concerning ElerironicaSlculuS.P.A. (ELSI).

- -
' WiihIwodocumentsattached. Questionsby Judge Oda

A. Question 10 60th Parlies

"Suppose that the decision of the Prefect of Palermo (which was actually
given on 22 August 1969) had been given one year earlier, say in August
1968. could the trustee of ELSI. under Italian law. have withdrawn the
prev;;>uspeiiiiun io hankrupic) uhich had once bec" filrd <in9 Apnl 1968
and hs\e pruceeded to liquidate in ,pite of the judgmenr of hanhruptcy by
the Tnbunal of Palcrmu, whish wiii de1itere.i on 7 Ma) 196à?"'

The answer is no.
The reason for ELSI's hankruptcy was its insolvency and not the requisition
order. As ELSI remained insolvent, the declaration of bankruptcy could not be
revoked.
Bankr~~tcv mav be revoked hv the iudee onlv if there has been a written
oppositio~ to the heclaration of bankrupic;(~rti: 18and II)si thc Bankruptc)
I.au). Thr gruund, for an nppositiun arc either the iormal nullity oi the declam-
tion i>fhankruntcv: the Iack of the nrereuuisitej for a declaratiun of bankrunics
(i.e. that the b;nkkpt is not a busieessman or a commercial company); or ihit
the debtor is not in a state of insolvency.
In ELSI's case the declaration contained no formal error: it concerned a
commercial compiny: and the insol\,ency-.as admittcd by the dehior itsclf, which
hsd reque,vd its own bankruptcy. Thereiorc, the sctting aaidc oi the requisition
ordcr could in no u,ïy afl'ectthe Jeîlïration of haiikruptcy and its lcgal efTects

B. Questions 10 Italy
"1 Am I righi in undersianding that the order orrcquisition oi 1 April

1968did h~r ELSl l'romclosing the plant in [lie iramruork of a liquidation
Drocess,but did not, or could not, prevent its closure in the framework of
ihe bankruptcy pro~edure?'~
On 31 March 1968ELSl dismissed most of the workers, but did no1yet "close"
the plant entirely. The so-called "orderly liquidation" could have resulted in a
complete closing of the plant within a short penod.
The requisition order was to ensnre that no such closure could take place while

the requisition lasted.
Bankmptcy does not necessarily require the closure of a plant. The plant was
not in fact "closed during the bankruptcy proceedings either, although pro-
duction was very limited.
"2. What kind of management plan did the Sicilian regional government
have for the six-month period after issuingthe order of requisition on 1Apnl
1968? In fact the regional govemment continued to pay wages to some 800
employees until 15October 1968,even after the judgment of bankruptcy was

delivered on 7 May 1968.What conld have been the intention of the Sicilian
regional govemment in paying the wages after the procedure of bankmptcy
had started in May 1968?"'

' Seep. 276,supro.
' Ibid.
"bid. CORRESPONDENCE 459

The Sicilian government, whose position is entirely separate from that of the
Mayor of Palermo, had nothing Io do with the requisition process.
The order of reouisition bv the Mavor of Palermo. actine as an officialof the
central ~overnmek, must héseen as.an emergency keasu;e, undertaken at the
las1minute, and triggered hy the precipitous dismissal of 800 workers by ELSI.
The Mayor was Gunting on the back-up of the regional government to make
emergencypayments to the workers. Under Regional Law 13May 1968,No. 12,
ELSl's former employees wereto be paid as from 1March 1968;those who had
no1 been dismissed by the end of March, as from I May 1968. Payment was
characterized as "an extraordinary and temporary monthly allowance,equivalent
to the wages infact receiveduntil February 1968"("indennità mensilestraordina-
na di attesa pari alla retribuzione mensile di fatto percepita fino al mese di
febbraio 1968'7.
Thrrc p3yment%u.r.rr. net undcrt:iken lightly. Indeed. thc regi<inïlgo\ernmcnt
considered itIO bc appropriate and ncccs,ary I;>rihs purposc, ui'puhlic ordcr IO
a\,uid ihs ~ojsibilitv of were hïrdshiir tg>the iiorkers and to Iiinit social unrrit

in a year-(1968) chat was proviiig disastrous in Italy as in other European
countnes.
The region also wished to preserve the qualifications and abilities of the
workforce that had heen dismissed.(Regional Law 13May 1968,No. 12,Docu-
ment 37, attached to the Counter-Memonal'; Regional Law 6 August 1968,
No. 23, Document 38, attached to the Counter-Memonal'; Regional Law 23
November 1968, No. 31, Document 39 attached Io the Counter-Memorial';
Regional Law 7 lune 1969,No. 16, Unnumbered Documents, II, p. 264'.)

Quesrionsby Judge Schwebel

A. Queslionfabofh Parties

"Let us assume,arguendo,that it has no1heen proved that the requisition
was the cause of the bankruptcy. Does it follow that ELSI and its stockhold-
ers sustained no damage by reason of the ~equisition?'~

The question of the damages caused by the requisition was examined by the
Court of Palermo, the Court of Appeal of Palermo and was finally settled hy the
"Corte di Cassazione" whichconfirmed the appeal decision (see Annexes 79, 80
and 81 to the Memonal). It was held that no damage had heen caused by the
actions of the workers occupying the plant, by negligent custody or any other
factors.
The only damage suffered wastliat ansing from the unavailability of the plant,
and this was quantified as an amount equivalent to the interest at a rate of 5 per
cent per year of the value of the property.

B. Questionsfo Italy
"1. MI. Highet spoke this morning of, 1 believe it was, 7 billion lire in
low-interest loans extended bv Italian eovernmental authonties to ELSI.

May 1 ask how much lower ihan commercial rates of interest were these
low-interest loans, that is to Say,what was their real valueY4

'See Il.
Exhibit 111-ZIA,II, p.315.
' See p. 276,supra.
' Ibid. With regard to the question of the value of the low-interest rates, the Report
on the Financial Statements at 30 September 1967 for Raytheon-Elsi S.P.A.
prepared hy Coopers & Lybrand and filed with the Court on 17 Febmary 1989
by the United States, shows on page 8' that the interest rates on the loans by
IRFIS and by the Banco di Sicilia were at 4 per cent, while a further loan hy
IRFIS and a loan hy the Chase Manhattan Bank were at 5.5 per cent.
Meanwhile,the averageannual commercialrates ofinterest on current accounts
for the relevant period were as follows:

-Year Rate (%)

1956 10.00
1957 9.83
1958 9.66
1959 9.34
1960 9.02
1961 8.63
1962 8.37
1963 8.41
1964 8.94
1965 8.80
1966 8.36
1967 8.18

(Source: Documenttransmittedto uson request by the Bancad'Italiaand attached
hereto.)

"2. And much more generally, what in the view of the Respondeut were
the purposes of the requisition? Were those purposes achieved?"'
With regard to the second question, the purposes of the requisition were as
stated in relativelyprecise lems hy the Mayor in the Order of Requisilion. These
included the purposes of "protect[ing] the general economic public interest (al-
ready serionsly compromised)". This meant that he did not want the place of
work of so many citizens to close. They also include the "protect[ioii of the. . .
public order". This meant that he did no1want strikes and riots.
These two purposes, stated in the seventh paragraph, must be read in the light
of the immediately preceding four paragraphs of the Order of Requisition, which
stated that:

". . .ELSI's actions, beside provoking the reaction of the workers and
of the unions ginng rise to strikes (hoth general and sectional) have caused
a wide and general movement of solidarity of al1public opinion which has
strongly stigmatized the action taken considering that about 1,000families
are suddenly destituted".

". . That ELSI is the second fim in order of importance in the District,
and that because of the shntdown of the plant a serions daniage will be
caused to the District, which has been so severelytried hy the earthquakes
had during the month of January 1968".
". . .That the local press is taking a great interest in the situation and
. .. is being very critical toward the authorities and is accusing them of
indifferenceto this serious civic problem";

'P. 438,supro.
See p.276, supro. CORRESPONDENCE 461

and that
". . . the present situation is particularly touchy and unforeseeable dis-

turbances of public order could take place".
When read in the context of these findings by the Mayor, and that have not
been challenged by the United States, the motivation of the Mayor appears to
be candidly expressed and straightfonvard in purpose.
Were those purposes acbieved?
Yes, up to a point. There were no riots; no solidarity strikes; no destitution
of at least800 families; no serious additional damage caused to the District; and

no "unforeseeable disturbances of public order" took place. In addition, the
workforce was paid by the regional govemmentthrough the end of the requisition
penod, and beyond (see reply to question from Judge Oda').
However, the pnrpose of protecting "the general economic public interest" was
not achieved, at least in its entirety, because, as the Prefect had pointed out, the
measures adopted did not take account of the fact that the situation of the
Company was,sucb "as not to permit the continuation of the activity".
"3. The Respondent has pointed out that the Prefect's decision holding
the Mayor's order of requisition to be 'destitute of anyjundical cause which

may justify it or make it enforceable' depended on bis conclusion that the
order did not, and could not, achieve the goal to wbich it was directed.
However. the Prefect also held that the order was issued
'undcr the influcncc of the prcssurc crcïtcd by, and of the rcmarks made
by the local press; and thcrrfore we have to hold that the Mayor, in order
to eei out of the above and show the inirni <ifthe Puhlic Administraiion
to yntervene in one way or another, issued the order of requisition as a
measure mainly directed to emphasize his intent to face the problem in
any way'.

This holding of the Prefect appears to mean that the Mayor issued the
order not for defensiblejundical reasons but as a way of showing the public
that he was doing something, whether that something was lawful or sensible
or not: he issued the order 'to showthe intent of the Public Administration
to intemene in one way or the other'; the order was issued as a measure
'mainly' directedto 'emphasize bis intent' to face the problem 'in any way'.
Now my question is this, is a measure taken by a public autbority 'to
intervene in one way or another' with a view not towards resolving a
problem - and the Prefect held that the order could not resolve the prob-
lem - but in order to appease press and public criticism or win public
favour 'in any way' an arbitrary measureY2

We would, first, respectfully disagree with the question's characterization (in
its sentence after the quoted material)

". ..that the Mayor issued the order not for defensiblejundical reasons but
as a way of showing the public that he was doing something, whether that
something was lawful or sensible or not"
The question's characterization of what the Prefect said is incomplete.
What the Prefect said was that the Mayor issued the order also for the reason
mentioned ("also under the influence of the pressure created by, and of the

'Seep. 458, supra.
Seepp. 276-277,supra.462 ELETTRONICA SICULA

remarks made by the local press: and therefore we have to hold that the Mayor,
alsoin order to get out of the above and show the intent of the Public Administra-
tion to intemene in one way or another, issued the order of requisition as a
measure mainly directed tu emphasize his intent to face the problem in any way").
The answer to the question must therefore takc into account the full context of
the Prefect's review.
The auswer is, that if the measure was taken solely " 'to intemene in one way
or another' . . with a view not towards resolving a problem . . .but in order to
appease press and public criticism or to win public favour 'in any way' an
arbitrary measure", tben it probably would have been an arbitrary measure.
But, if there were other snbstantial and sinceremotivations behind the measure
in addition to that of appeasing public opinioii, i.e., "to protect general public
interest . . and public order" it would then by no means have been an arbitrary
measure.
It should be added that it would not he right to disqualify as arbitrary any
measure that seeks to a..ease nress and oublic criticism or win nublic favour.
ince uiihout doiibt nll mcacurcs irkcn hy public ;iuihoriiies in 4iinie oi great
stress 2nd p~rceiv~dgra\,ity willbc nlolivnied ai Iça(1in pdrt IO rcrpond IO public
criticism oÏ to win public favour. and presumably also to "appease" press criti-
cisms of inactivity. This is a natural consequence of a free preiiand a democrati-
cally elected government.

"4. In view of the fact that the Prefect found that the requisition by the
Mayor of Palenno of ELSI's factory was 'destitute of any juridical cause
which may justify it or make it enforceable', and undertaken in order to
permit the Mayor to show 'the intent of the Public Administration to
intemene in one way or another', can it be maintained that the requisition
nevertheless was, in the words of Article 111of the Treaty, 'in confomity
with the ao..icable laws and reeu-ations~ ~f Italv? Can an action which is
iaken '\iithout juridiclil iïusc' in order .to jh<i\i the inten.. .10 inicr\enc
in one way iir ünother' be an action not rncrrly under culour of the ldu but
'in conformitv with the ipnlislible Iÿus and reculaiiuns'! II not. rnil if the
position of thé~es~ondentis that these holdings of the Prefect wére inerror,
why was not an appeal taken from them? If no appeal was open or was
taken, does not that establish that the requisition was not in confonnity with
the applicable laws and regulations of Italy?"

This question mus! be broken down into four sub-questions, each of which is
expressed in a sentence of the question.
(i) To the first sub-question (first sentence), we respectfully demur from the
characterization of the requisition. As pointed out in our answer to the immedi-

ately preceding question 3: there were a number of reasons stated for the
requisition order. On the correct premise, then, that the requisition was under-
taken for several reasons, and that the language quoted from the Prefect must
be read in the context of the impossibility of achieving the requisition's purpose
not beinz coenizable or known to the Mavor of Palemo at that tirne. the answer
is ihrt ihe rcquisiiiun wa; 'in ciinformiij wiih the applic3ble 1.1~sand rcgula-
tioni" (and hy irnplicrtiiiii dlso ~ubjcciIO üny xrrectiun, or rcmedic, proiided
by these laws and regulations).
The Prefect expressly stated as follows:

' Seep. 277, supro.
Seepp. 461-462, supra. CORRESPONDENCE 463

"The lack of competence of the Mayor to issue autonomous orders of
requisition, according to Article 7 of Law of 1865,assumed by the appellant,
is ils0 to be reiectel. since the comnetence of the Mavor is almostunani-

mously admittédby doctrinal write& and Case Law" (~nnumbered Docu-
ments attached to the Counter-Memonal, Vol.II, p. 131 ').
Thus, the Mayor's order was taken to be "intra vires" since "the grounds of the
erave nublic necessitv and of the emergencv-.nd ur-.ncv which caused the
i\iuance of thc ordçr m3) be hçld 10 he c~i~ting".3lthough il ii,rquii5hcd on
ihc hwir oithc Mayor bcing rni\iakcn iiihis forecari of the rcsultsthdi could he
achieved by the order.
(ii) As to the second sub-question in the second sentence, the description by
the Prefect of the action as being "destitute of any juridical cause" is not an

accurate translation and, moreover, must be read in context. In actual fact, the
Prefect affirmedtbat :
A. the Mayor of Palermo had the competence to issue the requisition order,
B. "in theory . . the grounds of the grave public necessityand of the emergency
and urgency which caused the issuance of the order may be held to be
existing", but
C. the goal to which the order was directed could not he achieved by it, this
being "proved by the fact that the activity of the Company was neither
resumed, neithermight it be resumed".

Thus the phrase "the order is destitute ofany juridical cause which may justify
it or make it enforceahle" is an inaccurate and misleadina interpretation of the
ltalian "manca, pertanto, ne1provvedimento, genericam&te, la-causa giuridica
che possa giustificarlo e renderlo operante". This phrase is more accurately
translated by "the order, genencally speaking, lacks the proper motivation that
could justify it and make it effective" as is explained by the Court of Appeal (see
Annex 81 to the Memorial).
Therefore, the Prefect'sdecision does not refer to the legal basis of the act, but
rather to the appropriateness or the adequacy of the measure to achieve the
purpose for which it was intended.
Thus, the Prefect was actually only stating that the Mayor, in the exercise of

his powers, was mistaken in his forecast as to the eiïect of his order.
Therefore. when read in context, such a description does not result in a
categuric~lor iihsolute dcsïripti<)nuithc aci as hcing (in ihc \i,<irdsoiihç bçcund
suh-quesiion) "without juridical c;iuse". ;ind thc question is therefore not ans\ier-
able in these terms.
(iii) To the third suh-question, the answer is that there was no procedure for
appeal or judicial reviewavailable under Italian law. In actual fact, the Mayor
of Palenno attempted to have the decision reviewed by the President of the
Republic, but the auulication was held to be inadmissible for lack of standing -
(se; Annexes 77 and 78 to the Memonal).
(iv) To the fourth sub-question in the fourth sentence, the reply is that even if
there was no appeal available, or taken, and even if the requisition was rejected
hy the Prefect of Palenno, tbat does not mean that "the requisition was not in
conformity with the applicable laws and regulations of Italy", for the following
reasons.
The action of the ltalian State subsequent to the requisition must he deemed
to have included the Prefect's ruling as well as the award of compensation to

'See II,p. 310,and 1, p.362464 ELETTRONICA SICULA

ELSI as the result of a claim by the Receiver in hankmptcy for the loss of
facilities dunng the requisition.
It is the action of the Mayor of Palenno as so corrected or modified that
constitutes State action measurahle as action under the Treaty that is, or is not,
"in conformity with the applicable laws and regulations of Italy".
If the language of the Treaty (and Supplement) were to be understood
differently, it would be possible to imagine an endless senes of Treaty violations

that take etlect, or "bite", before Italy (or the United States) has had the
opportunity Io remedy them. This analytic process could well he applied, for
example, to action taken by the United States at a local levelthat had not been
yet remedied at a higher level, such as an appeal for rectification or annulment
through the federal or State court systems. The concept is analogous to the
concept of the exhaustion of local remedies, in so far as hoth ideas presuppose
that the host country should, if ~ossihle, be rendered the ou~ortunitv to rectifv
or correct wh31could othe~wise,in i~olalion,ha\e constituied a ~reaiy violation.
In aciuul Fiicithe rcquisiiion wdsrollowed by: first, ihe appeal 10 the Prefeci,
and sccond, the claim hroueht befure ihc Couri.; hy the Receii,crin bankrupicy.
It is thus not possible to hold that the requisition alone "was not in confohiiy

with the applicable laws and regulations of Italy".
Therefore, the quashing of the requisition hy the Prefect must be considered
as having ensured that the overall actions of Italian authonties conformed 10
what was required.
"5 Italy hüs siated in its plcadings and oral argument ihdi certain of

E1.Sl.s actions or inactions madr itiboard of directors cnminülly Iinble. If
ihis is so. uhy 1sii thdt no cnminal actions wïrî pursued agltinst them?"'
The answer to this question requires us Io set out the relevant provisions of
law.
First, Article 217 of the Bankmptcy law states:

'.Therc is.isünciion oi between six months' and tuo yenri' impnsonmrni
in the case of the declaration uf bankrupicy of an entrepreneur who

...
(4) hm aggrnvated his own hiinkruptcy by ahsiaining [rom rr'quesiingthe
dçclaraiion oi his biinkruptcy or by some other gros, ncgligencc."
Second, Article 218 of the Bankmptcy law states:

"Unlejs iiconstitutes an ewn niore sïrious otleiiw. the sanction of up io
tno years'imprisonmeni atwches to an entrepreneur carrying out n commcr-
cial activity who resorts or continues to resort to credit, concealing his own
bankmptcy."

There is absolutely no douht that this refers to offences which, where they
exist, require the Receiver to take action and the Public Prosecutor, if he has
knowledge of them, to take action ex officio. It must be borne however in mind
that the Receiver in the ELSI case could not possibly have had at the time a
c-molet~ ~ ~ ~ncal oicture of the affair such as we now have.
In addition, the chce of the Public ~rosec"tor in Italy is an officecompletely
independent from the governrnent, central or regional, and from administrative
oower. He becomesaware of matters onlv when thev are broueht to his attention.

In ELSI's case it is therefore reasona6le to assume that thëPuhlic Prosecutor

' Seep. 277, supra. CORRESPONDENCE 465

was never brought in either by the Receiver or the creditors, because of wholly
incomplete knowledge.

"6. Volume 1of the Unnumhered Documents submitted hy Italy with its
Counter-Memonal reproduces a translation of the dismissal letter sent by
ELSI to its employees. That letter states:
'You will he paid an indemnity in substitution of notice equal to the
amount of your remuneration for the period of the notice you are not
-~ven. Such n.~~~ ~will be counted for the o. .ose of calculatine-,our
sc\cranie bcn:fits. and,ilsuch bc ihc cÿsc, fur the purpose ofdny othcr
pavrnenis owiny. IO .ou, al1in 3ccordansc iiith ihc 13~sand agreements
In force.'
In view of the tenns of this letter, is there ground for complaining of lack

of notice?"
Absolutely. Thisletter violaied the relevant "applicable laws and regulations"
in force. In fact, it was whollyinconsistent with the applicablecollectiveagreement
(Interorganizational Agreement of 5 May 1965on Lay-Offs for Personnel Cut-
hacks, in Unnumbered Documents, Vol.1, pp. 354-362'), pursuant to which
advance notice of any collectivedismissalwas required to be givento the represen-
tatives of the unions concerned. This was in order to allow the unions to discuss
with management the proposed actions before they are taken.
These defects of failure to give notice would exist even if there were funds
available to make the suhstituted indemnity payments suggested hy ELSI. But
when one realizesthat the company was in a state of capital deficit,and complete
insolvency, the illusory offer to pay the workers does not in any way "remedy"
these deficiencies.

"7. The written supplement of the Respondent to the oral reply to my
question of 21 Febmary states that, 'The requisition kept the factory open'.
Open to do what? Was work performed in the factory, by whom, and with
what results, in the period in which the factory was requisitioned? In this
regard, it may be recalled that the Prefect's decision of 20 November 1969
holds that it was 'the factthat the activity ofthe company'was not 'resumed',
that the plant was 'not working'and that it was occupied by the dismissed
employees."'

As mentioned in our replyto Judge Oda'sfirstquestion to Italy4, the requisition
was designed to ensure that the factory remained open.
Although the maintenance of the factory in an open condition did not result
in a retum to full activity or production, the Mayor of Palermo made provision
for the temporary management of the plant immediately after the requisition.
In fact, on 6 April 1968, the Mayor issued a special order entmsting the
management of the plant to Mr. Aldo Profumo, the managing director of ELSI.
After Mr. Profumo refused to accept this appointment and to carry out the tasks
assigned to him in the interest of ELSI, on 16 April the Mayor appointed MI.
SilvioLaurin. the senior comnanv director to replacehim temnorarilv. Mr. Laurin
îcccpvd the appointnieni ah ihc Mayor .~ls~appointed kir. ~rmünrlo Celonc
and Mr. Nicolo Maggiù as his rïprssrnt~tivcs tu enforcc his urrlers in the factory. CORRESPONDENCE 467

It should be noted, moreover, that the company may approach the judge and
ask that, instead of being declared bankrupt, it be allowed to submit to the
creditors a proposed settlemeut (concordaro prevenrivo).The proposal must:
(i) contain realistic assurances by the dehtor that the preferred creditors will
receive 100per cent payment and that the unsecured creditors will receiveat
least 40 per cent of sums due within 6 months, or assurances of the payment

of interest in the case of a delny; and
\~~, ~~~~-~~t~ ~transfer of al1the dehtor's assets to the creditors (alwavs assumine
that the evaluation of these assets shows a possible return'to the creditor;
as indicated above: see Art. 160of the Bankruptcy Law).
The Judge would then appoint a judicial commissioner (see Art. 163 of the
Bankruptcy Law). The creditors are called to vote, reaching decisions by a
majority representing at least f of the credits (see Art. 177 of the Bankruptcy
Law). If thejudge holds the proposal to he inadmissible or if the required majority

isnot ohtained (seeArt. 179,Bankruptcy Law), thejudge will declare the debtor's
bankruptcy as his own initiative (see Art. 162 (2) of the Bankruptcy Law).
A request for a "concordaro prevenrivo" (for the creditors' acceptance) could
certainly have been presented bg ELSl in April 1968, but only if the above
orereauisites or conditions could have ken satisfied. The conditions were not
iresent, since: (i) the company's hooks were not in order; and (ii) ELSI's assets
were not sufficientto satisfy its creditors to the extent indicated above.

"2. For the purpose of determining whether the requirements of Italian
law as to the impact of losses on the capital of the company were satisfied,
was the manaee-ent of ELSI entitled. as a matter of ltalian law or of sound
accouniing prdciicc. in bd,c ii,clf on the book valucs in th? Septemher 1967
bdl~ncc,hcct (first column) 50 long as the 3djusimcnts (second columni h~d
not heen made in the company's hooks, or it was obliged for that purpose
either to make those adjustnients forthwith in the company's hooks or Io
use the adjusted figures (third column) Io determine the company's financial
and legal position?"

The answer to this question is as follows.
First, Article 2423 (2) of the Italian Civil Code States that
"the balance sheet and the orofit and loss account mus1demonstrate clearlv
and accurately ("con chiakzza e precisione") the company's position with

regard to ils assets and liabilities and the profits made or losses sustained".
The principle of the "truth" of the balance sheet is thus constantly acknow-
ledged in Italian doctrine and jurisprudence. In the application of the legal
orincioles of evaluation..the .rincinleof ru den ce" is likewiserecog-ized in that
cvaluation. Buih of ihrse prinsiplrs arc considercd to belong to public pulicy.
Considering ihesc principles 11 is no1 evcn imaginable ihat a cornpan). wi~uld
use book values in its accounts when these are in excessof the actual values. The

fact that the company did uot make the adjustments to its own books is not
relevant. In actual fact the books of account can be "rectified" with successive
carry-overs. The amendment to the books must be made as soon as possible,
showing the lesser value decided on by the directors.
Furthermore, it must be noted that the adjustments accepted by ELSI's man-
agement were:468 ELETTRONICA SICULA

1,309million lire for a reserve for inventories, instead of 407.8 million;
100million in losses in subsidiary companies; and
1,653million in losses in deferred costs.

This means that in the adjusted figures accepted by ELSI's management, a
deficit of 881 million (after baving lost and cancelled capital stock, reserves and
stockholders' subscription accounts) was in fact recognized (see p. 3', third
column, of the Coopers & Lybrand Report).
But the accountants' adjustments were even greater:

453.3 million in cxccss of nci re:!limblc v~luein in\cntonci (po4,ipage 2'
of Coopcrs & 1.ybr~nd.sReport)
463 6 million in relation to fixedrisseis((minipage 2?'of satdReport).
The above figurescame to a grand total of 916.9millionlirein losses,according

to the auditors' sue~estedadiustments hot acceoted bv the com.anv,,
Therefore, the c&~~an~'sdeficit, according 1; the a&ountants, was not 881.3
million lire, but was 1,798.2million lire (916.9+881.3).
Of course. the ahove-mentioned deficit of 1,798.2million lire was ascertained
hy Coopers & Lyhrand in relation to the year ended 30 Septemher 1967. By
March 1968,as we know, there had been 1,068.2million lire in further losses ta
add to ELSI's economic and financial disaster.

BANCAD'ITALIA:INTERESTRATEON CURRENT ACCOUNTS
(1956-1967)

[See p. 460, supra.]

LEITERDATED 9 MAY 1968 FROMTHE MAYOROF PALERMO TO GENEiAL LUlGl
MANCINI,DIRECTORGENERALOF TEE NATOHAWK MANAGEMENT OFFICE

CONFIDENTIAL

Palermo, 9 May 1968.

Dear General Mancini,

1 thank you for the kind welcome extended the afternoon of May 2 ta my
delegates Messers. A. Celone and N. Maggio accompanied by MI. S. Rovelli.
1apologize once again for being unable ta take part in the meeting on account
of previous business engagements deriving from my office, which 1 could no1

'P. 434,supra.
P. 433,supra. CORRESPONDENCE 469

postpone. In regard ta the matters discussedwith my delegates, 1wish ta confirm
and stress the following points:

I.Seizureand operationalplan

Rayihcun-Elji hïd announccd ilicirintention i<iu\pcnd aciivli) in the Pslcrmo
plan1 sincç the monrh of March 1968, alleging purportcd union and n.on.imii
reasons. As ta the latter in particular they lamentedthat their rcpeated requests
for oarticioation hv Italian oublic aeencies had been turned down. Durine the ~ ~ ~ ~
pcri8d of iheir an~<iunamcni io il& ihc Ra)thri)n-Elsi pl;inr, the? proc$ded
wiih liplan of mdss dicmisslilofikillcd personnel, and ai ihc end oi hlarch ihc)

sent out several hundreds of letters terminatine emulovment contracts.
The implementation of these decisions by ~aythèon:~lsi generated lively reac-
tions on the part of labour. The unions promoted a general solidarity strike; the
conipany cmployee, hcld proicsi iiisnifistaiiuns and: among oihcr ihingi, occu-
pied the factory and callcd io the aiieniion of boih city and national public
opinion ihe exircmely grlivcprohlcni crciiicd by al1the implic-iioni dcriviiig irom
a final termination of al1electronic activity in the Palermo area.
In this connection it is worth emphasizing tbat the Raytheon-Elsi plant repre-
sents a concrete reality in the economic life of Our province and of the entire

Sicilian Region. This reality consists in equipment, facilities, highly skilledlabour,
a management staff. domestic and foreign commercialrelationshios. al1witnessine
a sociaÏand cconomic poicniial of \uh\ïaniial kïring and no dohhi irrcplaczÿbl~
in ihc framcuork of cionomic planning in Sicily.
Undcr ihcsc circumstnnw3, thercfore, Kayiheon-Elsi'sdeci,iuns si>undcdmore
like an extreme effort to exert pressure on the central and regional government
organs ta get the partnership requested rather than like an absolute need arising
from an irreversihle corporate situation.
Actually, the threat of a plant shutdown as well as the mass dismissal of

uersonnel with al1 the conseauent immediate and future social nroblems. the
drrïdcd ddngcr of ihr dcsiru~~iion2nd dismcnikrmeni 01' iiso&pany w~ihdn
econoniic value compossd noi solcl) of corporJtc invesrmcnis bur also ai' ihc
skill and co-ooeration of the ~ersonnel and Ïelatinr human element. al1roused
ihc cuncern ui ihc xntrdl and rqy<inal gi>r.ernmcn~orgdns a1 ever). Icvcl. This
conccrn is pro\cd b) ihc dciailcd 2nd frcqucni articlcs appilanng inihc locdl and
national press to inform public opinion of the efforts made to preserve, also
through State intervention, an electronic industry in Sicily, and particularly in
Palermo, an area naturally preferable to any other industnal area because of the
presence on the spot of a complete plant and skilled engineering and labour

forces.
No iiiiempts wcrc ~icglcciediu discu>s and ncgotiliir. ni 311Icvels uirh the
R3)tlicon-Elsi rcpreicniatii.~~ Iloiic\cr. no profitlihle re>ulisucrc obiaiiicd he.
cause oix ngid atiiiudc assunicd by ihrc represcni~tii,cs. ün diiiiude difliculi tu
ex~lain othe; than in the lieht of ~reconceivedclearlv su. .lative intentions. For
ihcie reawnh IIuas ncccsidry for the adminiriraiii,~ aurhonty io step in, in urder
icikccp ihc siiu~tion frum drlerii)raiing in man) uï)s. such as:

(a) a dismantlement of a productive activity highly affecting the economy of the
city and the Region;
(b) a continuation of labour strikes likely ta jeapardize also other productive
sectors in the long run;
(c) a worsening of the state of tension of the Company personnel, which was
already perturhing public order and increasingly worrying the authorities
because of surely foreseeable consequential actions in the immediate future. The seizure order made necessary by the facts expounded above aimed and
aims at safeeuardine the economic interests of the oublic and the welfare of the
Palermo la&ur cokwnity, without attempting in any way to prejudice Ray-
theon-Elsi. The purpose of the seizure is not to freeze an operation, but to use
and preserve the work force and production facilities.
Therefore, an operational plant composed of different phases has been drawn
up. After completion of the first phase consisting in the taking of an inventory
and in the maintenance of equipment not operating for two months, a gradua1
resumotion of activitv iscommencina both in the framework of existinecontracts.
provided they refer 1; economic anfindustrial operations, and in theïramework
of new relationships with domestic and foreign customers. The above activity is
meant 10 represent a continuity of the company's economic operation and bill

subsequently be carried on by the Company 10 be formed with the participation
of IR1 and ESPI under the auspices of the Sicilian Government. As a matter of
fact, there are definite indications that foreign groups, with which ne-otiations
are well under wav. will verv likelv oarticioge in th& new comoanv.
The solution al;eady proposed 6 ihe ~aio Hawk ~ana~emek office verbally,
and now being submitted formally in writing, falls within the framework of the
above report, which embodies the reasons that make the seizure legitimate and
expound the goals that the seizure plans to achieve.
The contractual commitments already existing shall remain and he met by the
seizure administration, which is perfectly in a position to do so as may he
confirmed bv the Militarv Aaencies of the Ministrv of Defence in charee of
secunty andman~facturii~. ~here seems ta be a po&ibility, however, thatkay-
theon-Elsi may disregard the legal implications of the state of seizure and take
actions 10cancel the contracts and eventuallv to have them transferred to other
foreign c.;iahlichnients of Rayiheon cornpan), or of third partie,. Evçn ssrdming
the ieasibility of ,u~.han action (among other things iiuould conflici with the
\.ers intercris of the conipilny which. thercfore. should behappy riith th? continu-
ance of an industrial manufacturing activity) the contracts under reference or at
least those that have not yet been completed, would have to be replaced by the
Bureau with new contracts with different parties. Now, since most of the work
under these contracts is performed, as known, with equipment belonging to the
Nato Hawk organization, it would be uneconomical Io dismantle this equipment
and transfer it elsewhere. Also, it would take substantial time to train new
personnel and start a new product line. The Hawk Department of the Palermo
plant, on the other hand, has already acquired the highest degreeof specialization
in this field.
For these practical reasons it is deemed that the Palermo plant should be
preferred, and the existing contracts should be transferred to the govemment
seizing authority, which would also assume al1relating responsibilities, since the
said contracts involvean indusrrial acriviv, and the purpose of the seimre is the
preservation of such activity.

2. Conrracrs in course

The enclosedchart (encl. 1) 'summarizesthe status of the contracts in existence.
For each contract a delivery schedule for the near future is indicated. 1wish to
confirm that the production lines affecting the Hawk program have already
resumed their activity, and that the delivery commitments indicated in the chart
are based on this fact. CORRESPONDENCE 471

3. Equipment,materialsandpersonnel

With regard to the perplexities raised by you in the course of the meeting, 1
wish to point out the following:

(a) Al1the personnel connected with the program (executives, engineers,techni-
cians. skilled workers) have returned Io work and aereed to oDerate under
the new administration. 1 am enclosing (encl. 2)l-a notarizid statement
indicating the work force presently at the disposal of the seizing authority.
IbJ The orocürement of matefial needed to carrv out the work planned does not
presént, for the time heing, any difficulti as a result if the change in
administration. All the materials required for the normal production cycle
are in the company stores. Should any shortages occur in the future, no
narticular orocurement oroblems are envisa~e-since the necessarv materials
are freely available on the market.
(c) All the material and equipment property of the O.P.L.O.H. as well as the
classifieddocumentation are in oerfect order and condition under the surveil-
lance of both the S.G.S. and thécompany security service, whichhave never
ceased to operate.

1hope 1have given you, dear General Mancini, al1the necessary information
to disoel your uueasiness concernina the continuity in the work and supply of
the màterials reauired b,,vour oreaGzation.
I.ooking f~rxard i<hc.iring rrurii pu xi )dur carli~,.i~unienicn~~çc~~ncerning
the proçdurcs idbç folli>u.cJtu iorniïlix ihr ncu rel.iiinn.hips. I ihmkyou iur
your kind attention and assistance.

(Signed) BEVILACQUA.

86. THE AGENT OF ITALY TO THE REGISTRAR

13March 1989.

Pursuant to the invitation of the President ofthe Chamher of the International
Court of Justice in the ELSIcase, addressed to the Parties at the public sitting
of 2 March last2, 1 have the honour to transmit hereafter the comments of the

Italian Government to the re.olies3 eiven. on 27 February, by the Amencan
Government to the questions put hy Che~udges
Our comments are as follows:
''1hç ansucrj pvrn h) thc Applicani tu question, irom tlic IIcnch mcrçl)
contain .Isiatcnient «i ihc Applic3nt'CASC ilsdc\elopçd In the second round
of pleadings. These answers,-as well as the pleadings, present a senes of
assertions which either distort facts or are unsupported by evidence.
As the essential aspects of the Applicant's case were considered hy the

Resoondent in its rebuttal, a detailed consideration of each answer does not
apGar to be necessary at this stage of the proceedings.
However, the Respondeni would like to point out in particular two inac-
curacies in the Applicant's replies.
****

' Not provided.
See pp.371 and 383, supra.
' See pp.449-456, supra. , 1. In its response to the question from Judge Schwebel, the Applicant
states that

'with the requisition in place, there was no opportunity to show the plant
to prospective buyers after 1 April and no ability to negotiate any deals
for the immediate disposition of the plant and assets'.
As exemplifiedhy much of the material contained in the letter from the
Mavor of Palermo to General Mancini of 9 Mav 1968that was filed with
thekourt hy Respondent in response to a from Judge Schwebel,il
was obviouslyquite possible for Raytheon to have explored various alterna-
tives with himand there is no evidence to the oontr&y.
The requisition was issued to avoid the closure of the plant. The plant
was kept open, operations were maintained to a certain extent and the
premisescould have been viewedby anyone showing an interest in doing so.

Moreover, it mus1be remembered that the Mayor had originally appointed
ELSl's own director, MI. Profumo, as manager of the requisitioned plant
(Annex 34 to the Counter-Memonal).

II. In ils resoonses to auestions from President Ruda. Ao.li..nt states
that '~avtheon'and ~achfett were committed 10suonlvin.,,ecessa~ ~funds
~o~~accokplihthe orderly liquidation', and thai 'Rayrhcon mouid h35.e
incrcdsediis fundini:of the liquidation progrüm io takç carc of any shortfaIl'
in reauired severance nav
~c;~ondent's rcpl>'isonce again thai Applicanl here appcar, itsclf IO bc
staiing a qucstion of Pdctlhat is, unhappily. unsupporicd byany contcmpora-
neousrecord or any document."

87. THE REGlSTRAR TO THE AGENT OF ITALY

13 March 1989.

1 have the honour to acknowledge receipt of Your Excellency'sletter of 13
March 1989,setting out the comrnents of Italy on the replies givenby the United
States to questions put by Members of the Chamber during the oral proceedings
in the case concerning ElerironicoSiculoS.P.A. (ELSI).

13March 1989.

Dunng the lasi day of ihc oral procecdings' in the case concernlng Elrrrronrcu
StruloSp.A (ELSI,. the Court offrred cach pan). the opportunity io comment

on the answers given by the other party to questions of the Judges during the
final week.The United States does no1agee with the conclusions of the Respon-
dent in any of its answers, and accordingly suhmits the following comments. To

' See pp. 371 and 383, supro. CORRESPONDENCE 473

avoid repetition, these comments are limited Io points not othenvise addressed
in the oral or written pleadings, including our own answers Io the same questions.

Quesrionsfroni Judge Oda

A. For the reasons stated in our oral statements, the United States fimly
disputes the Respondent's characterization of ELSI as insolvent a1 the time of
the reauisition order. ~P. ~ ~ ~su~ra.)
B.l.'~he Respondent's anSie; caididly admits that the ELSI plant was never
re-opened following t-e requisition and that at hest "production was very
limiied".
9.2. It is clear from the Respondent's answer that the Mayor, the regional
government, and the national Government had no management plan for ELSI

after therequisition. The United States disputes the Respondent's characterization
of the requisition as an "emergency measure . . .triggered by the precipitous
dismissal of 800 workers hy ELSI". The dismissal of the workers was anything
but precipitous. It followed a year-long effort by ELSI and its stockholders to
persuade the Respondent to participate in and back ELSI on a commercial basis
in order ta continue ELSI as an employment base in the Mezzogiorno.

Quesrionsfrom Judge Schwebel

A. The United States stands by its answer Io the same question (pp. 454-455,
supra). We strongly disagree, for the reasons stated in our written and oral
pleadings, with the Respondent's assertions that the damage arising Srom its
actions are limited to 5 per cent of the value of the property per year. See, e.g.,
pp. 115-121, supra.
B.1. The United States disputes the extent ta which ELSI was the recipient of
preferential low-interest loans. First, as the Respondent recognizes, Chase Man-
hattan Bank, a United States bank, extended a loan to ELSI at the rate of 5.5
percent - the same rate as a loan by IRFIS and only slightly above loans from

IRFIS and Banco di Sicilia. Second, the rates presented hy the Respondent
appear to be inappropriate for comparison purposes in view of the different
factors affectine the detemination of resoectiveinterest rates for lone-term loans.
3s conip~rcil t<;interest on current ïcii,;nts irhich are the highrst rites imposcd
b) biinks on horroivers. The loÿns idcntiiicd by the Kespondent were long-tcmi
loans fullv securcd hy CLSl's land and mïchinery, lo'inç which typically carry
lower intirest rates than the commercial rates quoted by the ~espondent. It is
noteworthy that at the time these loans were issued ELSI's plant and machinery
(characterized as virtually worthless by the Respondent) was found to be suffi-
ciently valuable to secure the loans. Similarly, the proceeds realized by the sale
of the land and buildines were sufficientta oav off these loans in full.

1%7-1. In drtermining the purpitscs ol'th<requirition. the Rcspundent extracts
Iwo gcncral clïu,e, irom the se\.enth pïragraph of the Masur', requisition order
(1, Memorial, Annex 33) relating ta ihe need to protect the "general economic
public interest" and the "public order". This language obviously is simply a
repetition of the requirements necessary ta allow use of the ltalian laws cited in
paragraphs 8 and 9. In fact, the stated purposes of the requisition are quite clear
from the nrecedine oaraeraohs. The Mavor essentiallv wanted to aooease "a wide
and geneial movznt of Solidarity of a11public oprnion", inclu&& press criti-
cism and lahor unrest, by avoidinl: a shut-down of the plant and further "unfore-
seeahle" nuhlic disturbances
~otwichstandin~ the Respondent's answer to the Court that these purposes

were achieved, the Respondent's own administrative review of the requisition474 ELETTRONICA SICULA

shows that these purposes were not achieved. Certainly the purpose of avoiding
a shut-down of the plant as of April 1968 was no1 achieved; the Prefect of
Palermo concluded that "This is proved by the fact that the activity of the
Companywas neither resumed, neither mightit be resumed." (Memorial, Annex
76, 1, p. 362.) Further, the Prefect found that labor unrest continued since
"employees werestaying [in the plant] to protest for the nonresumption of the
activity and for dismissal of the whole personnel". (Memorial, Annex 76, 1,
p. 363.)As for the unforeseeable publicdisturbances, the Prefect found that "the
events subsequent to the requisition have clearly demonstrated the inefficacyof
the measure; this is proved by the fact that the parades and demonstrations of

protest followed one another, creating also a situation of perturbation of the
public order . . ."(Memonal, Annex 76, 1, p. 363.) Further, the welfare of the
ELSl workforce was not enhanced by the requisition. After the requisition,
production was virtually non-existent and the workers remained unemployed.
The sale of ELSl or its product lines as live businesses, by contrast, could have
secured long-term employment for the workforce.
With regard to the desire to mitigate criticism by the public or local press,the
Resoondent aovarentlv admits in its answer that if this werethe ~ ~ ~ ~ason for
the ;equisitioi,'then Le requisition would be arbitrary. Yet in considering the
pressure created by the local press, the Prefect ruled that the Mayor "issued the
order of reauisition as a meaiure mainlv directed 10emohasize his intent to face

the prohlrm in somr w;iy". (~rniori3l:~nnex 76, 1, p' 363) the United Sriitcs
h3s shown thsi ihis moiii,aiion isarhiirnry under ihc Tre~ty(Memorial. 1,pp. 76-
80). Furihsr. unlawful eo\crnnicni action undcrtakcn uiihoui rcrard to individual
rightsmainly 10mute Gblic criticism(whetherin the form of newspapereditorials
or public demonstrations) is unjustifiable and arhitrary, and must he considered
the antithesis and not the necessary consequence of a CreeSociety.
B.4. The Respondent states that the United States has provided an inaccurate
and misleading translation of a significant phrase of the Prefect's ruling. The
Respondent would translate "la causa giundica" as "the proper motivation"
rather than as "juridical cause". There can be no question that "la causa
giuridica" translates as "jundical cause". Further, ii is completely unacceptable
for the Respondent to challenge at this late date the translation of a decision

that was filed by the United States in its very first pleading. Not only did the
Respondent never challenge this translation through two rounds of written
pleadings, but the Respondent specifically discussed thisphrase in English
without an assertion that it was inaccurate. (Memorial, 1, p. 88.) The Court
should not accept the Respondent's sudden efforts a1 the close of these
nroceedin~sto cast asnersions on the translations ~rovided bv the United States
ip. 463, &ro) when'the Respondent was fully 'capable OF challenging these
documents throughout the lengthy-co~rse of the written and oral proceedings,
but failed todo so.
Moreover, whether the accurate translation of this phrase or the inaccurate
translation proposed by the Respondent is used, it is a complete distortion of the
obvious ruling by the Prefect to state that the Prefect simply found that the

Mayor was "mistaken in his forecast as to the eiï'ectof his order". The Prefect
clearly found that ihe order was without proper basis because the stated purpose
of continuing operation of the plant was completely inapposite to the Mayor's
suhsequent action.
lronically the Respondent argues that the requisition by itself was "in confor-
mity with the applicable laws and regulations" because the Respondent could
subsequently appeal to the Prefect, who, of course, eventually found that the
requisition was unlawful. This argument is spurious. The requisition violated CORRESPONDENCE 475

ltalian law the day it occurred, whether or not the Prefect so recognized 16

months later. Therefore the requisition was not "in conformity with applicable
laws and regulations" of Italy. No provision within Article III (2) states that
Article III (2) isonly violated once the conduct of the Contracting Party ispassed
upon by that Party's administrative and judicial organs. A violation of Article
II1 (2)takes effect(or "bites") immediately, and the fact that local administrative
and judicial organs suhsequently determine that the conduct was wrongful con-
finns the existence of - not avoids - a Treaty violation.
8.5. The Respondent asserts that il is "reasonable to assume" the public
prosecutor did not cnminally prosecute ELSi's management because the prosecu-
tor had "wholly incomplete knowledge". This assumption is hoth wrong and
irrelevant to the basic dispute hefore the Court. By filing a petition in
bankruptcy ELSl submitted its books and its activities to the scrutiny of the

court. Moreover, an excerpt of the hankruptcy judgment must be sent by the
court to the public prosecutor to enable the prosecutor to undertake a criminal
action, if appropriate, under Articles 17 and 238 of the Bankruptcy Law. In
addition, under Article 33 of the Bankruptcy Law, the curator is required to
submit to the court a report covering the responsibility of the dehtor in the
bankruptcy under criminal laws. If the court had any doubt about possible
breaches of criminal law by ELSI's directors, these would have been reflected
in criminal charges. (Pp. 302-303,supra.)
B.6. The Respondent's statement that the dismissal letter sent to the workers
violated applicable laws and regulations is wrong. First, any laws and regula-
tions that relate to the "collective dismissal" to which the Respondent refers
are not applicable to a company in liquidation. A company in liquidation

issues "individual dismissals" uiider ltalian law to al1 emolovees. ELSI rave
the notice required by law when it sent out letters to al1affecied employeës ai
the end of March.
The collective labor agreement to which the Respondent refers did not have
the effectof law. SeeDecree No. 8of the Italian Constitutional Court (8 Februarv
19661(ruling thiit a predecessor I~bor agrcenicnt did no1 hd\e the fircc of la)!',
le.. \\as noi ergu ot~~~icrI). ~dditiun io its \irist siimpliiincr wiih Iirlirn law
governin,: di\mi\sxl ~iicmpl<i~ec~E , LSI xlsii iultillrd the inieni <ihs i~illcctive
agreement. In the year preceding the requisition, ELSI management met periodi-
cally with the unions to infonn them as to ELSI's future. (See Affidavit of Rico
Merluzzzo, 1, Memorial, Annex 21, paras. 15-16.) Union management and the
workforce were specificallyaware that if the Respondent did not participate in
and back ELSI that Raytheon and Machlett liquidate ELSl's assets and discharge

its employees. Thus, the workforce had a full year's notice ofthe liquidation of
ELSI's assets.
Ravtheon and Macblett out offthe orderlv liauidationand dismissal ofworkers
for ;i;long 3s possible 10'~ite the Kespondeni ctery opportunity to iiseri the
orderl) Iiquid~tion. In the dismisial notice, tlic uorkcrs ucre proniised sutlicient
severance-o.. eaui.alent to the amount thev would have received had thev
rccei\ed longer noticc of their disniirs~ls ~s\ie haie prcviousl) shoun, thes;
promises uere noi "illusory" and wcre barked hy tirm iommitmrni\ irom R3)-
thcon. (P. 306..iirpro.ln ans etent, the quesiion of iioiiccoidismissal isirrclevant
to the basic disnute before ihe Court
H 7. ~either'~a~lheon nor M;içhlett \vas au,üre of 3n) ionliniiation of uork
in the ELSI plant following the requisition The Prefcst of P.ilernio foiind thai

the ;iciiviivof the conivdny wiisno1resunied thlemorial. Annex 76, 1, 31D 36? )
However,ëven assuming the Respondent iscorrect that "very limited
continued on the Nato Hawk line, this cannot be equated with resumption offun production in the plant, employment of the dismissed workers, or any

continuation of work on the other lines. Thus, the requisition did not reault in
keeping the plant open as the Respondent had earlier suggested. Following the
requisition, the plant and machinery fell into disuse and deteriorated rapidly in
value.
However, the letter suhmitted by the Respondent to support its position is
noteworthy on several points. First, it belies the Respondent's pnor assertions
that the plant was valueless:
"mhe Raytheon-Elsi plant represents a concret6 reality in the economic
life of Ourprovince and of the entire Sicilian Region. This reality consists in
equipment, facilities, highly skilled labour, a management staiï, domestic
and foreign commercial relationships, al1witnessing a social and economic
potential of substantial beanng . . .(P. 469, supra.)

"Fe] company [has] . . . an economic value composed not solely of
corporate investments but also of the skilland CO-operationof the personnel
and relating human element . . ."(Ibid.)
The letter belies the Respondent's prior assertionsabout the undesirability of
the plant's location in Sicily:

". . an area naturally preferable to any other industrial area because of the
presence on the spot of a complete plant and skilledengineering and labour
forces" (ibid.).
The letter heliesthe Respondent's prior assertions that no one would invest in
or purchase ELSI:

"As a rnatter of fact, there are definite indications that foreign groups,
with which negotiations are well under way, will very likely participate in
this new company." (P. 468, supra.)

The letter underscores the substantial value of the Nato Hawk line:
"The Hawk Department of the Palermo plant . . .has already acquired
the highest degree of specialization in this field." (Ibid.)

Questions/rom PresidenrRuda

1. The United States stands by its answer to the same question (p. 455, supra)
and offers the following comments on the Respondent's answer.
The United States strongly disputes the Respondent's assertion that "the
company's books were no1 in order". The books were maintained through
24 Aonl 1968when the records were turned over 10 the trustee in bankm~tcv.
The Gookswerepropcrly closcd and complete management report, wereprcpîred
Tor the months of October. November. and December 1967 Thc management
rrDort for Jdnuarv 1968hdd been ~re~aredindrafi form inMarch 1968.con~i~ient
wi'ththe normal pattern of closi& tke books 30 1060 days after the end of each
operating period.
The United States has demonstrated that ELSl had no obligation to file a
petition in bankmptcy under articles 5 or 6 of the Bankruptcy Law (a point
conceded by the Respondent, II, Rejoinder, Annex 32). Further, ELSl's capital
never fellbelow the statutory minimum established by article 2447 of the ltalian
Civil Code. Finally, ELSI's management was at no point in the situation con-
templated by article 217 of the bankruptcy law. See pages 65-71,supra.
Bycontrast, ELSI'sshareholders did have an entitlement as a matter of ltalian
law to liquidate ELSl's assets and pay ELSl's creditors. Proceeds from the sale CORRESPONDENCE 477

of ELSI's assets would have heen sufficient to pay al1creditors in full. Even if
ELSI's liabilitieshad at any point exceeded its assets (a point wedo not concede),
ELSI's shareholders were entitled to proceed witb the orderly liquidation under
one of several alternatives identified bv Professor Bonelli. (The Court should he
a.ri,arcihai ihc Kcspondent'i dexripi;on of the ro~in~rduro prei,t,nrivo3viiiliiblc
under Iialiiin13ulISInct)rr~vl;page467, Iine7, supro. should read "or" no1'and".)
2. The Cnitcd Siairs stands bv its îniwer io rhe siimcaucsti~~nin. 456. buoral
'- ..,
and oîïers the following comments on the Respondent's answer.
The United States strongly disputes the Respondent's implications that ELSI's
books were not kept in accordance with principles of "tmth" and "prudence".
ELSI's books were in strict adherence with both Italian and US accounting
principles. Thus, it is wrong for the Respondent to refer to the Column 3 values
as "actual" and to imply that the Column 1values were not.

From the earliest days of its control of ELSI, Raytheon instructed Fidital, its
Italian auditors, to prepare its audit reports reflecting three columns:

Per Iralian Books Adjusrments AmericanAccountingBasis

"Per Italian Books" represented the balances in conformance with Italian ac-
counting regulations; US accounting principles are not mandatory or necessarily
even acceptable in Italy. "Amencan Accounting Basis" reflected Raytheon's
reporting practices to its shareholders in conformance with US accounting prin-
ciples.
The major adjustment annually to the Italian books was the write-off of al1
deferred charges. The deferred charges had been consistently camed on the Italian
books without challenge hy the auditors or others for many years. The only

reason these charges were written off was that Amencan accounting standards
require al1 research, development and improvement costs to be wntten off as
incurred. Their write-or for American accountine standards in no wav sueeesAs~ ""~~~~
that the charges themselves are somehow suspect Zr not in accord with the actual
value of ELSI's assets.
In complying with Italian Bankruptcy Law, ELSI's management was entitled
to rely on the Italian books kept in accordance with ltalian accounting regu-
.-. .. ... .

As a separate matter, Mr. Timothy Lawrence of Coopers & Lybrand has
oresented his analvsis of the value that ELSl's assets would have realized had ~ ~~ ~ ~ ~ ~
ihe stockholders &en permitted to proceed with the orderly liquidation: that is,
ELSI's tangible and intangible assets were worth at least 17,132.7 million lire.
(Pp. 122-129, supra.)

14 March 1989

1 have the honour to acknowledge receipt of your letter of 13 March 1989,
setting out the comments of the United States on the written replies by Italy to
questions put by Members of the Cbamber during the oral proceedings in the
case concerning EleitronicaSiculaS.P.A. (ELSI). 1have the honour further to

transmit to you herewith a copy of the comments of ltaly on the written replies
of the United States to such questions. ELETTRONICA SICULA

14 March 1989.

1have the honour Io transmit to Your Excellency herewith a copy of a letter
dated 13 March 1989 from the Deputy-Agent of the United States in the case
concerning Elettronica Sicula S.P.A. (ELSI), setting out the comments of the
United States on the written replies of Italy to questions put by Members of the
Chamber during the oral proceedings in that case.

14April 1989.

1have the honour to refer Io the request made by the President of the Chamber
formed Io deal with the case concerning ElertronicaSiculaS.P.A. (ELSI), at the
close of the las1 hearing in that case (2 March 1989, p. 383, supra), that the
Agents of the Parties should "remain at the disposal of the Charnber for any
further assistance it may require". Pursuant to this request, and with reference
to Article 49 of the Statute of the Court, President Ruda, in his individual
capacity as a member of the Chamher, wishes to put the following question to
the Agent of the United States:

"The minutes of the meeting of shareholders of ELSI held on 28 March
1968,filedin English translation as Annex 32 Io the United States Memonal,
refer to a numher of documents as being 'enclosed hereto' under identifying
letters, but those documents do not fom part of the Annex.
1. Are the 'financial statements (Balance Sheet and Revenue Statement)'

referred to uuder identifying letter C identical with tbose attached to the Co-
Agent's letter to the Registrar of 17 Fehruary 1989?If not, can a copy and
(if appropriate) translation of these be supplied, please?
2. Can copies and translations of the other documents (identifying letters
A, B, D and E) be supplied, please?"
1am transmittinga copy of this letter to the Agent of Italy for his information.

92. m~ DEPUTY-AGENT OF THE UNITED STA~ OF AMERICA
TO THE REGISTRAR

19 May 1989

In response to your letter of 14 April 1989, enclosed are twenty copies of
Attachments A through EL Io Annen 32 to the United States Mernorial in the
case concerning ElertronicaSicula S.P.A. (ELSI) and an original and nineteen
copies of certified English translations. 1 certify that the enclosed documents

'In ItalianNot reproduced. CORRESPONDENCE 479

constitute true copies of documents adduced in support of the contentions con-
tained in the United States pleadings.
In response to President ~uda's questions:

1. The financial statements referred to under identifying letter C to Annex 32
are enclosed. They are not identical in form with those attached to the United
States letter of 17February 1989.However, thecontent of the financialstatements
referred to under identifying letter C is in agreement with and is the source of
the balances per books reRected in the Coopers & Lybrand Report on the

Financial Statements of Raytheon-ELSI, S.P.A. for the period ended 30 Septem-
ber 1967that was attached to the 17 February letter.
2. Copies and translations of Attachments A, B,D and E are enclosed. 1note
that reference to "trimestre" in ltalian (translated literally as "trimester") at
Attachment D, p. 2' is synonymous with "quarter" for accounting purposes.
Reference to "legge del terzo" in the ltalian (translated literally as "law of the
third party") al Attachment D, p. 3' appears to be a reference to the so-called
"30% law" which required 30 per cent of government agency supply and job

contracts to bemade from companies located in the Mezzogiorno region.
The documents requested by the Court were not in United States Government
files. Accordingly, upon receipt of your letter, the United States fonvarded the
request 10the Raytheon Company which requested a searchof the filesof Studio
Legale Bisconti, Raytheon's counselin Rome. As soon as the documents were
identified. thev were sent bv courier to the United States and certified Enelish
translaiions mire madc. I hope tliat ihc unavoidable dclay in locating and irins-
Iaiing the requesied documents hÿr noi caused the Court any unnecesur) incon-
venience.

Enclosures: As stated.

(Translation)

ENCLOSURE [AI

Reportof theBoardof Directorsio ihe Regularand Special StockholderM s'eeting

Dear Stockholders:

We wish first of al1 to inform you that within a few days after the Board's
drafting of this report and hefore the current meeting, at which this report is
submitted 10 you, the increase in stock capital from 1,500,000,000 lire to
4,000,000,000 lire, decidedon by the Special Meeting of March 31, 1967,will be
eiïectuated on the formal levelaswell,bymeans of suhscription and total payment
for 2.500.000 ncwlv issued shares: namelv. 1.250.000 common shares marked
~ ~, ~ - - ~~~ ~ ~ ~
with ihe ietter "A" and 1,250,000preferr<d share; marked with the letter "B.
The defacto eiïectuation willhe wrformed by means of payment of 2.5 thousand
million-lire on the oart of the ~avtheon Comoanv oarlner before the aoorova..
of the fiscal year whch ended on September 36, 156?.
Before explaining to you the economic and asset-related results of the balance

'P. 483, injro.
'See 1C.J Reporrs 1989,p. 15.480 ELETTRONICA SICULA

sheet made out on September 30, 1967,we wish to briefly tell about the main
events that marked OUI operations.
During the fiscalyear, the executive organs decided:

- to carry out new corporate policieswith a view to reorganizing the company's
structure more effectivelyand increasing the efficiencyof its means of pro-
duction;
- to study the introduction of new products to augment sales;
- to put in effecta cost-reduction program, particularly in the area of overhead
COStS.

The benefitsof the programs described above, which were realized only in part
in the past fiscal year, should produce their effectsin future operations.
The fiscal year ended with an operating loss of 1.410 thousand million lire,
owing in large part to the heavy impact of financial charges (926.5 million
lire), to the cornpetition's continuous pressure on selling prices, and ta the
sagging of sales. This operating loss includes writedowns of 573.4 million lire
[Lmil. 573.41.
The total loss for the fiscal year is 2,683,460,080 lire, which includes the
following non-operating items: 1. Shrinkage of inventory (Lmil. 478),
2. Depreciation of inventory (Lmil. 242), 3. Provisions for obsolescence of in-
ventory (Lmil. 192), 4. Returns inwards (Lmil. 214), 5. Inventory clearance

(Lmil. 32), 6. Set-asidesfor accmed liability (Lmil. 84), 7.Other items (Lmil. 32).
Pursuant to Art. 2446 of the Civil Code, it is necessary to convene the Special
Meeting to take the appropriate measures. In this Meeting, and in the relevant
Report of the Board of Directors, the events and causes will be explained which
defined the cunent statement of assets and liabilities.
The enclosed statement of assets and liabilities shows total assets on 9-30-1967
of 22,041,757,580lire.
The most significant changes were recorded:

in Assets
- from a decrease in plant by Lmil. 507.9,
pnmarily owing to the wnteoff of fully depreciated items;
- from au increase in the inventory on hand and the products in

process, by Lmil. 490;
- from a decrease in debt by Lmil. 489.1.
in Liabililies

- from a decrease in writedown reserve by Lmil. 668.9
(see note regarding decrease in plant, above);
- from an increase in various reserves hy Lmil. 972.1. ;
- from a decrease in notes payable hy Lmil. 733.1 ;
- from a decrease in mortgage loans hy Lmil. 439.4;
- from an increase in debts owed to banks, suppliers, and
accrued liability by Lmil. 550.6.

For the Board of Directors.

(Signed)John D. CLARE. CORRESPONDENCE

(Translation)

Report of the BoardofAudifors on theBalanceSheerMade Out on
September30,1967
Dear Stockholders:

Weconfirm to you, first of all, that the increase in stock capital decided on hy
the Special Meeting of March 31, 1967,has been effectuated. On February 24,
1968, in fact, 2,500,000 newly issued shares were subscribed and paid for at a
total facevalue of L. 2,500,000,000 [lire].
The balance sheet made out on Septemher 30, 1967,which the Board of Direc-
tors submits for your examination and deliheration, can he summarized in the
followingfigures:

- Assets
- Liabilities
- Loss for the fiscalyear
- The suspense accounts are balanced by

The above result findsconfirmation in the economic account, which shows:
- Costs and opening inventory L. 15,870,584,079
- Revenue and finalinventory L. 13,187,123,999

- Net loss L. 2,683,460,080
We attest that the values recorded in the balance sheet are in conformity with
the results of the reeularlv maintained account books. The valuations used in the
balancc shrei u,erc<;hi~i&dinconformity uith ihe lega:rrgulations, in p~rticular.
ue cdn inforni )ou thai the xccrued items and ihe dudils u.cre idlculatcd in
complidnceu,ith ihs provisions conmincd in Art. 2426 <ifthe CivilCode
The depr~i3iions ucre pcrformed pur\uant i(1the legal rcgulations, an<:the
pcr,unncl oIJ-rgc pension fond co\crs ihc ioial owed hy the Company undcr ihis

heading.
Your Board of Directors has explained to you the changes that occurred in the
Company's assets in connection with activity performed in the past fiscal year,
and therefore, in accordance with Art. 2432,par. 2 of the Civil Code, we express
an opinion favorable to the approval of the present balance sheet,as il ispresented
to you.

The Board of Auditors,
[Signature,illegible.]
[Signature,illegible.]

(Translation)

BalanceSheetas of9/30/1967

Statement of AssersandLiabilities

Assets
Land and buildings
Plant, machinery, and equipment Furniture, fixtures,and motor vehicles
Construction in progress

Studies in progres -
Items to be amortized
Materials and work in progress
Materials in testing
Cash, banks, and postal checkingaccount
Notes in hand
lnvestments and holdings
Credits
Accrued assets and deferred charges
Loss for the fiscalyear

Total
Order accounts

Liabiliries
Stock capital:

- Shares of group A
- Shares of group B

Partners/capital increase account
Ordinarv reserve
~c\cri,c.for dcprr.sixti<)n
Kcscrvcfor cmpli)ycesc\,er3n:e pay
Rcservefor uriiedo\rn of crcdit~
Taxed reserve
Notes payable
Mortgage loans
Miscellaneous debts
Dcbts oued IO the parent Company
Accrurd li;ibilitics

Total
Order accounts

Cosrs
Opening inventory
Purchases
Personnel costs

Miscellaneouscosts
Consumption
Amount of depreciation
Set-asides or costs made good
Salesexpenses
Finance charges
Miscellaneouscharges
Direct taxes
Total

[Total costs: CORRESPONDENCE 483

Revenue
Sales
Self-oroduced olant and studies
~inàncin~recApts
Miscellaneousreceipts
Final inventory

Loss for the fiscal year
Total

We declare that the above balance sheet isin conformity with the facts.

The President,
(Signed)John D. CLARE. The Managing Director,
(Signed) Ing. A. PROFUMO.
The Board of Auditors,

Fhree signatures, illegible.]

[Dl

March 18, 1968.

Reportof theBoardof Directorsto theRegularand Special StockholderM s'eeting
of March 28, 1968

Special Section

Dear Stockholders:
Wehave convened you in a specialmeetingto deliberate on the following

AGENDA
1. Losses of the fiscal year whicli ended on September 30, 1967,and relevant
measures taken.

2. Any other business.
The fiscal year ended with an operating loss of 1.410 thousand million lire,
owing in large part to the impact of financial charges (926.5 million lire), to the
competition's continuous pressure on selling prices, and to the sagging of sales.
The total loss for the fiscalyear is 2,683,460,080lire, which includes the follow-
ing non-operating items: 1. Shrinkage of inventory (Lmil. 478 [million lire]),
2. Depreciation of inventory (Lmil. 242), 3. Provisions for obsolescence of in-
ventory (Lmil. 192), 4. Returns inwards (Lmil. 214), 5. Inventory clearance
(Lmil. 32), 6. Set-asidesfor accrued liability (Lmil. 84), 7. Other items (Lmil. 32).

Pursuant to Art. 2446 of the Civil Code, it was necessary to convene the Special
Meeting to take the appropriate measures.
The rate of loss for the first quarter of the 1967-68fiscalyear, which closed on
December 31, 1967,continued to he higb despite some signs of improvement in
the company's trading position, owing mainly to the seasonal demand for televi-
sion tubes. The losses for the first trimester of the current fiscal vear amount to
ahout 41 1millionlire Ilùue\cr. ihcrc is jolid reiisùnfor hclicvingih;it ihc raie of
Iosi since Dcccmber 31, 1967,hecarnc cvcn grcaicr hecïusc of inicrrupiions iif
corporate activitiesowing to earthquakes and intermittent strikes484 ELETTRONICA SICULA

Before reviewingthe causes of the worsening in the company's situation since

the end of the fiscalvear which closed on Seplember 30. 1967.it is im~ortant to
rccapitulatc the corp~r~tc policies and the keasures taken by the ~oÜrddunng
the pas1fisc31)car in conformity with the interpretation given hy the Board itsell
to the wishesof the stockholders. In carlv 1967.the Board'scorporate riolicy waj
initiated along the linesof the followingmeasuris taken hy the siockhokiers about
a year ago:
1. Acquisition from La Centrale Finanziaria Generale of the remaining 20 per
cent of the ELSI block of stock for 300 million lire. This gave the Board the
control necessary for the purpose of instituting appropriatë programs for irn-
proving the situation of Raytheon-ELSI and for seeking a strong Italian
partner.
2. Addition of a further 2.5 thousand million lire to the company'scapital.
3. Contribution of a further 1.5 thousand million lire in bank sureties necessary
to provide the company with the means with which to continue operating.

4. Deferral of collection by the Raytheon Company of sums owed hy Raytheon-
ELSI for previous salesand servicesrendered to il, whichstillamount to about
1.l thousand millionlire.
After these measures taken by the stockholders, the Board inaugurated a
recoveryprogram whichcan k summarized as follows:
(a) strengthening of ELSI's management witha skilledgroup of persons chosen
from among the staff for the Raytheon Company;
(6) a search for new products for ELSI, particularly via attempts Io have the
Government apply the so-called "law of the third party" in ELSI's favor,

and also via obtainine new oroducts from Ravtheon in Amenca:
(c) a search for an influential italian partner, preferahly among the companies
with governmental participation, in a position not only to make a financial
contribution to ELSI, hutalso to introduce new ~roducts in10the Company
from Italian sources, to help it obtain the knefits that are due to companiei
of the Mezzogiorno [Southern Italy, including Sicily],and finally to ensure
ELSI'sfuture within the framework of the national five-yearplan.
The last twelve months have seen a significant operating advance, but il has
not ken possible to achieve the inclusion of a suitahle Italian partner in the
company, just as it has not been possible to obtain new products and markets
from public-sector sources. All the activity performed to obtain the aforesaid
advance and the aforesaid oroducts and markets has ken documented in detail
elsewhere.Three reports wèrepresented to the Ente Siciliano per la Prodnzione
Industriale [Sicilian Agency for Industrial Production]; documented proposals
were made to the Central Government, emphasizing the need to obtain new

oroducts and identifvine these nroducts: substantial imorovements were also oh-
iained in the operatiig ;csults. 'rhe encrietic ncgoti3tini uork sonducted with sll
the kc) minibtersand niinistricsconsemed uith the question, on buth the central
and the regional government levels,has not producedany result up to now. It has
ken constanllv emnhasized in al1our reoorts and durine al1Ourneeotiations that
a strong and s;iisbic Itûliün partner is i~dispensûblcfo;an n.onorkcally hc~lth)
long-lem future for Rayrhcon-FISI. In the currcnt circumsiancrs. an electronics
company entirely owned by foreigners cannot easily compete in a market al1but
dominated hy orders andjobs that come from the public sector.
During the first months of this year, some events took place which caused a
rapid deterioration in the company's position. The earthquakes in Sicily last
January caused disruptions in production and negatively influencedno1only the
loss position but also the company's liquidity.These were followed hy strikes of CORRESPONDENCE 485

an intermittent nature in the cathode-ray tube division, which produced negative
eiïects laraer than what the loss of workine hours would suerest. This was inevi-
tahlc ongone consider\ ihc completcl) auComatcdmanu~~c&ng proccss for this
Iincof pri)ducis Iiu,a\ neccisary Io closc ihccathodc-ray tube production dcpart-
ment in order to negotiate conditions more in keeping with industrial and Com-
mercial needs with the unions. It also became necessarv to announce the olan to ~ ~
reduce the surf hy ahoui 175.Thcse c\ents re,ulicd in a lot31strike of the factory
hcginningon .March4 of thi~ye:ir, which has coniinued uithoui inicrrupiion and

shows no signs of king resolved in the immediate future. These evënts have
seriouslyand perhaps irrevocahly damaged the company'smarket position. There
have heen other events of a critical nature. Wewere informed hy the President of
the Sicilian Region that we did no1 succeed in ohtaining the approval of the
Central Govemment for an electronics olan in Sicilv. and that it was also not~ ~~~~.
possihlc to ohidin the pariicipation of {RI [l,~ituio'~er la Kicosirurione Indu-
siriale .- Instiiuic for ihc Rcconsiruction of Indusiry] in Rligtheon-ELSI. At ihc

same time, the stockholders, once informed of the losses of the oast fiscal vear.
and ihcrefore of the need for a rcc.ipit~liwiion or wriicdown,'have fo&ally
somrnunicdicd their iirm iiitcni noi IO coninhuic further financidlinvcstmenis to
Raytheon-ELSI.
Without a restructurine. "f comoanv. .tivities in coniunction with a suitahle ~~
partner, as war coniinuall) cmpliasi~ed dunng ilic Iiisi iwelsc rnonihr, wiih a
normal rate oi opcraiing losses of about 120 million Iirc per rnonih. with ihe
present strike situation and the resulting harm to the company's market position,

the Board of Directors is of the ooinion that no1onlv is il no1nossihle to recover
the losses in the course of the cirrent fiscal year, but it woAd not be prudent
to continue corporate activities hy means of a simple writedown of corporate
capital.
These circumstances, therefore, constrained the Board to adopt unanimously
the followingresolution al the Board meetingof March 16, 1968:

"After extensive discussion, the Board unanimously resolves upon the
cessation of corporate activities, 10he carried out in the followingways:

1. the cessation of nroduction willbe effectuatedimmediatelv:
2. the cessation ofCommercial activities and the dismissal if kmployeeswill
be effectuated on March 29, 1968.

The Partners' Meeting called for March 28, 1968,will formally make the
resolutions needed.
The Board directs the Maniiging Dircctors io cxplain ihe company's siiua-
[ion and the c\*cniswhich have Icd to the Board's reroluiions io the unions
and the representatives of the employees and to al1 the competent au-
thorities."

Therefore, the Board suhmits this resolution to theattention of thestockholders
for their ratification, and to receive any other directive which the stockholders

may consider suitahle to the circnmstances of the case.

The Board of Directors,486 ELETTRONICASlCULA

(Translorion)

[El

Report ofrhe Board of Auditors to the SpecialMeeting of Morch 28. 1968

[Translator's note: "Fehruary" is typewritten and crossed out; "March" is
written in hy hand.]

Dear Stockholders:

As c.in hcscenliom the balance jheci ofSeptcmher 30, 1967,which UAS alrc~dy
prcrentcd for your 3ppro!aI, the tissal )e3r closcd with3 loss of ?.683.460,0b0
lire. which cxccedi one third of the corporatc capital. and thcrcfore. in accordancc
with Art. 2446 of the Civil Code. vou havebeen c~ ~ ~ed in a soecial meetinu to
..
take the appropnate mcasurcs.
The Board of Dircciors has erplained to you ihc cau5esivhich broughi about
the aforcaid loss.and has 3150informed \ou thai \vithout neu iinancisl contrihu-
tions and withoui an expansion of markets, the loss itsclf not only cannot bc
recovcrcd dunng the currciir fiscal yerir, hut is dcstinrJ tu inîn-JR-.

Moreovrr, sincc the conditions indicarrd for sutvine ihe Companv's crisis ha\c
no1come about, the Board of Directors has decidedGpon the cessaiion of corpo-
rate activities, and submits this decision for your approval.

The Board of Auditors

93. THEDEPUTY-REGISTRA TRTHEDEPUN-AGENT OFTHE UNITED STATES
OF AMERlCA

26 May 1989

1have the honour to acknowledee recei~t of the letter which vou addressed10
the Reustrar on 19May 1989iogeiher wiih tucnty copier of yo;r Covrrnment's

responsr Io thc questions pui by ihc Presidcnt of the Chamher ai the closeof the
heann~ in the caseconccrnine t:lelrronicu SiculS.D..~ .ELSI)
CooTesof the letter and ik enclosure have heei trahsmitted to the Aeent of
1taly,'uho hasfurthcr ken informed, uith referenccio Article 72of the fulcs of
Court. th~t any commcnts he may wish to mdkc should bc rc~ei\,cdin the Rcgistry

not later than 9 June 1989.

94. THEREGISTRAR m me AGENT OF THE UNITED STATESOF AMERICA

3 July 1989.

1 have the honour to infom Your Excellencv that the Chamber of the Court
constituted in the case concerning Eletironico iicuio S.P.A. (ELSI) will hold a

public sitting al the PeacePalaceat 10.00am. on Thursday, 20 July 1989,for the
purpose of delivering ils Judgment CORRESPONDENCE 487

95. THF.REGISTRARTO THE SECRETARY-GENERALOF THE UNITED NATIONS

20July 1989.

Pursuant to Article 95, paragraph 3, of the Rules of Court, 1have the honour
to transmit ta Your Excellency herewitha copy of the Judgment 'given today in
the case concerning Elettronica Sicula S.P.A. (ELSI) by the Chamber fonned to
deal with that case. Further printed copies of the Judgment will be sent ta you in
due course.

22août 1989.

Le Greffier adjoint de la Cour internationale de Justice a l'honneur de trans-
mettre ci-joint un exemplaire de l'arrêt rendule 20 juillet 1989par la Chambre
constituéepar la Cour internationale de Justice pour connaître de l'affaire de
1'EleltronicaSicula S.P.A. (ELSI).
D'autres exemplairessuivront par la voie habituelle.

' See I.CJ Reporis1989, p. 15.
"ne communication analogue a étéaddresséeaux autresErats admis à esterdevant
la Cour. The publications of thc INTERNATIONAL COURT OF JUSTICE may be ordered
from any booksellei. For information rrgarding thcsaleof the Court's publications plcasc
write tu theDi.~trihutionmd Soles Srcrion. Ooce 01tlic Unirrd Nurions. 1211 Grneio 10
lS~i~it:erl<in.r the SulesSccrioil. Unirrd Nurionr. NraYork. N Y 10017 (USA).
The publications of thc PERMANENT COURT OF INTERNATIONAL JUSTICE

(1920-1946) are obtainable from Kraus Rrprinl Company. Krius Organization Lirnited.
Route 100.Millwoad. NY 10546(USA). IO which al1requests should be addrcsscd.

On peut acquCrir les publications de la COUR INTERNATIONALE DE JUSTICE
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