Pulp Mills on the River Uruguay (Argentina v. Uruguay) - The Court finds that Uruguay has breached its procedural obligations to co-operate with Argentina and the Administrative Commission of the Rive

INTERNATIONAL COURT OF JUSTICE

Peace Palace, Carnegieplein 2, 2517 KJ The Hague, Netherlands
Tel.: +31 (0)70 302 2323 Fax: +31 (0)70 364 9928
Website: www.icj-cij.org

Press Release
Unofficial

No. 2010/10
20 April 2010

Pulp Mills on the River Uruguay (Argentina v. Uruguay)

The Court finds that Uruguay has breached its procedural obligations to co-operate with
Argentina and the Administrative Commission of the River Uruguay (CARU)
during the development of plans for the CMB (ENCE)

and Orion (Botnia) pulp mills

The Court declares that Uruguay has not breached its substantive obligations for the
protection of the environment provided for by the Statute of the River U
ruguay
by authorizing the construction and commissioning of the Orion (Botnia) mill

THE HAGUE, 20April2010. The Internationa l Court of Justice (ICJ), principal judicial
organ of the United Nations, today delivered its Judgment in the case concerning Pulp Mills on the

River Uruguay (Argentina v. Uruguay).

In its Judgment, which is final, without appeal and binding on the Parties, the Court,

(1) finds, by thirteen votes to one, that the Eastern Republic of Uruguay has breached its

procedural obligations under Articles 7 to 12 of the 1975 Statute of the River Uruguay and that
the declaration by the Court of this breach constitutes appropriate satisfaction;

(2) finds, by eleven votes to three, that the Eastern Republic of Uruguay has not breached its
substantive obligations under Articles 35, 36 and 41 of the 1975 Statute of the River Uruguay;

(3) rejects, unanimously, all other submissions by the Parties.

Reasoning of the Court

The Court recalls that the dispute between the Parties concerns the planned construction,
authorized by Uruguay, of the CMB (ENCE) pul p mill, and the construction and commissioning,

also authorized by Uruguay, of the Orion (Botnia) pulp mill, on the River Uruguay.

1. The scope of the Court’s jurisdiction

The Court notes that the Parties are in agreem ent that its jurisdiction is based on Article 36,
paragraph 1, of the Statute of the Court, and on Article 60, paragraph 1, of the 1975 Statute of the
River Uruguay (hereinafter the “1975 Statute”). The Court is of the view that the claims advanced - 2 -

by Argentina concerning noise and visual pollution, and those concerning “bad odours” produced
by the Orion (Botnia) mill, do not fall within its jurisdiction because they do not relate to “the

interpretation or application” of the 1975Statut e, within the meaning of Article60 of that
instrument (para.52). The Court further observes that Article41 (a), the purpose of which is to
protect and preserve the aquatic environment through the enactment of rules and the adoption of
appropriate measures by each of the Parties in accordance with applicable international agreements,

“does not incorporate international agreements as such into the 1975Statute but rather sets
obligations for the parties to exercise their regul atory powers, in conformity with [these]...
agreements” (para.62). The Court concludes that the multilateral conventions relied on by
Argentina do not fall within the scope of Article 60 of the 1975 Statute and that therefore it has no

jurisdiction to rule whether Uruguay has complied with its obligations thereunder (para.63).
Finally, the Court points out that, in interpreting the terms of the 1975 Statute, it will have recourse
to the customary rules on treaty interpretation as re flected in Article 31 of the Vienna Convention
on the Law of Treaties (para. 65).

2. The alleged breach of procedural obligations

(a) The links between the procedural obligations and the substantive obligations

The Court notes that the object and purpose of the 1975 Statute, set forth in Article 1 of that
instrument, is for the Parties to achieve “the optimum and rational utilization of the River Uruguay”

by means of the “joint machinery” for co-operati on, which originates in the procedural obligations
and the substantive obligations under the Statute. The Court observes that, while the link between
those two categories of obligations is functional, it “does not prevent the States parties from being
required to answer for those obligations separatel y, according to their specific content, and to

assume, if necessary, the responsibility resulting fr om the breach of them, according to the
circumstances” (paras. 71-79).

(b) The procedural obligations and their interrelation

The Court considers that “the procedural ob ligations of informing, notifying and negotiating
constitute an appropriate means, accepted by the Parties, of achieving the objective which they set

themselves in Article 1 of the 1975 Statute” (para. 81).

The Court notes that the obligation to inform, provided for in Article7, first paragraph, of
the 1975Statute, “involves the State which is initiating the planned activity informing CARU

thereof, so that the latter can determine ‘on a pr eliminary basis’ and within a maximum period of
30 days whether the plan might cause significant dama ge to the other party”. It observes that the
information which must be provided to CARU at this stage has to enable it to “decid[e] whether or
not the plan falls under the co-operation proce dure laid down by the 1975Statute”, not to

“pronounc[e] on its actual impact on the river and th e quality of its waters” (para. 104). The Court
is of the view that the obligation to inform must “become applicable at the stage when the relevant
authority has had the project referred to it with the aim of obtaining initial environmental
authorization and before the granting of that aut horization” (para.105). It observes that, in the

present case, “Uruguay did not transmit to CARU the information required by Article7, first
paragraph, in respect of the CMB (ENCE) and Orion (Botnia) mills, despite the requests made to it
by the Commission to that effect on several occasi ons”. The initial environmental authorizations
were therefore, in the view of the Court, issued by Uruguay to the CMB (ENCE) mill on

9October2003 and to the Orion (Botnia) mill on 14February2005 without complying with the
procedure laid down in Article 7, first paragraph. The Court further notes that

“on 12April2005 Uruguay granted an authorization to Botnia for the first phase of

the construction of the Orion (Botnia) mill a nd, on 5July2005, an authorization to - 3 -

construct a port terminal for its exclusive use and to utilize the river bed for industrial
purposes, without informing CARU of these projects in advance” (para. 107).

The Court concludes from the above that

“Uruguay, by not informing CARU of the planned works before the issuing of the

initial environmental authorizations for each of the mills and for the port terminal
adjacent to the Orion (Botnia) mill, has fa iled to comply with the obligation imposed
on it by Article 7, first paragraph, of the 1975 Statute” (para. 111).

The Court notes that, under the terms of Article 7, second paragraph, of the 1975 Statute, if
CARU decides that the plan might cause significant damage to the other party or if a decision
cannot be reached in that regard, “the party con cerned shall notify the other party of this plan
through the said Commission”. It adds that, under th e terms of Article7, third paragraph, of the

1975Statute, the notification must describe “t he main aspects of the work” and “any other
technical data that will enable the notified part y to assess the probable impact of such works on
navigation, the régime of the river or the quality of its waters”. It observes that

“the environmental impact assessments which are necessary to reach a decision on any
plan that is liable to cause significant transboundary harm to another State must be
notified by the party concerned to the other party, through CARU, pursuant to
Article 7, second and third paragraphs, of the 1975 Statute” (para. 119).

The Court notes that this notification must take place before the State concerned decides on the
environmental viability of the plan. It observes that, in the present case,

“the notification to Argentina of the environmental impact assessments for the CMB
(ENCE) and Orion (Botnia) mills did not take place through CARU, and that Uruguay
only transmitted those assessments to Argentina after having issued the initial
environmental authorizations for the two mills in question” (para. 121).

The Court concludes from the above that “Uruguay failed to comply with its obligation to notify
the plans to Argentina through CARU under Ar ticle7, second and thir d paragraphs, of the
1975 Statute” (para. 122).

(c) Whether the Parties agreed to derogate from th e procedural obligations set out in the 1975
Statute

The Court is of the opinion that the “‘understanding’ [reached by the Foreign Ministers on]
2 March 2004 would have had the e ffect of relieving Uruguay of its obligations under Article 7 of
the 1975 Statute, if that was the purpose of the ‘understanding’, only if Uruguay had complied with
the terms of the ‘understanding’”. However, in the view of the Court, it did not do so. The Court

concludes that “the ‘understanding’ cannot be re garded as having had the effect of exempting
Uruguay from compliance with the procedural obligations laid down by the 1975 Statute”
(para.131). The Court further observes that the agreement of 31May2005 setting up the
High-Level Technical Group (the “GTAN”), while indeed creating a negotiating body with the

objective of enabling the negotiations provided for in Article 12 of the 1975 Statute to take place,
“cannot be interpreted as expressing the agreement of the Parties to derogate from other procedural
obligations laid down by the Statute” (para. 140). The Court therefore finds that Uruguay was not

entitled, for the duration of the period of consu ltation and negotiation provided for in Articles7
to12 of the 1975Statute, either to authorize the construction of or to c onstruct the planned mills
and the port terminal (para. 143). The Court conc ludes that “by authorizing the construction of the
mills and the port terminal at Fray Bentos befo re the expiration of the period of negotiation,

Uruguay failed to comply with the obligation to nego tiate laid down by Article 12 of the Statute”. - 4 -

Uruguay therefore, in the view of the Court, “disregarded the whole of the co-operation mechanism
provided for in Articles 7 to 12 of the 1975 Statute” (para. 149).

(d) Uruguay’s obligations following the end of the negotiation period

The Court recalls that, should the Parties fa il to reach an agreement within 180days,

Article 12 of the 1975 Statute refers them to the procedure provided for by Article 60, according to
which either party may submit the dispute to th e Court. It notes that “the ‘no construction
obligation’, said to be borne by Uruguay between the end of the negotiation period and the decision

of the Court, is not expressly laid down by the 1975Statute and does not follow from its
provisions”; Article9 only provides for such an obligation during the performance of the
procedure laid down in Articles7 to 12 of the Statute. The Court concludes from this “that
Uruguay did not bear any ‘no construction obligatio n’ after the negotiation period provided for in

Article12 expired on 3February2006, the Partie s having determined at that date that the
negotiations undertaken within the GTAN had faile d”. Consequently, “the wrongful conduct of
Uruguay could not extend beyond that period” (para. 157).

3. Substantive obligations

After addressing issues concerning the burden of proof and expert evidence (see paras.160
to168), the Court examines the alleged viol ations of substantive obligations under the

1975 Statute.

(a) The obligation to contribute to the optimum and rational utilization of the river (Article 1 of the

1975 Statute)

The Court notes that Article1 of the 1975Statute “informs the interpretation of the
substantive obligations, but does not by itself lay down specific rights and obligations for the

parties”. It states that that the objective of optimum and rational utilization must be pursued by the
Parties and by CARU and through the adoption of regulations by the Commission and of rules and
measures by the Parties (para.173). The Court is of the view that the attainment of such an
objective requires “a balance between the Parties’ rights and needs to use the river for economic

and commercial activities on the one hand, and the obligation to protect it from any damage to the
environment that may be caused by such activities, on the other” (para. 175). It adds that the need
to ensure this balance is reflected in various pr ovisions of the 1975 Statute establishing rights and
obligations for the Parties, such as Articles27, 36 and 41. The Court concludes from this that it

will assess “the conduct of Uruguay in authorizing the construction and operation of the Orion
(Botnia) mill in the light of those provisions of the 1975Statute, and the rights and obligations
prescribed therein” (para. 175).

(b) The obligation to ensure that the management of the soil and woodland does not impair the
régime of the river or the quality of its waters (Article 35 of the 1975 Statute)

The Court is of the opinion that Argentina has not established its contention that Uruguay’s
decision to carry out major eucalyptus planting operations, to supply the raw material for the Orion
(Botnia) mill, has an impact not only on management of the soil and Uruguayan woodland, but also
on the quality of the waters of the river (para. 180). - 5 -

(c) The obligation to co-ordinate measures to avoid changes in the ecological balance (Article 36
of the 1975 Statute)

The Court considers that the obligation laid down in Article 36 requires the Parties to adopt
the specific conduct of co-ordina ting the necessary measures through CARU to avoid changes to
the ecological balance. As this obligation is an obligation of conduct, both Parties are called upon

to exercise due diligence in taking such measures (para.187). The Court is of the view that
“Argentina has not convincingly demonstrated th at Uruguay has refused to engage in such
co-ordination as envisaged by Article 36, in breach of that provision” (para. 189).

(d) The obligation to prevent pollution and preserve the aquatic environment (Article41 of the
1975 Statute)

The Court observes that Article 41 obliges the Pa rties to adopt, within their respective legal

systems, rules and measures “in accordance with applicable international agreements” and “in
keeping, where relevant, with the guidelines a nd recommendations of international technical
bodies”, for the purposes of protecting and preserving the aquatic environment and of preventing

pollution (paras. 195-196). It notes that this obligation requires the Parties to act with due diligence
in respect of all activities which take place under their jurisdiction and control (para.197). The
Court notes that “the scope of the obligation to prev ent pollution must be determined in light of the
definition of pollution given in Article 40 of the 197 5 Statute”. Article 40 defines pollution as “the

direct or indirect introduction by man into the a quatic environment of substances or energy which
have harmful effects”. In the view of the Court, the rules by which any allegations of breach are to
be measured and, more specifically, by which the existence of “harmful effects” is to be
determined, are to be found in

“the 1975Statute, in the co-ordinated position of the Parties established through
CARU (as the introductory phrases to Article41 and Article56 of the Statute
contemplate) and in the regulations adopted by each Party within the limits prescribed

by the 1975Statute (as paragraphs (a), (b) and (c) of Article41 contemplate)”
(para. 200).

The Court notes that for the purposes of complying with their obligations under Article 41 of

the 1975Statute and under general international law, the Parties are obliged, when planning
activities which may be liable to cause transboundary harm, to carry out an environmental impact
assessment, the content of which must be determined by each State within its domestic legislation
or in the authorization process for the planned activity (paras.204-205). The Court observes that

an environmental impact assessme nt should include, at a minimum, “[a] description of practical
alternatives”. However, it is not convinced by Argentina’s argument that “an assessment of
possible sites was not carried out prior to the determination of the final site” (para.210) of the
Orion (Botnia) mill. The Court further observes that “any decision on the actual location of such a

plant along the River Uruguay should take into account the capacity of the waters of the river to
receive, dilute and disperse discharges of effluent from a plant of this nature and scale” (para. 211).
It is the Court’s view that “in establishing its water quality standards in accordance with Articles 36
and 56 of the 1975Statute, CARU must have taken into account the receiving capacity and

sensitivity of the waters of the river, including in th e areas of the river adjace nt to Fray Bentos”.
The Court is therefore of the opinion that “in so far as it is not established that the discharges of
effluent of the Orion (Botnia) mill have exceeded the limits set by those standards, in terms of the

level of concentrations, [it] finds itself unable to conclude that Uruguay has violated its obligations
under the 1975 Statute” (para. 214). The Court further considers that “no legal obligation to consult
the affected populations arises for the Parti es from the instruments invoked by Argentina”
(para.216). In any case, it finds that such a consultation by Uruguay did indeed take place

(para. 219). - 6 -

The Court further observes that

“the obligation to prevent pollution and pr otect and preserve the aquatic environment
of the River Uruguay, laid down in Article41 (a), and the exercise of due diligence
implied in it, entail a careful considerati on of the technology to be used by the
industrial plant to be established” (para. 223).

It considers, on the basis of the documents submitted to it by the Parties, that “there is no evidence
to support the claim of Argentina that the Orion (B otnia) mill is not BAT-compliant in terms of the
discharges of effluent for each tonne of pulp produced” (para.225). Following a detailed

examination of the Parties’ arguments, the Court ultimately finds that

“there is no conclusive evidence in the record to show that Uruguay has not acted with
the requisite degree of due diligence or that the discharges of effluent from the Orion

(Botnia) mill have had deleterious effects or caused harm to living resources or to the
quality of the water or the ecological balance of the river since it started its operations
in November 2007”.

Consequently, on the basis of the evidence submitted to it, “the Court concludes that Uruguay has
not breached its obligations under Article 41” (para. 265).

The Court adds that

“both Parties have the obligation to enable CARU, as the joint machinery created by
the 1975Statute, to exercise on a continuous basis the powers conferred on it by the
1975 Statute, including its function of monitoring the quality of the waters of the river

and of assessing the impact of the operation of the Orion (Botnia) mill on the aquatic
environment”.

It notes that Uruguay, for its part, “has the obligation to continue monitoring the operation of the
plant in accordance with Article41 of the Stat ute and to ensure compliance by Botnia with

Uruguayan domestic regulations as well as the sta ndards set by CARU”. It concludes that, under
the 1975Statute, “[t]he Parties have a legal obligation... to continue their co-operation through
CARU and to enable it to devise the necessary me ans to promote the equitable utilization of the

river, while protecting its environment” (para. 266).

4. The claims made by the Parties in their final submissions

The Court considers that “its finding of wrongful conduct by Uruguay in respect of its
procedural obligations per se constitutes a measure of satisfaction fo r Argentina” (para. 269). It is
the Court’s view that ordering the dismantling of the Orion (Botnia) mill would not constitute an
appropriate remedy for the breach of procedural obligations, since Uruguay was not barred from

proceeding with the construction and operation of the mill after the expiration of the period for
negotiation and since it breached no substantive obligation under the 1975 Statute (para. 275). The
Court is likewise unable, for the same reasons , to uphold Argentina’s claim in respect of
compensation for alleged injuries suffered in vari ous economic sectors, specifically tourism and

agriculture. Furthermore, the Court fails to see any special circumstances in the present case
requiring the ordering of adequate guarantees that Uruguay will refrain in future from preventing
the 1975Statute from being applied (paras.277-27 8). The Court further finds that Uruguay’s

request for confirmation of its right “to continue operating the Botnia plant in conformity with the
provisions of the 1975Statute” “is without any practical significance, since Argentina’s claims in
relation to breaches by Uruguay of its substantive obligations and to the dismantling of the Orion
(Botnia) mill have been rejected” (para.280). Lastly, the Court points out that “the 1975Statute

places the Parties under a duty to co-operate with each other, on the terms therein set out, to ensure - 7 -

the achievement of its object and purpose”, th is obligation to co-operate encompassing ongoing
monitoring of an industrial facility, such as the Orion (Botnia) mill (para. 281).

Composition of the Court

The Court was composed as follows: Vice-President Tomka, Acting President ;

Judges Koroma, Al-Khasawneh, Simma, Abraham, Keith, Sepúlveda-Amor, Bennouna, Skotnikov,
CançadTorindade, Yusuf, Greenwood; Judges ad hoc Torres Bernárdez, Vinuesa;
Registrar Couvreur.

JudgesAl-Khasawneh and Simma append a join t dissenting opinion to the Judgment of the
Court; JudgeKeith appends a separate opinion to the Judgment of the Court; JudgeSkotnikov
appends a declaration to the Judgment of the Cour t; JudgeCançadoTrinda de appends a separate
opinion to the Judgment of the Court; JudgeYusu f appends a declaration to the Judgment of the

Court; JudgeGreenwood appends a separate opinion to the Judgment of the Court;
Judge ad hocTorresBernárdez appends a separate opinion to the Judgment of the Court;
Judge ad hoc Vinuesa appends a dissenting opinion to the Judgment of the Court.

*

A summary of the Judgment appears in the document “Summary No.2010/1”. This press
release, the summary, and the full text of th e Judgment can be found on the Court’s website
(www.icj-cij.org) under the “Cases” heading.

___________

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Mr. Boris Heim, Information Officer (+31 (0)70 302 2337)

Ms Joanne Moore, Associate Information Officer (+31 (0)70 302 2394)
Ms Barbara Dalsbaek, Administrative Assistant (+31 (0)70 302 2396)