Preliminary Objections of the Government of Australia

INTERNATIONALCOURT OF JUSTICE

CERTAINPHOSPHATE LANDSIN NAURU
(NAURUv. AUSTRALIA)

PRELIMINARY OBJECTIONS OF THE
GOVERNMENT OF AUSTRALIA

VOLUME1

DECEMBER1990 TABLEOF CONTENTS

Page
lntroduction ............................................. 1
Section 1: Outlineof Preliminary Objections ................. 3
Section II: History and Scope of Dispute as Outlined by Nauru . 4

A. What the dispute covers .............................. 4
B: Time when the dispute arose .......................... 6
C .Summary ........................................... 6
Section III: Scheme of these Preliminary Objections........... 6
PART 1:BACKGROUND ................................. 9

Introduction ............................................. 11
Chapter 1: Factual and Historical Background ................ 12
Section 1:Mandate Period ................................. 12
A. 1914 Capitulation .................................... 12
B .Grant of Mandate over Nauru ......................... 13
C .The 1919Agreement ................................. 14
D .Terms of the Mandate ................................ 16
E. Administration of Nauru under the Mandate ............ 17
F. Phosphate Mining under the Mandate .................. 18
G .Period of the War .................................... 20
Section II: Nauru under the Trusteeship ..................... 21
A .The Trusteeship Agreement ............................ 23
B .The administrative system .............................
D..Progress in health and education ....................... 26
E .Political and administrative advancement................ 28
Section III: Political and Economic Evolution 1959-1966....... 29
A .The resettlement proposais ............................ 29
B. Changing policies .................................... 32
C .Australian/Nauruan Discussions. May-June 1965 ......... 32
D .The new constitutional order ........................... 34
E .The rehabilitation investigations....................... 34
1. The CSIRO lnquiry ............................... 34
2. BPC estimates .................................... 36
3 .The Davey Committee ............................. 38
4 .Reception of the Davey Report ...................... 40
F. Proposed new phosphate arrangements ................. 42
G . Nauruan/Partner Governments' discussions.
June/July 1966 ...................................... 43
Section IV: The Phosphate and Political Settlements 1967-1968 . 44
A .Policy re-thinking by the Partner Governments ........... 44
B .Resumed discussions with the Nauruans ................ 44 Page
1.Phase 1: 12-20 April 1967 .......................... 44
2. Phase 2: 9-20 May 1967 ........................... 46
3 .Phase 3: 13-14 June 1967 .......................... 48
4. Phase 4: Political discussions, 15 June 1967........... 49
5 .The purchase of BPC assets on Nauru ............... 49
C .Nauruan/Partner Governments' political discussions...... 52
D .The Phosphate Agreement. 14 November 1967 ........... 53
E .Constitution making ................................. 54
F. Independence. 31 January 1968 ........................ 55
Section V: Summary ...................................... 57
Chapter 2: The Social and Economic Situation on Nauru as a
Result of Phosphate Mining ................................ 58
Section 1: History of the BPC on Nauru ..................... j8
Section II: Benefits from phosphate mining .................. 62
Section III: Financial situation at independence and today ..... 64

Chapter 3: United Nations Consideration of Claims Raised by
Nauru ................................................... 67
Section 1: General United Nations Supervision and Conclusions
as to record of Administering Autliority ..................... 67
A.1964 ............................................... 69
B . 1965 ............................................... 69
C . 1966 ............................................... 72
D. 1967 ............................................... 74
E .Termination of the Trusteeship Agreement ............... 77
I. 13th Special Session. Trusteeship Council.
November 1967 ................................... 77
2 .United Nations General Assembly. December 1967 ..... 78
Section II: Nauruan Participation in the United Nations ....... 81
Section III: Financial reporting to the United Nations......... 83
Section IV: Resettlement and rehabilitation aspects............

PAADMISSlBlLlTY BASED ON INVOLVEMENTAND OF THE
UNITED NATIONS 93

Chapter 1: lnadmissibility of the Claim: The Termination of the
Trusteeship in1967Precludes the Present Claims hy Nauru .... 95
Section 1:Nature of the Obligations under Mandates and
Trusteeships ............................................ 95
Section II: The Trusteeship Council and General Assembly had
exclusive jurisdiction to settle any dispute................ 98
Section III: Termination of a Trusteeship Agreement settlesal1
claims relating to trusteeship obligation................... 101
Section IV: The termination of the Trusteeship Agreement settled
al1claims by Nauru arising under the Trusteeship Agreement . 105 Page

Section V: Nauru is bound by the settlement of the dispute by
the United Nations ...................................... 113
Sethe Nauruan claim by termination of the Trusteeshipttlement of
Agreement ............................................. 113

Chapter 2: Lack of Jurisdiction: The Australian Declaration
Under Article 36(2) of the Statute Excludes Jurisdiction ....... 115
Section 1: Relevant jurisdictional grounds .................... 115
Section II: During the continuance of the Trusteeship, Nauru
agreed to settle itslaims by direct negotiation .............. 115
A. United Nations Recommendations ...................... 115
B. The Negotiations and resulting Canberri Agreement ...... 116
Section III: At the termination of the Trusteeship, Nauru agreed
to settlement of al1issues between it and the Administering
Authority by resolution of the Trusteeship Council and
General Assembly ....................................... 117

PART III: OBJECTIONS TOJURlSDlCTION AND
ADMISSIBILITY BASED ON ABSENCE OF CONSENT OF
THIRDPARTIES ......................................

Chapter 1: The Nauruan Theory of Liability .................
Section II: The General International Law Position...............
Section III: The Rule in Domestic Legal Systems Corresponds to
the Rule in International Law ............................
Section IV: Conclusion ....................................

Chapt.. 2: Specific Issues in the Present Case Concerning
Liahility .................................................
Section 1: Can Australia Alone be Sued? .....................
A. The View of the United Nations .......................
B. The View of Nauru Itself .............................
C. The View of the Three Governments ....................
D. The Implications of the Legal Principle for the Present
Suit ................................................
Section II: If, contrary to the above Submission, the Court does
allow the claim to be made against Australia alone, can such a
claim be made for the whole damage? .....................
Chapter 3: The Absence of Jurisdiction Without the Conrent of
a Third State .............................................
Section 1: The Principle and its Implications .................
Section II: The right of intervention does not eliminate the need
for consent ............................................. Page

PART IV: ADDITIONAL CLAIMS MADE FOR FIRST TIME
IN THE MEMORIAL CONCERNING THE OVERSEAS
ASSETS OF BPC ....................................... 147
PART V: PROCEDURAL AND DISCRETIONARY
OBJECTIONS ........................................... 153
Chapter 1: The Claim by Nauru has not been made within a
reasonable time and cannot be enterîained by the Coud ...... 156
Section 1: International law recognises a rule of extinctive
prescription ............................................ 156
Section II: Previous claims by Nauru have not asserted a legal
claim and, hence, do not preclude an argument based on delay
................. ; ....................................... 158
Section III: The prejudice now faced by Australia in meeting the
.........................................
Nauruan claim 159
Section IV: The choice of an appropriate limitation period for
this case ............................................... 160
Chapter 2: 11would be Contrary to Judicisl Propriety for the
Court to Hear the Claim .................................. 162
Section 1:The principle of good faith in international law...... 162
Section II: Nauru has failed to act consistently and in good faith
in relation to rehabilitation whileking a claim in this regard
against Australia ........................................ 162
Section III: The Court's judicial function requires dismissof
theclaim .............................................. 163
SUBMISSIONS .......................................... 165

LISTOF ANNEXES ...................................... 166INTRODUCTION Section 1. Outline of Preliminary Objections

1. Australia wishes to raise preliminary objections, in accordance with

Article 79 of the Rules of the Court, in relation to the claims by Nauru
set out in their Application and Memorial. Australia does not, therefore,
at this time lodge its Counter-Memorial but shall confine itself to the
facts and law on which the preliminary objections are based.
2. In summary, Australia considers that the Nauruan claims relate to
a matter that was the subject of negotiation between the Administering

Authority and Nauruan representatives leading to a comprehensive set-
tlement on al1questions connected with the Trusteeship in 1967. Inde-
pendence followed in 1968on the basis of the comprehensive settlement,
details of which were before the United Nations. There are, therefore,
two principal reasons why Australia has raised preliminary objections.
The first is that termination of the Trusteeship Agreement for Nauru by
the United Nations in 1967settled any claim of Nauru that the Adminis-
tering Authority had acted in breach of the Trusteeship. Secondly, the
claim of Nauru is, in substance, not a claim against Australia itself but a
claim against the Administering Authority in relation to Nauru. The
Administering Authority comprised three governments-the United
Kingdom, New Zealand and Australia-yet Nauru has only brought its
claim against Australia.

3. The preliminary objections fall under a number of broad grounds.
These are that:

(a) the claims are inadmissible and the Court lacks jurisdiction as a
result of the termination of the Trusteeship by the United Nations in
1967;
(b) the Court lacks jurisdiction given the terms of the Australian declar-
ation made in accordance with Article 36(2)of the Statute, since the
Parties agreed to have recourse to other methods of settlement of
their dispute;
(c) the claims are inadmissible and the court lacks jurisdiction as any
judgment on the question of breach of the Trusteeship Agreement
would involve the responsibility of third States that have not con-
sented to the Court's jurisdiction in the present case;
(d) the claims are inadmissible for reasons of judicial propriety and
should not be entertained for reasons of

(i) delay; and
(ii) that it would, viewed overall, be contrary to judicial propriety
for the Court to entertain the claim.
4. Additionally, in relation to the claim relating to the Australian
allocation of the overseas assets of the British Phosphate Commissioners
(hereinafter 'BPC') disposed of pursuant to an agreement of 9 February

1987, Australia considers that this claim is inadmissible and the Court
lacksjurisdiction, in addition toal1or any of the above grounds, because(a) the claim is a new claim not raised by the Application;
(b) there is no dispute with Australia in relation to the claim; and

(c) Nauru has no legal interest in the claim.
5. The preliminary objections are set out in detail below.The Govern-
ment of Australia contends that al1the facts and evidence necessaryto
enable a determination of the preliminary objections are before the
Court and the Government of Australia therefore requeststhe Court to
make a decision on the matters raised in the preliminary objections
before any further proceedings on the merits.

Section II: History and Scope of Dispute as Outlined by Nauru

A. WHATTHEDISPUTE COVERS .-

6. The central issue in the dispute allegedto exist betweenNauru and
Australia and which is the subject of the Nauruan Application is the
alleged failure by Australia to make any or adequate provision for the
rehabilitation of certain phosphate lands on Nauru worked out before
Nauruan independence (paras.43-49 Nauruan Application). Nauru al-
leges that Australia has a responsibility to rehabilitate the phosphate
lands mined between 1919and 1 July 1967. Australia has consistently
denied this claim.

7. For the reasons that willbe set out below,Australia does not accept
that there is any legalbasis for such a Nauruan claim nor that the Court
has jurisdiction to determine the claim or that the claim is admissible.
8. In the Nauruan Memorial, and previously in the Application
(paras.43-49). the legal basis for the Nauruan claim is set out. Breaches
of fiveseparate obligations are alleged. It isclear that al1fiveallegations
ultimately involvea determination of the extent of the obligations which

existed under the Trusteeship Agreementand Article 76 of the United
Nations Charter which isthe only cause of action allegedby Nauru. The
five alleged obligations are:
(a) Breach of the Trusteeship Agreementand Article 76 of the United
Nations Charter

This is the fundamental and only fully developed allegation that is said
to support the Nauruan claimto rehabilitation. The obligations set forth
in these instruments are described in paragraph 243 of the Nauruan
Memorial as forming "the primary causesof action on which the Repub-
lic of Nauru relies".
(b) Breach of International Standards applicable in the administration
of the Trusteeship

Under this heading Nauru alleges that the principles of self-
determination and permanent sovereignty overnatural wealth and re-
sources were breached by Australia. Nauru argues that these principles
are relevant in determining the criteria governing the performance ofduties under Article 76 of the Charter (para.427, Nauruan Memorial) or
constitute "objective international standards providing aids to the in-

terpretation of the Trusteeship Agreement and the relevant provisions of
the United Nations Charter" (para.429, Nauruan Memorial). Yet the
obligations arising under a trusteeship agreement provide simply a spe-
cial process for self-determination. The right to self-determination is not
a different orseparate right from the right that arises under a trusteeship
agreement, under which the obligations assured towards the inhabitants
are both higher and more specific than those arising under the general
principle. It would be quite unrealistic to suppose that conduct not in
breach of the trusteeship could nevertheless be in breach of the general
principle of self-determination.

As to "permanent sovereignty", Australia does not deny that this prin-
ciple, like that of self-determination, is one of those evolving principles
which would need to be taken into account in interpreting the relevant
obligation under the Charter and Trusteeship Agreement if that was
necessary. But the cote issue remains whether there has been a breach of
the Trusteeship Agreement at the time when it was in force (see para.9
below). For this reason, the Nauruan claim under this head is no more
than an elaboration of the first claim.
Additionally, the only factual material put forward to support this claim
involves the administration of Nauru under the Trusteeship Agreement
(paras.413 and 419, Nauruan Memorial).

This is not, therefore, in reality a separate ground on which Nauru
founds its case but is no more than an elaboration of the first ground.
(c) Denial of justice la10sensu

Again, the Nauruan allegations based on denial of justice involve solely
the framework of duties and relationships set by the Trusteeship Agree-
ment (para.437, Nauruan Memorial) and administration of the island
pursuant to that Agreement.
(d) Abuse of rights and maladministration

Again, Nauru founds this claim "in the form of acts of maladministra-
tion within the context of the powers conferred upon the Administering
Authority in accordance with Article 76 of the United Nations Charter
and the Trusteeship Agreement" (para.444, Nauruan Memorial). This is
not therefore an independent ground.

(e) Breach of duties of a predecessor State
The essence of the Nauruan claim is based on the fact that under the
Trusteeship the Territory had a "status separate and distinct from the

territory of the Administering Authority" (General Assembly resolution
262S(XXV) of 24 October 1970). Hence the claim depends on an in-
terpretation of the content of the trusteeship obligation.
9. It is also necessary to keep in mind the intertemporal law principle
according to which the validity of the Nauruan claims must be deter-mined by reference to the state of international law at the time the

relevant acts in question werecommitted.

B. TIMEWHENTHEDISPUTE AROSE
10. Any dispute with Nauru concerning rehabilitation arose prior to

independencein 1968. It emergedas an outstanding issuethroughout the
negotiations leading up to independence. The absence of agreement on
this issue was made known to the United Nations, particularly in 1965
and 1966.Australia contends that the matter was settled as part of the
comprehensive settlement in 1967of phosphate and political questions.
Any subsequent alleged articulation of the Nauruan claim such as in
1969and 1983(seeAnnexes 76ff, Vo1.4of Nauruan Memorial) made no
newclaim, but werereaffirmations of the previously existingclaim. They
did not create or giverise to a newdispute and wereonlyattempts to re-
open a definitively settled question.

II. It should also be noted that no specificallegation was made, on
any of the occasions when Nauru allegedthat it was the responsibilityof
the Administering Authority to rehabilitate, that the responsibility to
rehabilitate arose from breach of the trustee obligations or any other
identified legal as opposed to moral obligation.

12. Australia, in summary, considers that: -

(a) lands arose during negotiations leading to independence;phate

(b) if a dispute now exists within the meaning of Article 36(2), that
disputeonly arises from, and can only be based on, allegedbreaches
of the Trusteeship Agreement and relevant Charter articles; and
(c) the Court should also find that no dispute exists in relation to the
claim for the overseas assets of BPC distributed in 1987.
If a dispute is held to exist in relation to some oral1of the Nauruan
claims, the Court lacks jurisdiction to consider the various claims form-

ing the basis of the dispute or the claims are inadmissiblefor the reasons
set out in subsequent Parts of these Preliminary Objections.

Section III. Scheme of these Preliminary Objections
13. These Preliminary Objections commence with background on

Nauru relevant to the determination of these Preliminary Objections.
This background includes both factual and historical, as well as social
and economic material. An account of United Nations consideration of
Nauru is also provided dealing particularly with the years from 1964
leading to independence.
14. The Preliminary Objections are then divided into two major parts
(Parts 11and III) dealing with:(a) objections to jurisdiction and admissibility based on involvementof
the United Nations; and
(b) objections to jurisdiction and admissibility based on absence of
consent of third parties.

The Preliminary Objections then deal separately with the additional
claims made for the first time in the Nauruan Memorial concerningthe
overseas assets of the BPC (Part IV). A number of further procedural
and discretionary objections areraised inPart V.The Preliminary Objec-
tions conclude with Submissions seeking dismissal of the Nauruan
claims for reasons relating to their inadmissibilityand the lack of juris-
diction. PART1

BACKGROUND Introduction
15. The Preliminary Objections of Australia directlyraise the issueof
the roleof the United Nations in relation tothe claimsof Nauru and also
raise the question of the obligations of the other States, as well as
Australia, that comprised the Administering Authority. It is the alleged

breach of these obligations that form the basis of the Nauruan claim. In
order to provide the Court with necessarybackground it is desirable to
set out the relevant factual and historical background, including the
consideration by the United Nations of the Nauruan claims. Australia
also contends that the comprehensive settlement reached in 1967on the
basis of whichthe United Nations terminated the Trusteeship Agreement
wasdesignedto provide Nauru with adequate financial resourcesto meet
its future needs including, if it chose, adequate resources to undertake
rehabilitation of mined areas. This was wellunderstood by the United
Nations at the time it approved independence. It is for this reason that

information on the financial implications of the comprehensive phos-
phate settlement isprovided to the Courtat this time. The Chapters that
follow, therefore, provide information relevant and necessary for the
Court when considering Australia's preliminary objections. CHAPTER 1

FACTUALAND HISTORICALBACKGROUND

16..At this preliminary stage of proceedings Australia does not con-
sider it necessaryor appropriate to provide a detailed historical account
of its association with Nauru or to deal with allegations made Pan 1
of the Nauruan Memorial, although it entirely reserves its position on
this presentation. This Chapter sets out only those historical facts and
background which it considers relevant to its Preliminary Objections.
However,Australia considersthat the factual material set out isadequate
to enable the Court to reach final decisions on the preliminary objec-
tions.

17. The information given in this chapter must, in particular, be
related to the argument made in Part III of the Preliminary Objections,
where it will be established that Nauru"s Application is inadmissible
because it disreeards the fact that du-ine the Mandate and the Trustee-
ship ~dministraiion NewZealand and the United Kingdom werejointly
responsible with Australia for the administration of the territory, thus
requiring the Court to decide on the responsibilities of those two States
without their consent.

Section 1. The Mandate Period

A. 1914CAPITULATION
18. The Australian Governmentns first direct involvementwith Nauru
commencedin 1914whenAustralian forcestook action against Nauru at

the request of the British Imperia1Government. The wirelessstation was
put out of action and the German Government representativeon Nauru
surrendered on 9 September 1914. On surrender,. the population of
Nauru was reported to be "30 Germans, 1700nativesand 500Chinese"
(see 109Britishand ForeignStatePapers 632-3). The island was included
in the capitulation of German Pacific possessions dated 17 September
1914. An Administrator was appointed for the island by the High
Commissioner for the Western Pacific on 27 October 1914 following
instructions from the United Kingdom Secretary of State for the Col-
onies (109 Britishand Foreign State Papers 651). A civil administration
under the jurisdiction of the High Commissioner was established on 1
January 1915but, in accordance with the capitulation, local laws and
customs werecontinued as far as practicable.

19. This indirect Australian involvementwas put on a different basis
with the conclusion of the Mandate and the 1919Aereement betweenthe
United Kingdom, Australia and New Zealand. B. GRANT OF MANDATO EVERNAURU

20. Mandates were created pursuant to Article 22 of the League of
Nations Covenant, in order to deal with territories formerly governedby
the defeated powers, and which, on past practice, may have beenan-
nexed by the victorious States. The feature of the mandate system was
that theterritories would not be in the ownership of any State, but were
entrusted to "Mandatory States" to administer on behalf of the League.
(The Mandates systemissummarised in the South WestAfrica, (Prelimi-
nary Objections), Judgment , ICJReports 1962at p.329; seealso Mur-
ray, The UnitedNations TrusteeshipSystem (1957)ch.1.) As part of the
arrangements agreedon during negotiations on the Treatyof Peace with

Germany signed at Versailleson 28June 1919,a Mandate wasconferred
on His Britannic Majesty in relation to Nauru. It was also agreed that
this would be a "C" class Mandate. The allocation of Mandates was
effected by the Allied Supreme Council in May 1919,before the Ver-
sailles Treaty was ineffect or signed. (Quincy Wright,Mandates under
the League of Nations (1930)p.43; Duncan Hall, Mandates, Dependen-
cies and Trusteeship(1948)pp. 145-7).

21. As is wellknown, Article 22 recognisedthree classesof Mandate,
which havecome to be referredto as "A" "B" and "C" class Mandates.
The "A" Mandates are referred to in Article 22.4:
"certain communities formerly belonging to the Turkish Empire
(which)havereached astageof developmentwheretheir existenceas

independent nations can be recognisedsubject to the rendering of
administrative adviceand assistance by a Mandatory until such time
as they are able to stand alone. The wishes of these communities
must be a principal consideration in the selection of the Manda-
tory".
The "B" Mandates refer to less developed territories (Art.22.5):

"other peoples, especially those of Central Africa, are at such a
stage that the Mandatory must be responsiblefor the administration
of the territorynder conditions which will guarantee freedom of
conscience and religion, subject only to the maintenance of public
order and morals; the prohibition of abuses such asthe slavetrade,
the arms traffic and the liquor traffic, and the prevention of the
establishment of fortifications or military and naval bases and of

military training of the natives other than for police purposes and
the defence of territory, and willalso secureequal opportunitiesfor
the trade and commerce of other Members of the League".
This last requirement of equal trade opportunities became known as
"the open door". The "C" classmandates werecreated at the insistence
of the British Empire delegates at the Peace C~nference to avoid the

open door for immigration and trade for certain territories adjacent to
Dominions (Quincy Wright, Mandates under the League of Nations(1930) pp.37.47; Duncan Hall, Mandates, Dependencies and Trustee-
ship, (1948) p. 113). The "C" Mandates are described as follows
(Art.22.6):
"There are territoriessuch as South-West Africa and certain of the
South Pacific Islands, which, owing to the sparseness of their popu-

lation, or their small size, or their remoteness from the centres of
civilisation, or their geographical contiguity to the territory of the
Mandatory, and other circumstances, can be best administered un-
der the laws of the Mandatory as integral portions of its territory,
subject to the safeguards abovementioned in the interests of the
indigenous population".
The "open door" policy applicable to "A" or "B" class Mandates did
not apply to "C" class Mandates. This latter category, with its exclusiàn

of the "open door" and right of administration as "integral portions" of
the territory of the Mandatory power, was a compromise which the
British Dominions, including Australia, accepted only reluctantly in
place of their original desire to annex the territories in question; see
generally, L F Fitzhardinge, The Little Digger, William Morris Hughes:
A Political Biography Vol.Il (1979) pp.387-400.
22. It is important to remember that, in any consideration of the

actions of the Administering Authority during the period of the Man-
date, its actions must be appreciated in theight of the law in force when
each act of administration was performed. The right of the Mandatory
to administer mandate territories such as Nauru as "an integral portion
of their own territory" is of particular significance in this regard.
23. Once it was settled that Nauru would be subject to a mandate
granted to His Britannic Majesty, Australia and New Zealand were
anxious to ensure that their interests in Nauru which had been strongly

put at the Versailles Conference were protected. This led to the conclu-
sion of the 1919Agreement between the United Kingdom, Australia and
New Zealand.

C. THE 1919AGREEMENT

24. The three concerned Governments (Australia, United Kingdom
and New Zealand) concluded the 1919Agreement between them in order
to "make provision for the exercise'of the said Mandate and for the
mining of the phosphatè deposits on the said Island" (Preamble, 1919
Agreement-Annex 26, Vo1.4, Nauruan Memorial). The 1919 Agree-
ment is described in the Nauruan Memorial as "the controlling instru-
ment" for Nauru until 1965 (para.43). Yet the 1919 Agreement was an
agreement between three countries. It provided for joint control of the
administration of Nauru. It was approved by legislation in Australia and
the United Kingdom and by a resolution of both Houses of the New

Zealand Parliament (para.36, Nauruan Memorial). 25. The 1919 Agreement dealt with two issues:
(a) administration of Nauru
(b) phosphate mining on Nauru.

For purposes of administration, an Administrator was appointed with
power to make Ordinances (Art.1). The initial appointment, by agree-
ment of the three Governments, was to be made by Australia for a term
of five years and thereafter "in such manner as the three Governments
decide".

26. The 1919Agreement was amended in 1923, to clarify the relation-
ship between the Administrator and the three Governments. This Agree-
ment in effect required the Administrator to refer Ordinances, and be
answerable, to the Contracting Government by which he was appointed
(for text seeAnnex 28, Vo1.4,Nauruan Memorial). However, the Admin-
istrator was to provide copies of any ordinances, proclamations and
regulations totheother two Contracting Governments other than that by
which he was appointed. He was also to supply "such other information
regarding the administration of the Island as either of the other Con-
tracting Governments shall require" (Art.3). In 1965a further agreement
altered these administrative provisions with the establishment of Legis-

lative and Executive Councils (for text see Annex 30, Vo1.4, Nauruan
Memorial).
27. In relation to phosphate mining, the Agreement provided for title
to the phosphate deposits and to al1land, building, plant and equipment
on the island used in connexion with the working of the deposits to be
vested in a Board of Commissioners (Art.6). The Board comprised three
members, one appointed by each Government party to the Agreement

(Art.3). The Governments retained control over their respective Com-
missioner by reason of the fact that appointment was during the pleasure
of the Government by which he was appointed (Art.4). The right, title or
interestof the previous owner of the phosphate concession, the Pacific
Phosphate Company, became a claim for compensation (Art.7).
28. The Commissioners (who were known as the British Phosphate
Commissioners, and commonly called BPC) were required to work and

dispose of the phosphate:
"for the purposes of the agricultural requirements of the United
Kingdom, Australia and New Zealand, so far as those requirements
extend" (Art.9).

The proportion in which each government could secure phosphates was
set out in Article 14. Approval of al1three Commissioners was necessary
before phosphate could be sold or supplied to any country other than
United Kingdom, New Zealand and Australia (Art.10).

29. The Agreement also dealt with the pricing of phosphate (Art.11).
This required phosphate to be: "supplied to the United Kingdom, Australia and New Zealand at the
same fob price, to be fixed by the Commissioners on a basis which
will cover working expenses, cost of management, contribution to
administrative expenses, interest on capital, a sinking fund for the
redemption of capital and for other purposes unanimously agreed
on by the Commissioners and other charges."

The 1919 Agreement continued to govern the operation of the BPC up
until the new arrangements agreed on in 1967for Nauruan controlof the
phosphates.
30. It is thus clear from the terms of the 1919 Agreement itself that
the conduct of phosphate operations on Nauru was done for and on
behalf of al1three Governments. Australia had no greater say than any
other Government in the conduct of BPC operations.

31. The fact that Australia recognised that al1 three Governments
remained responsible for Nauru, even though an Australian Adminis-
trator had been appointed, is reflected in a Ministerial statemenf by the
Australian Prime Minister made on 8 September 1922(Annex 1). In fhat
statement the following statements appear:

"the Adrninistrator has full powers of legislation and government,
but héacts under instructions fromthe Commonwealth Government
and in al1important matters the Commonwealth Government con-
sults the other two governments interested in the island, which
receive copies of al1 Ordinances made by him and of the orders
issued by him, which contain full information of al1his administrat-
ive measures.
It cannot be said, then, that the administration of the island is

exercised by the Australian Government to the exclusion of the other
two Governments".
The 1919and 1923Agreements, when concluded, were regarded as inter
se arrangements between members of the British Empire. This repre-
sented the then perceived unity of the Imperia1 Crown on which the
Mandate and responsibility for administration of Nauru had been con-
ferred. The agreements werenot registered with the League of Nations as

treaties. However, subsequently, after World War II they were so re-
garded and the termination in 1987of the 1919Agreement was effected
by treaty.

D. TERMS OF THE MANDATE

32. The actual terrns of the Mandate over Nauru, in elaboration of
Article 22 of the Covenant, were adopted by the Council of the League
of Nations on 17December 1920(for text see Annex 27, Vo1.4,Nauruan
Memorial). The Mandate confirmed that it was a Mandate granted to
"His Britannic Majesty". The terms of theMandate dealt with a number
of specific issues,uch as the slave trade and traffic in arms and ammu-nition (Art.3). military training (Art.4). and freedom of conscienceand
admission of missionaries(Art.5). The Mandatory wasgiven "full power
of administration and legislationoverthe territory subject to the present
Mandate as an integral portion of his territory" (Art.2). The Mandatory
was to "promote tothe utmost the material and moral well-beingand the
social progress of the inhabitants" of Nauru. The Mandate also con-
tained provision for any dispute between the Mandatory and another
Member of the League to be referred to the Permanent Court of Inter-

national Justice ift could not be settled by negotiation (Art.7).
33. The Mandate was undertaken on the basis that it would beexer-
cised "on behalf of the League of Nations" (3rd preambular paragraph),
and the Mandatory undertook to make annual reports to the Council of
the League (Art.6). The Administrator in September 1921in fact pro-
vided a report to the Council of the League on the pre-mandate period
which provided information about the island since 1915. The first an-

nual report was made to the Council in March 1922coveringthe period
17 December 1920to 31 December 1921. The 1923Agreement which
amended the 1919Agreement makes clear that such reports would be
"transmitted by the Adrninistrator through the Contracting Government
by which he has been appointed to His Majesty"~Government in Lon-
don for presentation to the Council on behalf of the British Empire as
Mandatory" (clause4) (for text of 1923Agreement see Annex 28,Vo1.4,
Nauruan Memorial).

34. The Mandate was not a Mandate granted to Australia. To the
extent that Australia provided the Administration for Nauru and was
otherwise involved inrelation to decisions concerning Nauru it did this
solelyas the designated representativeof the three Contracting Govern-
ments to the 1919Agreement, under whichan administrative framework
to implementtheMandate granted to His-BritannicMajesty was created.
It consulted with the other two governments on al1major matters.

E. ADMINISTRATIO ONF NAURUUNDER THE MANDATE
35. For present purposes it is not necessary to provide a detailed
account of the administration of Nauru during the Mandate period.
Detailed reports weresupplied annually to the Leagueof Nations. (Cop-

ies of these reports, as well as of the reports during the Trusteeship
period,willbe made availableto the Court.) These included information
on Ordinances made for the Territory, and, from the 1923report on-
wards, contained financial accounts of BPC. The reports werestructured
around the questionnaire issued by the League for "C" class Mandates.
36. The first Administrator, an Australian nominee in accordance
with the 1919Agreement, remained in officeuntil June 1927when he

was replacedby another Australian nominee, withthe concurrenceof the
British and New Zealand Governments and this occurred on other
occasions when appointment of a newAdministrator was necessary.AnAdvisory Council wasestablished in July 1927.It consisted of the Head
Chief and Deputy Head Chief and the Chiefs of each of the fourteen
districts. This Council advised the Administration in relation to a wide
range of matters of concern to the Nauruan people. As indicated above,
whilethe Administrator reported directly to the Australian Government
as the appointing Government, the other two Governments party to the
1919 Agreement were kept fully informed of al1major administrative

decisions.
37. The viewsof the Nauruan people themselvesas to the situation
under the Mandate, whereby it was al1three Governments that were
responsible for their welfare, is reflected inthefollowing statement by
the Head Chief reported in the 1932annual report on the Administratiop
of Nauru to the League of Nations.

"We Nauruans are very proud of our island and our governmental
institutions, and we are very grateful to the League of Nations for
enabling us to work out our destinyunder wiseand beneficient rule.
Weknow that,' untilsuch time as we are able to stand by ourselves
amid the strenuous conditions of the modern world, we may rely
upon the protecting and sympathetic arms of the powerful nations
of Great Britain, Australia and New Zealand. We have full confi-
dence in the Mandatory system of control, and we will ever be
grateful for the opportunities made availableto us by the Leagueof
Nations of gaining knowledge in educational mstters and in local

government procedure" (p.20).

38. The Nauruan Memorial (paras.80-100 and paras.521 and 541)
deals with the phosphate mining on Nauru during th@Mandate and the
role of BPC by focussing on the Lands Ordinances of 1921and 1927.
Australia reserves its position as to the allegations contained in the
Nauruan Memorial. However,it points out that the Nauruan allegations
amount, in effect, to sayingthat the administration of Nauru was carried
out solelyin the interestsof the BPCand that "on keyoccasions wherea
conflict between the British Phosphate Commissioners and the interests
of the Nauruans occurred, it was the Commissioners who prevailed"
(para.540). If this wasin fact the situation, then rather than such action,

as Nauru alleges, reinforcing the submission that Australia acted in
breach of obligations incumbent on it in the administration of Nauru, it
reinforcesthe fact that any breach was a breachbyall three Governments
reoresentedthroueh the BPC. It isnot oossible in such a situation to sav
that Australiaacted in anywayindivid6ally and othel than in a cornmon
venture with the other BPC Partner Governments.
39. As to the position in relation to financial benefits for Nauru from
phosphate mining during the Mandate period, the position has been

summarised as follows: "In the nineteen years in which the BPC worked the phosphate up to
World War II Nauruan royalties rose from 1/2d per ton in 1920to 8d
per ton in 1939. Of this 8d a ton, half was a cash payment, one
quarter was spent on works and education for the Nauruan com-
munity and one quarter was held in trust for landowners. The total
royalty paid to Nauruans in 1939was 5.1 per cent of the fob price of
Nauru phosphate. Another 4.1 per cent of the value of the phos-
phate was paid by the BPC for administration costs and about half

of this was spent solely for Nauruans" (N Viviani, Nauru (1970)
p.72).
The 1921 Lands Ordinance was a significant step forward, with royalty
being increased from the 1/2d per ton which had operated under the
German regime. The consent of Nauruan landowners was obtained to
the royalty rates provided for in the 1921 Ordinance, but on condition
that they should only apply for a period of six years and that immedi-

ately prior to the expiry of six years, the scale be reviewed. As a result, in
1927the rates werereviewedand agreement reached on a further increase
in the payments to Nauruans (Annex 2).
40. The 1927 agreement was concluded between the Nauruan land-
owners and the BPC and was implemented in the 1927Lands Ordinance.
The 1927 report to the League of Nations on Nauru records that rep-
resentatives of the Nauruan landowners conveyed to the Administrator

the following message:
"We would like to place on record an expression of our complete
satisfaction with the terms of the agreement recently entered into
with the British Phosphate Commissioners and Our appreciation of
the care which was taken by the Administration in safeguarding the
interests of the Nauruan landowners" (1927 report, p.29).

The agreement reached in 1927was intended to last 20 years. However,
reductions in the price of phosphate necessitated a reviewas the Nauruan
landowners had not contemplated a fall in royalties, despite the possibil-
ity for this in the 1927 formula which provided for five yearly reviews
based on fob price (see c1.4(b) of 1927 Lands Ordinance, Annex 36,
Vo1.4, Nauruan Memorial). In 1938 agreement was reached on revised
rates for the 1937-1947 and 1947-1967 periods (see 1939 Lands Ordi-

nance, Annex 38, Vo1.4, Nauruan Memorial). The 1938 annual report
indicates the situation surrounding the 1938 negotiations and the situ-
ation then agreed. Relevant passages read (at p. 8):
"ln 1927,the price of phosphate fobNauru was 23s per ton. In 1932
(the end of the first period of five years) the price of phosphate had
risen to 24s.6d. per ton, and the royalty paid to the individual
landowner was accordingly increased from 4d. to 4 3/8d. per ton

and payment was made at that rate until 1937, when the second
review under the Agreement was due. In June, 1937, the price of
phosphate had fallen to 14s. per ton. If the terms of the Agreement werefollowedthe royalty would be reducedfrom 4 3/8d. per ton to 1
3/4d. per ton. This decreasein the rate was consideredby al1parties
to be inequitable and negotiations were commenced between the
Administrator, the British Phosphate Commissioners and the Chiefs
representing the Nauruan landowners with the object of finding a
basis acceptable to al1parties for variation of the Agreement.

After lengthynegotiations an Interim Agreement was signed on 7th
December, 1938,wherebythe parties concerned agreedto the follow-
ing variations in the Agreement:
1. The present Agreementto be extended until the 30th June,
1947:

2. The following alterations in the terms of the Agreement to
have effectfrom 1stJuly, 1937,and tocontinue in force until
30th June, 1947:
11/2d. per ton to be paid to the Administrator to be used solely
for the benefit of the Nauruan people (no variation).

2 1/2d. per ton (instead of 2d. as at present) to be paid to the
Administrator to be held in trust for the landowner(s) and
invested for a period of twenty yearsat compound interest.
4d. per ton to be paid to the Nauruan landowner(s) (instead of
13/4d. per ton that would be payableif the present Agreement
were not altered). The rate of 4d. to be reviewedat the end of
five yearsfrom 1st July, 1937,and if the fob price of phosphate
isthen in excessof 14s.per ton, the royaltyof 4d. per ton to be
increasedby 1/4d. per ton for every 1s.per ton by which the fob
price of phosphate exceeds 14s.per ton. The rate of royalty not

to exceed6d. per ton at any time:'

G. THEPERIOD OF THE WAR

41. In December 1940German raiders shelled the phosphate plant
and sank severalBritish and allied merchant vesselsowned by or under
charter to the BPC. There wasno further German action and phosphate
continued to be shipped though in a reduced amount. In August 1942
Nauru wasinvaded by Japan. The Australian Administrator and remain-
ing officials were executed. ManyNauruans were deported to Truk. In

September 1945 the allied forces retook the island which reverted to
civilian administration in November 1945. Phosphate exports did not
resumeuntil 1947when repairsto the phosphate worksand port facilities
had been undertaken. The Nauruans on Truk returned on 31 January
1946. No allegations by Nauru againsi Australia relate to the period of
Japanese occupation. Australia points out,however,the major suffering
caused to the Nauruans during this period and documented in the
Nauruan Memorial. Section II. Nauru Under the Trusteeship
42. The Nauruan Memorial in paragraphs 107-116 refers to discus-

sions between the three Governments holding the Mandate about the
transfer of Nauru to the trusteeship system. Reference is made in these
paragraphs to records held in United Kingdom and New Zealand ar-
chives, as well as Australian records. This highlights the direct involve-
ment of al1 three Governments in relation to the administration of
Nauru. In these Preliminary Objections Australia does not consider it
necessary to respond to these paragraphs in the Nauruan Memorial.

43. Rather, Australia turns to a consideration of the Trusteeship
Agreement itself, which, together with Article 76 of the Charter, is the
central focus and fundamental basis of the Nauruan allegations against
Australia: "the primary causes of action on which the Republic of Nauru
relies" (para.243 Nauruan Memorial). The United Nations trusteeship
system, which is the successor to the mandate system of the League, is
set out in Chapters XII and XII1 of the Charter. The basic objectives are
set out in Article 76:

"The basic objectives of the trusteeship system, in accordance with
the purposes of the United Nations laid down in Article 1 of the
present Charter, shall be:
(a) to further international peace and security;
(b) to promote the political, economic, social, and educational
advancement of the inhabitants of the trust territories, and their
progressive development towards self-government or indepen-
dence as may be appropriate to the particular circumstances of
each territory and its peoples and the freely expressed wishesof
the peoples concerned, and as may be provided by the terms of

each trusteeship agreement;
(c) to encourage respect for human rights and for fundamental
freedoms for al1without distinction asto race, sex, language, or
religion, and to encourage recognition of the interdependence of
the peoples of the world; and
(d) to ensure equal treatment in social, economic, and commercial
matters for al1 Members of the United Nations and their
nationals, and also equal treatment for the latter in the adminis-
tration of justice, without prejudice to the attainment of the
foregoing objectives and subject to the provisions of Article 80".

The General Assembly on 9 February 1946invited al1States administer-
ing territories under mandate to place those territories under the trustee-
ship system.

44. On 1 November 1947 the proposed Trusteeship Agreement sub-
mitted by Australia, New Zealand and the United Kingdom was ap-proved by General Assembly resolution 180(II) (Annex 13, Vo1.4,
Nauruan Memorial). The Agreement (Annex29, Vo1.4,Nauruan Mem-
orial) approved terms of trusteeship in substitution for those of the
Mandate under which the Territory had been administered. The key
articles were:

'Hrticle 2
The Governments of Australia, New Zealand and the United King-
dom (hereinafter called "the Administering Authority") arehereby
designated as the joint Authority which will exercisethe adminis-
tration of the Territory.
Article 3

The Administering Authority undertakes to administer the Territory
in accordance with the provisions of the Charter and in such a
manner as to achieve in the Territory the basic objectives of the
International TrusteeshipSystem, whichare set forth in Article 76of
the Charter.

Article 4
The Administering Authority will be responsible for the peace,
order, good government and defence of the Territory, and for this
purpose, in pursuance of an Agreement made by the Governments
of Australia, New Zealand and the United Kingdom, the Govern-
ment of Australia will, on behalf of the Administering Authority
and exceptand until otherwise agreed bythe Governments of Aus-
tralia, New Zealand and the United Kingdom, continue to exercise
full powers of legislation, administration and jurisdiction in and
over the Territory.

Article 5
The Administering Authority undertakes that in the discharge of its
obligations under article 3 of this Agreement:
1. It willCO-operatewith the TrusteeshipCouncil in the discharge of
al1the Council's functions under Articles 87and 88of the Char-
ter.
2. It will, in accordance with its established policy:

(a)Take into consideration the customs and usages of the inhabit-
ants of Nauru and respectthe rights and safeguard the interests,
both present and future, of the indigenous inhabitants of the
Territory; and in particularensurethat no rights overnative land
in favour of any person not an indigenous inhabitant of Nauru
may be created or transferred except with the consent of the
competent public authority;
(b) Promote, as may be appropriate to the circumstances of the
Territory, the economic, social, educational and cultural ad-
vancement of the inhabitants.
(c) Assure to the inhabitants of the Territory,as may beappropriate

tothe particular circumstances of the Territoryand its peoples, a progressively increasing share in the administrative and other

services of the Territory and takel1appropriate measures with a
view to the political advancement of the inhabitants in accord-
ance with Article 76b of the Charter;
(d) Guarantee to the inhabitants of the Territory, subject only to the
requirements of publicorder, freedom of speech, of the press, of
assembly and of petition, freedom of conscience and worship
and freedom of religious teaching".
The obligations imposed by the Mandate, as described in Section 1
above, were of a different nature. There was only a general obligation

that the Mandatory "shall promote to the utmost the material and moral
well being and the social progress of the inhabitants" of the Territory
unlike the specific undertakingsof the Trusteeship Agreement to achieve
the basic objectives of the international trusteeshisystem, as set out in
Article 76 of the Charter, including the political advancement of the
inhabitants of the trust territories.

B. THEADMINISTRATIV SYSTEM
45. The political and administrative system, which was progressively
modified until the advent of independence in January 1968, is described
in the annual reports of the Administering Authority to the United

Nations, in the reports ofthe Trusteeship Council and in the six reports
of the United Nations Visiting Missions. Broadly the territorial Adminis-
tration was headed by an Administrator, appointed by the Australian
Government with the concurrence of the United Kingdom and New
Zealand Governments, who controlled a number of Departments mostly
staffed by Nauruans. Indigenous opinion was initially obtained from the
Nauruan Council of Chiefs until its supersession by the Nauru Local
Government Council (NLGC) in 1951. The Head Chief also had direct
access to the Administrator on matters affecting policy. The BPC con-
trolled and worked the phosphate deposits, the Island's soleindustry and
principal source of income. The BPC met the costs of administration,
paid royalties to Nauruans and employed large numbers of Nauruans
and other workers to extract the phosphate.

46. In the immediate post-war period the major effort of the BPC
went into reconstruction of the phosphate installations but it was not
until 1949that phosphate production substantially increased and only in
1950 did exports surpass the prewar level of 932,100 tons in 1939. The
Administration, for its part, in cooperation with the BPC, restored the
Island's social infrastructure. Thisncluded the consiruciion in the laie
1940sof 250 new houses for the Nauruans. In 1949the Council of Chiefs
negotiated with the Administrator for the settlement of war damage
claims. The extent of the devastation wrought by the war was described

in the report of the first (1950) United Nations Visiting Mission (Annex
7, Vo1.4, Nauruan Memorial): "11. .. . Nauru was one of the Territories hardest hit by the last
war. All buildings and installations on the island were des-
troyed without exception .. .

12. The problems of material rehabilitation facing the Australian
authorities after their reoccupation of the island must have
been considerable, especiallyas there wereshonages of build-
ing material and labour, not only in Nauru, but also in Austra-
lia itself and other territories under its control. Even now,
when facilities have beenlargely restored, much of the effort
of the Administration is still concentrated on reconstruction.
13. The problems involvedin restoring the morale of the Nauruan
community have been no less considerable, but here also a
large measure of success has been achieved.The Nauruan
population isonceagain rapidly increasing.Nauruansare once
more planning for the future . .."

That same report also commented (para.42):
"that the Nauruans have derived considerable benefit from the
[phosphate] industry is at once obvious to anyone visitingtherri-
tory. On the whole the Mission found the Nauruans better clothed,
in better health. better nourished and better educated than usual at
this time in Pacific Island territories".

C. ROYALT INS ECONOMA IDVANCE

47. In the 20 year period from 1948to 1968royaltiescontinued to be
paid-and were substantially increased-by the BPC to the Nauruans.
This wasin addition to the costs of administration which,nder Article
2 of the 1919Nauru Agreement, weredefrayedout of the proceedsof the
sales of the phosphate. Royalty adjustments were made in 1947, 1950,
1953, 1957, 1960, 1964 and 1966 following negotiations between the
Nauruans and the BPC. In the three years precedingindependence rates
became increasinglya matter directly dealt with by the Partner Govern-
ments and the NLGC representatives. Forinstance, the first postwar
agreement concluded on 23May 1947betweenthe Nauruan landowners,

the Administration and the BPC provided that the following royalties
should be paid: 6d for the landowner, 3d to the Nauruan Royalty Trust
for the benefit of al1Nauruans, 2d for the Landowners Investment Fund
and 2d for the Long TermCommunity lnvestment Fund (Report of the
Administering Authority for the period 1 July 1948to 30 June 1949,
pp.34-35).
48. Inthe calendar year 1966total royaltiespaid to Nauruans totalled
sA1.75' for a ton payable on the delivered weightsof phosphate ex-

1. On.14 February1966Australiaswit10edecimalcurrencyunderwhichone pound
Auslraliancqualledtwo Auitraliandollars.ported and inthe 1967calendar yearthis wasincreasedto $A450 per ton
(Report of the Administering Authority for the period 1 July 1966-30
January 1968, p.16). The royalties paid were invested on behalf of the
community until the year 2000. At 30 June 1967the fund amounted to
$A6,241,719.49.
The Nauruan royalties were paid to:
(a) TheNauruLandowners'Royalty TrustFund.This was establishedin
1927by agreement with the Nauruans. Royaltieswerepaid into the
fund every sixmonths on behalf of the landowner whose land was
being workedand investedby the Administration for 20 years. Until
the mid 1950sonly interest on matured investment was paid to the

landowners and the capital reinvested. From 1955 the investment
period was reduced to 15years and the capital was also distributed
along with the interest as the investment matured. At 30 June 1967
the total amount invested inthis fund was $A3,022,607.
(b) Royalîypaid direct to landowners. Individual landowners werepaid
a cash royaltyat the rate of 35cents a ton for the yearended 30June
1967 which amounted to $A701,954. An additional amount of
$A66,090 was paid for advance royalties on permanent installation
sites.
(c) The Nauru Royalty Trust Fund, instituted in 1927, provided ad-
ditional funds for amenities and services to the Nauruans. It was

mainly used from the 1950son to fund the activities of the NLGC
and someeducational activities. During the year ended 30June 1967
payments amounted to $A307,774.
(d) TheNauruan Communiiy Long TermInvestment Fund was estab-
lished in 1947to provide for the economic future of the Nauruan
people when the phosphate was exhausted. The royalties paid were
investedon behalf of the community until the year 2000. At 30June
1967the fund amounted to $A6,241,719.49.

49. Paragraph 124of Volume I of the Nauruan Memorial says that
"rather lessthan 50% of the Royalties'paid to Nauruans' werepaid
direct to the landowner; in the subsequent fifteen yearsthat figure
was reduced to about 20%. The remainder of the moneys paid by

way of royalty 'to Nauruans' were paid to funds invested and con-
trolled by the Australian Administration".
50. Apropos of this point, Mr R Marsh, a senior Department of
Territories' official, on 4 October 1955in a submission to his Minister
(Annex 3) wrote on royalties thus:

"For many years efforts have been made to change the basis of
royaltypayments from the individual to the community but this has
not so far been acceptable to the Nauruans. In 1947an attempt was
made to get the Nauruans to agree to royalty beingpooled but the
Nauruans were solidly against the proposal. It is understood the
principal reasons were- (i) Nauruans have inalienable historical right to their land and
phosphate;
(ii) Equal distribution of wealth would makethe women too inde-
pendent;
(iii)There have always been rich and poor among the Nauruan
people;
(iv) The scheme proposed had not been tried elsewhere;and
(v) The scheme savouredof communism.
Ownership of land is determined by native custom and a position
has been reached where al1the phosphate land isowned by relatively
few persons. Whilst it is true that few Nauruans receive direct

payment of royalty most of them receiveincome from employment
with the Administration, the Commissioners or the Nauru Cooper-
ative Society".
On the second point raised concerning control of investment by the
Administration, upon independencecontrol of al1the royaltytrust funds
was vested inthe independent governmentof Nauru, whichcontinued to
administer them.

51. Toconclude this sectionon the economic advance made by Nauru
whilst a Trust Territoryone can but quote paragraph 2 of the last (1965)
Visiting Missionreport (Annex 12, Vo1.4,Nauruan Memorial):
"2. On this island-so isolatedthatitcan be reached by air only

after flying for many hours above the Pacific, so small that at
first it appears to be just the reflection of the clouds in the
ocean-it is astonishing to discover,as in an adventure story, a
great industrial plant working rich phosphate deposits. The
proceeds of these operations cover al1 public expenditure.
Thanks to the phosphate, this tinyisland lost in mid-ocean has
houses, schools and hospitals which could be the envy of places
with a very ancient civilization. Its citizens pay no taxes. Be-
cause of these favourable conditions and the spirit of mutual
assistance characteristic of the inhabitants, poverty is virtually
unknown in Nauru. There is a high standard of living: necessi-

ties and evenmany luxuries are imported. The stores and shops
are wellstocked withgoods. Few people walk in this Territory,
whichhas an area of 8% square milesand a circumferenceof 12
miles: there are over 1,000 motor vehicles (not to mention
bicycles)for a total population of 4,914 including 2,661 Nau-
ruans (at 30 June 1964)".

D. PROCRES N HEALTH AND EDUCATION
52. Article 5 of the 1947Trusteeship Agreement for Nauru enjoined
on the Administering Authority that it "promote .. . the economic,
social, educational and cultural advancement of the inhabitants". Social
progress, particularly education and health, may be measuredfrom theannual reports on the administration of the Territory to the United
Nations and noting the comments of the six United Nations Visiting
Missions.

53. At 30January 1968the total Nauruan population was3,065(1607
males, 1458females)compared with 1369at 31 December 1946,that is,
the population had more than doubled. At independence 1549were in
the age bracket 0-14 and 1051between 5 and 14. At 30 January 1968,
1191Nauruan pupils were being educated both in CO-educationalAd-
ministration and Sacred Heart Mission Schools at primary and second-

ary levels. Education, in accordance with Nauruan wishes, was
compulsory for Nauruan children from 6 to the end of the school year in
which theyattained 16.For European children it was between 6 and 15.
Secondary school courses, which involvedfour years' study,led to the
Intermediate examination conducted by the University and Schools
Examination Board of the State of Victoria in Australia. The 1966-68

Administration report (p.39) noted that a system of scholarships and
other forms of assistance provided secondary, technical and higher edu-
cation and vocational training at overseasinstitutions, mainly in Austra-
lia, for children who reached the required standard. At 30 June 1967
there were 105students and trainees studying overseas,of whom 77were
financ~ ~ ~the Administra~~~~~~~- 28wer~fin~ ~ ~ orivatelv.Twowere
-,
studying in Papua and NewGuinea and the test in Australia. Approved
training establishments included universities, technical colleges,second-
ary schools and other institutions which provided vocational training
such as nursing, dressmaking and hairdressing.

54. The 1965United Nations Visiting Mission, the last before inde-
pendence, commented, inter alia , on the educational system in these
terms (paras.54-57, Annex 12,Vo1.4,Nauruan Memorial).

"54. The Mission visitedmost of the schools on the island and was
veryfavourablyimpressed withthe standards maintained, the facilit-
ies provided and the quality of teachers, buildings and equipment.
55. The educational system providesfor free, compulsoryeducation
and, in so far as the indigenous people of the Trust Territory are

concerned, has as its objectives: (a) the provision of the means by
which each child shall have the opportunity at al1relevant ages of
obtaining an education comparable in syllabus, content and stand-
ards with that available inAustralia; (b) the attainment of a literate
population with graduates in the arts, sciences and trades sufficient
to meet the future needs of the Nauruans.

56. The extent of the achievementof these objectives may be gauged
by the following figures:
Nauruan students in Australia

(a) At universities 5
(b) At technical colleges 4
(c) In teacher-training colleges 3 (d) Nurses in training 2
(e) At secondary schools
(58 scholarships, 7private) 65
-
79
Nauruan students in Nauru
(a) At primary schools 791
(b) At secondary schools 251
(c) At the teacher-training centre 15
(d) Enrolled in adult education class 73
-

1,130,
57. In consideringhese figuresit must be rememberedthat overhalf
the Nauruan population is under twenty years of age and that the
118Chinese and Pacific Islands children at school only remain for
short periods in Nauru".
A similar picture is shown in the reports on the Department of Public
Health which maintained a general hospital (of whichthe 1965United
Nations Visiting Mission spoke (para.80) of "the excellent services il

provided to the community") at which al1treatment was free. The BPC
in addition maintained a well equipped hospital for their employees.
Patients in need ofspecialist care, not available on Nauru, weresent to
Australia for treatment with the Administration bearing the costs. In
addition measures were undertaken on environmental sanitation, im-
munisation and health education. Nutrition was a special priority and
the last (1966-68) Administration report noted (p.36) that the Nauruan
diet showed considerable improvement which was attributed to the
greater diversityof food available,the generaladvancement in socialand
economic conditions and the effects of health education. No cases of
vitamin deficiency were seen during the period under review.

55. The 1959United Nations Visiting Mission commented (para.62,
Annex 10, Vo1.4,Nauruan Memorial) that:
"on the whole, the Mission was very favourably impressed by the
medical facilities providedand the measures taken by the Adminis-
tration to care for the health of the people, as wellas its programme
for the training of Nauruan men and women to assume eventual
responsibility inal1sections of the.public health field".
At 30 January 1968, nine years later, this last point of greater Nauruan
responsibilitywasillustraied bythe fact that 96Nauruans wereemployed

in public health of whom six weremedical practitioners, 36were nurses
(men and women) and 10were nursing aides.

E. POLITICAL AND ADMINISTRATIA VEVANCEMENT

56. BeforeWorld War II the Administration was advised by the Nau-
ruan Council of Chiefs. This body, which wasbased on Nauruancustom, was revived after the war. In 1951 it was replaced by the
Nauruan Local Government Council (NLGC) consisting of nine Coun-
cillors elected for four years by al1Nauruans over 21. One Councillor
waschosen as Head Chief. The Council advisedon Nauruan matters and
maintained peace, order and good government among the Nauruans. It

could also, subject to the lawsof Nauru and the approval of the Admin-
istrator, organise, finance or engagein any businessor enterprise. These
powers and functions were enlarged in 1963representing, as the 1965
United Nations Visiting Mission put it, "an advance in the political
development of the Council and the Nauruan people" (para.13, Annex
12, Vo1.4,Nauruan Memorial). Eleçtions to the Council were held in
December 1951, 1955, 1959,1963and 1967.In 1955Councillor Hammer
DeRoburt was elected as Head Chief which position he has retained to
the present.

57. The powers of the Council and a description of some of its
activities are available in the annual reports of the Administering Auth-
ority (whichwillbe made availabletothe Court)and in the sixreports of
the United Nations VisitingMissions (see Annexes7 to 12, Vo1.4,Nau-
ruan Memorial).
58. Consistent with the obligations under the TrusteeshipAgreement,
Nauruans.were increasingly employed inthe Administration and as-
sumed senior positions. The last report of the Administering Authority

(1966-1968) set out their employment at independence.

Section III. Political and Economic Evolution 1959-1966

59. From 1959on, increasing awareness and concern by the Partner
Governments, the BPC, the United Nations and not least the Nauruan
people under the leadership of Head Chief Hammer DeRoburt and his
fellowcouncillorson the NLGCabout the progressiveworkingout of the
phosphate on Nauru led to plans and proposais to resettle the Nauruan
people away from the Central Pacific. These came to nothing. A second
careful study of the feasibility and practicality of rehabilitation of the
worked out lands on Nauru was made in 1966but no agreement was
reached. Eventuallythe Partner Governments and the NLGC, ina series
of negotiations during 1966and 1967,concluded phosphate and politi-
cal settlements which led to the termination of the Trusteeship when
Nauru became an independent republic on 31 January 1968.

60. Resettlement, as the long term solution to a worked out island,
wasearly recognisedas desirable by the Partner Governments, the Nau-

ruans and the United Nations. The 1953United Nations Visiting Mis-
sion report said (para.13, Annex 8, Vo1.4,Nauruan Memorial) that "theMission, without wanting to be dogmatic, is of the opinion that resettle-
ment in some other location, as expressed by the Nauruans themselves,
may be the only permanent and definite solution". In a later section
(paras.32-35) of the report the Mission saw "no other alternative to the
resettlement of the population elsewhere". In the following years a
number of possible sites in and near Papua New Guinea were investi-
gated by the Administering Authority but none could meet the three
requirements considered necessary, viz employment opportunities ena-
bling Nauruans to maintain their standard of living; a community which
would accept the Nauruans; and willingness and readiness on the part of

the Nauruans to mix with the existing people.
61. On 12 October 1960 the Partner Governments, following discus-
sions between themselves, offered permanent residence and citizenship
in Australia, New Zealand or the United Kingdom to any Nauruans who
wished "to transfer to those countries and are likely to be able to adapt
themselves to life there" (Annex 4). It was envisaged that the transfer
should take place gradually over a period of 30 or more years and that
some material assistance to that end would be given. On 15 December
1960 the NLGC rejected the offer on the grounds that it did not afford
them a new homeland and that by its very nature the proposal would

lead to the assimilation of the Nauruans intothe metropolitan communi-
ties wheie they settled. The NLGC instead asked for another island in a
temperatezone (Appendix A, Annex 1, 1962UN Visiting Mission report,
Annex 11, Vo1.4,Nauruan Memorial).
62. In early 1962two Nauruan Councillors, one of whom was Head
Chief Hammer DeRoburt, inspected islands in the Torres Strait and
Fraser Island which was close to Maryborough on the east coast of
Queensland. In August 1963, the Australian Government following in-
vestigations from its specially appointed Director of Nauruan Resettle-
ment and consultations with the United Kingdom and New Zealand

Governments, offered Curtis Island close to Gladstone on the
Queensland coast, with extended local government powers. This offer
was rejected because the proposed political arrangements were unsatis-
factory to the Naunians. The Australian Government, for its part, made
it clear as early as April 1962 that Australian sovereignty would not be
surrendered over any mainland or island location in Australia which
might be identified for resettlement by Nauruans. In the hope, neverthe-
less, that resettlement on Curtis Island might be possible, it commenced
negotiations to purchase land on Curtis Island.
63. In July and ~&ust 1964 discussions took place in Canberra

between Australian officials led by the Secretary for Territories and the
NLGC led by Head Chief DeRoburt (Annex 5). Dr Helen Hughes, an
economist at the Australian National University, was present as an
adviser to the Nauruans on royalties. Little agreement was reached on
the issues of resettlement, royalties, Nauruan independence by 1967, the
rate of extraction and the ownership of phosphate. On 20 August 1964,Mr Barnes, the Australian Minister for Territories issued a comprehen-
sive statement which, inter dia, set out the differing positions of the

Administering Authority and the NLGC on Curtis Island (Annex 6).
Relevant extracts read:
"For some years past it had been accepted by the Nauruan people,
the Australian Government and the United Nations Trusteeship
Council that resettlement of the Nauruans in another place was
essential for a satisfactroy solution to the problems which would
confront them, when the phosphate deposits were exhausted before
the end of the century, if they remained on Nauru. The Island was

remote and small and would ultimately consist largely of worked out
phosphate land: the population was expanding and was accustomed
to high standards of living based on the phosphate industry. After
inspection of a number of possible locations, proposals had been
worked out in some detail for resettlement on Curtis Island. Under
these proposals the Nauruans would be given the freehold of Curtis
Island. Pastoral, agricultural, fishing and commercial activities
would be established, and the entire costs of resettlement including
housing and community services such as electricity, water and sewer-
age etc would be met out of funds provided by the Governments of
Australia, New Zealand and the United Kingdom. It was estimated
that the cost would be in the region of 10million pounds.

.. .

In the discussions the Nauruan representatives said that they held
firmly to the view that the Australian Government's proposal would
not secure the future of the Nauruans as a separate people but on the
contrary would result in their absorption in the Australian com-
munity as Australian citizens.

Moreover, after further considering the difficulties of finding a
place for resettlement that would meet enough of their requirements
to be acceptable to the Nauruan people their Council had now
formed the view that they should no longer expect the Australian
Government to be responsible for Nauruan resettlement and that the
Nauruan people should stay on Nauru and not resettle at all.

The Australian representatives noted these viewsand said that the
Commonwealth Government would consider them in the light of al1
the circumstances including the obligations placed on the Adminis-
tering Authority by the United Nations Trusteeship Agreement and
the recommendations mnade concerning resettlement and related
matters by the United Nations Trusteeship Council. However, the

Government would continue with its investigations and negotiations
with a view to the successful achievement of the resettlement of the
Nauruan people. latter was backed by two other Councillors and three expatriate advisers
(2 economic, 1 legal). One of the economic advisers was Mr K E Walker
who in Appendix 2, Volume 1, Nauruan Memorial mentions that from
1965 to 1971 he was involved in al1of the negotiations between Nauru

and the Partner Governments that dealt with phosphate, financial and
political matters. Since November 1983 he has been the Honorary Nau-
ruan Consul, Sydney.
67. On 10 June 1965 a Summary of Conclusions was signed by both
parties and compUsed, inter alia, the following:

-As a step towards self determination a Legislative Council and an
Executive Council wereto be established. The former was to have an
elected Nauruan majority and wide powers excluding only defence;
external affairs and the phosphate industry.
-The statement tha the Nauruans wanted 31 January 1968 as the
target date for independence whereas the Administering Authority's
view was that further discussions should take place in 1968 regard-

ing the possibility of further movement towards greater Nauruan
executive responsibility.
-Future arrangments for the phosphate industry including some
form of partnership or joint enterprise should be discussed in 1966
after the Legislative Council had been established and was overat-
ing effectiveÏy.
-Royalties for 1965/66 should be 17/6 per ton and for 1964/65 13/6
ton, ad referendum, with the former being based on an extraction
rate of2m tons per annum "subject to the assurance of the Austra-

lian delegation that this acceptance was without prejudice to any
Nauruan requests for a reduction in the rates of extraction after
1967/68". (These proposed royalty rates were put to the United
Kingdom and New Zealand Governments for their agreement,
which was given.)
-"The Nauruan delegation stated that it considered that there was a
responsibility on the partner Governments to restore at their cost
the land that had been mined, since they had had the benefit of the

phosphate. The Australian delegation was not able on behalf of the
partner Governments to take any commitment regarding responsi-
bility for any rehabilitationproposais the objectives and costs of
which wereunknown and the effectivenessof which was uncertain."
-Agreement to establish an independent technical committee of ex-
perts to examine rehabilitation.
-A restatement of the differing views on the ownership of phosphate
mining rights. The Nauruans argued that the BPC could not validly

, work the phosphate without the agreement of the Nauruan people,
whereas the Australian delegation held that the rights were legally
vested in the British Phosphate Commissioners.
The Summary of Conclusions is set out as Annex L to the 1965 Record
of Negotiations reproduced in Annex 2, Volume 3,-Nauruan Memorial. D. THENEWCONSTITUTIONA OLRDER
68. The agreed Nauruan/Australian Minute of 10 June 1965 had
included the establishment of an Advisory Committee consisting of

Nauruan representatives (Head Chief Hammer DeRoburt and
Councillor Bernicke with Mr K E Walker as adviser) and Australian
officiais to advise on the establishment of the proposed Legislative and
Executive Councils. The recommendations of the Committee were
approved by the NEC and the Partner Governments. However, before
legislation could be introduced intothe Australian Parliament to provide
for the new arrangements it was necessary for amendments to be made to
the Nauru Agreements of 1919 and 1923 between the Partner
Governments which provided for the administration of Nauru. These
amendments were effected in the Nauru Agreement signed in Canberra
on 26 November 1965 by the three Partner Governments (Annex 30,

Vo1.4,Nauruan Memorial). Subsequently, legislation was introduced in
the Australian Parliament in early December 1965. On 18December Act
115 of 1965 to provide for the Government of the Territory of Nauru
receivedassent (Annex 39, Vo1.4, Nauruan Memorial). The Legislative
and Executive Councils commenced operation in 1966.

E. THEREHABILITATIOIN NVESTIGATIONS

1. TheCSIROInquiry

69. The possibility of regenerating the worked out phosphate lands
was raised in the post war years by the United Nations, theinister-
ing Authority and the Nauruans.

70. The Trusteeship Council, at its 8th session951), recommended
that it consideredt "advisable that studies of a technical nature should
be carried out inorder to determine the possibility of making use of
worked-out phosphate land" (United Nations, Report of Tnrsteeship
Council, GeneralAssembly Official Records, 6th Session,Suppl.No.4
(A/1856), p.229). Such an inquiry was subsequently initiated by the
Australian Government in 1953 when it commissioned to that end the
Commonwealth Scientific and Industrial Research Organisation
(CSIRO) to report in particular on:

(a) the area and location of land suikble for agricultural purposes;
(b) the crop or animal production systems which might be followed to
make the best use of the land, having regard to the environment and
the settlement pattern of theisland and with due regard to self-
sufficiency and commercial farming;
(c) the physical and economic possibilities of regenerating worked-out
phosphate land so as to make it useful for agricultural purposes in
the future;
(d) recommended research and experimental agricultural projects which

might be undertaken. 71. The report (Annex 14) ran to 23 pages and encompassed the
geography, population, food supplies (past and present), land use, cli-
mate, soils, problems of increasing the area of land suitable for agricul-
ture and possible agricult ural systems with special reference to
self-sufficiency. The last two sections covered estimates of human popu-
lation that might be supported and five recommendations. With regard
to rehabilitation of the worked-out phosphate lands, the report found as
follows:

"Phosphate has been extracted from about 25 per cent of the avail-
able area, and at the present rate of extraction, the whole area will
have been worked-over within the next half century. The authors
werespecifically requested to investigate the possibility of regenerat-
ing these worked out areas so as to make them useful agricultural
lands for the future but as a result of this examination have formed
the opinion that the regeneration of this land is a practical impossi-
bility.

The old German workings (pre World War 1)were inspected most
carefully. These have now been abandoned for about forty years. It
is true that they have now a partial cover of vegetation but this
vegetation appears to have rooted in small unextracted pockets of
phosphate, and consist essentially of the same three or four species

which at present dominate the phosphate lands. There is no sign of
any appreciable weathering on the exposed coral pinnacles, as might
well have been anticipated from the presence of protruding coral on
the unworked phosphate lands.
It would be possible to level this worked out land with the aid of

explosives and heavy crushing equipment, and it would be possible
to import soil, eg as backloading from themainland, but there is no
certainty that the soi1would stay on the surface and not be washed
down into the crushed coral. Even if the plateau were to be resur-
faced and maintained in this manner, there would still be the ques-
tion of an adequate water supply to supplement rainfall. It is
believed that any such scheme would be fraught with so much
uncertainty as to final success, and would be so expensivethat it may
be ruled out at once as a practical proposition for the widescale
utilisation ofthese lands. (page 13)

No practical possibility whatsoever is seen of widescale utilisation

of worked out phosphate lands for agriculture. Although it is poss-
ible that some better use can be made of these lands than at present
there will always be the limitation imposed by dependence upon an
erratic rainfall" (page 14).
72. The report was brought to the attention of the Trusteeship Coun-

cil and was referred to from time to time in its proceedings. In 1959/60,both orally and in writing, the CSlRO confirmed that in its view there
had been no developments of any sort which wouldcause it to alter its
1954conclusions (Annexes 15and 16).Dr Phillis, one of the two authors
of the CSIROreport, wasquoted as sayingon I November 1960that "he
sees no hope of regenerating the worked out phosphate land on the
Island, and even if the phosphate was replaced withsoi1the fact that the
Island was subject to very severedrought and that fresh water reserves
were very limited (as ascertained since 1953)agriculture would not be
possible" (Annex 16).

2. BPC Estimates

73. On 5 October 1964the BPC, in response to a Department of
Territories' requestof 14 September 1964, sent a memorandum which
covered an estimate of rehabilitating the worked-out areas after the
pinnacles had been levelledby blasting and on the basis of shipping the
soi1from the closest proximityto ports of phosphate discharged by ships
employed in the trade (Annexes 17and 18).The reason for approaching
the BPC and thus reactivating the subject was that in announcing their
rejection of resettlementproposais, the NEC had linked them with a
request that their worked out phosphate lands should be restored by

backfilling withsoi1from Australia. Head Chief Hammer DeRoburt was
quoted in the BPC estimate memorandum as sayingthat it was intended
to plant coconuts on the restored mining areas with a viewto maintain-
ing the growing population of Nauru after the phosphate deposits were
worked out.
74. The total cost ofrestoration, the BPC concluded, was:

Cost per ton of soi1spread 5 pounds 13s.8d
Cost per acre 36,570 pounds
Total cost 128million pounds
Cost per year over25 years 5.12 million pounds
The Nauruans were given a copy of this letter.

75. On 14 December 1964 CSIRO advice was again sought on the
Nauruan rehabilitation request (Annex 19). On 18 January 1965it re-
plied (Annex 20):
"The proposal to level out limestone pinnacles and cover the
worked-out areas with four feet of imported soi1isof such high cost
that it could not possibly bejustified on any grounds for the likely

return that would accrue from such investrnent.
With the variablerainfall pattern at Nauru weare verydoubtful if
coconut palms could be grownon areas treated in that wayat higher
altitudes where the roots of the coconut palms could not tap the
water table. Also, the population that could be supported by coco-
nut planting would be very small in relation to the size of the
investment. In addition there is obviously no point in reclaiming worked-out phosphate areas at very high expense until the narrow
strip of coastal plains surrounding the island is intensively used for
agriculture.
Because of the variability of the rainfall, the lack of suitable
underground water for irrigation and the isolated location of Nauru

Island, we are unable to foresee any type of agriculture at a reason-
able cost that could possibly give the Nauruan population a stand-
ard of living appreciably above the subsistence level.
The phosphate areas apparently have never been productive lands
and it appears that vegetation regeneration on worked-out areas is
virtually nil. Fresh water supplies for domestic and garden use

appear to be a major problem on the island. A thought that has
occurred to us is that the mined areas consist of inert coral and
phosphate which apparently behave in a similar manner to no-fines
concrete. Would it be feasible and economic to seal some of these
areas with bitumen or cement, firstly to give catchments for gather-
ing rainfall and secondly to store water for domestic and garden use?
If this is feasible the water could be initially used for domestic and
garden use by the present relatively large population and when
mining is completed, for small scale intensive irrigation for food
crop production by Nauruans. Importation of soi1of only one foot
depth may be worth considering for these small, intensively gar-

dened areas. You might consider that this suggestion belongs in the
crazy field, but we consider it far less crazy than the proposal to
resoil the major part of the island.
If the Nauruans wish to foresee a reasonable standard of living in
the future, we do not consider there is any reasonable alternative to
resettlement in another location".

The BPC later commented (letter of 10 February 1965, Annex 23) that
the CSIRO suggestion to seal worked out phosphate land for water
catchment purposes appeared impracticable.

76. On 20 January 1965 the BPC had at the request of the Depart-
ment of Territories, made an estimate of the cost of shipping soi1from
Fauro, an island in the Solomons (Annex 21). The exercise, which BPC
stressed was hypothetical, concluded (page 2) that
"the governing factor in the freight cost is the rate of discharge at
Nauru which would have to be carried out with ships' gear, that the

use of medium sized bulk carriers might be most favourable and that
the cost of procuring and shipping soi1from an island such as Fauro
would be much the same as from normal discharging ports in
Australia and New Zealand".
77. A further BPC letter (Annex 25), dated 2 April 1965, to the
Department of Territories on the cost of a pilot project in regenerating

the worked out phosphate land was discouraging in that it concludedthat a pilot operation would yield little information in the way of
establishing cost. It read:
"Our estimate of 36,570 pounds per acre (see Our letter dated 5th
October 1964) wss based on a large scale operation fully equipped to
obtain, receive, load, discharge, land and distribute the soi1includ-
ing the laying of a special set of moorings at Nauru. It assumed the
availability of suitable soi1and of course the necessary labour force

was taken into account.
In operating a Pilot scheme none of these factors would pertain.
Assuming that suitable soi1 could be obtained close to, say, Mel-
bourne or Geelong (130,000 tons would be required for 20 acres) it
would need to be carted by road vehicle, dumped on wharf, loaded
by grabs and discharged at Nauru with makeshift equipment into
barges not suitable for carrying bulk material. Adequate shore dis-
charge facilities do not exist at the Island to off load the soi1from
the barges and ships would need to moor at existing berths to the
exclusion of ships discharging general cargo and/or loading phos-
phate. Turn around would thus be slowed down which would reduce

the effective supply of phosphate and add to freight costs.
Not in any respect could existing plant and labour handle such a
project efficiently. To attempt it on these lines would amount to
attacking a mammoth project on a knife and fork basis and the cost
could be expected to be as much as two or three times more than the
estimated cost of 36,570 pounds per acre which is based on a
thoroughly planned and mechanised operation. In such circum-
stances it seems to us that a pilot operation would yield little in the

wayof establishing cost-indeed unless ways (unknown to us) can be
found of greatly reducing Our present estimates cost will in any case
defeat the purpose of the exercise".
On 11 June 1964 rehabilitation was raised again in the Trusteeship
Council (31st Session) by the Liberian representative (United Nations,
Trusteeship Council Official Records, 31st Session, Doc.T/SR/1236).
The Australian representatives cited the CSlRO to the effect that it
would be difficult and expensive.

3. TheDavey Committee

78. By May 1965the Department of Territories concluded that its own
investigation had established that the cost of rehabilitation would be so
high as to be uneconomic and that there were serious doubts about any
worthwhile results for agriculture due chieily to probable loss of soi1
through the porous coral base and the erratic rainfall. It also noted that
the Monsanto Company in the United States had cooperated with the
University of Tennessee in recent years in experiments on the use of
mined phosphate land and that the Company had commented that: "where the phosphatic material is right at the surfaceof the ground
and practically al1the soi1is removed bearing only exposed bare rock
.. . this type of mined over land has insufficient soi1left to relevel
and the only wayof putting this landinto its formercondition would
be to move soi1 in by trucks from some other locations. This we
consider as uneconomical and unrealistic as the cost would be more
than the possible value of the land for agricultural purposes" (An-
nex G to the 1965 Record of Negotiations, reproduced in Annex 2,
Vo1.3,Nauruan Memorial).

79. On 10June 1965, Mr Warwick Smith and Head Chief DeRoburt,
in discussions in Canberra on the future of Nauru, signed a summary of
conclusions which included the following section on rehabilitation (An-
nex L to the 1965 Record of Discussions, Annex 2, Vo1.3, Nauruan
Memorial):
"The Nauruan delegation stated that it considered that there was a

responsibility on the partner governments to restore at their cost the
land that had been mined, since they had had the benefit of the
phosphate. The Australian delegation was not able on behalf of the
partner governments to take any commitment regarding responsi-
bility for any rehabilitation proposals the objectives and costs of
which were unknown and the effectiveness of which was uncertain.
It was agreed to establish at the earliest practicable datean inde-
pendent technical committee of experts to examine the question of

rehabilitation, the cost to be met by the Administering Authority".
About the same time the 1965United Nations Visiting Mission to Nauru
published its report which, while it did not touch on rehabilitation ints
conclusions, included (Annex II) a NLGC memorandum on the rehabili-
tation of worked-out phosphate lands (Annex 12, Vo1.4,Nauruan Mem-
orial).

80. By the end of 1965the members of the technical committee were
appointed. The individual members were mutually acceptable to the
NLGC and the Administering Authority. They comprised:
Mr G E Davey Consulting Engineer
(Chairman) Sydney, NSW
Prof J N Lewis Professor of Agricultural Economics

University of New England
Armidale, NSW
Mr W F Van Beers Soil and Land Classification Officer,
FAO, ROME
The Committee's terms of reference, as described in the Report, were to
examine:

"(i) whether it would be technically feasible to refill the mined
phosphate reasons with suitable soi1 and/or other materials
from external sources or to take other steps in order to tender them usable for habitation purposes and/or cultivation of any
kind;
(ii) effectiveand reasonable ways of undertaking such restoration,
including possible sources of material suitable for refilling;
(iii) estimated costs of any practicable methods of achievingrestora-
tion in any effective degree.

The terms of reference also instructed the Committee, assuming it
appeared to be feasibleto achieverestoration along the linesreferred
to in the paragraph above, to:
(i) investigate the water resourcesof Nauru;
(ii) examine fully the possibility of growing in the areas to be
restored, trees, vegetablesand other plants ofa utilitarian kind,

having regard both to what wasdone in this wayin the past and
what might be mostuseful totheNauruan people in the future."
81. The Committee's68 page Report (reproduced as Annex 3, Vo1.3,
Nauruan Memorial) was submitted in June 1966to the Australian Gov-
ernment and the NEC. It comprised 10sections and 7 appendices and
was the result of submissions and consultations with the NEC, the
Australian Government, BPC and others as well as a 10 day visit to
Nauru. The first conclusion (Section 2) was as follows:

"(i) that while it would be technically feasible(within the narrow
definition of that expression)to refillthe mined phosphate areas
of Nauru with suitable soi1and/or other materials from external
sources, the very many practical considerations involved rule
out such an undertaking as impracticable;"

4. Reception of the Davey Report

82. On 20 June 1966,in discussionsbetween thePanner Governments
and the Nauruans about the future of the phosphate industry, Head
Chief DeRoburt submitted a 20 page statement on the DaveyCommit-
tee's Report whichcommended certain parts, and damned those parts
which did not support the Nauruan case on rehabilitation (Annex 1I to
the 1966 Record of Negotiations, reproduced in Annex 4, Vo1.3,Nau-
ruan Memorial). The latter approach predominated, with such section
headings as "Signs of Undue Bias in the Committee's Report", "Asser-
tions unsupported by the Report" and "Factual lnaccuracies in the
Report". Among the 17conclusions were that the Committee had:

-confirmed the judgment of the NEC that it was "technically
feasible to refill mined phosphate areas with suitable soi1and/or
other materials from external sources".
-confirmed that givena water supply and improvedcommunications
the Nauruans would enjoy a very satisfactory levelof living on the
island. -gone beyond its terms of reference when it presumed to pronounce
that complete re-soiling was technically feasible but "impracti-
cable".
-commended the proposal to build an airstrip designed as a catch-
ment area for water.
-made a serious error of judgment in considering only the facilities
needed tosupport a population of 10,000by the turn of the century.

83. On 28 June 1966 Mr Warwick Smith replied in a joint delegation
statement (Annex 16 to the 1966Record of Negotiations, reproduced in
Annex 4, Vo1.3,Nauruan Memorial). He stressed that the Partner Gov-
ernments had not yet considered in detail either the Davey Committee's
report or the Nauruan statement. The Committee's report, he said,
followed two offers of resettlement, both declined by the NLGC. He
then traversed parts of the Nauruan comments, deprecated attacks on

the Committee's integrity, proposed a joint detailed examination and
concluded that the costs involved in restoring the land to its original
condition "when added to the working costs of extraction of the phos-
phate and the administration costs on the Island would greatly exceed
any price that the phosphate would bring".

84. On 1 July 1966 Head Chief DeRoburt and Mr Warwick Smith
signed another agreed minute which contained a lengthy paragraph on
the relationship of rehabilitationand resettlement costs to financial
arrangements for the phosphate industry (Annex 19to the 1966 Record
of Negotiations, reproduced in Annex 4, Vo1.3, Nauruan Memorial).
Nauru linked the issue of rehabilitation to future financial arrange-
ments. The statement read:

"The Nauruan view wasthat rehabilitation of Nauru was a matter of
primary concern for the Nauruan people. They indicated that they
were pursuing the rehabilitation proposals in the absence of any
acceptable proposal for resettlement. Theysaid that theyshould
receivethefullfinancial benefitfrom thephosphateindustrysothot
there would be funds availableto rehabilitatethe whole of the
Island. The Joint Delegation explained that the benefits to be re-

ceived by the Nauruan community from the proposed phosphate
arrangement would, it was envisaged, be adequate to provide for the
present and long-term securityof the Nauruan community including
an adequate continuing income when the phosphate has been ex-
hausted and when the costs of any resettlement or rehabilitation
have been met. The Joint Delegation said they would be prepared to
consider that, within the framework of a long-term agreement,
arrangements be made for an agreed payment into the long-term
investment fund, from which the costs or part of the costs of
rehabilitation could be met. It was agreed that the report of the
Committee on Rehabilitation should be examined by the Working
Party" (emphasis added). 85. The Working Party was chaired by Mr C E Reseigh, a senior
officer of the Department of Territories,and included two Nauruans and
their financialadviser. Its report (Annex 7) noted that agreement could
not be reached regardingconsideration of the Davey Committee find-
ings. Head Chief DeRoburt criticised the failure of the Department of
Territories to present a detailed critique of the Davey Report similar to
the Nauruan, repeated the Nauruan view that rehabilitation was the
responsibility of the Partner Governments and said how they financed
that responsibility was up to them. Mr Reseigh emphasised (para.15)

that the Government was not saying that it did not take any responsi-
bility for meeting the cost of rehabilitation, but that it would do this by
ensuring that the payments to the Nauruans would be sufficientlygener-
ous to enable al1expenditure necessary for the long term welfareof the
Nauruans, includingrehabilitation if they decidedupon it, to be met. He
suggestedthat it would beof use to look carefully at the Daveyreport to
determine what rehabilitation seemed sensibleand proper to undertake.
It would also be useful to know what the order of magnitude of the cost
of such a rehabilitation program would be. Head Chief DeRoburt re-
plied (para.16) that as there was not an acknowledgment of Partner
Governments' responsibility hecould not see that any advantage would

be served by the Working Party discussing the report.
86. On 18April 1967the Report of the Working Party wasdiscussed
in formal negotiations between the Partner Governments and the Nau-
ruans (SRS,pp.85-89, Recordof the 1967Negotiations, Annex 5, Vo1.3,
Nauruan Memorial). It covered, inter alia,the preparation of a price
indicator, profit sharing in mineral extracting, rehabilitation and the
Long Term Investment Fund. On rehabilitation Mr Warwick Smith

repeated that the Partner Governments considered that decisions on
what action should be taken on rehabilitation was wholly a matter for
the Nauruans. Thereafter there is no mention in the formal negotiations
with the Nauruans of the Davey Report although exchanges on the
principle of rehabilitation and responsibility continued for another
month.
87. On 16 May 1967,the Davey Report was made available to the
members of the Trusteeship Council. Its handling in the Council is

detailed in paragraphs 382-386 and paragraphs 399to 403 of the Report
of the Trusteeship Council 27 July 1966-30June 1967(United Nations,
Report of TmsreeshipCouncil, GeneralAssemblyOfJcial Records,
22ndSession, Suppl.No.4 (A/6704); reproduced, as Anna 28).

88. Parallel with the constitutional changes, the ~e~artment of Terri-
tories also prepared, with advice from the BPC, a package of proposals
to be put to the Nauruans in February or March 1966 on long term

arrangements for the futureconduct of the phosphate industry at Nauruand the level of royalties to be paid pending such arrangements being
accepted and put in place.
89. These proposals were considered by the Australian Government
which decided, subject to the agreement of the United Kingdom and
New Zealand Governments, that a set of proposals be put to the Nau-
ruans under which the phosphate industry would be operated by the

Partner Governments and Nauruans; that the arrangements should en-
sure the continued supply of Nauru phosphate to Partner Governments;
the Nauruans to have full participation in the conductf operations;and
that the financial basis be that the Naurans receive notess than 50% of
the financial benefit. From 27 to 30 April, 1966 discussions took place
between officiais of the three governments in preparation for the talks
with the Nauruans. The meeting endorsed the broad line of the Austra-
lian approach on the phosphate industry, which was then presented to
the Nauruans in negotiations commencing in June 1966.

G. NAURUAN~~ARTNG ERVERNMENTD S'ISCUSSIONSJ.UNEIJULY1966
90. NauruadPartner Governments' discussions were held over 12
sessions from 14 June to 1 July 1966. Mr Warwick Smith led for the

Partner Governments and Head Chief DeRoburt for the Nauruans. (The
Record of Negotiations is contained in Annex 4, Vo1.3,Nauruan Mem-
orial.)
91. The Partner Governments' openingstatementon 14June 1966put
forward general principles which might serve as the basis of a long term
agreement. It proposed the establishment of a Nauru Phosphate Com-
mission, the fixing of the levelof exports, financial arrangements and an
assurance that the whole of the Nauru output would be available to the

Partner Governments. The opening Nauruan statement rejected partner-
ship with the BPC, said that the beneficial interest in phosphate should
accrue to the Nauruans but that the BPC could operate the phosphate
industry as managing agents with both parties agreeing through a long
term contract on price, the costsof administering Nauru, payment of
profits and purchase by Nauru of BPC owned assets on the islands. In
the following discussions most exchanges centered on pricingpolicy. The
Davey Commission's report on rehabilitation was also examined
(paras.82 to 84 above).

92. On 1July 1966the two delegation leaders signed an agreed minute
covering the valuation of Nauru phosphate fob at Nauru ($A12.00 per
ton), variation of notional base value, financial arrangements to be
examined by a Working Party, the rate of extraction not to be altered
without the concurrence of both parties, the BPC to be agents for
operating the industry, the relationship of rehabilitation or resettlement
costs to financial arrangements (a restatement of their differing pos-
ition), phosphate rights (no agreement), capitalassets (see paras 109 to
112below), the long term investment fund and a new development fund.It was also agreed that talks should resume in October or November 1966
after the Working Party had met.

SectionIV. The Phosphate and Political Settlements 1967-1%8

A. POLICY RE-THINKING BYTHEPARTNER GOVERNMENTS

93. The Partner Governments reconsidered again in the last quarter of
1966and the first quarter of 1967where they weregoing in respect of the
future of Nauru before resuming discussions with the Nauruans which
had been suspended since July 1966. They took into account the size of
Nauru and concluded that its small size did not provide any particular
reason against self-determination. Broadly their view was that they
should aim to reconcile the political advancement of the Nauruans with
reasonable security of supplies of Nauruan phosphate to Partner Gov-
ernments. Under an envisaged arrangement, the phosphate rights exer-
cised by the Partner Governments might be extinguished and BPC assets

on Nauru transferred to the Nauruans at an agreed price as the Nau-
ruans themselves had requested on 14 June 1966 (see paras.110 to II2
below). A phosphate settlement would also cover al1outstanding ques-
tions and Partner Governments would have no responsibility in such
matters as resettlement or re-filling of mined areas. The Nauruans could
determine their own future and become independent in 1968if that was
theirwish. A negotiating position along these lines was agreed between
the three Partner Governments.

B. RESUMED NEC~IATIONSWITHTHE NAURUANS

94. From 12April to 15June discussions resumed with the Nauruans
in Canberra. The Record of the 1967 Negotiations (hereinafter "1967
Negotiations") is reproduced in Annex 5, Volume 3, Nauruan Memorial.
There was a break from 22 April to 9 May to enable the Partner
Governments to reconsider their negotiating stance on the future of the
phosphate industry and a second one from 20 May to 13 June for the
same purpose. Most inter-delegation discussions in these two months
centred on the industry. Only three sessions were devoted to political
matters and in thethird ofthese Australian Ministers (Territories and the
Attorney-General) led for the Partner Governments. As the phosphate
negotiations culminated in a Heads of Agreement on 15 June 1967,
which is not in dispute, little attention is devoted to the give and take in

the flow of the phosphate discussions with the exception of rehabili-
tation and the purchase of BPC assets on Nauru.

1. Phase 1: 12-20April 1967
95. The I'artner Governments led on 12 April with a statement that
the discussicins werea resumption ofthose adjourned in July 1966(SRI,pp.99-101, 1967Negotiations). At that stage it had been agreed: finan-
cial arrangements to be based on notional base fob price adjusted for
changes in world values with$12.00per ton an agreedacceptable base; 2
million tons per annum output not to be altered without concurrence of
both parties; BPC to operate the deposits; the NLGC to establish a
developmentfund; an adequate and securelong-term investment fund to

be maintained; and reciprocal assurance of supply and marketing for
whole output. Still under discussion were finance, purchase of BPC
assets, control of the phosphate, phosphate rights and rehabilitation.
96. Nauru submitted a statement prepared by its economic advisers
Philip Shrapnel and Co Pty Ltd of Sydney.It had two keyelements: the
Partner Governments' interests in the phosphate should be confined to
supply and price and al1other matters affectingthe industry should be

the exclusiveconcern of the Nauruan people. The primary criterion for
appraising various proposais was the welfare of the Nauruan people.
"The needs of the Nauruan people centre around their longterm future
on Nauru. In order to remain on Nauru the island must be rehabilitated
in a manner satisfactory to the Nauruan people" (Nauruan Document
67/1, pp.144-153, 1967Negotiations).
97. Mr WarwickSmith said that the Partner Governments had recon-
sidered their position with a fresh approach especially on phosphate

rights and saleof capital assets subject, as part of an overallsettlement,
to acceptance by the Nauruans that their receipts would be adequate to
provide for their needs including rehabilitation (or resettlement).
98. On 18April the report of the Rehabilitation (Davey)Committee
set up in 1966 was discussed, with Mr Reseigh noting that agreement
could not be reached inthe Working Party regarding its consideration.

Mr WarwickSmith said that he had gathered that the Nauruans thought
that it could be useful for the joint delegation to indicate its viewson the
Report in an informal way.This he then did.
"The Partner Governments consideredthat decisionson what action
should be taken regarding rehabilitation waswhollya matter for the
Nauruans. The Partner Governments had said they would expect
that the amount accruing to the Nauru people from phosphate
income would be adequate for the future needs of the Nauruan

comrnunity including rehabilitation" (SRS, pp.85-99, 1967Nego-
tiations).
On 19April Head Chief DeRoburt made and submitted three lengthy
statements: on rehabilitation, financial considerations and management
of the industry (Nauruan Documents 67/2-67/4, pp.136-143, 1967
Negotiations). The first wasfour pages. The Nauruan delegation, it said,
had argued from the beginning that the responsibility for restoring the

land already mined rested withthe Partner Governments "who cannot
divestthemselvesof this responsibilitybysayingthat they willnot accept
it". The Partner Governments must realise that the Nauruan need forproper rehabilitation of Nauru was a direct result of the breakdown of
negotiations for resettlement.
"The Nauruans themselves proposed resettlement as being a solution
that would be better for al1 parties concerned, and had such a
solutionbeen achieved there would by now have been a partnership

arrangement yielding considerable benefits to both sides. However,
the failure of the resettlement proposals to provide a secure future
and preserve the national identity of the Nauruan people has left us
no alternative except an expensive rehabilitation project for which we
need every penny we can get" (Nauruan Document 67/2).
99. The following day (20 April) Mr Warwick Smith replied (SR7,
pp.80-82, 1967Negotiations). The decision to abandon the resettlement

proposals, he said, was a decision by the Nauruans, not one that was
forced upon them and and that in so deciding they were rejecting
proposals which were sound and practicable. It was the view of the
Partner Governments that decisions regarding rehabilitation were also
matters for the Nauruans and that the Partner Governments' proposals
in respect of the financial arrangements provided adequate means to
carry out whatever re-development of the mined areas might prove to be
necessary. Mr Warwick Smith also denied that there was any widely
accepted obligation to restore mined lands to their original condition
and then tried unsuccessfully to get the Nauruans to discuss specific re-
development projects which the Nauruans claimed would cost $240

million. This was rejected and the following day the negotiations were
then adjourned until 9 May to enable the Partner Governments to
reconsider their position.

2. Phase 2: 9-20 May 1967

100. Following reconsideration by the Partner Governments of their
negotiating stance, the next phase was almost totally devoted to the future
of the industry on Nauru. On 10May a Joint Delegation proposal was put
to the Nauruans which substantially met their position on control of the
industry. The paper, however, contained one paragraph (9) on rehabili-
tation, namely that "the partner governments consider that the proposed
financial arrangements on phosphate cover the future needs of the Nau-

ruan comniunity including rehabilitation or resettlement" (Joint Del-
egation Document 67/2, pp.158-161, 1967Negotiations).
101. On 12May Head Chief DeRoburt asked whether he was right to
assume that on the question of independence there were no differences
between the Partner Governments and the Nauruans except on the
timing of independence. Mr Warwick Smith, in reply, said that the Joint
Delegation was able to talk about politicaldvance in only a preliminary
way. It was simply not ready to talk in depth about political advance

because iti; attention had been concentrated on the not unrelated ques-
tion of phosphate which had yet to be settled in a number of respects.The Partner Governments had agreed to discuss political issues during
the current series of talks but before he could reply to the Head Chief he
wanted to know what he meant by independence (SR12, pp.62-5, 1967
Negotiations).
102. Head Chief DeRoburt responded by reading a 15page statement

(Nauruan Document 67/7, pp. 119-133, 1967Negotiations) on political
and constitutional changes which had been prepared by his newly ap-
pointed constitutional adviser, Professor J W Davidson of the Depart-
ment of Pacific History at the ANU. (Davidson, a New Zealander by
birth, had gained his Ph.D at Cambridge but had lived in Australia since
1950as a foundationprofessorat the ANU. He had earlier been involved
as a constitutional adviser for the Western Samoans when they were in
the process of attaining their independence, achieved in 1962, and was
the leading expert in this field in Australia). Mr Warwick Smith said the
Nauruan statement would be studied and then asked if the Nauruans had
considered the various possible outcomes of self-determination and
whether it could offer any comments on its reasons for choosing the

particular proposal (sovereign independence) then put forward. He also
asked how the process of self-determination was to be ascertained. Head
Chief DeRoburt explained that it would be done through the elected
members of the NLGC (SR12, pp.63-64, 1967 Negotiations).
103. From 16 May to 14 June negotiations again returned to the

phosphate industry. Mr Warwick Smith, in a long statement on the
industry on 16 May, said that on the question of rehabilitation the
Partner Governments maintained that it was not for them to decide what
should be done for rehabilitation; this was a decision for the Nauruans.
Financial arrangements could be such as to permit the Nauruans to do
what they wished, within reasonable limits, in the way of rehabilitation.
As part of the total arrangement the Joint Delegation would like to see
the Nauruans withdraw their claims in respect of rehabilitation (SR13,
p.56, 1967 Negotiations). The following session he asked whether the
Nauruans would press that the Partner Governments had responsibility
for rehabilitation despite the financial arrangements made. The sum-
mary record noted that "during the following discussion it emerged that
the Nauruans would still maintain their claim on the Partner Govern-
ments in respect of rehabilitation of areas mined in the past, even if the

Partner Governments did not press for the withdrawal of the claim in a
forma1 manner such as in an agreement". Mr Warwick Smith also
offered immigration rights to Australia and New Zealand to which the
Head Chief replied that the Nauruans had given up the notion of
resettlement (SR14, pp.46-52, 1967 Negotiations).

104. On 18 May Head Chief DeRoburt raised again his concern that
the Partner Governments were stalling in not discussing political ques-
tions but was told that the Joint Delegation was not in a position to talk
substantially at that stage(SR16, pp.38-40, 1967 Negotiations). At the Phosphate will be supplied to the British Phosphate Commission-
ers at the rateof two million tons per year. The basic price will be
$11per ton in each of the three years provided that if the assets have
been paid for in full by 30th June 1969 the basic price in the third
year willbe $12 per ton. The basic price willbe varied so as ro reflect
market conditions according to an agreed formula. After al1costs of
production and of administration of Nauru have been met the figure
of$11would represent a return to the Nauruans of about $6per ton.

Mr Barnes said that it is open to either of the parties in the second
year of the agreement to review the arrangements for the supply of
phosphate but if these are not altered they will continue to operate
after 30th June, 1970, unless they are subsequently altered at twelve
months' notice.
The royalty payments which have hitherto been made for phos-
phate from Nauru have been fixed at $4.50 per ton for 1966/67.

Royalty payments in future years will be superseded by the arrange-
ments set out above".
4. Phase4: PolificalDiscussions,15June1967

108. The subsianiive political discussions took place on 15June. The
Partner G-\-ernments' delev-tion wabled bv Mr Darnes. ihe Minisier for
Territories, and Mr Nigel Bowen, the Attorney-~eneral. The New
Zealand and United Kingdom Governments wererepresented by officiais
from their High Commissions. Head Chief DeRoburt and Professor
Davidson were the principal Nauruan interlocutors. Mr Barnes put
forward the proposition that Nauru accept an association of legal form
with Australia, under which Nauru would have full autonomy in interna1
affairs while defence and external affairs remained with Australia. The

Nauruans, after reflection, rejected this course as not meeting their wish
for sovereign independence. The Australian Ministers then put forward
as an alternative that Nauru be accorded full independence and that a
treaty relationship with Australia be concluded under which responsi-
bility for external'affairs and defence would devolveupon Australia. The
two possibilities would be further considered by the Nauruan representa-
tives after the Trusteeship Council meeting to be held late that month. It
was agreed that a working party of both delegations should consider the
proposals and report back later. Professor Davidson represented the
Nauruans on the working party. The subsequent consideration of the
issues is detailed below in paragraphs 113 to 115.

5. ThePurchaseof BPC assetson Nauru

109. Paragraphs 496 to 500 of Volume 1 of the Nauruan Memorial
deal with "reparation in respect of the payment for BPC assets pur-
chased with Nauruan funds". The substance of the claim is that the
$A21m paid by Nauru for the BPC assets on Nauru "were made on
sufferance" (para.497) and that "498. In the viewof the Government of Nauru, the forced purchase
of access to its own natural resources was a further segment in the
long line of inequitable treatment at the hands of the Australian
Government and its collaborators. The payment compounded the
unjust enrichment resulting from the economic management of
phosphati: affairs in the trusteeship period and before. It was ex-
tracted diiring the very sensitive period prior to independence in

January 1968, and one of several unusual features was the payment
required by the outgoing authority for the capital assets of the
British Phosphate Commissioners on the island: see the provisions
on capital assets in Articles 7 to 11 of the Agreement of 1967".
Australia rejects this allegation. While, at this stage of preliminary
objections, it is not necessary to rebut in detail this allegation, Australia
considers it riecessary at this stage briefiy to set the historical record

right.
110. The daim is clearly rebutted by a short examination of that
historical record. The question was first raised in 1966, not 1967, in the
context of discussions on the future arrangements for the phosphate
industry. On 14 June 1966 the Partner Governments in an opening
statement (Annex 3 to the 1966 Record of Negotiations, reproduced in
Annex 4, Vo1.3, Nauruan Memorial) proposed an association agree-
ment, with the Nauruans receiving 50% of the benefits. At no point in

the 5 page statement was there any mention madeabout Nauru purchas-
ing the assets. At the same meeting the Nauruan delegation presented
and circulated a 6 page opening statement (Annex 4 to the 1966 Record
of Negotiatic~ns).Its substance was rejection of partnership. The BPC
should instead operate the phosphate industry in the capacity of manag-
ing agents "iinder contract with the Nauruan people with present mat-
ters of conteiition (extraction rate, calculation of selling price etc) being
defined by the contract". The statement then expanded on six basic
principles which should underlie the agreement on the managing agent
relationship. Principle(d) read:

"(d)Purchaseof BPC ownedCapital Equipment
The Nauruan people consider that it is consistent with their moral
and legal rights as owners of thephosphate deposits that they should
also own the capital equipment used by the BPC in mining phos-
phate on Nauru. It is cherefore proposed that the Nauruan people
should purchase this equipment fromthe BPC at a mutually agreed
price. Since the Nauruan people do not have the financial resources
to undertake the payment immediately it is further proposed that
payment be made over a period of ten years with the annual amount

being viewed as a charge on profits. Once the initial purchase has
been cornpleted it is expected that the BPC will look to the Nauruan
people for such replacement of the capital equipment as may be
required." 111. On I July 1966 an agreed minute was signed by Mr Warwick
Smith and Head Chief DeRoburt (Annex 19 to the 1966 Record of
Negotiations). It contained the following paragraph
"Capital Assets
The Nauruan Delegalion proposed thepurchase of the capital assets
of theBPC at Nauru, the intention being that payment he made for

these assets out of the financial benefits that the Nauruan people
received from the industry over a period of ten years and thathese
assets be made available to the BPC for the operations at Nauru.
The Joint Delegation indicated that it was part of the Partner
Governments' proposal for a long-term agreement that the capital
assets would continue to be vested in the British Phosphate Commis-
sioners" (emphasis added).
112. In the 1967 Nauruan/Partner Governments' negotiations, the
sale of the BPC assets was mentioned in the Nauruan openingstatement

(Nauruan Document 67/1, pp.144-153, 1967 Negotiations, reproduced
in Annex 5, Vo1.3,Nauruan Memorial). On 17April 1967the purchase
of assets was discussed. A Nauruan paper of 14 April 1967 on the
"Constitution and Role of the Extracting Authority at Nauru" was
tabled which incorporated the sentence that "the assets of the BPC
would be purchased by the Nauruansand held by the [Nauruan] corpor-
ation, paying over ten years with ownership passing before or soon after
independence" (Working Paper 1, pp.164-166, 1967 Negotiations). Mr
Warwick Smith after acknowledging that the Partner Governments had
in 1966wanted the assets to continue to be vested in the BPC, said that
"the Partner Governments wereagreeable now to the sale of the assets as
part of a mutually acceptable total arrangement but agreement would
depend on the future arrangements for the phosphate industry" (SR4,

pp.90-93, 1967Negotiations). In this and following meetings there were
discussions about splitting the assets (rejected by the Nauruans), their
valuation, how they were to be paid forand when ownership would pass
but at no stage was thereany suggestion by the Nauruansthat they were
being forced to make an offer for them. lndeed on 18 May 1967 a
Nauruan Delegation document "Phosphate Proposals by Nauruan Del-
egation" repeated in paragraphs 5-7 that "the Nauruan Delegation
submit that the Partner Governments should seIlthe capital assets of the
phosphate industry at Nauru to the Nauru Local Government Council
.. !' (Nauruan Document 67/8, pp.108-118, 1967Negotiations). On 15
June 1967 a Heads of Agreement in respect of the Nauru Phosphate
Agreement was signed by the Partner Governments and the Head Chief.
Paragraph 6 dealt with capital assets to the effect that "the Partner

Governments undertake to seIl and the Nauruan Local Government
Council undertakes to buy the capital assets of the phosphate industry at
Nauru" and certain arrangements were set out. On 14 November 1967
these provisions were formalised in Part III of the Nauru Phosphate
Agreement (Annex 6, Vo1.3,Nauruan Memorial). It is thus nonsense tosay, as the Nauruan Memorial puts it (para.498). that there was a
"forced purchase of accessto its own natural resources" and [the agree-
ment] "was extracted during the very sensitiveperiod immediatelyprior
to independence in January 1968". Torepeat, the purchase of the assets
wasproposed.by the Nauruans themselveson 14June 1966ie 17months
before the final agreement was signed. There is no evidence that they
were unhappy about the purchase.

C. NAURLJANIPARTN GORVERNMENT PO,LITICAL DISCUSSIONS

113. The Working Party on political matters was set up on 15 June
and consisteri of Professor Davidson and Australian officials. It met
eight times. The two delegations met again in formal session on 23
August and Head'Chief DeRoburt read a statement in which heagain
rejected associated status but was prepared to discuss full independence
and a treaty relationship with Australiaalthough such a treaty would not
havethe al1embracing character of that earlier proposed by the Panner

Governmenté,.There should be no encroachment on Nauruan sover-
eignty.A longand inconclusivediscussion ensuedbut Head Chief DeRo-
burt refusedio concedeanyground onthe central issueof the attainment
for Nauru of full and unfettered sovereignty.
114. On 18October 1967the Nauruan delegation wasinformed byMr
Barnes, the Minister for Territories, that the Partner Governments
agreed to meet the Nauruan request for full independence. The other

points conveyed related to the timing of independence, the transition
arrangement:; and the termination of the Trusteeship Agreement.
115. On 24 October 1967with the agreement of Head Chief DeRo-
burt, Mr Barnes made a lengthy statement in the House of Representa-
tives in Canberra announcing the decision (Annex 8). It incorporated a
joint statement subscribed to by the representativeswho took part in the
talks. The text read in part:

"Discusrions on the constitutional future of the island of Nauru
havebeen proceeding between representativeof the Nauruan people
and of the three Governments-Britain, New Zealand and
Australiii-which are at present responsible under United Nations
Trusteeship. for the administration of the island. The conclusions
reached inthose discussions are recorded in a joint statement sub-
scribed to by the representativeswho took part in the talks. The text
of the statementis-

'Discussions between representativesof the Nauruan people and
representativesof the Governmentsof Australia, Britain and New
Zealarid on the constitutional future of Nauru were recently re-
sumed.
At the earlier discussions held inJune this proposaisby the

Nauruan delegation seekingthe agreement of the partner govern- ments to Nauru becoming an independent state on 31st January,
1968wereconsidered. At that timethe Governments agreed that it
was appropriate that basic changesshould be made in the govern-
ment of Nauru but they put forward for consideration alternative
arrangements under which Australia would exercise responsibili-

ties for external affairs and defence but which would otherwise
give the Nauruans full autonomy.
...
The position of the Nauruan delegation was, however, that the
nature of the future links between Nauru and the three countries
which were now the Administering Authority should be deter-

mined by agreement after independence had been attained. The
primary objective of the Nauruan delegation was the attainment
for Nauru of full and unfettered sovereignty.
The partner governments responded that they would respect the
views put forward by the Nauruan Delegation. The partner Gov-
ernments were therefore agreeable to meet the request of the
Nauruan delegation for full and unqualified independence.

The date on which Nauru will become independent requires
consideration in the lightof the steps that are necessary to enable
the change to be made. The partner Governments have agreed to
take the necessary steps to seek from the present United Nations
General Assembly a resolution for the termination of the trustee-
ship agreement upon independence being achieved.'
. ..
The agreement that has been reached is an historic one and is of
far reaching importance to the Nauruan people. The choice of full
independence is theirs. Wewish them well. If after independence the
Nauruan Government wishes to continue close links with Australia,

as forecast by the Nauruan delegation at these talks, the Australian
Governments will be ready to respond and to consider sympatheti-
cally any requests that may be made for assistance.
....

116. On 14 November 1967 the Phosphate Agreement was signed in
Canberra. It is reproduced as a Schedule to theNauru Phosphate Agree-
ment Ordinance 1968, set out in Annex 9. It formalised the Heads of
Phosphate Agreement initialled on 15 June 1967. The main provisions
were:

-Nauru phosphate would be supplied exclusivelyto the Partner Gov-
ernments at a rate of 2 million tons per annum.
-The price would Vary from year to year according to an agreed
index. -For the first three years the basic price would be$Al1 per ton fob
Nauru and if the Nauruan purchase of BPC assets was paid in full
before 31 July 1970the basic pricefor the third and subsequent year
would b<:$A12 per ton.
-The Partner Governments would seIlto the NEC the capital assets
of the BPC on Nauru.
-The assets would be valuedat original price less depreciation at a
rate consistent with the economic life of the assets. A jointm
would establish the value of the assets.
-The NU3C would commence quarterly payments for the assets of
no lessthan $750,000commencing 30 September 1967with interest
accruing at the rate of 6% on the unpaid balance.

-The NLGC wouldset up a body to be known as the Nauru Phos-
phate Corporation to manage the phosphate on behalf of the
NLGC.
-For the ïirst three yearsof the agreementthe BPC wouldcontinue to
manage the phosphate installations on Nauru.
-During the three year period there would be consultations for the
transfer of management authority from the BPC to the Nauru
Phosphate Corporation at the end of the third year.
-The Agreement wouldenter into force from 1July 1967and would
remain in force for three years and thereafter indefinitely subject to
certaini:onditions.

As with the Heads of Phosphate Agreement there was no mention of
rehabilitation. Subsequently it was agreed that the value of the BPC
assetswould be$A21million. That sum wasfullypaid by 18April 1969.

E. CONSTITUTIOM NAKING
117. Froni October 1967to January 1968most Nauruan and Austra-
lian energies went into the transitional administrative arrangements, the
establishment and deliberations of a Constitutional Convention to draft
and aoorovethe oermanent constitution and elections for the Leeislative
-
~ssembly.
118. As well, Ordinances were made to put Nauruan administration,
particularly that concerning the phosphate royalties, on a satisfactory
basis prior to independence. TNauruPhosphate RoyaltieT srustOrdi-
nance 1968and the Nauru Phosphate Royaltie(sPaymentand Invest-
ment) Ordirrance 1968were among the Ordinances enacted in the few
days prior to independence. These Ordinances appear as Annexes 10and
11to these :PreliminaryObjections. These Ordinances were designed to

reflect the riewarrangements for the payment of royalties after 1 July
1967as a re!;ultof the 1967Agreement. At the same time, the phosphate
agreement was givenlegislative effect in thNauru Phosphate Agree-
ment Ordinance 1968. The Trust Ordinance formally established the
Long Term Investment Fund and Land Owners Royalty Trust Fund,subject to the control of the RoyaltiesTrust, in place of their exisasnce
trust funds under the control of the Administrator. In the other Ordi-
nance, the Royalties Ordinance, detailed provision was made for a
number of different trust funds, including for the first time avelop-
ment Fund and Rehabilitation Fund. The amounts payable to the vari-
ous funds set out in the Ordinance reflectedthe wishesof the Head Chief
and Chairman of the NLGC.

119. On 10November 1967,after short debates in both the House of
Representatives (26October) and the Senate (2 November), the Nauru
Independence Act 1967 was adopted. It provided, inter alia, "that on
and after Nauru Independence Day Australia shall not exercise any
power of legislation, administration or jurisdiction in and over Nauru"
(Annex 40, Vo1.4Nauruan Memorial).

F. INDEPENDENC3E 1.JANUARY 1968

120. Throughout the negotiations, the United Nations had taken a
close interest and receiveddetailed reports. The United Nations in No-
vemberand December 1967considered the final agreement reached with
Nauru, including the decision to grant independence (see paras.177 to
183below)and approved termination of the Trusteeship. Nauru became
independent on 31 January 1968. Mr Barnes, the Minister for Territo-
ries, representedAustralia on the occasion in Nauru. The record of part
of the inaugural meeting of the LegislativeCouncil is set out in Annex

12. Apart from the customary congratulations, the Minister'sspeech in
the Legislative Assemblyof Nauru contained a passage on phosphate:
"Last June, an Agreement was made with the representativesof the
Nauru Local Government Council concerning the future of the
phosphate industry. This was subsequently signed in Canberra by
the Head Chief on behalf of the Local Government Council. The
Australian Government is particularly pleased to seethis agreement

specifically mentioned in the Constitution of Nauru on the basis
that the responsibilities and obligations previously entered into by
the Nauru Local Government Council become the responsibilities
and obligations of the Republicof Nauru. This agreement provides
for continued cooperation between the parties and it is the earnest
hope of the Australian Governmentthat the phosphate industry will
continue to bring prosperity to Nauru and provide an assured future
for the Nauruan people".

He was followed by the British High Commissioner who conveyed a
congratulatory message from his Prime Minister.
121. The NewZealand Representative,Mr D J Carter MP, Parliamen-
tary Secretary for Agriculture, said, ;nfer alia:

"New Zealand's association with Nauru is a long one, commencing
in 1919. In 1947, we, with Australia and Britain, accepted goodresponsibility as trustees for Nauru under the United Nations Trustee-
ship Agreement. Under this agreement the three Governments under-
took to takc: al1 appropriate measures to promote the political
advancement of the Nauruan people towards self-governmentor inde-
pendence, as might be appropriate to Nauru's particular circumstances
and thefreely expressed wishesof its people.

Webelievethat this undertaking has been carried out and carried out
in full. Under the Trustee Agreement, Nauru has seen twenty yearsof
peace and stability,the present assumption of responsibilityby its people
and nowthe orderly handing overof the reinsof Government to those to
whom those reins belong. This has now been achieved."

122.The representativeof the Secretary-Generalof the United Nations
said, interali~i:

"1havecome to share with you the joys of this day and to conveyto
you the messageof good willand congratulation on the achievement
which is evolved in glory to your sound principles, your determi-
nation and to the joint and unlimited efforts of the administering
authority and the United Nations overthe past twenty years.It isyet

another example of the objectives of the Trusteeship system being
fully realised. At times there were some who doubted whether a
country so small and isolated as Nauru could stand alone in the
strenuous conditions of our modern world. The facts of geography
and size did not bend the will of this small community, deeply
consciour of its fidelityand its resolute determinatito be freeand
independent. Consequently, a new member is added today to the
family of nations."

123. In coricludingthe sessionHead Chief Hammer DeRoburt, in his
capacity as Chairman of the interim Council of State spoke as follows:

"Mr Speaker,on behalf of the Council of State and al1the Members
of this Assembly,1should liketo expressOurgreat pleasure at having
with us this morning, on the floor of the House, the distinguished
representntivesof friendly governments and also the personal rep-
resentativeof the SecretaryGeneral to the United Nations. 1should
like toexpress Our deepest thanks for the words they havespoken
and for the messagesthat they have delivered.

During this inaugural sessionof the Legislative Assemblywehave
finally brought the Government of the Republic of Nauru into
being, but this session has a symbolic importance as well as a
political one, and in both respects, the symbolic and political, our
distinguished visitors havecontributed greatly to that importance by
their presence with usas wellas by their words. They havegiven us
an assurance that Nauru begins its life as an lndependent State with
their friendship and good will. Thank you, Mr Speaker". Section V. Summary
124. On independencethe Nauruans could feelwellpleased withwhat
they had achieved under the 47 years of the Mandate and the Trustee-

ship. Politicallyand economically,Nauru wasamongthe most advanced
States in the South West Pacific with its economy based on a major
economic asset whose expected exploitativelifehad about another 25 to
30 years to run. It had gained a notional world price for its phosphate
exports, assured markets in Australia and New Zealand, ownership of
the deposits, the BPC assets on Nauru, four royalty trust funds and a
large annual revenue from sales. If investedwisely and managed effi-
ciently,this revenue wouldcontinue to givethem a per capita income at
least equal to if not superior to Australia and New Zealand, a continu-
ance of the no tax regime, and high health and education standards. It
was, as well, a socially contented community whose mores combined

traditional and western valuesand whose unfettered independencein the
community of nations was underpinned bythe goodwilland the continu-
ingsupport of Australia, the United Kingdom and New Zealand.
125. Every major political and phosphate goal, bar one, that the
Nauruan leaders had set themselves theyhad achieved. The exception-
the rehabilitation of the phosphate lands workedout to June 1967-was
one whichneither they nor the Partner Governments could agreeupon in
the extended negotiations in the period 1964-1967. Both sides stated,

and restated, their positions to each other in Canberra and New York
until on 6 December 1967Head Chief DeRoburt, with his eyes set on
independence and conscious of the distance the Partner Governments
had come in the negotiations, waivedthe claim by acknowledging that
"the revenue which Nauru had received in the past and would receive
during the next 25 years would however make it possibleto solve this
problem". The subsequent change of heart, post 31 January 1968,does
not invalidate that renunciation. CHAPTER 2

THE SOCIAL ALNDECONOMlC SITUATION ON NAURU AS A
RESULT OF PHOSPHATE MINING

126. In these Preliminary Objections Australia considers it necessary
to provide a brief outline of the social and economic situation on Nauru
as a resuit of phosphate operations in order to ensure the Court has
adequate background information to enable a decision on the prelimi-
nary objections. IItdoes not seek to deal comprehensively withthese
issuesbut it has been deemed necessaryto rectify the misleading impres-
sion of exploitation and financial disadvantage that Nauru's presen-
tation tries to give of the case and of the respective economic and
financial situation of the two parties. Moreover,the information given in
this chapter is of specialsignificancewith regardto the objections made

by Australia to N;auru'sApplication in Part V, on the ground that the
Applicant State haisfailedto act consistentlyand in good faith in relation
to the question it now puts before the Court.

Section 1. Hisitoryof the BPC Phosphate Concession on Nauru

127. The following brief account is provided of the basis for the
operation of the phosphate industry on Nauru by BPC. At this stage of
preliminary procei:dingsthe Court is not called upon to reach decisions
on the substantive legal basisof the phosphate concession held by BPC.
These Preliminary Objections do not, therefore, address the differences
of viewexpressedthroughout the negotiations betweenthe Partner Gov-
ernments and Nauru as to whether the BPC concessionwasin fact valid.
The fact was, hawever, that the negotiations over the future of the

phosphate industry took place on the basis that BPC had rights under
the concession to mine the phosphate until the year 2000.The resulting
1967Agreement can only be explained on that basis even though the
legal positions of' both sides may have been put to one side. It is,
however,relevantin considering the preliminary objections of Australia,
to appreciate the basis on which the phosphate operations were con-
ducted.
128. The BPC concession on Nauru derived from two sources: its
inheritance of the concessionary rights of the Pacific Phosphate Com-
pany in 1920and the terms of the 1919 Nauru Agreement concluded
between the United Kingdom, Australia and New Zealand.

129. On 16April 1888Nauru was formally annexed by Germany and
placed "under thecommand of the administration of the Protectorate of
the Marshall, Brown and Providence Islands". Even beforethis, on 21
January 1888,the Imperial Government of Germany had grantedto the
German firm, Jaluit Gesellschaft, the right, inolia,to exploit guano
deposits in the Marshall Islandsand Nauru (page 87,Ch.4, Vol.1,Part 1,
1988 Nauru Conimission of Inquiry into the Rehabilitation of theWorked-out Phosphate Islands of Nauru). In 1905 this concession,
entailing the "exclusive right of exploiting" the phosphate deposits, was
continued for a period of 94 years beginning on 1 April 1906, thus
extending the rights under the concession to the year 2000 (Annex 43,
Vo1.4,Nauruan Memorial).

130. The original 1888Jaluit concession, to run to 1906, was assigned
in 1900to the Pacific Islands Company which, in turn, was superseded
by the Pacific Phosphate Company (formed with both British and Ger-
man capital). The Pacific Phosphate Company took over the extended
Jaluit concession in 1906 with the consent of the Imperia1 German
Government (Annex 44, Vo1.4,Nauruan Memorial).

131. On 2 July 1919 the Governments of the United Kingdom, Aus-
tralia and New Zealand concluded the Nauru Island Agreement to make
provision for the administration of the island and the mining of phos-
phate (Annex 26, Vo1.4, Nauru an Memorial). The two preambular
paragraphs read:
"Whereas a Mandate for the administration of the Island of Nauru
has heen conferred by the Allied and Associated powers upon the

British Empire and such Mandate will come into operation on the
coming into force of the Treaty of Peace with Germany, and
Whereas it is necessary to make provision for the exercise of the
said Mandate and for the mining of the phosphate deposits on the
island:'

The Agreement then dealt with the administration and set up a Board of
Commissioners to be responsible for mining. Articles 6, 7 and 9 dealt
with title and rights to phosphate.

'Xrticle 6
The title to the phosphate deposits on the island of Nauru and to al1
land, buildings, plant and equipment on the island used in connec-
tion with the working of the deposits, shall be vested in the Commis-
sioners.

Article 7

Any right, title or interest which the Pacific Phosphate Company or
any person may have in the said deposits, land, buildings, plant and
equipment (so far as such right, title and interest is dealt with by the
Treaty of Peace) shall be converted into a claim for compensation at
fair valuation.

Article 9
The deposits shall be worked and sold under the direction manage-
ment and control of the Commissioners subject to the terms of this
Agreement.

. . .players in the regular consultations and negotiations concerning the
phosphate industry. Financial information on BPC operations was nev-
erthelessprovided tothe United Nations. Thisisdealt with in paragraphs
189to 192below.

135. Although concern was expressedfrom time to time in the United
Nations that the BPC exerciseda commanding position on Nauru, the
consistent Australian response was that BPC only had control and
responsibility overthe technical operations of the phosphate industry. It
was not responsible for the framing of the budget of the Territoryor the
day to day civil administration of the island. Yetthe presence of BPC

and the phosphate enterprise brought considerable benefits to Nauru
that it would not otherwise have enjoyed.
136. In 1967the Partner Governments gaveup al1the valuable rights
BPC enjoyed under the Concession without anycompensation. This was

done as part of acomprehensive agreementon the future conduct of the
phosphate industry (see paras.95 to 107above). Earlier in 1966,during
the negotiations with Nauru, consideration was givento an appropriate
financial basis for the conduct of the Concession given financial ar-
rangements under mining concessions in other parts of the world. For
that purpose, a Working Party was established to review this issue,
among other matters.

137. The report of the Working Party was completed in late 1966
(Annex7). One major matter considered in the Report was the question
of financial and commercial arrangements that exist in various parts of
the world for the extraction of mineral products.

138. Amongst the material prepared for the Working Party by the
Department of Territorieswasa paper setting out information regarding
such commercial and financial sharing arrangements. A second paper
was prepared bytheNauruan representative (Walker)showingthe profit-
ability of a selection of Australian companies. These papers form An-
nexes 11and III respectivelyof the Working Paper report.

139. Paragraphs 10to 12of the report deal with the two papers under
the heading "The consideration of financial Arrangements". They read:

"10. The Working Party considered that the data prepared by the
respectiverepresentativesshowed no basic incompatibility but
rather represented two appro'aches-viz:
(a) the share of profit between operating companies and the
Government on the one hand; and
(b) the return of profit on shareholders' fund which mining
companies in Australia actually obtain.
11. The Working Party considered that its task was to prepare a

statement of facts and that it was not its function to express
agreed conclusions drawn from the facts. 12. In discussion the Working Party agreed that the information
obtainable regarding sharing arrangements did not show any
uniformsort of arrangement for the determination of the basis
of sharing but that in every case the arrangement was influ-
enced by the local economic policies and political situation.
The information presented in Annex II showed that there was a
very wide variation in the percentage of net profit going to the

Government and Landowners. This percentage varied from
35% in the USA to 85% in Chile. However, the Department
representatives suggested that a 50/50 sharing arrangement
between the Government as owner of the resources and the
cornmercialenterprise as the operator of the resources was not
an unreasonable basis in the light of Annex II. An alternative
approach was suggested by the Nauruan Representatives (see
Annex III) in which the return to the mining operator is
exyiressedas a percentage of shareholders funds. The Nauruan
Representatives argued that the return of 15% on shareholders
funds as shown by Annex III was an appropriate measure of
the managerial fee payable to the BPC as the mining operator
on Nauru".
140. The Working Party's report was considered on 18 April 1967 in

the discussions between the Nauruans and the Partner Governments
(SR5, pp.86--87, 1967Negotiations, reproduced in Annex 5, Vo1.3,Nau-
ruan Memorial). However, Nauru pointed out:
"that the Nauruan suggestion had been that a return of 15% on
shareholder funds uas an appropriate measure of the managerial fee
ua\able io[lie BI'C. TIii, \vas no lancer relerünt because the Nau-
&ns had advanced their thinking to propose at the present talks a

Nauru C:orporation to operate the industry and the question of a
managernent fee would not arise".
No subsequent discussion touching directly on practices at other sites
look place. What the report highlighted, however, was that there was
certainly no practice which would suggest that a Statehas a right to take
over a concerisioncompletely without the payment of any compensation,
as was to happen as a result of the subsequent 1967negotiations. Those
discussions, of course, led to a situation where Nauru obtained complete

control of the phosphate industry, with no continuing liabilities to BPC
or the Partex Governments.

Section II. Benefits from Phosphate Mining

141. The phosphate mining operations on Nauru transformed the
Nauruan coinmunity from an isolated subsistence island community to
one that had adequate financial and other resources to become a modern
independent State. Throughout the period of the Mandate and Trustee-
ship, the provision of administration expenses from the proceeds of the phosphate operations led to a community that was well provided for in

terms of health, education and welfare and that paid no taxes.
142. In this the role of BPC was important.
"The role of the British Phosphate Commissioners in the Territory
was related primarily to the phosphate enterprise, which was the sole
reason for the presence of their Nauru management. The direct

effects of the enterprise on the Nauruan community were, first,
financial benefits through royalties, surface rights payments, free
social services and freeor subsidised public utilities; and second,
opportunities for employment of Nauruans within the Commission-
ers' Nauru manaee-ent. lncidental benefits included the freauent
diversion of the management's resources to public works and hous-
ing projects for the Nauruan community, and a share in the use of
various facilities, such as a cheap shipping service for which they
were te-imbursed by theAdministration or theNauru Local Govern-
ment Council as the case might be.

Although the Commissioners provided nearly al1the funds for the
Administration budget, they had no powers in determining its con-
tent. They may have been invited to give advice on some item"
(Report on the Administration of Nauru, 1966-68, p.17.).

143. While Nauruans were well provided for as a result of the phos-
phate operations, there was also a large community comprised of per-
sons from outside, principally to provide labour to work in the
phosphate operations. The pattern emerged from early days whereby the
Nauruans, while receiving direct income and other benefits from those
operations, did not find it necessary to seek employment in the industry.
Non-Nauruans made up around half of the island population during
most of the period under Mandate and Trusteeship.'

144. At the time of independence in 1968, the population was:
Chinese 924
European 482
Other Pacific Islands - 1715

3,121
Nauruans -3,065
Total 6,186
(taken from Report on Administration of Nauru, 1966-68)

United Nations.eealso TableII to the 1965 Reportof the Visiiing tosNauru,ty to the
Annex 12.Vo1.4 .auruan Mernorial.As to employment, figures at 30 June 1968 show Nauruans in employ-
ment as follows:
Administration 474
British Phosphate Commissioners 119
Nauru Co-operative Society 62

NLGC 72
Other (including self employed) - 31
758
(taken from Report on Administration of Nauru, 1966-68)

145. That the phosphate operations brought the island prosperity is
evident from comments by United Nations Visiting Missions. The 1965
Visiting Mission said for instance:

"Thanks to the phosphate, this tiny island lost in mid-ocean has
houses, schools and hospitals which could be the envy of places with
a very ancient civilization. Its citizens pay no taxes. Because of these
favourable conditions and the spirit of mutual assistance character-
istic of the inhabitants, poverty is virtually unknown in Nauru.
There is e high standard of living: necessities and even many luxuries
are imported. The stores and shops are wellstocked with goods. Few
people w;xlkin this Territory, which has an areaof 8 1/4 square miles
and a circumference of 12miles: there are over 1,000 motor vehicles
(not to mention bicycles) for a total of population of 4,914,includ-

ing 2,661 Nauruans (at 30 June 1964)" (para 2, Annex 12, Vo1.4,
Nauruan Memorial).
This was not a new phenomenon. Earlier Visiting Missions expressed
similar views:

"That the Nauruans have derived considerable benefit from the
industry is at once obvious to anyone visiting the Territory. On the
whole the Mission found the Nauruans better clothed, in better
health, better nourished and better educated thao is usual at this
time in Pacific Island territories". (para.423, 1950 Visiting Mission
report, Annex 7, Vo1.4, Nauruan Memorial)

and
"the miriing of phosphate has brought to the Nauruans greater
prosperity and better social servicesthan are enjoyed by any other
community of similar size in the Pacific region" (para.18, 1956
Visiting lvlission report, Annex 9, Vo1.4,Nauruan Memorial)

Section III. Financial situation al independence and tnday

146. As outlined in the history of the negotiations set out in Chapter 1
above, Australia considered that at independence it had given Nauru
adequate financial resources to provide a secure future for the island. It

took the view that it was for Nauru to decide how it wished to spend thethen accumulated royalty funds and the income from the phosphate
operation, of which they would receive the full benefit. The BPC re-
tained, once the BPC assets were purchased on Nauru, no remaining
interest in the phosphate. This complete relinquishment of any interest
amounted to a renunciation of concession rights over the phosphate that
ran to the year 2000. As Nauru itself indicates, since July 1967 almost
the same amount of phosphate has been mined as was mined before that
date (para. 207, Nauruan Memorial).

147. Nauru has thus had the benefit of considerable phosphate in-
come since independence which, properly managed, should have pro-
vided a considerable income for Nauru and put it in a position where its
future was secure. It is worth noting çtatements made in the few years
prior to independence that indicate the wealth then available to the small
Nauruan population. In 1965, Australia told the Fourth Committee that
it estimated the proposed royalties and an extraction rate of 2 million
tons a year meant that the Nauruans would receive the equivalent of
some $4 million a year.

"As a result of those royalties, the average income of the island,
according to a recent United Nations survey was the second highest
in the world surpassed only by the United States" (United Nations,
GeneralAssemblyOfficial Records,20th Session,Fourth Commit-
tee, Doc.A/C.4/SR.1588).

In 1967, Australia told the Fourth Committee that during the years of
the Trusteeship the Nauruans had enjoyed an enviable prosperity:
"The per capita income at 30 June 1966 had been over US$I,BM),
higher than the per capitaincome of Australia and one of the highest

in the world."
And, the representative of Australia continued in explaining theoutcome
of the 1967 phosphate negotiations:

"The agreement provided for the supply of 2 million tons of phos-
phate per year at the price of $US 12.10 per ton fob which would
mean an annual return to the Nauruans of $15 million. The Nau-
ruan authorities would set up the Nauru Phosphate Corporation
. .. If the price of phosphate and cost of production remained in the
same relationship as at present and the Nauruans continued to put
aside the same proportion of their funds as in the previous year, they
would build up a fund which, in twenty five years, would stand at
approximately $400 million. In that way the economic well being of
the population would be ensured once the phosphate deposits were
exhausted" (United Nations, GeneralAssemblyOfficial Records,

22ndSession.Fourth Committee, Doc.A/C.4/SR. 1739).
148. This economic well-being was recognised in an article that ap-
peared in the magazine National Geographic in September 1976entitled
"This is the World's Richest Nation-All of It!" (Annex 32). 149. Attached to these Preliminary Objections is an independent
study prepared for the Australian Department of Foreign Affairs and
Trade which examines Nauru's income from phosphate both before and
after independence (Annex 26).' It confirms that at independence
Nauru's per capita income was one of the highest in the world. Following

independenct:, while information is hard to compile, the study concludes
that "available evidence suggests that the phosphate income has not
always been well spent. Educational and health standards have fallen
and large surns of money have been wasted on items such as a national
airline" (p2). The airline in fact consumed 70 per cent of government
phosphate revenue between 1974-75 and 1987-88. The study also shows
that

(a) from the trust funds available to Nauru at independence, their
value in terms of income saved in today's terms would be some
$83 inillion, which by 1995 would have accumulated to $136
million;
(b) the capitalized value of the future stream of profits from the

concession from 1968, assuming they continued to 1995, would
in today's dollar terms amount to $945 million; and
(c) assuniing a Nauruan population of 6,000 in 1995, and adding
the savings that could have been made by placing the same
proportion of phosphate revenue in trust funds as occurred
before independence with the savings available at independence,
these would provide a per capita income per year of $16,600-

only :rlightlyless than Australia's current per capita income.
150. Indeed, even with some of the problems associated with the use
of revenue noted in the study, the Trust Funds managed by the Govern-
ment of Nauru still hold substantial assets. These are set out in the
Annual Report of the Nauru Phosphate Royalties Trust for 1988-89,
tabled in the Nauruan Parliament (Annex 27). They include a large

number of vnluable and sound property investments in Australia, the
United States, Guam, the Philippines and other countrjes.
151. Hence, Nauru should be a community of essentially retired
persons-witli no necessity to work-living on the substantial income
from the phosphate resources. The economic study strongly suggests

that the Nauruan claim that they were left with inadequate resources at
the time of independence is without foundation.

1. The studywas preparedby the Centre for InternationalEconomics. This centre ir a
highly respected,independentlirm of economic consultants based in Canberra.It is
headed byDr Andrew Stoeckel,oneof Australia'sleading ecanomists. Many of ils
professionalslafï havehadexperienceingovernmentasasprivateenterprise.IIhas
undertakenseveralmajorstudierin theeconomiesof developingcountriesin theAsia/
Pacific region. and its clients include theWorldBankand AustralianNational Centre
forDevelopm:nt Studies. CHAPTER 3

UNITED NATIONS CONSIDERATION OF CLAIMS RAISED BY
NAURU

152. The United Nations was provided with information throughout
the period of the Trusteeship on thesituation on Nauru in relation to the
economic, social and educational advancement of the inhabitants and
was also provided with information on the particular issues of rehabili-
tation and the negotiations on the phosphate industry. This Chapter
provides the Court with information necessary at this stage to show that
the United Nations was in possession of al1 the relevant information
concerning the Nauruan claims when it definitively settled the issue in
1967. This Chapter is particularly relevant in relation to the preliminary
objections developed in Part II, based on involvement of the United
Nations.

Section 1. General United Nations Supervision and Conclusions as to
Record of Administering Authorily
153. Throughout the time of the Trusteeship over Nauru, the United
Nations received detailed annual reports by the Administering Authority

which set out the economic, political and social situation on Nauru.
These reports were considered each year by the Trusteeship Council,
which included a chapter on Nauru in itsreport each year to the General
Assembiy. The United Nations was fully appraised of the situation on
Nauru throughout the period of the Trusteeship, including being fully
briefed on the various negotiations leading to independence.
154. As well as annual reports, Visiting Missions to Nauru look place
on a regular basis. Missions visited in 1950, 1953, 1956, 1959, 1962and

1965.The reports of these visits are set outas Annexes 7-12 of Volume4
of the Nauruan Memorial. These Missions were of importance in the
Trusteeship System. This has been described asfollows by the representa-
tive of the Dominican Republic when speaking on the Report of the
Trusteeship Council on 27 November 1953:
"The Visiting Missions were one of the most important features of
the Trusteeship System. They provided a means whereby inter-
national supervision over the Trust Territories could be exercised.

The Council chose its visiting missions by a system of rotation. It
was the Council's present practice to advise its members to choose
persons who wererepresentatives on the Council or as far as possible
associated with its work and with the International Trusteeship
System. It tried to avoid sending on mission people who were not
acquainted with its procedure and were not profoundly interested in
its development. The results of rhat policy had been excellent"
(United Nations, General Assemblv, Official Records, 8th Session,
Fourth Committee, Doc.A/C.4/SR.381). 155. Throughoutthe period of Trusteeship,the AdministeringAuthority
reported on its plans for resettlement, their abandonment and subsequent
negotiations for political advancement and subsequent independence. At
the same time it providedinformation, including financial information, on
economic conditions in the Territory, particularly the phosphate industry.
Separate sections below examinein greater detail United Nations consider-
ation of rehabilitation and resettlement and financial reporting. In these
Preliminary Objections, however,Australia does not provide a comprehen-
sive account of United Nations involvement and supervision of Nauru. It
concentrates on the attitude and responses of the United Nations on the
matters raised by Nauru in the last fewyears of the Trusteeship leading to

independence.
156. Throughout the Trusteeship, the United Nations expressedsatisfac-
tion with the Administering Authority. Thus in 1961 the Report of the
Trusteeship Council:

"notes with satisfaction the progress made in the Territory during the
year under review in various fields, through the efforts of both the
Administering Authority and the Nauruan people, particularly in the

field of public health, social security and welfare services" (United
Nations, Reporf of :l?usfeeshipCouncil, General Assembly Officiaal
Records, 16th Session, Suppl. No.4 (A/4818), Part II, ch.VI, para.1).

Similarly, in the 1967Trusteeship Council Report, it is said:
"The Council notesthat relations between theAdministeringAuthority
and the representativesof the Nauruan people continue to be cordial-

that economic, social and educational conditions continue to be satis-
factory; and that commendable progress has been made in the
Territory" (United Nations, Report of Tmsteeship Council, General
Assembly Offical Rtrords, 22nd Session, Suppl.No.4 (A/6704) Part
II, para.310; Annex 28 to these Preliminary Objections).

This ishardly a statement that isconsistent with there being breachesof the
Trusteeship Agreement as alleged by Nauru.

157. Once proposals for resettlementwereabandoned in 1964,movesfor
political advancement and reviewof arrangements for the phosphate indus-
try led rapidly to agreement in 1967on independence and transfer of the
phosphate operations. The recommendations of the TrusteeshipCouncil on
this aspect, from 1964to 1967,support the viewthat, at the termination of
the Trusteeship,the United Nations waswellsatisfied with the Administer-
ing Authority and that there were not outstanding issues concerning com-
pliance by the Administering Authority with the Trusteeship at that time.

158. In considering the views of the United Nations it is important to
consider the record of the principal supervisory organ, the Trusteeship
Council. Whatever might emerge out of discussions in the GeneralAssembly or Fourth Committee, the detailed examination of the conduct
and responsibilities of the Administering Authority took place in the

Trusteeship Council. In that body, there was never any cal1 for the
Administering Authority to meet obligations that the Council considered
had been breached, nor any suggestion that failure to rehabilitate in-
particular was itself a breach of trusteeship obligations. Its clear that
the Council reviewed the situation on Nauru with an overall concern to
ensure that the interests of the Nauruans were adequately taken into
account in the various negotiations leading to independence. There is no
suggestion in any of the reports of the Council to suggest that this was
not in fact considered the case.

A. 1964
159. Thus, in the 1964Report of the Trusteeship Councilthe continu-
ing efforts of Australia on behalf of the Partner Governments to deal
with the future of the Nauruans were recognised. At this stage the

Nauruans had expressed the wish for an independent sovereign nation,
wherever they might be resettled. Australia, on the other hand, indicated
that it was not able to transfer sovereignty over an area that was an
integral partofits territory. The Council noted that a meeting would take
place in July 1964 between Australia and the NLGC with regard to the
future of the Territory. The Council:
"appreciating the difficulties involved, urges the Nauruan leaders
and the Australian Government to continue their consultations

aimed at a harmonious solution, bearing in mind the legitimate
desire of the Nauruan people to preserve their national identity"
(United Nations, Report of TrusteeshipCouncil, GeneralAssembly
Offici Ralcords, 19th Session, Suppl No.4 (A/5804), Part II,
para.194.).
In the same 1964Report, the Council noted that the first annual meeting
between representatives of the BPC and Nauruan elected representatives
had taken place. It also noted that royalty rates would be reviewed in July
1964. The Council:

"reiterates its belief that further consultationbetween representa-
tives of the BPC and the Nauruan elected representatives will be
instrumental in ensuring the equitable sharing of the proceeds of
phosphate mining" (para.249).

160. In 1965, the Trusteeship Council noted that the July 1964 talks
had been inconclusive but that further talks had been held in June 1965.
At those further talks agreement had been reached on a number of

matters, including establishment of the Davey Committee to examine the
question of rehabilitation of mined out areas. There was still disagree-ment on a number of matters, including political progress and rights
over the phosphate and operation of the industry. Among the conclu-

sions and recommendsitions of the Council were the following:
"The Council notes that, as the Administering Authority was unable
to satisfy fully the Nauruans' conditions that they be able to resettle
as an independent people and that they should have territorial
sovereignty in their new place of residence, and as the offer of
Australian citizenship was unacceptable to the Nauruans, they de-

cided not to proceed with the proposal for resettlement on Curtis
Island and the Australian Government has discontinued action on
this proposal.
It further notes that at the 1965 Canberra Conference the rep-
resentatives of the Nauruan people and the Australian Government

agreed that the Administering Authority in cooperation with Nau-
ruan representatives would actively pursue any proposals that might
give promise of enabling the Nauruan people to resettle on a basis
acceptable to thein and one which would preserve their national
identity.
The Council endorses the view of the 1965 Visiting Mission to

Nauru that the question of the future of the Nauruan people has
been closely bound up with their search for an alternative homeland
and that the idea of resettlement should not be abandoned, but that
a further effort to finda basis of agreement would be desirable.
The Council notes that at the Canberra Conference the represen-
tatives of the Nauruan people proposed that a target date of 31

January 1968should be established now for independence and that
the Australian delegation to the meeting indicated that theAdminis-
tering Authority did not consider it appropriate to establish now,
ahead of any practical experience of the operation of the Legislative
Council, any specifictarget dates for independence or complete self-
government. The Administering Authority did, however, propose
that after two or three years' experience of the working of the
Legislative Council and the Executive Council, further discussions
should take place regarding further political progress.

The Council reaffirms the right of the people of Nauru to self-
government or independence. The Council urges the Administering
Authority to accede to the desire of the Nauruan representatives that
the further discussions on the question of independence be held in
1967and hopes tliat at these discussions a solution satisfying to the
Nauruans will be found". (United Nations, Report of Trusteeship
Council, General Assembly Official Records, 20th Session, Suppl.
No.4 (A/6004), F'art II, para.324.)

161. In relation to economic development the Council noted the
decisions taken at the 1965 Canberra Conference on the phosphate industry, and that further discussionswould be held on future extraction
rates and future arrangements for the industry. The Council, in relation
to future arrangements "hopes that this problem will also be resolved to
the full satisfaction of the Nauruan people" (para.431).

162. As to the disagreement over the ownership of thephosphates, the
Council

"hopes that the forthcoming negotiations between the representa-
tives of the Nauruan people and Administering Authority will re-
solve this problem. The Council believes that every effort will be
made to adopt a solution in conformity with the interests of the
Nauruan people" (para.431).

As the 19th (1964) General Assembly did not function normally, the
Fourth Committee at the 20th Assembly (1965) considered the Trustee-
ship Council's Reports for 1963-64 and 1964-65. The Chairman of the
1965 Visiting Mission (M Naudy, France) noted on 14 December 1965
that the situation had improved with the resumption of negotiations-
which had broken down in 1964-and that some agreement had been
reached on earlier differences (United Nations, General Assembly Of-
ficial Records, 20th Session, Fourth Committee, Doc.A/C.4/SR.1588).
Mr McCarthy (Australia), in a statement at the same meeting, touched .

on Nauru's isolation, phosphate royalties, the Nauruan standard of
living, resettlementffers, the planned Executive and Legislative Coun-
cils, the establishment of the DaveyCommitteeand concluded by posing
the rhetorical question what form of independence was conceivable in
the circumstances of Nauru.

163. The Liberian representative introduced a draft resolution on
behalf of the Afro/Asian group and argued that the Nauruans were
already capable of full self-government and that the independence they
sought should be granted to them. Australia should restore the island by
returning soi1in phosphate vessels which now arrived in Nauru empty.
The cost of doing this would be 12m pounds, which was little compared
with what he claimed was a profit of 250111 pounds made in 1964by the
BPC (United Nations, General Assembly Official Records, 20th Session,
Fourth Comrnittee, Doc.A/C.4/SR.1591). Mr McCarthy, in reply, said
that the draft resolution did not reflect the true circumstances. The

description of the island as "devastated" gave a false picture as it was
only by exploiting the phosphates that the Nauruans could live so well;
"worked out" would be a more accurate description (United Nations,
General Assembly Offiial Records, 20th Session, Fourth Committee,
Doc.A/C.4/SR. 1593).

164. The Afro-Asian resolution, from which the term "devastated"
was dropped, was adopted in the Committee by 61-0-19 (Australia). It
requested the Administering Authority to fix the earliest possible date,
but not later than 31 January 1968, for Nauruan independence and"that immediate steps be take by the Administering Authority towards
restoring the island of Nauru for habitation by the Nauruan people as a
sovereignnation" (United Nations, GeneralAssembly OfficialRecords,
20th Session, Fourth Committee, Doc.A/C.4/L.825). On December
1965resolution 211I(>:X)wasadopted in plenary by 84-0-25 (Australia,
NZ, UK, US, other Westernand Latin American).

C. 1966

165. The 1964-65 annual report of the Administering Authority was
considered by the Tru!iteeshipCouncil at its 33rd Sessionfrom Il to 26
July, 1966.Mr R S Leydin, the recently retiredAdministrator of Nauru,
was theSpecial Representativeand Head Chief DeRoburt his adviser.Mr
Leydinmade a long statement on II July 1966describing, interalia,the

current situation on Nauru, the DaveyReport and the functioning of the
Executiveand LegislativeCouncils (UnitedNations, TmsteeshipCouncil
OfficialRecords,33nl Session,T/SR.1285). Head Chief DeRoburt, at
the same meeting, said that the only serious point that remained in
respect of the question of independence was that of its timing. The
Island nevertheless would have to be completely rehabilitated and the
responsibility for that rested with the Administering Authority. The text
of his statement is set out at paragraph 186of the Nauruan Mernorial.

166. The Liberian representative (Miss AngieBrooks) said on 19July
1966 that since her delegation had joined the Council in 1963, the
reports of the Administering Authority and the visiting missions had
shown that general conditions on Nauru were verysatisfactory. The
averageper capitainc'omewas $3,000; health conditions had improved,
the illiteracyrate was ni1and the talent and ability shown in the Council
by the Nauruan representativesleft no doubt as to their capabilities. The
Administering Authority was to be congratulated on its achievements.
However,the phosphate belonged to the Nauruan people. The Nauruans

had proposed that they should pay two thirds of the cost of restoring the
island to habitation arid the AdministeringAuthority one third. It wasto
be hoped that that gesture would speedup the decision to undertake the
project and that by the time of the Council's next session, the Adminis-
tering Authority would beable to report that restoration was under way
(United Nations, TrusteeshipCouncilOffiial Records,3rd Session,T/
SR.1291).

167. In its Report the Council made specific mention of rehabili-
tation. The conclusions on this point read as follows:
"The Council recalls that the General Assembly, by its resolution
2111 (XX), requested that immediate stepsbe taken by the Adminis-
tering Authority towards restoring the island of Nauru for habi-

tation bytheNauruan peopleas a sovereignnation and notes that an
investigationinto the feasibilityof restoring the workedout land has been carried out by a Committee of Experts, including a representa-
tive of FAO, appointed by the Administering Authority.
The Council notes the statement of the representative of the
people of Nauru that 'the responsibility for rehabilitating the island,
in so far as it is the Administering Authority's remains with the

Administering Authority. If it should turn out that Nauru gets its
own independence in January 1968, from then on the responsibility
will be ours. A rough assessment of the portions of responsibility for
this rehabilitation exercise then is this: one third is the responsibility
of the Administering Authority and two thirds is the responsibility
of the Nauruan people'.

The Council recalls that at its thirty second session the Special
Representative gave the Council some details which outlined the.
magnitude and cost of replenishment of the worked out phosphate
land. It is also noted that the 1962Visiting Mission remarked that no
one who had seen the wasteland pinnacles could believethat cultiva-
ble land could be established thereon except at prohibitive expense.
The Council requests the Administering Authority to make the

report of the Committee of Experts on the rehabilitation of the
worked out mining land available to its members as soon as possible
and recommends that it be studied as soon as possible during the
course of conversations between the Administering Authority and
the delegates of the people of Nauru.
The Council recalls resolution 1803(XVII) concerning permanent

sovereignty over natural resources and invites the attention of the
Administering Authority to its provisions.
The Council notes the statement of the Administering Authority
that the discussions between the joint delegation and the Nauruan
delegation in Canberra willcontinue to be infused by what the Head
Chief called 'a spirit of understanding' and a 'positive, most hear-
tening and most encouraging' response and attitude" (United Na-

tions, Report of îiusteeship Council, General Assembly Official
Records, 21sr Session, Suppl.No.4 (A/6304) Part II, para.408).
The Council in this recommendation also noted that further joint discus-
sions were to be held to deal with the question of rehabilitation and the
future operation of the phosphate industry. The Council hoped that
these discussions would resolve both problems:

"lt believes that every effort will be made to adopt a solution in
conformity with the rights and interests of the Nauruan people"
(para.408).

168. It is clear that the Council was fully conversant with the Nau-
ruan claims during the negotiations on the future of the phosphate
industry, including their claims as to responsibility for rehabilitationwhich were $et out in the preamble to the conclusions and recommen-
dations of the Council. The question of rehabilitation wasclearlyseenas
part of the overallnegotiations on the future of the industry. There is no
suggestion that rehabilitation wasa prerequisite to independence or that

failureto rehabilitate would involvea breach of a trustee obligation. The
soleconcernwasthat the overallsettlement securethe rights and benefits
of the Nauruans as a whole.
169. The Fourth Committee at the 21st General Assemblyconsidered
Nauru in December 1966. The Australian Representative referred
(1663rdmeeting, 9 December 1966)to the various plans for the future of

the Nauruan people iiicluding resettlement and the DaveyReport while
~ ~ ~ ~e~~~~~-~.resentative(Miss Brooks) took issue with severalof the
Trusteeship Council's conclusions. She raised again the question of
ownership ofthe phonphate, independence by 31 January 1968and her
confidence that the Administering Authority would contribute to re-
storing the worked-out phosphate lands. (United Nations, GeneralAs-
sembly Official Records, 2lst Session, Fourth Committee.
Doc.A/C.4/SR.1663.) A Liberian resolution (Doc.A/C.4/L.851) was
introduced which had three main recommendations:

-that Australia fix the earliest possible date, not later than 31 Janu-
ary 1968, for Nauruan independence;
-That the AdministeringAuthority transfer control overoperation of
the phosphate industry to the Nauruan people;
-that the Administering Authority take immediate steps, irrespective
of the costs involved, towards restoring Nauru to habitation by the
Nauruan people as a sovereignnation.

This resolution was adopted in Committee by a vote 58-3 (Australia,
UK)-13 and on 20 December 1966in plenary by a vote 85-2 (Australia,
UK)-27 (NZ). For the text of resolution 2226(XX1), see Annex 16,
Volume4, Nauruan Pvlemorial.

170. The 34th session of the Trusteeship Council (29 May-30 June
1967)which examined Nauru was attended by Mr Reseigh as Special
Representativeand H:eadChief DeRoburt. The actual consideration of
Nauru took place during the last few days of June. Mr Reseigh men-
tioned, in the course of an account of conditions in the Territory, the
1966Daveyreport or1rehabilitation:

"the Administering Authority considered that the Committee had
made a painstaking reviewof the problem whichmade a valuable
contribution to the solution of the problem, but the final decision
rested with the Nauruan people. The new financial arrangements
which had been made for the phosphate industry should enable the
Nauruan people to take the necessary measures for their future" (United Nations, Trusteeship Council Of/icial Records, 34th Ses-
sion, Doc.T/SR.1313).
He also described the phosphate agreement and the political discussions

which had commenced in Australia on 15 June. The latter would be
continued after the Trusteeship Council session.
171. Head Chief DeRoburt said that, while the talks between the
NLGC and the Partner Governments had created a favourableatmos-
phere for a solution to problems, he regretted they had taken place so
late. The Nauruans would prefer not to make their independencecondi-

tional on the conclusion of a prior agreement which would makeAustra-
lia responsible for foreign affairs and defence. The Australian
Government had suggested that a plebiscite should be held, but the
NEC did not feel it was necessary as the people fully supported the
NLGC and becausea plebiscitecould delay independenceand in viewof
the need to hold NEC elections in December 1967. He felt the only
important point on which there was real disagreement was the question
of the rehabilitation of the worked-out mining lands. The Nauruans
believedthat the Partner Governments should accept responsibility for
rehabilitating land workedbefore I July 1967,whilethe Nauruans would
accept responsibilityfor land workedafter that date, thus assuming two-

thirds of the responsibility. (United Nations, Tnrsteeship Council Of-
ficial Records, 34th Session Doc.T/SR. 1313.)
172. In answer to questions and in the general debate Mr Reseigh
repeated the Partner Governrnents' view on rehabilitation. The Davey
Committee had recommended measures for rehabilitating the worked-
out areas. Under the phosphate agreement, payments to the Nauruans
wouldamount to about $US21million during the coming financial year.

This sum represented about $US40,000 for each family over and above
its earnings. If the Nauruan community continued to contribute to the
long-term fund at the same rate and the price-cost relationship remained
the same, the fund would total about $US400 million by the time the
phosphate deposits wereexhausted. This would mean an annual income
from investments of about $US24million per annum. (United Nations,
TrusteeshipCouncil Official Records, 34th Session, Doc.T/SR.1314.)

173. Mr Reseigh, in his closing statement on 23 June 1967regretted
that agreement had not been arrived at on the treatment of the worked-
out lands. He gave details of a plan under which the Nauruans would
pay $A12million per annurn in10a special fund and meet the costs of a
newairport and livingspace until the whole of the mining area had been
treated. The responsibility of the Partner Governments was to see that
the financial resources would beavailable so that the Nauruans could
giveeffect to decisionsconcerning theirown future. The Partner Govern-
ments could not have been more generous in their financial arrange-
ments. For example, they wereselling the assets of the BPC at historic
rather than commercial cost and it had been decided to give the Nau-ruans 100%of the net proceeds of the phosphate at fair value, although
the practice ofsharing net profits in most other similar enterprises was
50/50. The agreed arrangements had taken into account the extractive
nature of the industry and the srnall size of the island. (United Nations,
Trusteeship CouncilOfficiol Records,34th Session, Doc.T/SR. 1317.)

174. At the 1320th meeting of the Committee a Liberian resolution
(T/L.I 132), that recommended that Nauru becorne an independent re-
public by 31 January 1968;that the conclusion of a treaty of friendship
should not be a precondition to independence; and that the Administer-
ing Authority should take immediate steps to restore the island for
habitation, was defeated 2(Liberia, USSR)-5-1 (China) (United Na-
tions, TrusteeshipCouncil Official Records,34th Session, Doc.T/
SR.1320).

175. The chapter of the 1967 report of the Trusteeship Council on
Nauru is set out in Annex 28. The Council in its report noted the
proposals for the future of Nauru that had been put forward in discus-
sions between the Partner Governments and Nauruan representatives.
This led the Council to:

"note(s) with satisfaction that the 1967 Canberra discussions were
held in a favourable atrnosphere. The Council, however, regrets that
the parties were iinableto complete their discussions due to lack of
time but notes that they undertook to study the various proposals
and to resume discussions at an early date. The Council is confident
that these discus!;ions will take place in the same spirof coopera-

tion and expresses earnest hope that agreement will be reached to the
satisfaction of both parties. The Council is gratified to note that the
Administering Authority has expressed its sympathetic attitude in
connexion with the Nauruans wish to realize their political ambi-
tions by 31 January 1968" (United Nations, Reportof Trusteeship
Council,GenerolAssembly OfficiolRecords,22ndSession, Suppl.4
(A/6704), Part 11,para.322).

176. In relation to rehabilitation, this was considerednder the gen-
cral heading of econ<imicadvancement. I'he Council rehearsed at length
the ~revious consideiation of ihis matier bv the Counsil and the vicu of
the relevant Parties. The viewsofthe ~artnérGovernments and of Nauru
were set out at length (United Nations, Reportof Trusteeship Council,
GeneralAssembly Official Records,22nd Session, Suppl.4 (A/6704)
Part 11, paras.378-390.) Ii is useful to set out the full text of the
conclusion reached by the Council in relation to the phosphate settle-
ment:

"The Council, recalling its belief that every effort will be made to
adopt a solutiori to the phosphate question in conformity with the
rights and intercsts of the Nauruan people, notes with satisfaction
that an agreement was reached in Canberra in 1967 between the Nauruansand the Administering Authority, whereby the ownership,
control and management of the phosphate iiidustry will be trans-
ferred to the Nauruans by 1 July 1970. The Council further notes
with satisfaction that transitional arrangements provide for a sub-
stantial increase in phosphate royalties and for the increased partici-

pation of the Nauruans in the operation of the industry.
The Council notes that the Administering Authority has distrib-
uted the report of the Committee of Experts on the rehabilitation of
the worked-out land in accordance with the Council's recommen-
dation at the thirty-third session.

The Council also notes that the report of the Committee of
Experts concluded, inter alia, that 'while it would be technically
feasible (within the narrow definition of that expression) to refill the
mined phosphate areas of Nauru with suitable soi1 and/or other
materials from external sources, the very many practical consider-
ations involved rule out such an undertaking as impracticable'. At
the same time the report provides alternative means of treating the
mined land. The Council further notes that the Nauruans have
voiced strong reservations to this report and, inter alia, stated that
the Nauru Local Government Council believes that the land already

worked should be restored by the Administering Authority to its
original condition. The Council notes further the statement of the
Administering Authority that the financial arrangements agreed
upon with respect to phosphate took into consideration al1 future
needs of the Nauruan people, including possible rehabilitation of
land already worked.
The Council, regretting that differences continue to exist on the
question of rehabilitation, expresses earnest hope that it will be

possible to find a solution to the satisfaction of both parties"
(para.403).

1. 13th SpeciolSession, TrusleeshipCouncil, November 1967

177. A special session of the Trusteeship Council, to terminate the
1947Agreement for Nauru, was held on 22November 1967. Head Chief
DeRoburt, assisted by Professor Davidson, represented Nauru. The
records of the meeting of the Trusteeship Council meeting are repro-
duced in Annex 29.

178. Head Chief DeRoburt's speech on 22 November 1967wasgener-
ous in its praise of Australia and the other partner Governments.
"Australia had administered the island of Nauru for almost half a

century. About two generations of Nauruans had taken four decades
to arrive at their present situation. Fifty years was not an unduly short period for a homogeneous group of a few thousand people
with a single culture and heritage, one language andone religion, to
learn to manage their own affairs. Australian tutelage of those
people, which it also exercised also on behalf of the other two
partner Governments of New Zealand andthe United Kingdom, had
been effective.Those governments could be proud of their achieve-
ments on Nauru and he wished to thank them, on behalf of the

people of Nauru, for the many benefits received."
Towards the end of tlie speech Head Chief DeRoburt raised rehabili-
tation:
"There was one slibject, however, on which there was still a differ-

ence of opinion-responsibility for the rehabilitation of phosphate
lands. The Nauruan people fully accepted responsibility in respect
of land mined subsequently to 1 July 1967, since under the new
agreement they wsre receiving the net proceeds of the sale of phos-
phate. Prior to that date, however, they had not received the net
proceeds and it w:istherefore their contention that the three Govern-
ments shouldbear responsibility for the rehabilitation of land mined
prior to 1 July 1967. That was not an issue relevant to the termina-
tion of the Trusteeship Agreement, nor did the Nauruans wish to
make it a matter for United Nations discussion. He merely wished to
place on record that the Nauruan Government would continue to
seek what was, in the opinion of the Nauruan people, a justsettle-

ment of their claims" (United Nations, TrusteeshipCouncil Officia/
Records, 13th Special Session, Doc.T/SR.1323; reproduced in An-
nex 29).
179. Among the speeches made by other delegations at the same
meeting the United Kingdom representative observed that "his own
Government and that of New Zealand, as jointly constituting with the
Government of Austialia the Administering Authority, had been closely
involved at al1 stages in the negotiations of recent months .. ."
(para.32). At the conclusion of the session the Council unanimously

adopted resolution 2149 (S-XIlI) on 22 November 1967 which recom-
mended "that the General Assembly at its twenty-second session resolve,
in agreement with the Administering Authority, that the Trusteeship
Agreement for the Territory of Nauru approved by the General Assembly
on 1 November 1947 shall cease to be in force upon the accession of
Nauru to independence on 31 January 1968" (text in Annex 19, Vo1.4,
Nauruan Memorial).

2. United ArationsGeneralAssembly, December 1967

180. The Fourth Committee considered the Trusteeship Council rec-
ommendation on 6 and 7 December 1967. The Summary Records are
reproduced in Anne:u 30. Mr K H Rogers of the Australian delegation
made a comprehensive statement on 6 December 1967on the history ofNauru and its administration under the Mandate and Trusteeship, its
economy, social conditions and the recently concluded phosphate and
political settlements (United Nations, General Assembly, Offciol Re-
cords, 22nd Session, Fourth Committee, Doc.A/C.4/SR.1739; repro-
duced in full in Annex 31). He also observed in passing that "the
Nauruans had enjoyed an enviable prosperity. The per capita income at
30June 1966had been over $US1,800, higher than the per capita income
of Australia and one of the highest in the world". On the phosphate
industry he said:

"For most of 1967 the representatives of Nauru and Australia had
been discussing the future of Nauru and the phosphate industryand
had reached happy agreements on both questions. Nauru would
attain full and unqualified independence, without limitations of any
kind, on 31 January 1968. The phosphate enterprise would be
purchased by the Nauru Local Government Council and would
come completely under its control and management in three years'
time. The agreement provided for the supply of 2 million tons of

phosphate per year at a price of $US12.10 per ton fob which would
mean an annual return to the Nauruans of $15 million. The Nau-
ruan authorities would set up the Nauru Phosphate Corporation,
which would take charge of the phosphate industry in 1970, pro-
vided that the agreed payments had been completed by then. If the
price of phosphate and the cost of production remained in the same
relationship as at preçent and the Nauruans continued to put aside
the same proportion of their funds as in the previous year, they
would build up a fund which, in twenty-five years, would stand at
approximately $400 million. In that way the economic well-being of
the population would be ensured once the phosphate deposits were
exhausted" (para. II).

181. Head Chief DeRnburt spoke at the same meeting and after
describing the situation and the history of Nauru he commented on the
events of recent years and the future inthese terms:

"Those [historical] experiences had intensified the Nauruans' con-
sciousness of their identity as a separate people and had increased
their determination to be free and independent. Those were the
social or cultural reasons why the decisions taken by the Nauruans
and the Administering Authority were the only ones which could
rightly have been taken. They were the reasons for the decision that
he was sure the Committee would shortly be taking in regard to the
Trusteeship Agreement.

In other respects, the case was no less strong. During most of
1967, as had been mentioned, work had been under way to prepare
the necessary political and administrative structure. Economically,
Nauru's position was strong because of its good fortune in possess-
ing large deposits of high-grade phosphate. That economic base, of course, presented irs own problems. One which worried the Nau-
ruans derived from the fact that land from which phosphate had
been mined would be totally unusable. Consequently, although it
would be an expensive operation,that land would have to be rehabi-
litated and steps were already being taken to build up funds to be
used for that purpose. That phosphate was a wasting asset was, in

itself, a problem; in about twenty-five years' time the supply would
be exhausted. The revenue which Nauru had received in the past and
would receive during the next twenty-five years would, however,
make it possible to solve the problem. Already some of the revenue
was being allocated to development projects, so that Nauru would
have substantial alternative sources of work and of income long
before the phosphate had been used up. In addition, a much larger
proportion of its income was being placed in a long-term investment
fund, so that, whatever happened, future generations would be
provided for. In short. the Nauruans wanted independence and were

confident that they had the resources with which to sustain it"
(paras. 19 and 20).
182. In theconsideration of the draft resolution on the termination of
the Trusteeship Agreement, which was introduced by Mr Rogers, the
United Kingdom representative, also at the same meeting, noted that the

actual administration of Nauru had always been entrusted to Australia,
which had transmitted the relevant informationto the Trusteeship Coun-
cil and stated the casecifNauru in the General Assembly. He continued:
"While recognising the importance of the role played by Australia in
the development of Nauru and its progress toward independence, he

wished to point out that the three administering Governments had
contributed to that evolution and had participated in the nego-
tiations leading to independence. Moreover, he was happy to note
that it had been possible to meet the wishes of the Nauruans in a
satisfactory manner" (para.28).
The Philippines representative for his part, said:

"He congratulated the Joint Administering Authority, in particular
the Government of Australia, on the successful accomplishment of
its obligations under the Charter of the United Nations and the
Trusteeship Agreement for Nauru. No tribute could be greater than
that paid by Head Chief DeRoburt at the 1323rd meeting of the
Trusteeship Council on 22 November 1967, when he said that Aus-

tralian tutelage, exercised also on behalf of the other two partner
Governments of New Zealand and the United Kingdom, had been
effective, that tho:;e Governments could be proud of their achieve-
ments, that he wished to thank them, on behalf of the people of
Nauru, for the many benefits received and that the association of the
Nauruan people with the Governments of the three Administering
Authorities would remain friendly and close" (para.24). 183. On 7 December 1967 the draft resolution, as amended and
further orally revised, wasadopted unanimously by the Committee. On
19December 1967,at its 164lst plenary session, the General Assembly
formally adopted resolution 2347(XXII) (text in Annex 17, Vo1.4,Nau-
ruan Memorial). Its principal operative paragraph read:

"Resolves accordingly,in agreement with the Administering Auth-
ority, that the Trusteeship Agreement for the Territory of Nauru
approved by the General Assembly on 1November 1967shall cease
to be in force upon the accession of Nauru to independence on 31
January 1968".

Section II. Nauruan Participation in the United Nations

184. The first direct Nauruan participation in the work of thetee-
ship Council occurred in 1961during the 27th Session of the Council.
Mr R Gadabu, a Member of the NLGC, was an adviser to the Special
Representative of the Administering Authority. Inclusion of an adviser
followed the statement by the Administering Authority at the 24th ses-
sion of the Council that it had no objections in principle to a Nauruan
representative being associated in some way with the Australian del-
egation to the TrusteeshipCouncil and theadoption by the Council at its

26th Session in 1960of a recommendation on this matter (United Na-
tions, Report of Tnrsteeship Council, General Assembly Official Re-
cords, 15th Session, Suppl.No.4 (A/4404) ch.Vl1, para.45). The
presence and valuable contribution of Mr Gadabu waswelcomedby the
Trusteeship Council in its 1961Report and the hope was expressedthat
the practice of including Nauruans in delegations would continue
(United Nations, Report of the TrusfeeshipCouncil, General Assembly
Official Records, 16th Session, Suppl.No.4 (A/4818), ch.VI, para.70).

185. In 1962,the Head Chief, Mr Hammer DeRoburt wasan adviser
to the Special Representativefor Nauru in Trusteeship Council consider-
ation of the report of the Administering Authority on Nauru. Nauruans
participated in subsequent yearsas advisers tothe SpecialRepresentative
of the Administering Authority during consideration by the Trusteeship
Council of the Report from the Administering Authority.
1963 Head Chief Hammer DeRoburt

1964 Councillor A Bernicke
1965 Head Chief Hammer DeRoburt and Councillor B Detu-
dam0
1966 Head Chief Hammer DeRoburt and Mr Detsimea
1967 Head Chief Hammer DeRoburt and Councillor James Ate-
gan Bop
186. During the Council consideration, the advisers were present at

the table and were asked and answered questions by members of the
Council. At the Special Sessionof the TrusteeshipCouncil in November1967, Head Chief Hammer DeRoburt participated as Special Adviser to
the Australian delegation and made a statement which has been referred
to in paragraph 178 above. The Head Chief was also present as part of
the Australian delegation to the General Assembly in November 1967
and spoke in the Fourtli Committee at its 1739thmeeting on 6 December
1967.

Section III. Financial Reporting to the United Nations

187. One matter dealt with by the United Nations in its consideration
of the Trusteeship over Nauru was the provision of financial information
on the phosphate operations. Some brief comments will be made on this
issue as it is referred t'oin the Nauruan Memorial. Australia deals with
the issue of the provision of financial information at this time, however,
solely in order to indicate that the United Nations was fully cognizant of

the financial position both before and at the time of termination of the
Trusteeship. At this the Australia reserves its position generally on the
allegations made in this regard by Nauru.
188. In the Nauruan Memorial it is alleged that Australia failed to
provide adequate financial information to the United Nations concern-
ing mining operations on Nauru. This issue is dealt with at Part IV,

chapter 4 of the Nauruan Memorial (paras.542-560). This issue is also
dealt with at paragraphs 314-321 and paragraphs 334-354 of the Nau-
ruan Memorial. See also paragraph 25 of the Nauruan Application.
Australia considers these parts of the Memorial and Application contain
an inaccurate portrayal of the true situation.
189. Throughoutthe reporting period Australia provided information

on the amount of royalties paid and the various funds to which they were
paid as well as information on the amounts contributed by BPC to the
cost of administratioii of Nauru. This was set out in detail in the annual
reports of the Administration. The accounts of BPC were annexed each
year to the reports. Throughout this period the Tmsteeship Council
regularly examined the information provided and considered the ade-
quacy of the royalties. The Trusteeship Council annual reports regularly
note the volume of phosphate exported, its value and the royalty pay-
ments. Visiting Missions also considered these questions: see for in-
stance, the detailed examination of financial information in the 1962
Visiting Mission Report, paragraphs 96-1 15; reproduced in Annex II,

Volume 4, Nauruan Memorial.
190. On occasion:$the Trusteeship Council called for greater infor-
mation and suggested that the Nauruan cal1for higher royalties deserved
sympathetic consideration. However, at no time did the Council make
any finding that the lack of informationamounted to a failure to comply
with trusteeship obligations. As the Nauruan Memorial itself acknowl-

edges (para.353). from 1963 on there is no reference in the TrusteeshipCouncil reports to the issue of provision of information. There were
references to that issue before then.

191. In fact, the history of United Nations concern with the provision
of financial information is an excellent illustration of the effectiveness of
the supervisory machinery of the United Nations in relation to the
trusteeship system. As a result of repeated calls for moreinformation the
Administering Authority sought to provide increased information. As a
result of recommendations made by the Trusteeship Council regular
annual consultations between Nauruan representatives and the BPC
were commenced and the Nauruan delegation was given access to pro-
fessional advisers; in accordance with calls for sympathetic consider-
ation of Nauruan demands for higher royalties, the royalty rates were
gradually increased. The statement in paragraph 353 of the Nauruan

Memorial concerning the absence of certain recommendations after a
certain date isclear evidence of the proper consideration of and response
by the Administering Authority to the recommendations of the Trustee-
ship Council. In none of the reports is any finding made that the
Administering Authority was acting contrary to its obligations.
192. While in the earlier period the Trusteeship Council expressed the
view that it had insufficient information to determine the adequacy of

royalty rates, this attitude clearly changed inater years. The Trusteeship
Council was primarily concerned that Nauruan representatives be given
a reasonable opportunity to be involved in the setting of royalty rates and
in decisions involving the phosphate industry. In the years from 1964to
1967there were, of course, detailed negotiations between Nauruan rep-
resentatives and thePartner Governments over phosphate mining issues,
including royalty rates. Details of these have been set out in detail in
Chapter 1above. As indicated, the Trusteeship Council was fuliy aware
of the details of the finalphosphate settlement. At the termination of the
Trusteeship Agreement thcre wereno outsiariding issues in relation to the
~rovision of financiül information bv ihe Administerinr-Authoriiv to the
United Nations.

Section IV . Resettlemenl and Rehabilitation Aspects

193. It is appropriate to deal in greater detail with the question of
United Nations consideration of resettlement of Nauruans and rehabili-
tation of the island. Concern with resettlement and the rehabilitation of
Nauru had a long history of consideration in the Trusteeship Council,
where the choice between resettlement or rehabilitation was regularly

debated. This issue is dealt with in the Nauruan Memorial at paragraphs
561-591. The story of consideration of rehabilitation by the Partner
Governments is set out in detail in paragraphs 69 to 87 of these Prelimi-
nary Objections. The following additional critical information concern-
ing action in the United Nations on this issue in the years leading up toindependence is neces!iary for a proper consideration of Australia's
preliminary objections.

194. The question of rehabilitation or resettlement was first raised in
1949, at which time Australia indicated that financial provision was
being made for the tiune when the phosphate deposits would be ex-
hausted in 70 years (United Nations, TnrsteeshipCouncil Officia1Re-
cords, 5th Session,7th meeting).Thistook the form of introduction of a
component in the royalties, when adjusted in 1947, for a long term
investment fund that could be used whetherthe Nauruans remained on
Nauru or moved to another island.

195. The 1950Visiting Mission commented that resettlement might
offer the only long terin solution unless research revealedsome alterna-
tive livelihood (United Nations, TrusteeshipCouncil Official Records,
8th Session, Suppl.No.3 (T/898) para.58; reproduced in Annex 7,Vo1.4,
Nauruan Memorial). This was a widely shared view at the tirne. The
issue of resettlement and rehabilitation was raised in discussion in the
Trusteeship Council in 1951, 1952and 1953and concern expressed for
the future of the island. In 1951the Trusteeship Council expressed the

view that it "considers it advisable that studies of a technical nature
should be carried out in order to determine the possibility of making use
of worked-out phosphate land" (United Nations, General Assembly
OfficialRecords, 6th Session, Suppl.No.4 (A/1856) p.229). Yetthe 1953
Visiting Mission expressedthe view that "without wishing to be dog-
matic, resettlement may be the only definite and permanent solution"
(United Nations, Trusteeship Council Officiai Records, 12th Session,
Suppl.No.2, para.13; reproduced in Annex 8, Vo1.4,Nauruan Mem-
orial). The Council itself in 1953recommended that the Administering
Authority formulate plans for resettlement in consultation with Nau-

ruans; it further recommended that the Administering Authority give
consideration to the viewsof the Visiting Mission regardingthe estab-
lishment of a capital Iùnd for resettlement (United Nations, Report of
TnrsteeshipCouncil, iJenera1Assembly Officia Records, 8th Session,
Suppl.No.4 (A/2427) p. 113.)In 1954again this issueof rehabilitation or
resettlement receivedconsiderable discussionand the Council noted that
the Administering Authority was studying plansfor gradua1resettlement
(United Nations, Report of TnrsteeshipCouncil, GeneralAssembiy Of-
ficial Records, 9th Session, Suppl.No.4 (A/2680) p.265).

196. In 1955the Council heard that Australia had investigated the
possibility of resettlenient on Woodlark Island, Papua NewGuinea and
that the search contiiiued for suitable islands. The Council also sug-
gested further consideration be givento the possibility of rehabilitation
(United Nations, Report of TrusteeshipCouncil, GeneralAssembly Of-
ficial Records, 10th Session, Supp.No.4 (A/2933) p.220). Australia had
informed the Council that an expert study (by CSIRO) had found that
resoiling was "a practical impossibility". This Report is Annex 14 tothese Preliminary Objections and is discussed in more detail in para-
graphs 70 to 72 above. Australia indicated that a need for resettlement
was a consequence of improved living standards and likely population
pressures, not phosphate mining itself (United Nations, Trusteeship
Council Official Records, 16th Session, Doc.T/SR.613).

197. In 1956 the Visiting Mission concluded on the basis of the
CSIRO study that there was no practical possibility of widespread utilis-
ation of worked out phosphate land for agriculture and that it believed
"there is no alternative to resettlement after the phosphate deposits are
exhausted" (United Nations, Trusteeship Council Official Records, 18th
Session, Suppl.No.4, para.51; reproduced Annex 9, Vo1.4, Nauruan
Memorial). The Council that year also recommended that the search for
a site continue and supported a Visiting Mission recomrnendation that a
standing joint body be created "so that there would be continuous

consultations with Nauruan people, who would thus realise their share
of responsibility forsolving the problems of the future of the Nauruan
community to a greater degree" (United Nations, Reporr of Tmsteeship
Council, General Assembly Official Records, Ilth Session, Suppl.No.4
(A/3170), p.325). Australia confirmed to the Council what it had told
the Visiting Mission, namely that the Administering Authority would
bear the cost of any resettlement: in the Report the Council "welcomes
the assurance given by the Administering Authority that whatever funds
will be needed for the possible resettlement of the Nauruans,these funds
will be forthcoming as and when required" (p.325).

198. Investigation of possible islands off Papua and New Guinea
continued in 1957and 1958. In 1959the Visiting Mission, in light of the
failure to find suitable islands, recommended that "earnest consider-
ation should be given to (the Nauruan community's) gradua1 integration
into the metropolitan territory of one of the three Administering
Authorities" (United Nations, Tmsteeship Council Official Records,

24th Session, Suppl.No.4, para.24; reproduced Annex 10, Vo1.4, Nau-
ruan Memorial). The Council recommended that effortscontinue to find
a concrete solution. An attempt by lndia and Paraguay to seek inclusion
of a recommendation in the Council Report that further examination be
made of the possibility of rehabilitation was rejected 7-6 (United Na-
tions, Trusteeship Council Official Records, 24th Session, Doc.T/
SR. 1013).

199. The issue was again raised in 1960 and this lime the Council
recommended that rehabilitation issues be kept under active consider-
ation (United Nations, Report of Trusteeship Council, General Assem-
bty Officia1 Records, 15th Session, Suppl.No.4 (A/4404) para.61).
Australia indicated at the tirne, however,that CSIRO had informed them
that there were no new developments that would lead them to alter the
conclusions concerning rehabilitation previously reached. In 1961 Aus-
tralia provided details of a proposal endorsed by the three administeringGovernments to allow Nauruans to resettle in their countries. It was
noted by the Council that the Nauruans werenot yet prepared to accept
those proposals as they "hope that a place may be found where they
could continue to liveas a separate community and retain their identity
as Nauruans" (United Nations, Report of TmsteeshipCouncil, General
Assembly Official Records, 16th Session, Suppl.No.4 (A/4818) ch.VI
para.18). The Council also called on the Administering Authority to
obtain further technical advice on rehabilitation and to consider the
establishment of a pilot project to assess the technical and economic
feasibility of rehabilitation "bearing in mind the possibility that some
Nauruans may decide to remain on the island in the event of the
resettlement of the community elsewhere" (para.18). It appears that no

pilot project was undertaken at this time.
200. The 1962.VisitingMission whichthe TrusteeshipCouncil hoped
would givespecial attention to the question of resettlement, concluded
that
"settlement .. .in a new home is unavoidable .. . no one who has
seenthe wasteland of coral pinnaclescan believethat cultivableland
could be established overthetop of it, exceptat prohibitive expense.
Even a layman can seethat and it is to be noted that the suggestion
for rehabilitation has never come from anyone who has visitedthe
island" (United Nations, TmsteeshipCouncil Official Records, 29th

Session, Suppl.No.2, para.65; reproduced in Annex 11,vo1.4,Nau-
ruan Memorial).
The Mission concluded that, instead of looking for an island, a single
community centre in Australiacloseto somecentreof population may be
appropriate. The Misisionalso was of the opinion that
"the strongest obligation rests with the governments of those coun-
tries which havebenefited from low-price, high quality phosphate
over the many years .. .to provide the most generous assistance
towards the costs of whateversettlement schemeis approved for the

future home of the people of Nauru" (para.115).
201. The TrusteeshipCouncil in its 1962report said that it shared the
Visiting Mission'sviewthat
"the strongest otiligation rests withthe governments of the countries
which havebenefited from low-price, highquality phosphate over
the many years .. . to provide the most generous assistance towards
the costs of whatever resettlement scheme is approved . . ..In this
connexion it takes note with satisfaction of the declaration of the
Administering Authority that ample provisionof means for develop-
ing a future home is not and willnot be a stumbling block towardsa

solution and that the Administering Authority willbe mindful of its
obligation to prqsvidesuch assistance" (United Nations, Report of
Tmsteeship Council, General Assembly Official Records, 17th Ses-
sion, Suppl.No.4 (A/5204) p.41). In 1962the Council report also said the time had come for specific and
detailed plans for resettlement, and trusted that in a search for a solution
to the resettlement problemthe Administering Authority would respect
the desire of the Nauruan people to retain its identity (p.33).

202. It was also at that time that the Nauruan Resettlement Sub-
Committee of the NLGC first submitted proposals which wouldinvolve
the creation of a sovereign Nauruan nation related to Australia by a
treaty of friendship (this was still premised on resettlement somewhere
else).

203. In 1963Australia indicated that Curtis and Fraser Islands off
Queensland had been investigated by Nauruans and found suitable,
subject to agreement with Nauruans on the future form of government.
Australia indicated, however, that it did not consider Fraser Island
offered economic prospects and there were problems of water supply.
Australia indicated at the time that it could not relinquish sovereignty
over the islands while itcould accept resettlement of Nauruans as a
group on the islands. Head Chief DeRoburt, asan adviser to the Special
Representative of Nauru, indicated that he did not think Nauruans

would go hack on the basic decision that they be resettled elsewhere.
(United Nations, TrusteeshipCouncilOfficialRecords,30th Session,T/
SR.1205.) In response to a United States query as to the possibility of
rehabilitation, Australia indicatedthat it had thoroughly investigatedthe
rnatter and had consulted FAO,but, after considering material provided
by them and having regardto other determining factors, had decided not
to pursue the matter (United Nations, TnrsteeshipCouncil Official
Record,30th Session, Doc. T/SR. 1206).

204. In 1964Australia set out details of a resettlement scheme based
on Curtis Island. The proposal would enable the Nauruans to manage
their own affairs, the island contituting a distinct local government area.
The Administering Authority would provide al1the money necessaryfor
resettlement. (For details see United Nations, TnrsteeshipCouncilOf-
ficial Records,31st Session, Doc.T/SR.1232). As to rehabilitation, the
Special Representativeexplained, in answer to questions from Liberia,
why it was not feasible:

"it would be extremely difficult and expensiveto reclaim the land
from which the phosphate had been taken. The phosphate deposits
occurred in plateaux around very hard limestone pinnacles and
reached to a depth of twentyto thirty feet. The pinnacles occurredat
intervalsof about three or four yards, and their diameter at the base
was ten or twelve feet. In order to recover the land, it would be
necessaryto blast downthe pinnaclesone hyone, crush the rock and

cover it with a sufficient thick layer of fertile soi1imported from
Australia. But even if that were done two insuperable difficulties
would remain. First, the ground on Nauru was veryporous. When
there was any tain, whatever the amount, the water passed quickly through the layersof earth and was held only by the pressure of the
salt water, whose density was greater. The extreme porosity meant
that the land would be arid. Even if certain crops could be grown,
cash crops would be out of the question. Secondly, the island was
remote from any possible market and could be worked only on a
basis of subsistence agriculture. That was not what the Nauruans
wanted. It wasprobably for that reason that the people of the island
had stated that they would be compelledto find a newhome in order
to survive as a people" (United Nations, Trusteeship Council Of-

ficial Records, 3lst Session, Doc.T/SR. 1236).
205. The 1965Visiting Missionnoted the viewsof the 1962Mission
on rehabilitation. It noted the enormous expenseand difficulties said to
be involved but, not being experts, declined to make any recommen-
dation. Appended to the Report, however, werememoranda submitted
by the NEC. Also reproduced was a statement of the BPC with
estimated cost of rehabilitation (United Nations, Tmsteeship Council
Official Records, 32nd Session, Suppl.No.2, reproduced in Annex 12,
Vo1.4,Nauruan Memorial; original in Annex 18 to these Preliminary

Objections).
206. The Nauruan memorandum followedthe rejection by Nauru in
July 1964of the proposal for resettlementon Curtis Island. This wasdue
to an inability to agree on the degree of control to be accorded the
Nauruan community. Australia was not prepared to consider indepen-
dence. In April 1965 Australia announced that in view of the clear
attitude of Nauru, the particular resettlement proposals involvingCurtis
Island should be dropped. The Trusteeship Council in June 1965never-

theless endorsed the viewof the 1965Visiting Missionthat the idea of
resettlement should not be abandoned, whilereaffirming the right of the
people of Nauru to self-government or independence (United Nations,
Report of TrusteeshipCouncil, GeneralAssemblyOffiial Records, 20th
Session, Suppl.No.4 (A/6004) para.324). A USSR draft resolution (T/
L.1098) inviting the Administering Authority, inter alia, to restore the
ground cover of the island was defeated in the Trusteeship Council
(United Nations, 7iusteeship Council Official Records, 32nd Session,
Doc.T/SR 1269).IIIdiscussion in the Council in June 1965the Special
Representative indicated that an expert committee would be established
to make a full scale investigation. This suggestionfor an expertmmit-
tee arose out of the June 1965negotiations with Nauru and led to the

formation of the DaveyCommittee, the report of which is discussed in
paragraphs 81 to 8:)of these Preliminary Objections.
207. In 1965the General Assembly adopted resolution 21 1l(XX).
This called for imniediate steps to be taken by the Administering Auth-
ority towards restoring the island of Nauru for habitation by the Nau-
ruan people. Further details of this are provided in paragraphs 162to
164. In 1966the General Assembly adopted a further resolution (tes.
2226(XXI)) which again called for rehabilitation. The original resol-ution introduced by Liberia in the Fourth Committee on 12 December
1966 (Doc.A/C.4/L.851) had confined its recommendation on rehabili-
talion to a situation "should the Committee of Experts consider that
rehabilitation of the worked-out land is feasible". These words were
however deleted in a Corrigendum-A/C.4/L.851/C o.rThe
amended resolution was adopted by the Fourth Committee on 15 De-
cember 1966(United Nations, General Assembly Official Records, 21st
Session, Fourth Committee, Doc.A/C.4/SR. 1672).An attempt by Libe-
ria to get a similar resolution adopted by the Trusteeship Council in July
1966 had failed (United Nations, Trusteeship Council Officia Records,
33rd Session, Doc.T/SR.1296). This followed unsuccessful efforts by
Liberia to obtain references in the Report of the Trusteeship Council to
the effect that "if the Committee of Experts considers rehabilitation is

feasible, Council recommends that Administering Authority should take
immediate steps towards restoring Nauru" (see United Nations, Report
of Trusteeship Council, General Assembly Official Records, 21st Ses-
sion, Suppl.No.4 (A/6304) para.426). In the Trusteeship Council, Head
Chief DeRoburt had set out his viewson rehabilitation: responsibility for
rehabilitation rested with the Administering Authority; the one third
which had been mined in the past was their responsibility. If Nauru
became independent they would assume responsibility for the remaining
two thirds. This is referred to in more detail at paragraphs 165 to 166
above.

208. In the Trusteeship Council in June 1967 Australia through the
Special Representative indicated its attitude to rehabilitation. This was
summarised in the Report of the Council (United Nations, Report of
Trusteeship Council, General Assembly Official Records, 22nd Session,
Suppl.4 (A/6704) paras.400-402; reproduced as Annex 28 to these Pre-
liminary Objections). In summary, the view was taken that decisions on
rehabilitation were for Nauruans and the responsibility was to see that
adequate financial resources were available to make provision for the
future. The views of the NLGC on the Davey Report were also provided
to the Trusteeship Council (see paras.385-386 of the Report). An at-
tempt by Liberia to have passed a resolution calling for the Administer-
ing Authority to restore at ils cost the worked out land until the time
when the Nauruans received the full economic benefits from the phos-

phate was defeated-see paragraphs 38-39 of the Trusteeship Council
Report. Australia, New Zealand and the United Kingdom expressed their
views on the Liberian draft (paras.44-48, 49 and 51 respectively). The
Council did, however, adopt certain conclusions and recommendations
on the issue of rehabilitation, in particular expressing the hope that a
solution to the satisfaction of both parties wouldbe found (para.403).
All these paragraphs are set out in Annex 28.
209. The question of rehabilitation was also considered in the Special
Committee (Committee of 24) in its 1967 report, which "requested the

Administering Authority to rehabilitate Nauru according to the ex-pressed wish of the people so that they could continue to live there".
This wasdespite noting the statement of the AdministeringAuthority on
the "practical impra.cticability3'of rehabilitation. The report, however,
noted that the Davey Committee had considered some limited form of
rehabilitation to be possible(United Nations,GeneralAssemblyOfficial
Records,22ndSession, Doc.A/6700 Add.13, ch.XX, para.98).

210. Events movedfast and by the end of 1967agreement had been
reached that Nauru should become independent on 31January 1968.On
19 December 1967 resolution 2347(XXII) was unanimously adopted
terminating the Trusteeship on independence of Nauru on 31 January
1968. No referencewas made to rehabilitation in the resolution. At the
1323rdmeeting of the TrusteeshipCouncil on 22 November 1967,Ham-
mur DeRoburt did, however,refer to the issue, in the terms set out in
paragraph 178 above. It is, however,useful to repeat his statement:

"There was one subject, however,on which there was still a differ-
ence of opinion-responsibility for the rehabilitation of phosphate
lands. The Nauruan people fully accepted responsibility in respect
of land mined subsequently to 1 July 1967, since under the new
agreement they werereceivingthe net proceeds of the sale of phos-
phate. Prior to that date, however,they had not received the net

proceedsand it was therefore theircontention that the three Govern-
ments should bi:ar responsibility for the rehabilitation of land mined
prior to 1July 1967.That was not an issue relevantto the termina-
tion of the Trusteeship Agreement, nor did the Nauruans wish to
make it a matter for United Nations discussion. He merelywishedto
place on record that the Nauruan Government would continue to
seek what was, in the opinion of the Nauruan people, a just settle-
ment of their claims" (United Nations, Tmsteeship CouncilOfficial
Records,13th SpecialSession, T/SR.1323; reproduced in Annex
29).

211. In the Fourth Committee on 6 December 1967,DeRoburt, how-
ever,took a different approach in relation to rehabilitation. The state-
ment appears in paragraph 181above, but the relevant part for present
purposes reads:

"although it would be an expensive operation, that land (ie the
rnined land) would have to be rehabilitated and steps were already
being taken to build up funds to be used for that purpose . .. .The
revenue which Nauru had received in the past and would receive
during the next 25 years would, however,make it possible to solve
the problem. Already some of the revenue was being allocated to
development projects, so that Nauru would havesubstantialalterna-

tive sources of work and of income long before the phosphate had
been used up. In addition a much larger proportion of its income
was being placed in a long-term investment fund, so that, whateverhappened, future generations would be providedfor". (United Nations,
Generol Assembly Official Records, 22nd Session, FourrhCommillee,
Doc.A/C.4/SR.1739; reproduced in Annex 30).

Australia in its statements in theourth Committee and the Trusteeship
Council did not respond directly to the statements by DeRoburt. In the
Fourth Committee it did however point to the economic position of
Nauru, as set out in paragraph 180above.
212. The conclusion that must be drawn is that the question of
rehabilitation wascentral to the United Nations consideration of Nauru
throughout the period of trusteeship, as wellas at the time of termina-
tion. Rehabilitation and resettlement wereinextricably linkedto the well

beingof the Nauruan people under the Trusteeship,and wereseenin that
context to have been resolved at the termination of the Trusteeship. PARTII

OBJECTIONS TOJURlSDICTlON
AND ADMlSSlBlLlTY

BASED ON INVOLVEMENTOF THE UNITED NATIONS CHAPTER 1

INADMISSIBILITY OF THE CLAIM. THE TERMINATION OF
THE TRUSTEESHIP IN 1967PRECLUDES THE PRESENT
CLAIMS BY NAURU

213. Australia contends that the claim is inadmissible on the ground
that termination of the Trusteeship by the United Nations precludes
allegations of breaches of the Trusteeship Agreementfrom now being
examined by the Court.

214. The United Nations General Assemblyin resolution 2347(XXII)
of 19 December 1967resolvedthat the Agreement should cease to be in
force on 31 January 1968upon the accession by Nauru to independence
(Annex 17, Vo1.4,Nauruan Memorial). There was no suggestion in the
resolution that there had beenany allegations of breachesof the Trustee-
ship Agreement or that there were any outstanding unresolved issues
relating to the termination. There was no indication that the decision of
the United Nations was intended to be other than final and definitive.

Any claims of alleged breachesmust, therefore, be taken to have been
settled by the United Nations, whichwas thesupervisory body under the
Agreement and the Charter with jurisdiction to settle any dispute con-
cerning fulfilment of trusteeship obligations.
215. Thus, the rehabilitation issue, as well as the alleged disputes
concerning the adequacy of the royalties paid, the furnishing of infor-
mation tothe Trusteeship Council, the allegations of maladministration,
of expropriation without compensation, of denial of justice and abuse

of rights, in sum, al1the grievances alleged inthe Nauruan Memorial,
have been settled by or within the United Nations organs competent to
supervise the performance of the TrusteeshipAgreement. Indeed, al1of
the issueswerecanvassed inthe negotiations leadingup to independence
and must be considered to have been resolvedby that settlement.
216. And this conclusion has the consequence of making Nauru's
Application inadmissible, on the ground that it requests the Inter-
national Court of Justice to undertake the task ofexploring again the

performance of the Trusteeship inorder to overrule and contradict the
recommendations, conclusions and decisions taken by the competent
United Nations organs in the exerciseof their functions of supervision of
the trusteeship system.

Section 1. Nature of the Obligations under Mandates and Trusteeships

217. In these Preliminary Objections, it is not necessaryto undertake
a detailed examination of the nature of obligations that arise under a
Mandate or TrusteeshipAgreement. One can, however,distinguish three
types of obligations that arise under the mandate and trusteeship sys-
tems. These are:(a) obligations related to the administration of the territory concerned;
(b) obligations related to machinery for supervision and control-the
"securities for performance" referred to in Article 22 of the Cove-
nant. lniernational Status of South WestAfrica, Advisory Opinion,
1CJ Reports 1950 p.128 at 133. Voting Procedure on Questions
relating Io Reports and Petitions concerning the Territoryof South
WestAfrica, Advisory Opinion, 1CJReports 1955, p.67; and
(c) obligaticins owed by the Administering Authority towards other
Member States.

Australia contends that al1the Nauruan allegations of breaches of obli-
gations fall into the first category and that they are no longer justiciable
or legally enforceable by an action before the International Court more
than twenty years after termination of the trusteeship.

218. In the 1971 Namibia Advisory Opinion the Court indicated in
relation to the Mandate that "definite legal obligations" arose designed
for the attainment of the object and purpose of the Mandate (1CJ
Reports 1971, p.30). Australia, at the time of conclusion of the Trustee-
ship Agreement for Nauru conceded that Article 76(d) of the Charter

imposed a binding obligation on the Partner Governments. The records
state:
"In reply to questions raised by the delegations of lndia and china,
the Australian delegation affirms that Article 76(d) of theCharter is
accepted by the Delegations of Australia, New Zealand and the

United Kingdom as a binding obligation in relation to the Trustee-
ship A1:reement for Nauru, it being also noted that in accordance
with the terms of Article 76(d) the welfare of the inhabitants of
Nauru is of paramount consideration and obligation" (United Na-
tions, General Assembly Offiial Records, 2nd Session, Fourth
Committee, Report of Sub-Committee 1, Doc.A/C.4/127).

Australia does not, therefore, dispute the legal nature of the relevant
obligations. However, one should not ignore that the obligations involve
the exercise of a political as well as legai judgment.

219. The obligations that arise under Article 76 are defined in terms
of the aim to be achieved (what some would term obligations of result:
see Report of the International Law Commission, [l977] 2 YBlLC at
pp.18-30). The obligations are not defined in terms which specify the
precise means to be employed by the Administering Authority to achieve
that result. In consequence, the Administering Authority is left with
considerahle discretion as to the choice ofmeans, provided the end result
is achieved. This is significant in the present case, for there can be no
doubt thar the result was achieved: Nauru became independent and the
people prospered. And at no stage did the supervisory bodies within the
United Nations express the view that, in its choice of means, the Admin-
istering Authority was in breach of its legal obligations. 220. The nature and significance of the General Assemblyresolutions
on Nauru has to be consideredin the light of the fact that the obligations
of the Administering Authority are obligations of result. The termina-
tion of the Trusteeshipmust be seenas determinative and, in the absence
of any conditions or reservation concerning the performance of obli-
gations, to have put an end to any claim based on breach of
obligations-see paragraphs 231 to 237 below. It is also important,
however,to recognise that many United Nations resolutions concerning
particular trusteeships will relate to choice of means and matters of
judgment as to how to achieve the result in question. Necessarily,such
resolutions can be no more than recommendations and they will not
normally be cast interms of a breach. The Administering Authority will
be under an obligation to consider such resolutions in good faith (Voting

Procedure on Questions Concerning South WestAfricu, Advisory Opin-
ion, ICJ Reports 1955, p.66, per Judge Lauterpacht at p.116). The fact
that a resolution calls for particular action cannot in itself be taken as
indicating that failure tocomply amounts to a breach of obligation. By
contrast, repeated calls by the United Nations that particular action was
in breach of a trusteeship could constitute an authoritative determi-
nation of such a breach. This was clearly not the situation in relation to
Nauru as will be indicated below.

221. Nauru contends that the obligations arising under the Trustee-
ship can be expressed, inthe alternative, as obligations under general
international law. However,the attempt, in paragraphs 248-249 of the
Nauruan Memorial, to view Australia's conduct as a breach of the
Trusteeship Agreement or, alternatively,a breach of standards of general
international law is based upon a misunderstanding of the relationship
between such an Agreement and general, customary law principles. For
the Trusteeship Agreementimposed higher, more vigorous, and more
specific obligations.It cannot be supposed that conduct in full compli-
ance with the Trusteeship Agreementcould nevertheless be in breachof
standards of customary law.Accordingly,it is to the Trusteeship Agree-
ment and the Charter that the Court must look to see whether any
breach of obligation by the Administering Authority occurred.

222. As Lord McNair said in relation to Mandates, but in words
equally applicable to trusteeship:

". .. what are the rights and duties of the Mandatory in regard to
the area of territory being administered by it. The answer to that
question depends upon the international agreements creating the
systemand the rules of lawwhich theyattract" (InternationalStatus
of South WestAfricu , Advisory Opinion, ICJ Reports 1950 at
p. 150).
Whether this Court has jurisdiction in a particular case to determine

cornpliance with the trusteeship obligation of result depends, however,
on whether or not a particular clairn is properly brought before theCourt. It will be subject to determination by the Court of any objections
to jurisdictiori and admissibility. In this case, Australia contends that
there are such obstacles.
223; In these Preliminary Objections Australia contends that, once
the Trusteeship Agreement was terminated, there was no longer any basis
whereby Nauru could bring a claim before this Court concerning the

discharge of the obligations of administration. The basis for any such
claim had dis:appeared. Australia, therefore, reserves its position as to
the proper interpretation of the obligations that arose under the Trustee-
ship until a decision is made on its preliminary objections. But in any
event, itcontends that it fully discharged the relevant obligations.

Section III.The Trusteeship Council and General Assembly had
exclusive jurisdiction Io settle the dispute.

224. Australia contends that the cornpetence to determine any alleged
breach of the Trusteeship Agreement and Article 76 of the Charter rested
exclusively with the Trusteeship Council and General Assembly. Inter-
national supervision, through the League or United Nations was the
principal merhod of enforcement ofthe obligations in relation to admin-
istration of ;imandate or a trusteeship. As Oppenheim says "the ulti-
mate responsibility for its operation" ie the operation of the trusteeship
system "rests with the General Assembly and, with regard to strategic
areas, with the Security Council".

"These bodies approve the trusteeship agreements; their consent is
required for any alteration or modification of those agreements;
they bear the general responsibility for the administration of such
trust territories and strategic areas in regard Io which the administer-
ing authority is placed with the United Nations as a whole; and,
finally, the General Assembly exercises, in principle, concurrent
jurisdicrion with the Trusteeship Council with regard to the super-

vision of the administration of trust territories" (L Oppenheim,
Internarional Law, (1955) vol. 1, p.233).
225. The supervisory role of the United Nations was much more
significant ihan that of the League. As Goodrich and Hambro, writing
in the early days of the trusteeship system say;

"The most significant differences between the League mandates
system and the trusteeship system, as developed in the provisions of
the Charter and the trusteeship agreements, and the rules of pro-
cedure of the Trusteeship Council, relate to the matter of inter-
national supervision. Under the trusteeship system, not only is the
administering authority required to make an annual report, but to
assure uniformity and adequate coverage, this report must be based
on a qiiestionnaire prepared by the Council. Furthermore, the right
of petition is not only admitted, but according to the rules of procedure adopted by the Trusteeship Council, may be exercised under
most liberal conditions. Finally, the General Assembly and the Trustee-
ship Council may arrange for periodic visits to trust territories for the
purpose of establishing the facts by on-the-spot investigations" (Charter
of the United Nations (2nd rev ed 1949), pp.80-81).

(Seealso J Beaute, "commentaire de l'article 87" in J-P Cotand A Pellet
(eds),Lo Charte desNations Unies (1985) pp.1201 ff.)
226. Similarly, the Court has said:

"The obligation incumbent on a mandatory State to accept inter-
national supervision and to submit reports is an important part of
the Mandates System. When the authors of the Covenant created
this system, they considered that the effective performance of the
sacred trust of civilisation by the Mandatory Powers required that
the administration of mandated territoriesshould be subject to

international supervision. The authors of the Charter had in mind
the same necessity when they organised an International Trusteeship
System" (International Status of South WestAfrica, Advisory Opin-
ion,ICJ Reports 1950 at p.136).

227. The powers of supervision of the United Nations are set out in
the Charter and Trusteeship Agreement. The United Nations supervisory
structure comprises the General Assembly and, under its authority, the
Trusteeship Council (Arts.85 and 86 of the Charter). In carrying out
their functions the General Assembly and Trusteeship Council rnay.
according to Article 87 of the Charter:

(a) consider reports from the Administering Authority;
(b) accept petitions and examine them in consultation with the Adminis-
tering Authority;
(c) provide for periodic visits to the trust territories; and
(d) take these and other actions in conformity with the terms of the
Trusteeship Agreement.

The United Nations, throughout the period Nauru was administered
under the Trusteeship Agreement, received regular annual reports from
the Administering Authority, dealt with petitions and sent visiting mis-
sions to Nauru. As a result of these activities, as well as regular debates
on Nauru in both the Trusteeship Council and Fourth Cornmittee, the
United Nations was fully apprised of the situation surrounding Nauru,
including the various alleged breaches of the Trusteeship Agreement
raised by Nauru. The detail of United Nations consideration of the

various issues is set out in Part 1 of these Preliminary Objections. As
Nauru itself recognises "in accordance with Articles 87 and 88 of the
United Nations Charter the Trusteeship Council duly exercised its super-
visory function in respect of Nauru" (para.278 of Nauruan Memorial).
228. In the Namibia case the Court said that: "the United Nations .. ..actingthrough its competent organs must
be seen above al1as the supervisory institution, competent to pro-
nounce, in that capacity, on the conduct of the mandatory with
respectto its international obligations and competent to act accord-
ingly" (ICJ Reports 1971at pp.49-50).

The United Nations and its organs clearly therefore had competence to
act in relation to any allegation that there was failure to comply with
trusteeship obligations. There isno differencein this respect betweenthe
United Nations as a successorbody to the League of Nations in relation
to a Mandate and its position when exercisingan ultimate supervisory
authority with respect to a trusteeship regime under its powers derived
from Articles 16and 85of the Charter. As the Court said in the Nomibia
case:

"it wouldnot be correct to assume that, becausethe GeneralAssem-
blyis in principlevested withrecommendatory powers, itisdebarred
from adopting, in specific cases within the framework of its com-
petence, resolutions which make determinations or have operative
design" (ICJ Reports 1971, p.50).
Nor is it any objection that the General Assemblycannot act to settle a
dispute because itis a political and not a judicial organ. This was
rejected inthe Nomibio case (ICJ Reports 1971, p.49).

229. The decisions of the General Assembly include decisions that
either explicitly or implicitly are determinative of legal obligations. In
the Nomibiii case the Court said:
"To denyto a political organ of the United Nations .. .the right to
act on the argument that it lacks competence to render what is

described as a judicial decision, would not only be inconsistent but
would amount to a complete denial of the remedies available . .."
(ICJ Reports 1971, p.49).
As well,the Court has made it clear that it "does not possess powersof
judicial review or appeal in respect of decisions taken by the United
Nations organs concerned" (Nomibia case, ICJ Reports 1971at p.45).

230. Unlikethe situation in relation to a number of other Trusteeship
Agreement:: there was no provision in the Trusteeship Agreement on
Nauru for disputes concerning its interpretation or application to be
referred to the International Court. This was also different from the
position under the Mandate. The clear intention therefore was that any
dispute concerning the Trusteeship would be resolved through the nor-
mal supervisory mechanisms of the United Nations. As this Court
recognised in 1962:
"legally valid decisionscan be taken by the General Assemblyof the
United Nations and the Trusteeship Council under Chapter XII1 of

the Charter without the concurrence of the trustee State, and the
necessity for invoking the Permanent Court for judicial protectionwhich prevailedunder the Mandates Systemis dispensed with under the
Charter" (South WestAfrica, Preliminary Objections, Judgment, ICJ

Reports 1962at p.342).

Section III. Termination of a Trusteeship Agreement settles al1claims
relating to Trusteeship Obligations

231. The termination of a Trusteeship Agreement isthe ultimate act
of supervision by the United Nations exercisedeither because of serious
breach or on the ground of fulfilment of the obligations under the
trusteeship as a result of which the self-determination of the peoples
under the trusteeship system has been exercised. The power of the
General Assemblyto terminate the Trusteeshipin case of serious breach
isleft to be inferred from the trusteeship systemand general principlesof
law and not express provision inthe Charter or trusteeship agreements.
However,theNamibia Advisory Opinion in 1971confirms the existence
of this power and the definitive legal effectof such termination.

232. Inthe same way,when the General Assemblyterminates a Trust-
eeship on the ground that it is satisfied that the people subject to
trusteeship have exercisedtheir right to self determination and that the
Trusteeshiphas no longer any legitimatepurpose, so such a decision also
has "definitive legal effect". Bythis act, the General Assemblynot only
puts an end to the Trusteeshipbut also disposes of al1the legal issues-
"at least, those relating to the basic trusteeship obligations as distinct
from individual rights of United Nations members, such as for example
to equality of treatment" (J Crawford, The Creation of States in Inter-
national Low (1979) p.342).

233. This conclusion as to the definitive legal effect of a termination
on claims relating to trustee obligations is supported by the decision in
the Northern Cameroons case. In that case the Court said:
''whatever the motivation of the General Assembly in reachingthe
conclusions contained in those paragraphs, whether or not it was
acting whollyon the political planeand without the Court finding it
necessary to consider here whether or not the General Assembly
based its decision on a correct interpretation of the Trusteeship
Agreement, there is no doubt ... that the resolution had definitive
legal effect .. ."(ICJ Reports 1963, p.32).

As the Court said also in that case:
"lt mus! be assumed that the General Assemblywas mindful of the
general interestwhen, actingwithin itscompetence, it decidedon the
termination of the Trust . . . .Thereafter, and as a result of this
decision of the General Assembly,the whole systemof administrat-

ive supervision came to an end . .. . The Court cannot agree that
under these circumstances the judicial protection claimed by the
Applicant to have existedunder the Trusteeship System, would have alone survivedwhen al1of the concomitant elementsto which itwas
related had disappeared" (at p.36).
234. There is a statement by the Court in Northern Cameroons which
is clearly no rnore than obiter that:

"Neverthi:less, it may be contended that if during the life of the
Trusteeshipthe Trusteewas responsible for some act in violation of
the terms of the TrusteeshipAgreement which resulted in damage to
another Member of the United Nations orto one of its nationals, a
claim for reparation would not be liquidated by the termination of
the Trust" (ICJ Reports 1963 at p.35).

However,this statement clearly refers to third State claims, such as those
referred to by Professor Crawford, in the book referred to in paragraph
232above, arid not claims going directlyto the conduct of the Adminis-
tering Power in regardto the discharge of trusteeship obligations to the
inhabitants of the territory. As Professor Crawford has indicated, three
issues arose in the Northern Cameroons case:

(a) whether Cameroons had any legal rights in the due administration
of the British Cameroons under Trusteeship;
(b) whether such rights (if they existed) survivedthe termination of the
Trusteestiip; and
(c) whether even if such rights existed and survived, the Court in the
circumstances ought to adjudicate on them.

"Although the dispositif of the Majority Judgment appears to be
phrased in terms of the third alternative, it is quite clear that the
decision is based on the second" (J Crawford, The Creation of
States in International Law (1979) 343).

235. Australia agrees with this interpretation of the effect of the
Northern Cameroons case. This view receivesparticular support in the
separate opinion by Judge Wellington Koo inthat case (ICJ Reports
1963, at p.41). He said:
"The character, purport, structure and working of the Trusteeship
System, being different from those of the Mandates System and

resulting in a much broader and more effective supervision of the
administration of the trust territories than in the case of the Man-
dates, may tender recourse to judicial protection less necessary but
the right of another Member to invoke it, as shown above, subsists
for the intended purpose of protecting the interests of the people of
the trust territory and thereby advancing the basic objectives of the
Trusteeship System prescribed inthe Charter" (ai p.46).

However, hasays:
"lt appears clear that the whole matter of the Trusteeship of the
Cameroons formerly under United Kingdom jurisdiction has been
definitively and completely settled and the Trusteeship Agreementcategory of pronouncements by United Nations organs that determine
the existenceciffacts or legal situations. A determination in these cases
as such
"is apronouncementof the Organisation, whichislegallydefinitive,
and against which there is no legal recourse. lnasmuch as it rep-

resentsthe official United Nations position on the existenceof a fact
or legal situation,itis the only one that the Organisation takes into
account as the basis for eventualaction; thus the individual dissident
attitude lacks juridical relevance. In this sense these pronounce-
ments have legal validity,and the resolutions that contain them can
properly be characterized as bindingin what they determine"(em-
phasis in original; Legal Effects of United Nations Resolutions
(1969)p.121).,

A resolution terminating a trusteeship agreementthat makes no refer-
ence to breach by the Administering Authority of any trusteeship obli-
gation must be regardedas not just definitive so far as the status of the
territory is concerned but must necessarily also be taken to decide
definitively that the obligations of the Administering Authority under
the Trusteeship have also been met. This situation is explained, for
instance, by Crawford as follows:

"the ansiwerwould seemto be that the Assembly'sfunction here isa
determinative one-that it is designated by the Charter to decide
particular matters of political fact, applying principles of self-
determination implicit inthe Trusteeshipinstruments. It isobviously
necessary,as Judge Wellington Koopointed out, that in these mat-
ters ther'ebe some finis litium. The General Assembly, exercising
these furictions, puts an effective end to the Trusteeship. The terri-

tory is then incorporated in or associated with another State ("self-
government") or becomes independent-in either case a new
situation has arisen, the legality of which cannot be open to ques-
tion" (TheCreotionof Statesin InternationalLaw (1979)pp.343-
4).
237. Australia submits that the termination of the Trusteeship means

that there is no longer any basis to question the performance of obli-
gations undcr the Trusteeship. This is certainly the case in respect of
termination without conditions or subject to any reservation as to out-
standing duties to perform obligations. Termination in this situation
must be taken as determinative and a finis litium to the continued
assertion of any such claims. The question havingbeen definitely settled
by the Gencral Assembly, the dispute-if there is any dispute-is not
between Nauru and Australia, but between Nauru and the United Na-
tions. The Court has no jurisdiction as regards such disputes. ln the
absence of an expressreservation recording a breach and an outstanding
responsibili1.yon the Administering Authority, termination is conclusive

and operates as a complete discharge from al1further responsibility. Section IV. The Termination of the Trusteeship Agreement settled al1
daims hy Nauru arising under the ïkusteesbip Agreement.

238. The detailed history of the Nauruan claims and their consider-
ation by the United Nations are detailed in Part 1of these Preliminary
Objections. However,it isnecessaryto indicate howcertain critical issues
were considered and disposed of by the United Nations in order to
demonstrate that termination of the Trusteeship did in fact settle any

Nauruan claims arising out of the Trusteeship.
239. Final settlement betweenthe Partner Governments and Nauruan
representatives on various issues concerning the future of Nauru was
reached in 1967. Both phosphate and political questions were covered.

These issues were settled in favour of the Nauruan position of full and
sovereignindependence from 31 January 1968and a complete 100per-
cent transfer to Nauru of the phosphate operation. Agreement was
reached after detailed negotiations and, as in al1negotiations, compro-
mise by both sides. However, the principal Nauruan objectives were
achieved. The details of this settlement were before the United Nations
taken into account in its consideration of resolution
and were
2347(XXII). Yettoday Nauru wants to reopen a comprehensivesettle-
ment on the basis of whichthe United Nations approved the termination
of the Trusteeship.

240. Oncethis final agreement wasreachedin October 1967it became
necessaryto convene a sessionof the TrusteeshipCouncil, in order that a
resolution bringing the Trusteeship Agreement to an end could be
adopted by the General Assembly before the end of its then current
session. This development made it indispensable to hold on 22 Novem-
ber 1967a special sessionof the Trusteeship Council, in order also to
cancel a previously decided Visiting Missionto Nauru.

241. The Nauruan Memorial, in paragraphs 593 to 602 invokesthe
reservations made by Nauru in the course of the 1967Canberra talks
concerning the rehabilitation issue. However,these reservations, made in

the course of bilateral ncgotiations leading up to United Nations consid-
eration and determination, are not conclusive for the question now
under consideration. What is important is what occurred before the
United Nations supervisory organs.

242. It is an incontrovertible fact that in the 34th session of the
TrusteeshipCouncil in 1967,when examiningthe situation in Nauru, the
Trusteeship Council refused to maintain and reiterate the pre-existing
re~omme~dation to the Administering Authority concerning the re-
hab~- ~ ~ ~ ~ ~ ~~ ~ ~-~~d-out land. As the Nauruan Memorial recoa- -
nises in paragraph 607, the Trusteeship Council in 1967 rejected a
Liberian draft resolution that would have raisedthis issue. The reasons

for thissignifiant rejection are easyto understand. In the course of the
34th session of the TrusteeshipCouncil great attention had been paid tothe Davey Committee report on the feasibility of rehabilitating the

worked-out land. This report had been made availableto the members of
the Trusteeship Council on 16 May 1967. This report was rejected by
Nauru but not on the basis of any alternative technical advice (United
Nations, Report of Tmsteeship Council, General Assembly OfJcial
Records, 22nd Session, Suppl.No.4 (A/6704), para.385, reproduced as
Annex 28).

243. The Special Representative of the Administering Authority
pointed out that with regardto measures to betaken for the treatment of
worked-out areas these had been considered by a Committee of Experts.
The Nauruari representativeshad expressedreservationson the objectiv-
ity of the experts. The experts were people with highqualifications and
the Nauruan representatives had approved their appointment. He also
pointed out that the Partner Governments were not opposed to the
restoration of worked out lands. He indicated in detail the position of
the partner Governments. This was setout in paragraphs 399-401 of the
Report of the Trusteeship Council for that session (United Nations,
Report of lïusteeship Council, General Assembly Official Records,
22nd Session, Suppl.No.4 (A/6704); Annex 28. The Trusteeship Coun-
cil, at its 34th session followingconsideration of the above information
made the following finding:

"The Council also notes that the report of the Committee of Experts
concluded, inter alia, that 'while it would be technically feasible
(within the narrow definition of that expression)to refill the mined
phosphate areas of Nauru with suitable soi1or other materials from
external sources, the very many practical considerations involved
rule out such an undertaking as impracticable'. At thesame time the

report provides alternative means of treating the mined land. The
Council further notes that the Nauruans have voicedstrong reser-
vations to this report.. .. The Council further notes the statement
of the Administering Authority that the financial arrangements
agreed upon with respect to phosphate took into consideration al1
future needs of the Nauruan people, including possible rehabili-
tation of land already worked". (UnitedNations, Report of Trustee-
ship C~,uncil,General Assembly Offin'al Records, 22nd Session,
Suppl. No.4 (A/6704) para.403; Annex28).

The unilateral statements which the Nauruan Mernorial transcribes in
paragraphs 603 to 606 do not detract from the significant fact that the
Trusteeship Council did not insist on rehabilitation and rejected a con-
crete proposal advocating it.
244. Another reason fortheattitude of the TrusteeshipCouncil in not
reiterating the recommendation concerning rehabilitation resulted from
the fact that at its 34th session the Trusteeship Council was also in-

formed of the terms of settlement of the issueconcerning the phosphate
operation. This included information on the financial position thatNauru would be placed inunder the settlement. This followedcompre-
hensivenegotiations in 1967in whichthe Partner Governmentsagreed to
give up the phosphate concession and any continuing interest in the
phosphate operations post-independence.
245. As has been written by a specialiston these problems, during the

13th Special Sessionof the Trusteeship Council which led to Nauru's
independence the declarations made by the Administering Authority
were"pleinement acceptéespar les autoritésindigènes"(N Veicopoulos,
Traitédes territoires dépendants, tome II, L'oeuvrefonctionnelle des
Nations Uniesrelative au régimede tutelle, (1971) p.629).In November
1967during this special session of the Trusteeship Council, the Head
Chief of the Nauruan people, DeRoburt, withdrewthe claim to rehabili-
tation. He made the statement which istranscribed in paragraph 609of
the Nauruan Memorial. What is relevant inthat statement is the admis-
sion by DeRoburt that the question of land mined prior to 1 July 1967
"was not an issue relevantto the termination of the Trusteeship Agree-
ment, nor did theNauruans wishto make it a matter for United Nations

discussion". Therefore, Nauru withdrewthe issue from discussion in the
United Nations and made it clear that the claimwas nolonger an issue in
subsequent debate.
246. This action has considerable significance. For there is a clear
inconsistency between a statement by Nauru in 1967that the issue of
rehabilitation wasno longer a matter for United Nations discussion,and
a claim in 1990 that the same issue involves a serious breach of the
Trusteeship Agreement justifying a claim before the principal judicial

organ of the United Nations.
247. In the subsequent Fourth Committee debate and passage by the
General Assembly of resolution 2347(XXII) no cal1was made for re-
habilitation nor was any allegation made by Nauru or anyone else that
the Administering Authority had been in breach of the Trusteeship
Agreement. Yetif any issueremained as to the obligations of the Trustee-
ship Administering Authority one would have expectedit to have been

pursued in some way.
248. The Fourth Committee of the General Assembly, as is well
known, is a Committee of the Whole, composed of the full membership
of the United Nations, and the competent authority to exercise the
functions which Articles 16and 85of the Charter assign to the General
Assembly.The second paragraph of Article 85 of the Charter makes it
clear that the Trusteeship Council operates under the authority of the
General Assembly and merely assists the General Assernbly incarrying

out its functions. In accordance with Article 86 of the Charter the
membership ofthe TrusteeshipCouncil isequally dividedbetween those
Members who administer territories and those which do not.
249. A large majority of the whole membership of the General As-
sembly wasalready in 1966fullyinclined in favourof decolonisation. Ifthe Nauruans had a claim to formulate it could be expected that they
would advance it in the Fourth Committee, where it would find a
receptive audience. For these reasons, everything that was said or left
unsaid at the 6 December meeting of the Fourth Committee of the
General Assernblyis of crucial importance for the decision of this case.

250. In the Fourth Committee the representative of Australia made
the followingstatement:

"For most of 1967the representatives of Nauru and Australia had
been discussingthe future of Nauru and the phosphate industry and
had reaclied happy agreements on both questions. Nauru would
attain full and unqualified independence, withoutlimitations of any
kind, on 31 January 1968. The phosphate enterprise would be
purchased by the Nauru Local Government Council and would
come cornpletelyunder its control and management in three years'
time. Th'eagreement provided for the supply of 2 million tons of

phosphaie per yearat a priceof $US 12.10perton fob, which would
mean an annual return to the Nauruans of $15 million. The Nau-
ruan authorities would set up the Nauru Phosphate Corporation,
which would takecharge of the phosphate industry in 1970,pro-
vided that the agreed payments had been completed by then. If the
price of phosphate and the cost of production remained in the same
relationship as at present and the Nauruans continued to put aside
the sami: proportion of their funds as in the previous year, they
would build up a fund which, in twenty-five years, wouldstand at
approximately $400 million. Inthat waythe economic well-beingof

the population would be ensured once the phosphate deposits were
exhausted" (United Nations, General Assernbly Official Records,
Fourth t:ommittee, 22nd Session, Doc.A/C.4/SR.1739; Annex 30
to these Preliminary Objections).
251. In ci~ncluding,the representative of Australia paid a tribute to

the Head Chief of Nauru, Mr Hammer DeRoburt, who himself made
the following statement, inserted verbatim in the records of the Fourth
Committee:
"Economically, Nauru's position was strong because of its good

fortune in possessing large deposits of high-grade phosphate. That
economic base, of course, presented its own problems. One which
worried the Nauruanx derived from the fact that land from which
phosphate had been mined would betotally unusable.
Consequently, although it would bean expensiveoperation, that

land would have to be rehabilitated and steps were already being
taken to build up funds to be used for that purpose.'

1.para118 above.rencepresumablyta the RehabilitationFundrecentlyestablishcd-see That phosphate was a wasting asset was, in itself a problem: in
about twenty-five yearstime the supply would be exhausted. The
revenue which Nauru had received in the past and would receive
during the next twenty-fiveyears would, however,make it possible

to solve theproblem. Already some of the revenuewas king alloca-
ted to development projects, so that Nauru would havesubstantial
alternative sourcesof work and of income long beforethe phosphate
had been used up. In addition, a much larger proportion of its
income was being placed in a long term investment fund, so that,
whatever happened, future generations would be provided for. In
short, the Nauruans wanted independence and wereconfident that
they had the resources with which tosustain it" (para.20) (emphasis
added). (United Nations, General Assembly Offiial Records,
Fourth Cornmittee, 2nd Session, Doc.A/C.4/SR.1739; Annex 30
to these Preliminary Objections.)

It is submitted that the emphasised words in the previouslytranscribed
statement by the Head Chief DeRoburt constituted a waiverof the clairn
formulated in the Memorial concerning the rehabilitation issue. He
clearly stated, before the whole membership of the United Nations, that
"the revenue which Nauru had received in the past and would receive
during the next twenty-five years would .. .makeit possibleto solvethe

problem" caused by "the fact that the land from which phosphate had
been mined would be totally unusable".
252. Given the revenue which had been already receivedin the past
and what was to be receivedafter independence from mining the phos-
phate over which the concession had been wholly relinquished without

payment of any compensation, there is no room for the extravagant and
retrospectiveclaim now advanced in the Nauruan Memorial.
253. It is not simply that DeRoburt "did not mention the Nauruan
claim for rehabilitation", as the Nauruan Mernorial says in paragraph
611. It is much more than that; the relevant fact isthat DeRoburt left no

room for Nauru's present claimand consequently Nauru waived it. If
account is taken of the previous statement from the Australian represen-
tative the issue was then settled.
254. The Nauruan Memorial attempts to diminish the significanceof
the formal statement byDeRoburt. It observesthat DeRoburt wasspeak-

ing as a member of the Australian delegation, as if that fact could affect
his representative character as Head Chief of the Nauruans and their
main protagonist in al1discussions and negotiations. To include him in
the Australian delegationwas themeans of allowinghim to participate in
the debate and explain theNauruan position.' Such participation wasin

1. Seestatementby DeRoburt, NauruanMemarialp.252 describingasone of his viclories
thatAustraliaallowed a Nauruanrepresentativeas pan of the Australiandelegaiion.fact encouraged by,and approved by the United Nations as appropriate
for the repreijentativeof a people approaching independence (see eg R
Kovar, "La participation des territoires non-autonomes aux organis-
ations internationales", 1969Annuaire français de droit international
pp.529-530).
255. The Nauruan Memorial adds (para.612) that the formal nature

of the proceedings and the spirit of the occasion made the Fourth
Committee an inappropriate forum before which to voice a note of
discord. This is again wrongly conceived giventhat this was the perfect
opportunity for the Head Chief Io press his claim before the whole
world.
256. The contention in the Nauruan Memorial that the statement
"must be read in the context of his earlier assertion at the Trusteeship
Council" (para.612) ignoresthe fact that the significanceof the proceed-
ings before theFourth Committee of the General Assembly, including
the full membership of the United Nations, as the highest organ on

questions of trusteeship and the only one vested with decision-making
powers, made itnecessary to be very exact and precise with the terms
used in referring to an issue which had been highly controverted and
discussed. DeRoburt must have been conscious that there would be no
sympathy for the claim and it wasnot worth pursuing. India did refer to
the matter (United Nations, General Assembly Official Records, 22nd
Session, FourthCornmittee, Doc.A/C.4/SR/1741); Annex 30)but there
wasno other support or responseto their comments. Other States spoke
with praise of the fulfilment by the Administering Authority of its
trustee obligations. This further supports the view that the claim was

waived or overtaken by the termination of the Trusteeship Agreement.
257. The Nauruan Memorial (para.608) invokesa resolution adopted
by the Committee of 24, but this political body, whichwasinstrumental
in the processof decolonisation,did not reiteratethe recommendation to
restorethe land. It limited itselfto recording in a neutral resolution, "the
desireof the people to remain in Nauru and for the rehabilitation of their
island; bu1 notes the statement of the Administering Power on the
practical irnpracticability of rehabilitation".

258. The Nauruan Memorial also invokes the reference in General
Assembly resolution 2347(XXIl) to the previous resolutions 2111(XX)
and 2221(?:XI),which mention the restoration of the land. However,the
mere recalling in the preamble of resolution 2347(XXII) of the previous
General Assembly resolutiois does not have the legal effect claimed in
the Nauruan Memorial, at paragraph 613, of saving or resurrecting the
rehabilitation claim. The fallacy in the Nauruan argument is that it
assumes tliat the Nauruan claim for rehabilitation was in some way
validated, as a legal claim against Australia, by the earlier General
Assembly resolutions 21 11(XX)and 2226(XXI). It was not.

259. It is important to emphasise that the legal obligations of the
Administering Authority are those in the United Nations Charter, es-pecially Article 76, and in the Trusteeship Agreement. Neitherinstru-
ment, in fact, contains any referenceto rehabilitation. The issueisrather
whether rehabilitation was the appropriate means to carry out the legal
obligations to promote the well-being and advancement of the Nau-
ruans. In relation to the choiceof appropriate means, the Administering
Authority necessarily had a considerable margin of discretion. In the

exerciseof that discretion it had to take full account, in good faith, of
such guidance as it might receive from the competent organs of the
United Nations. The General Assemblyformulated its guidance in terms
of "requests" or "recommendations", and made no finding of a breach
by the Administering Authority of its legal obligations.
260. Nevertheless, these resolutions were acted upon. Resolution
211l(XX) of 21 December 1965(para.4):

"Further requests that immediate steps be taken by the ~dminister-
ingAuthority towards restoringthe island of Nauru for habitation".

In the following year, on 20 December 1966, resolution 2226(XXI),
(para.3):
"Recommended . .. immediate steps, irrespectiveof the cost in-
volved, towardsrestoring the island of Nauru for habitation .. .".

These requests and recommendations were fully taken into account by
the Administering Authority, as subsequent events revealed. Theywere
not, of course, the only factors or guidance of which the Authority had
to take account. Another important factor wastiming. Giventhe lateness
of the Nauruan decision to reject resettlement, there remainedonly two
to three years prior to independence, a period quite inadequate for the
Authority to undertake itself the rehabilitation exercise: the most that
could be done was to make financial provision for it.Yetanother factor
was the report of the Visiting Missionin 1965,endorsed by the Trustee-
ship Council in June 1965, recommending that resettlement should not

be abandoned. A further factor wasthe rather pessimisticviewtaken in
the CSIRO inquiry of the practical benefits from rehabilitation, a view
confirmed in 1960,and the equallypessimisticBPC report of 1965.Even
the 1966 Davey Report offered only marginal encouragement for the
prospects of rehabilitation.
261. Nevertheless, steps were taken, in accordance with the General
Assembly'sresolutions of 1965and 1966,on the basis that the decisions

on how, and when, to rehabilitate should be taken by the Nauruans
themselves, so that the primary aim of the Administering Authority
should be to ensure that the Nauruans had the necessaryfinancial means
at their disposal.This was accomplished by the 1967Agreement, as the
Nauruans themselves acknowledged. The necessary "steps", calledfor
by the Assembly, had been taken.
262. Not surprisingly, therefore, when the TrusteeshipCouncil met in

June 1967,the Council rejected the Liberian draft resolution calling onthe Administering Authority, once again, to take immediate steps to
restore the island for habitation. For the Heads of Agreement in respect
of the Nauru Phosphate Agreement had been signed on 15 June 1967,
and adequate steps had already been taken to give to the Nauruans the
financial resources to take their own decisions on rehabilitation.

263. By the time the General Assembly met to consider the Trustee-
ship Council recommendation, in December 1967, the detailed Phos-
phate Agreement of 14November 1967had been signed, and Head Chief
DeRoburt, in addressing the Fourth Committee of the Assembly on 6
December 1967 had confirmed that Nauru would have the financial
means to "solve the problem". Accordingly, the General Assembly's

resolution 2347(XXII) of 19 December 1967 terminated the Trusteeship
without reference to the problem of rehabilitation. This omission from
the operative part of the final resolution of any recommendation con-
cerning the restoration of the land is legally very significant. It is this
omission which is the striking difference when compared with the earlier
resolutions 211l(XX) and 2221(XXI).

264. Thur, the preambular "recall" of the resolutions of 1965 and
1966 was not to preserve a Nauruan claim against the Administering
Authority.' The earlier resolutions were simply part of the history of the
Trusteeship. The Administering Authority had complied with them, and
the 1967Agreement was, in effect, recognised by the General Assembly
as a full and complete discharge of the Administering Authority's obli-
gations. And that is why, in terminating the Trusteeship, the General
Assembly had no need to reserve or exclude the issue of rehabilitation as

a matter still unresolved and requiring settlement in the future, post-
independence.
265. Moreover, from a legal point of view,the requests or recommen-
dations contained in the preceding resolutions to restore the land for
habitation, could no longer be performed by the former Administering
Authority, who had become "functus officio" and divested of al1power

and authotity over the territory, by virtue precisely of resolution
2347(XXII). The previous recommendations thus-ceased to have an
object or a legal effect and were not replaced (as it would have been
necessary for Nauru's claim) by a recommendation transforming the
duty to rehabilitate land into thealleged duty to pay pecuniary compen-
sation, which is claimed in the Nauruan Memorial.

266. But now, more (han 20 years after, the question is brought back
for discussion before the International Court of Justice, asking for a
favourable pronouncement from the principal judicial organ of the
United Nations.

1. The rame can be raid about the prwious resolutionsinfaras they callefor
independence.It would be absurdto think that, in citing resolutionsandI(XX)
2226(XXIJ in resolutian2347(XXII). thismeant thatthe Administering Authoritywas
still underan obligationto giveindependenceto Nauru. Section V. Nauru is bound by the settlemeni of the dispute by the
United Nations

267. Nauru was intended to benefit directly from the obligations
arisingunder the Trusteeship Agreement. Its people were able through
the supervisory rnechanisms of the United Nations to bring its claims
direct& beforëthe United Nations and they did this as outlinid in detail
in Part 1of these Preliminary Objections and in paragraphs 242 to 260
above. Its representatives participated in the critical final consideration
of the terminarion of the Trusteeship Agreement by the United Nations.

268. As the precedingparagraphs have shown, the Nauruan represen-
tatives were given every opportunity to put their case and claim before
the United Nations. Yetat theend of the day they agreedto an indepen-
dence seulement that was associated with a phosphate industry settle-
ment that gave them nearly everything which theyhad sought in the
preceding negotiations. There was no reservation or assertion of the
claim concerning rehabilitation as a matter arising from the breach of
the Trusteeship. Nauru waivedits claim and warmly welcornedthe grant
of independence and termination of the Trusteeship.

269. Nauru is therefore bound by the determinative nature of the
termination of the Trusteeship by the United Nations and agreed to in
resolution 2347(XXII). It cannot seek to avail itself of the benefits of
resolution 2347(XXII) and at the same time deny its binding effect in
relation to alleged breaches of the Trusteeship.

Section VI. The legal consequences that flow from seitlement of the
Nauruan claim by termination of the ïiusteesbip Agreement

270. The conclusion that the United Nations settled al1 the issues
concerning the discharge of obligations under the Trusteeship by the
Administering Authority, and in particular the claim to rehabilitation,
has the consequence of rnaking Nauru's Application inadmissible, on
the ground that it requests the International Court of Justice to under-
take the task of exploring again the performance of the Trusteeship in
order to overrule and contradict the conclusions and decisions taken by
the competent United Nationsorgans in the exerciseof their functions of
supervision of the trusteeship system.The termination must be taken by
this Court as conclusive. That this isa correct appreciation of the legal
position is supported by the cases and writings of jurists referred to in
paragraphs 231 to 237 above.

271. Respect isalso due to the situation which nowobtains in regard
to the former Trusteeship. The application is inadmissible because, as it
has been heldby thejurisprudence of the Courtand sustained by reputed
publicists, it wouldinfringe the propriety of exercisingjurisdiction to do
so when that exerciseof jurisdiction would exceedthe inherent limits of
the judicial function. 272. The Court has stated that it "possesses an inherent jurisdiction
enabling it to take such action as may be required .. . to ensure the
observance ol' the 'inherent limitations on the exercise of the judicial
function' of the Court and 'to maintain its judicial character' ". The
Court added that
"such intierent jurisdiction, on the basis of which the Court is fully
empower4:d to make whatever findings may be necessary for the
purposes just indicated, derives from the mere existence of the Court
as a judicial organ established by the consent of States, and is

conferred upon it in order that its basic judicial functions may be
safeguarded" (Nuclear Tests(Australiav France)and (New Zealand
v France),Judgmenls, ICJ Reports 1974 at pp.259-260 and p.463
respectively).
273. In respect, in particular, to the crucial rehahilitation issue, these
inherent limitations on the judicial function apply with particular force.
As the Court has said, it "has first to examine a question which it finds
to be essentially preliminary, namely the existence of a dispute" ( ICJ
Reports 19741 ,at p.260) between Nauru and Australia. It is submitted
that such a dispute was settled and disappeared when Nauru waived its

claim before the Fourth Committee of the General Assembly. And
certainly the claim disappeared when the General Assembly terminated
the Trusteesliip Agreement, thereby acquitting the Administering Auth-
ority of any further responsibility, and without reserving the question of
responsibility for rehabilitation.
274. As has been said by this Court in the Nuclear Tests case:

"the Court, as a court of law, is called upon to resolve existing
disputes between States. Thus the existence of a dispute is the
primary condition for the Court to exercise its judicial function"
(ICJ Reports, 1974 at pp.270-271).
The Court added:

"the dispute having disappeared, the claim advanced . .. no longer
has any object. It follows that any further finding would have no
'raison d'etre'.. . TheCourt can exerciseits jurisdiction in conten-
tious proceedings only when a dispute genuinely exists between the
parties. In refrainingfrom further action in this case the Court is
therefore merely acting in accordance with the proper interpretation
of itsjiidicial function... .The object of the claim having clearly
disappeared, there is nothing on which to give judgment" (at
pp.271--272).

In accordance with these considerations the Court held that, in the
circumstances of that case, the claim "no longer has any object and that
the Court is therefore not called upon to give a decision thereon" (al
p.272).
275. The same conclusion applies here. CHAPTER 2

LACK OF JURISDICTION-THE AUSTRALIAN DECLARATION
UNDER ARTICLE 36(2O )F THE STATUTE EXCLUDES

Section 1. Relevant jurisdictional grounds

276. Nauru relies on the acceptance by Australia and Nauru of the
compulsory jurisdiction of the Court under Article 36(2) of the Statute
in order to found the jurisdiction of the Court in this case. No other
provision is relied upon (Nauruan Application, para.1). Nauru also
alleges that there is no relevant reservation which would preclude the
jurisdiction.
277. Australia, however, submits that the jurisdiction of the Court is
excluded by virtue of the reservation contained in its acceptance of the

Court's jurisdictionof 17 March 1975 which excludes:
"any dispute in regard to which the parties thereto have agreed or
shall agree to have recourse to some other method of peaceful
settlement".

Australiais entitled to avail itself of this reservation which is applicable
to the present case.

Section II. During the continuance of the Trusteeship, Nauru agreed
to settle its claims by direct negotiation

A. UNITEDNATIONS RECOMMENDATIONS

278. The United Nations itself encouraged the Administering Auth-
ority and Nauru to undertake negotiations on the issue of the political
future of Nauru and issues related tothe phosphate industry. At an early
period there had been calls for discussions on resettlement. In 1962, for
instance, the Trusteeship Council took note of proposals made on reset-

tlement and expressed the hope that "the result of these negotiations will
be communicated to the Trusteeship Council at an early date .. :'
(United Nations, Report of ïiusteeship Council, GenerolAssembly Of-
ficial Records, 17thSession, Suppl.No.4 (A/5204), ch.111,para.12). In
1965after resettlement was abandoned and attention was directed at the
political futureofthe Nauruan people, the Trusteeship Council:
"urges the Administering Authority to accede to the desire of the
Nauruan representatives that the further discussions on the question
of independence be held in 1967and hopes that at these discussions

a solution satisfying to the Nauruans will be found" (United Na-
tions, Reporl of Trusteeship Council, Generol Assembly Officiol
Records, 20th Session, Suppl.No.4 (A/6004), para.324). negotiations and the position of the Partner Governments was specifi-
cally stated and understood by Nauru. The silenceof the Agreement on
the issue is a clear sign of the recognition that the two sides could not
agree on an express provisionbut not that the Nauruan claim remained
aiive and outstanding. A similar solution of omission was adopted in
relation to another issue on which the two sides took different views
during the negotiations-the question of the title to the phosphate
deposits themselves. Yetthis issue, as with al1other issues in the nego-

tiations, must be considered to have been resoived by the terms of the
Canberra Agreement and the agreement for independence in January
1968.
281. The terms of the Canberra Agreement (Schedule to Annex 9)
provided for consultations between the F'artnerGovernments and the
NLGC (clause 21). There was provision for review of Part II of the
Agreement (clause 24).

282. While the Agreement did not deal explicitlywith the Nauruan
claim for rehabilitation, it is clear from the history of the negotiations
and subsequent Nauruan conduct leading up to independence that the
Agreement did represent a comprehensive settlement of al1 claims by
Nauru in relation to the phosphate industry. The F'artnerGovernments
at al1times made clear their understanding that they weresubject to no
continuing liabilities inrelation to rehabilitation of Nauru.

283. The only conclusion, therefore, in the light of this record is that
Nauru agreed to the settlement of disputes between it and the Adminis-
tering Authority on the phosphates, including rehabilitation, by direct
negotiation. This was the agreed method of settlement. Nauru is, there-
fore, precluded, by the terms of Australia'sreservation to its acceptance
of the Court's jurisdiction, from bringing its claims before the Court.
The Court has no jurisdiction to entertain such claims.

Section III. At the termination of the Trusteeship, Nauru agreed to
settlement of al1issues betweenil and the Administering Authority, by
resolution of the Trusteeship Council and General Assembly

284. At the conclusion of the Trusteeship, Nauru agreed to accept as
settled ail outstanding issues withthe Administering Authority by resol-
ution of the Trusteeship Council and General Assembly, as the final
method of settlement. In this way, Nauru is also prevented from now
bringing a claim against Australia in this Court by virtue of the reser-
vation in Australia's acceptance of the Court's jurisdiction excluding
disputes which the Parties have agreed to settle by other methods.

285. The outstanding issues requiring settlement before termination
of the trusteeship were:
(a) the date of independence;
(b) the terms of the transfer of control; and
(c) rehabilitation.The parties agreed on al1these issues in the negotiations leading to the
Canberra Agreement. As regards rehabilitation, it was agreed that the
Nauruans would have funds adequate for them to make their own
decisions.
286. Nevertheless, even if that were not regarded as settlement
through an agreed method of settlement, the Trusteeship Council and

General Assemblyhad final authority to resolveany disputes remaining
unsettled. So that resort to the United Nations organs was the agreed
method of set.tlementof al1disputes betweenNauru andthe Administer-
ing Authority.
287. This viewof the matter issupported by Judge Wellington Kooin

the Northern Cameroons case where he says:
"lt appears clear that the whole matter of the Trusteeship of the
Cameroons formerly under United Kingdom jurisdiction has been
definitively and completely settled and the Trusteeship Agreement
relating thereto irrevocablyterminated .. .Nowthe same resolution
1608(XV)by settling the whole matter of the Trusteeship of the
Cameroons, by necessaryimplication and effect, has also settled the

dispute between the present Parties. This settlement then fulfils the
conditions of exclusion from the scope of Article 19prescribed by
the term 'settled by . . other means" (ICJReports 1963,at pp.51-
2).
288. In this respect, it must be recalled that "itis not so much the

form of negotiation that matters as the attitude and viewsof the Parties
on the substantive issues of the question involved" and that:
"In cases wherethe disputed questions are of comman interest ta a
group of States on one side or the other in an organised body,
parliamentary or conference diplomacy has often been found to be
the most practical form of negotiation" (South WestAfrica cases,

ICJ Reports 1962, p.346).
In the preseiitcase, this collectivemethod of settlement has been usedto
complement the direct negotiations between the parties, referred to in
section II, above.

289. According to the Australian declaration accepting the jurisdic-
tion of the Court it is necessary that the parties to the dispute have
agreed to have recourseto "some other method of settlement". In this
case, the Nauruan agreement to the method of settlement involvingthe
TrusteeshipCouncil and the General Assemblyresults from the fact that
the representatives of the Nauruan people, freely and of their own
accord, participated in the debates of the TrusteeshipCouncil and of the
Fourth Conimittee of the General Assembly,acceptedthese fora for their

claims, raising and discussing the very questions which are now the
subject-mauer of the dispute brought to the Court. These representativesconsented to and did not oppose resolution 2347(XXII). Al1this consti-
tuted agreement by conduct.
290. The Republicof Nauru bases its case on beingentitled to invoke
the actions and statements of the representativesof theNauruan people,
before independence. Clearly, they must also he bound by their actions
and statements at that time.

291. Nor can Nauru be heard to Saythat it was not in a position to
participate fully asan independent nation in the United Nations consid-
eration of the issues raisedby its claim. It was a third party beneficiary
of the trusteeship system and must, therefore, be bound by and taken to
have agreedtothe method of settlement provided for through the United
Nations organs. PARTIII

OBJECTIONSTO JURISDICTIONAND ADMISSlBlLlTY
BASEDON ABSENCEOF CONSENTOF
THIRDPARTIESessential component in any action brought against a State which was
jointly liable with one or more other States. As the Nauruan Memorial
recognises, such a power "in municipal law is the necessary correlativeof
a rule that al1necessary parties must be joined in particular proceedings"
(para.629).

Section II. The General International Law Position

298. There is no evidence of the existence in customary international
law of a general regime of joint and several liability in cases where
damage results from the joint action of more than one subject of
international lavr.Such a rule only exists where there is agreement.
299. Thus, a special regime of joint and several liability has been
imposed by treaty in the case of the 1972 Convention on International
Liability for Damage by Space Objects (961 UNTS 187). That Conven-

tion established an exceptional regime for the new and unprecedented
risks created by state activities inouter space. Article V provides:
"1. Whenever two or more Statesjointly launch a space object, they
shall be jointly and severally liable for any damage caused.
2. A lauriching State which has paid compensation for damage
shall have the right to present a claim for indemnification to
other participants in the joint launching. The participants in a

joint launching may conclude agreements regarding the appor-
tioning among themselves of the financial obligation in respect
of which they are jointly and severally liable. Such agreements
shall be without prejudice to the right of a State sustaining
damage to seek the entire compensation due under this Conven-
tion from any or al1of the launching States which are jointly
and severally liable".

Article IV also provides for joint and several liability, and apportion-
ment of damages, where damage is caused other than on the surface of
the earth to another space object.
300. The States which drew up this Convention were not setting out a
system which already existed in customary international law. An explicit
provision to grant to the State seeking compensation the right "to seek

the entire cornpensation due under this Convention from any or al1of
the launching States which are jointly and severally liable" was required
to set up the exceptional regime of passive solidarity for the liability
"due under lhis Convention". This is conclusive evidence that, in the
absence of express stipulations, the obligations "in solidum" do not
existunder general international law concerning state responsibility. It is
to be noted that, in setting up this special regime, the contracting States
established siright of contribution between liable States.

301. The differences in approach during the debates leading to the
conclusion of the Convention make it clear that while States acceptedthat more than one State could be liable for the same damage, they did
not consider that customary international law in those circumstances
imposed several liability on each State concerned for the whole of the
damage. ln the 1967Outer Space Treaty(610 UNTS 205), only limited
agreement could be reached on liability and no express provisionon the
precise basis on which such liability could arise was agreed (cf Art.7).

The discussionson this issuewerecarried overand werefinally reflected
in the 1972Convention. Discussions on liability, however,commenced
very early in the discussions on outer space.l
302. The statements made by delegates during the debates indicate

that they were conscious of breaking new ground and adopting a sol-
ution suitable for the particular subject matter-hazardous activities in
outer space-a solution based on practicality and the desire to deter
States from behavingnegligently.What the negotiations on that Conven-
tion reveal,however,isthe absenceof any common understanding that a

principle of joint and severalliability existedas customary law.
303. There are no decisions of either the International Court of
Justice or domestic courts which support the existence in international
law of a regimeof joint and severalliability, by which a defendant State

would haveto respond entirely for an alleged liabilityincurred together
with other States. The cases before the International Court of Justice
invoked inthe Nauruan Memorial (para.624)do not support the conten-
tion Nauru advances as to the principle of "solidary liability" being "a
general rule of international law" (para.628 of Nauruan Memorial). The

Corfu Channel and the Nicaragua cases are mentioned, but in these
there was only one State accused of unlawful acts: Albania for not
having advised of the presence of the mines and the United States for
supporting the "contras". In these circumstancesit is impossibleto find
in these precedents any support for the alleged general principle or

presumption in favour of passivesolidarity between two or more States

1. In Tact.the first detailed proposal on liability, provided by Belgium i1963ril 29,
provided not forjoint and severalobligations. but for obligatory joinder of actions(A/
AC.IOS/C.Z/L.7: Manual, p.237). The Hungarian proposal in March 1964provided
for joint liability in ihe case of joint launching venturesL.2I.I0; Manual,
p.245):
"ln the case of joint launching or joint possession or ownerrhip or cooperation,
liability may be laid upon more than one State or international organisation; their
liabilitywardr the damaged State shall be joint".

TheUnited States proposals, on the other hand, favouredjoint and severalliability,and
this approach came to be accepted in the Liability Convention. combined with pro-
vision for apportionment of compensation betweenthe Statesng responaibility(cg
A/AC.IO5/C.Z/L.8/REV.t: A/AC.lOJ/C.2/L.8/Rev.2; A/AC.IOS/C.2/L.8/Rev.3:
A/AC.IOS/C.2/L.19; Manual. pp.247. 258, 263, 301 respectively). The rcfer10ce
"Manual" is to N Jasentuliyana and R Lee, Manual on Space L,Vol.lll (Oceana.
1981).guilty of unlawïul acts exercised in common. On the contrary, in the
Nicaragua case the International Court has clearly decided that if the
United States is fully responsible for its own unlawful acts, it "is not
responsible for the acts of the contras" (emphasis added, ICJ Reports
1986, p.65).

304. During its last session, in 1990,the International Law Commis-
sion discussed the 6th report by Ambassador J Barboza on "Inter-
national Liability for lnjurious Consequences arising out of Acts not
prohibited by Iriternational Law". The special rapporteur proposed two
options in cases wheredamage has been caused by more than one State:
solidary or joint responsibility. Byan overwhelmingmajority, the mem-

bers of the Commission werein favour of the second proposal for joint
responsibility (Report of ILC on ils 42nd Session, Doc.A/45/10,
para.517).
305. The only arbitral award invoked in the Nauruan Memorial
(para.626) is TheZafiro ((1925)6 UNRIAA 160).but this case givesno
support to the contention that there is in international law a general

principle or evena presumption of solidarity, that is, that in the case of
parallel unlawlul acts by two or more States it is possible to claim from
any one of them the entire compensation forthe whole damage suffered.
The case arose out of the looting and destruction of the property of
British nationals in Manila caused by Chinese crew members of the
Zafiro, a US public vessel, who had been allowedto go ashore without
effectivecontrol. No other State was involved ina parallel unlawful act
so the question of passive solidarity did not arise at all. Besides the
Zafiro crew, :inumber of unknown persons, Filipino insurgents and
Chinese employees, had participated in the looting. The British-United
States Arbitral Tribunal held that allowing the crewto go ashore uncon-

trolled wasculpable and that the United States waswholly liable for the
damages, saying:
"... wedo not consider that the burden ison GreatBritain to pmve
exactly what items of damage are chargeable to the Zafiro. As the
Chinese crew of the Zafiro are shown to have participated to a

substantial extent and the part chargeable to unknown wrongdoers
can not be identified, we are constrained to hold the United States
liable for the whole" (at pp.164-5).
However,the Tribunal, confirming the purely equitable and evidentiary
character of its award went on to decide that:

"In view,however,of our finding that a considerable, though unas-
certainable, part of the damage is not chargeable to the Chinese
crewof the Zafiro, wehold that interest on the claims should not be
allowed" (at p. 165).

306. Sincethe arbitration was conducted twenty-seven yearsafter the
damage wa!;caused, the interest was a substantial proportion of the amount claimed and therefore the Tribunal in effect did not require the
US to compensate for the total amount of theharm caused. It is easy to
see that the Tribunal did not base its decision on a presumption of
passive solidarity in the international law of state responsibility, as
claimed by the Nauruan Memorial.

307. Nor does the work of the International Law Commission on
State responsibility support the Nauruan contentions. The passage
quoted in paragraph 625of the Nauruan Memorial from a commentary
in the 1978report tothe GeneralAssembly onstate responsibility([l978]
II(2) YBILC.99)relates to the distinction between casesof participation
covered by draft Article 27 on aid or assistance provided by a State to
another State and other cases wherethe liability of more than one State
is involved. That passage isirrelevant to the alleged principle of passive
solidarity. No suggestion is made in the passage of any solidarity in the

liability of. the States acting through a common organ. Rather, the
reference in that passage to parallel conduct and to separate illicit acts
suggeststhe contrary. In any event, that passage isonly authority for the
obvious principle that each State is responsible for its ownacts. It is, on
the contrary, highly relevantto note that, when studyingthe second part
of this topic, devoted to the consequences of State responsibility and,
morespecifically,to reparation, the International LawCommission, has,
at no stage, envisagedany possibilityof a joint and severalresponsibility
in international law.In particular, in his second Report on state responsi-
bility,the specialrapporteur, Professor Arangio-Ruiz, has insistedon the
fact that, in case of concurring causes of damage, each concerned State

was responsible only for its own behaviour (A/CN.4/425, 9 June 1989,
para.44 ff). No member of the Commissionhas challengedthis view(see
Report of ILC on ifs 42nd Session, Doc.A/45/10, paras.375-377).
308. Fewjurists have written on the issue of joint liability. What has
been written supports the view that joint and several liability has not
been established as a rule of customary international law. Professor
Brownliewrote in 1983:

"The principles relating to joint responsibility of States are as yet
indistinct, and municipal analogies are unhelpful. A rule of joint
and several liability in delict is probably not justified in the con-
ditions of state relations" (Principles of Public Internalionol Law,
3rd ed, 1979, p.456).

By contrast, in the Fourth edition of the same book (1990), Professor
Brownlierepeats the first sentence quoted but concludes:

"A rule of joint and severalliability in delictshould certainlyexistas
a matter of principle, but practice isscarce" (p.456).
In an article on "Complicity in International Law" Professor Quigley
wrote: "ln a situation of CO-principals,one can oppose the notion of
joint and several liability on a State sovereignty analysis-that a Stateshould be respoiisible only for its own acts" (1986)LVlI British Year-
book of Internai'ionalLow p.77 at p.128.

Section III. The Rule in Domestic Legal SystemsCorresponds tothe
Rule in International Law

309. The position at international lawconcerning the absence of any
authority which would support the Nauruan contentions on liability is
not essentially different from the position in domestic legal systems.
Thus, under the common law of contracts:
"a promise is joint when a single promise is made by two or more
persons without words indicatingthat each is to be bound individu-
allyas wellasjointly. If there are such wordsthe contract isjoint and

several. The presumption is that a contract made by two or more
persons is joint, express words being necessaryto make it joint and
several" (GlanvilleWilliams, Joint Obligations, London 1949,p.35
(para.2).
See also Chitty on Contracts Vol.1,para.1302 (26th ed, 1989).

310. In civillaw,the special regime which would makea singlesubject
liable for the whole inthe wayclaimed by Nauru is describedas creating
special kinds of legal duties which are called "passive solidarity obli-
gations" or obligations "in solidum". Their special feature is that a
creditor mayclaim the whole of a debt from any one of those bound "in
solidum", and the one who pays the whole debt is entitled to claim
reimbursement from the other debtors afterwards.

311. In the French law of contract, solidarity of obligations is the
exception rather than the rule. According to Article 1202of the French
Civil Codeit isnot presumed; itmust be expresslystipulated. According
to Planiol:

"La solidaritéest une exception au droit commun; la règle estla
division de la dette entre ceux qui s'obligent conjointement. Aussi
l'art 1202dit-il que 'la solidariténeseprésumepas': Cela veut dire
que, dans le doute, on ne déciderapas que les débiteurssont soli-
daires;" (TruitéElémentairede Droit Civil, 10th ed 1926,tome II,
p.245).
(Seealso G Marty, P Reynaudand Ph Jestaz, Les Obligations, tome II,

le régime,2nd ed 1989,pp.97-99.)
312. A brief surveyof municipal law systems in relation to contrac-
tual obligations indicates that there is no general presumption of a rule
of joint and severalliability.Wheresuch liability existsitisgenerallythe
result of agreement between the parties or has been imposed by legis-
lation. The imposition of the special regimeof solidary obligation in
municipal law is based on certain policy considerations designed to
protect an inlured Party. But such decisionsmade for the collectivegoodcannot be made in some incremental way by international law contrary
to the sovereigntyand independence of equal States.

313. In addition, whereverin municipal lawa rule of joint and several
liability is imposed on defendants, there is also a rule by which the
defendant who bears sole liability has recourse against the others who
are liable. These can be compulsorily joined in the original suit, or
contribution can be claimed from them in a separate subsequent action.
The availabilityof an enforceable right of contribution isessentialto any
regime of joint and several liability. There is no such provision in
international law.

314. As Lord Templeman said in the judgment of the United King-
dom House of Lords in a case concerning the debts of the International
Tin Council:

"An international law or a domestic law which imposed and en-
forced joint and several liability on 23 sovereign States without
imposing and enforcing contribution between those States would be
devoid of logic and justice" (Maclaine Watson v Departmentof
Trade 1198913 All ER p.523 at p.529; also contained in (1990) 29
InternationalLegalMaterials p.671 at p.676).
In the same case, Lord Templemanadded, very significantly, that "no

plausible widence was produced of the existence of such a rule of
international lawbefore or at thetime of the Sixth Agreement in1982or
thereafter" (at p.529; p.675 in ILM); seealso Lord Oliver (p.554; p.706
in ILM). In that litigation it was accepted by the English Courts that
members of an international organisation werenot liable for the debts of
the International Tin Council.

315. It is also significant that, when the principle of joint and several
liability was included in the 1972Convention on International Liability
for Damage by Space Objects the Contracting States coupled it with
provision for contribution between liable States. It is no answer, as
suggestedby Nauru (para.628, Nauruan Memorial) that the position of
other Statesjointly and severallyliableisprotected by the requirement of
consent in international litigation. Consent to judicial settlement is a
basic rule of international law.If Nauru's allegations wereadmitted, this
basic principle would be defeated.The requirement of consent would be
ignored.

SectionIV.Conclusion

316. The irrelevanceof the casesand precedentscited in the Nauruan
Memorial demonstrates that there are no international awards, judg-
ments or learned opinions which wouldsupport the alleged principle of
passivesolidarity in the international lawconcerning State responsibility.
And this absence of support is conclusive for rejecting Nauru's conten-
tion as to the basis for the liability of Australia in this case. 317. Nor can Nauru (para.629, Nauruan Memorial) dismiss the seri-
ous implications for third States of its argument concerning liability by
referringin relation to the alternative possibilityof joint, but not several,
liability to the theoretical avoidance or frustration of third party settle-
ment by a State CO-optinganother State in the course of committing an
international wrong.

318. Australis considers that rather than pursue the question of what
is the proper basis of liabilityin international law of two or more States
engaged in a common enterprise, by speculation and rhetorical asser-
tions as in the Nauruan Memorial, the only appropriate course for the
Court is to examinein detail the facts of this particular case. As a result
of the examination of those facts, Australia submits that it will become
apparent that the Court cannot determine the Nauruan claims against
Australia in the absence of the other Governments that formed the
Administering -4uthority for Nauru.

319. SinceNauru's Application is hased on joint and severalliability,
it is defectiveand hence inadmissible. CHAPTER 2

SPECIFIC ISSUES IN THE PRESENT CASE CONCERNING
LIABILITY

320. The Nauruan thesis of "passive solidarity", perhaps becauseof
the levelof abstraction at which it is expressed, conceals the fact that, in
the present case, there are in reality twoseparate and distinct issues.
These are whether Australia alone can be sued, and, if so, whether it can
be sued for the whole damage. These two issues will be addressed in
turn.

Section 1. Can Australia alone be sued?

321. Nauru assumes an affirmative answer to this question. But that,
in turn, assumes that the obligations-the breach of which is the whole
foundation of the suit-are the obligations of Australia. Yet, as the
following demonstration will show,this has never been the accepted view.
On the contrary, the consistent view of the United Nations, of Nauru

itself, and of the three Governments has always been that the trusteeship
obligations test on the Administering Authority. The three Governments
together constituted that Administering Authority, as a form of "Part-
nership". This has been acknowledged by publicists, as for instance,
Charles Rousseau, who describes the Trusteeship for Nauru as a "tutelle
collective de la Grande-Bretagne, de l'Australie et de la Nouvelle-
Zelande" (Droit International Public, tome 11,(1974), p.404).

A. THEVIEWOF THEUNITEDNATIONS

322. The Trusteeship Agreement, as approved by the General Assem-
bly of the United Nations in New Yorkon 1November 1947(Annex 29,
Vo1.4, Nauruan Memorial) states in Article 2 that:

"The Governments of Australia, New Zealand and the United King-
dom (hereinafter called "the Administering Authority") are hereby
designated as the joint authority which will exercise the adminis-
tration of the territory".
This was in strict conformity with the wording of Article 81 of the
Charter according to which the Administering Authority "may be one or
more States or the Organisation itself". It is this joint Administering

Authority which, in Article 3, undertakes to administer the Territory in
accordance with the Charter. The preamble refers to the fact thatunder
the League of Nations Mandate, the territory had been administered by
the Government of Australia "on the joint behalf of the Governments of
Australia, New Zealand and the United Kingdom", and this situation is
continued by Article 4:
"The Administering Authority will be responsible for the peace,

order, good government and defence of the Territory, and for this purpose, in pursuance of an agreement made by the Government of
Australia, New Zealand and the United Kingdom, the Government
of Australia will, on behalf of the Administering Authority and
except ariduncilotherwise agreed by the Governments of Australia,
New Zealand and the United Kingdom, continue to exercise full
powers of legislation, administration and jurisdiction in and over
the Territory".

Thus, it isclear that the obligations of the Administering Authority were
undertaken jointly by the three Governments, eventhough the Govern-
ment of Australia exercised powerson behalf of that Authority. Accord-
ingly, any breach of the obligations of the Administering Authority
would be, prima facie, the joint responsibility of the Governments of
Australia, New Zealand and the United Kingdom.
323. The fact that Nauru wasadministered under a trusteeship involv-

ing three equal and joint parties was recognised by the United Nations
itself. For iristance, New Zealand and the United Kingdom remained
members of the Trusteeship Council up until Nauruan independence,
although New Zealand would not otherwise have qualified after 1962
(withthe independenceof WesternSamoa) apart from beingparty to the
Nauru Trusteeship Agreement. Following Nauruan independence, New
Zealand ceaisedto be a member of the Council and the United Kingdom
retained membership pursuant to Article 86(l)(b) of the Charter. This
highlights the fact that Australia itself was not able to represent the
Administering Authority.

324. The recognition of the joint role ofal1three Governments in the
administration of Nauru was reflected, for instance, in the 1949Report
of the Trusteeship Council which contained the following recommen-
dation:
"The Council, recallingthat although in accordance with article 4of
the TrusteeshipAgreement the Government of Australia isentrusted

with thi: administration of the Trust Territory,the Governments of
the United Kingdom and New Zealand are also accountable to the
United Nations under the terms of the Trusteeship Agreement,
recommends that these Governments take such steps as may be
appropriateto assist the Government of Australiain carrying out the
recornniendationsof the Council" (UnitedNations, Reportof Tmst-
eeship Council, GeneralAssembly Officia1Records, 4thSession,
Suppl.No.4 (A/933), p.76).

The 1956Trusteeship Council report also recognised that:
"Naurii is unique also in having more than one State as the Joint
Adminlstering Authority and in the special economic interest which
the thn:e Governments havein the Territoryand which they exercise
througli the British Phosphate Commissioners designatedby them"
(United Nations, Report of ïiusteeship Council,GeneralAssembly
OfficialRecords, 11thSession, Suppl.No.4 (A/3170), p.323). In fact, when one scrutinises the various resolutions of the Trusteeship
Council and the General Assembly over the years, dealing with the
Trusteeship for Nauru, they wereconsistently addressed to thedminis-
tering Authority, and not to Australia.

B. THE VlEW OF NAURU ITSELF

325. From the outset Nauru has treated the duties owed to it, both
under the Mandate and Trusteeship, as owed by the three Partner Gov-
ernments, not by Australia alone.
326. As early as the 1919Agreement, the British Phosphate Commis-
sioners established under it were, as Nauru itself recognises, "an instru-

mentality of the three governments" (para.269, Nauruan Memorial). See
also paragraph 97 of the Nauruan Memorial which refers to "the power
and direction of the British Phosphate Commissioners and the Govern-
menls behind them" (emphasis added).
327. During the negotiations on rehabilitation Nauru was adamant
that the responsibility involved the three Governments jointly. On 10

June 1965, Mr Warwick Smith and Head Chief DeRoburt, in discussions
in Canberra on the future of Nauru, signed a summary of conclusions
which included the following section on rehabilitation:
"The Nauruan delegation stated that it considered that there was a
responsibilily on rheportner governments to restore at their cost the
land that had been mined, since they had had the benefit of the
phosphate. The Australian delegation was not able on behalf of the

parfner governments to take any commitment regarding responsi-
bility for any rehabilitation proposals the objectives and costs of
which wereunknown and the effectiveness of which was uncertain".
(Emphasis added) (Annex L to 1965 Record of Negotiations, repro-
duced in Annex 2, Vo1.3, Nauruan Memorial.)
In fact the Nauruan insistence on the joint responsibility forrehabiii-

tation was simply a continuation of Nauru's attitude on resettlement,
since Nauru had, throughout the earlier discussions on resettlernent,
insisted that that, too, was the joint responsibility of al1 three Partner
Governments.
328. The 1956 Trusteeship Council Report quoted a NLGC Resol-
ution which recognised the responsibility of al1 three Governments to

meet the cost of a future home. It read in part:
"The Councii [NLGC] seriously considers it should now ask the
United Kingdom, New Zealand and Australia, the three countries
constituting the Administering Authority, to meet the costs of a
futurehome . .." (United Nations, Report of Trusteeship Council,
General Assembly Official Records, 11th Session, Suppl.No.4 (A/
3170), p.324). 329. In the 1966negotiations over independence and rehabilitation.
Nauru negotiated with the Partner Governments, and during the meet-
ings of the Trusteeship Council in July 1966, Head Chief DeRoburt
insisted that rehabilitation was the responsibility of the Administering
Authority (see above, paragraphs 166to 168).This position was main-
tained during the discussions between the Nauruans and the Partner
Government~in April 1967:at no stage was it suggested that Australia
bore the whole responsibility. The Nauruan delegation, said Mr DeRo-

burt, had argued from the beginning that the responsibility for restoring
the land already mined rested with the Partner Governments "who
cannot divest themselves of this responsibility by saying that they will
not accept it" (Nauruan Document, 67/2, pp.140-143, 1967 Nego-
tiations, reproduced in Annex 5, Vo1.3,Nauruan Memorial).

330. During the sessionof negotiations on 16May 1967,Mr Warwick
Smith asked whether theNauruans would pressthat the Partner Govern-
ments had responsibilityfor rehabilitation despite the financial arrange-
ments made. The record continued that "during the followingdiscussion
it emerged chat the Nauruans would still maintain their claimon the
Partner Governments in respect of rehabilitation of areas mined in the
past, evenif the Partner Governmentsdid not pressfor the withdrawalof
the claimin a formal manner such as in an agreement" (emphasisadded)
(SR14, pp.4.6-52, 1967 Negotiations).

331. In the following month of June 1967,at the 34th Session of the
TrusteeshipCouncil, when Head Chief DeRoburt raised the issue of the
disagreemerit overrehabilitation, hisroposal on behalf of the Nauruans
was that PartnerGovernments should accept responsibility for rehabili-
tating land workedbefore 1July 1967,whiletheNauruans would accept

responsibility for land worked after that date, thus assuming two-thirds
of the responsibility. This position was repeated at the 13th Special
Session of the Trusteeship Council on 22 November 1967, when Head
Chief DeRoburt again stated.
"The Mauruan people fullyaccepted responsibility in respectof land

mined subsequently to 1 July 1967,since under the new agreement
they werereceivingthe net proceeds of the sale of phosphate. Prior
to that date,however,they had not receivedthe net proceeds and it
was therefore their contention that the three Governments should
bear responsibility for the rehabilitation of land mined prior to 1
July 1967" (United Nations, Tieeship CouncilOfJicia1Records,
13th SpecialSession, Doc.T/SR. 1323;Annex 29).

332. As recently as 20May 1989,the Department of External Affairs
of the Government of Nauru informed the United Kingdom and New
Zealand Governments, through their respective High Commissions in
Suva, Fiji, that its act in bringing a claim against Australiain this Court
was "without prejudice" to its position, as recorded in its Note of 20
December 1988,that the United Kingdom and New Zealand "in theircapacity as one of the three States involvedin and party to the Mandate
and Trusteeship over Nauru, was also responsible for the breaches of
those Agreements and of general international law referred to in that
Note" (Annex 80, Vo1.4,Nauruan Memorial).
333. The record discloses, therefore, a clear and consistent assertion

by Nauru that any claim regarding rehabilitation lay against the three
Parîner Governments. It was never asserted asa claim against Australia
alone. The position now adopted in the Nauruan Memorial is quite
incompatible with that maintained over many years by the Nauruans.
The explanation for this volte-face is obvious. Before the International
Court the claim cannot be maintained as a joint claim against the three
Partner Governments, for lack of jurisdiction.

C. THEVlEW OF THETHREE GOVERNMENTS

334. There can be little doubt that, so far as the three Governments
wereconcerned, their responsibilities werejoint: they acted throughout
as "Partners" in a relationship which assumed joint responsibilityfor1
obligations arising from the Trusteeship.
335. The participation of al1three Governments in major decisions

affecting Nauru was reflected in action in relation to resettlement. The
attitude of the Partner Governments was agreed at Ministerial consul-
tations in Wellington, New Zealand, on 16-17 September 1960. There
was agreement at that meeting that the costs of resettlement wouldbe
shared although there was no agreement on the precise basis on which
this should occur. As a result of that meeting, proposals on resettlement
wereput forward on behalf of al1three Governments. The 1961Trustee-
ship Council Report records these in detail (United Nations, Report of
Tmsteeship Council, GeneralAssembly Offiial Records, 16th Session,
Suppl.No.4 (A/4818), ch.VI). The proposals werenot, however,accept-

able to Nauru.
336. In 1962the Special Representative forNauru confirmed that the
three Governments were prepared to meet the expense of resettlement.
This fact was clearly on the public record (United Nations, Trusleeship
Council Official Records, 29th Session, Doc.T/SR/190). Australia itself
on occasions in the United Nations pointed to the fact that in al1
questions affecting Nauru it was necessary to remember that it was
obliged to consult New Zealand and the United Kingdom as Nauru was

subject to a joint trusteeship-see eg, 1965Report of Committee of 24,
United Nations, GeneralAssembly Official Records, 19th Session, An-
nex No.8 (A/5800/Add.6).
337. Consultations took place betweenal1three Governments before
the major series of negotiations were then undertaken with Nauruan
representatives in 1964, 1965, 1966and 1967.These occurred on 26-27

May 1964,7-9 April 1965,27-30 April 1966and 7-9 March 1967.Theinterna1 deliberations of those consultations are not in issue. What is
important is the fact that they occurred. These consultations were an
essential element in relation to major decisions concerning Nauru, in-
cluding the. offer of resettlement, the move to self-government and
ultimately independence. Such consultations were also an important
element in the decisionson phosphateindustry issues, particularly in the
fewyears before independence. Prior to that, in many decisionsinvolv-

ing phosphate the BPC itself took decisionsor wasa party principal, but
this again points to the joint nature of any liability.
338. To the extent that responsibility issaid to arise from the actions
of the BPC this would also be joint. The BPC, through whom many of
the breaches by Australia of international obligations were allegedly

committed, was also a tripartite body and the responsibility foracts of
that body ~ould clearly be a joint liability of al1three Partner Govern-
ments. The details of establishment of the BPC in the 1919Agreement
and its charter has been set outabove (paras.27 to 30).
339. It is, of course, true that Australia exercised actual adminis-

tration of the territory of Nauru, as agent for the Administering Auth-
ority. Article4 of the Trusteeship Agreement recognisedthat pursuant to
an agreement betweenthe three Governments, Australia will, "on behalf
of the Administering Authority and except and until otherwise agreed by
the Governments of Australia, New Zealand and the United Kingdom
continue to exercise full powers oflegislation, administration and juris-
diction in aindover the Territory". The agreement referred to was the
1919Agreement as amended in 1923.

340. The fact that Australia may have appointed the Administrator
and as a consequence been in charge of day to day administrative
decisions does not detract from the fact that al1such acts weredone on
behalf of al1three Governmentsparty to the Trusteeship Agreement.The
existence of an agency relationship does not affect this joint liability.
Rather it confirms the joint liability-acts done by an agent on behalf of
another within the scope of his authority bind the principal. (see eg,A P

Sereni, "La représentationen droit international" (1948)73 Recueildes
Cours pp.75-6; R Daoudi, La représentation en droit international
public (1980) pp.73. 232.) This basic principle of the law of agency
confirms that al1 acts of administration pursuant to the Trusteeship
Agreement bind al1three Governments jointly.
341. The arrangements for administration between the three Govern-

ments are cietailedabove (see Part 1, paras.26 and 31). These indicate
that under the 1919Agreement as amended in 1923,the Administrator
was responsible to al1three Governments, and his appointment waswith
their concurrence. Thus, the conclusion must be that al1responsibilities
arising froin the Trusteeship Agreementwerejointly held, and the three
Governments were, in effect, "Partners", and so recognised by the
United Nations, by Nauru, and by themselves. D. THEIMPLICATION OSFTHELEGALPRINCIPLE FORTHEPRESENT
SUIT

342. The consequenceof this, in law,isclear. It issubmitted that, as a
general principleof law,the liabilityof a partner is joint, and not several,
with other partners in relation to contracts into which he has entered as
agent for the firrn. This is certainly the position under the pannership
law of the United Kingdom and other common law countries such as
Australia and NewZealand. The basic rule, enshrined in the Partnership
Act 1890(UK) isthat everypartner is an agent of the firm and his other
pariners for the purpose of the partnership business. Inother words, if
an act is done by one partner on behalf of the firm and it was done for

carrying on the partnership businessin the ordinary way,the firm wilbe
liable whether the act was authorised or not by the other partners:
Lindley on Partnership (15th ed, by E Scamell, 1984) pp.285-6.
343. Equally, in civil law, as has been demonstrated in Chapter 1
above, any specialregimeestablishing "passive solidarity obligations" is
exceptional and depends upon expressstipulations. This same approach
is reflected in theGerman Civil Codeand in the Codes of Spain and a

number of South American countries. And it is this same approach
which seemsto be reiiected in international jurisprudence.
344. The 1902arbitration between Germany, Great Britain and the
United States of America, relating to Claims on Account of Military
Operations Conducted in Samoa in 1899decided that the United King-
dom and United States of Arnerica wereresponsible for lossesresulting
from joint military action in Samoa, "while reserving for a future

Decisionthe question as to the extent to which the two Covernments, or
each of them, may be considered responsible for such losses" (IX UN-
RIAA 21). However,the viewthat an action involvingjoint liabilitymust
be brought against al1those jointly liable is supported by other arbitral
awards in the area of diplomatic protection where there have been a
number of cases that have involved partnerships. In a few exceptional
cases parties have been able to bring individual claims to recover their
pro mia share of partnership claims where the partnership as a whole
could not do so. However,these appear to be limited exceptions related
to the special feature of diplomatic claims. "International law seems to
accept that as a rule a partner may not sue in his own name alone on a
cause of action accruing to the partnership" Housing and Urban Ser-

vicesInternational Inc v TRL (1985)Iran-US Claims Tribunal Reports
p.313 at p.330('the Haus Award"); seealsoPhillips Petroleum Co Iran v
Iran (1989)21 Iran-US Claims Tribunal Reports p.79 at p.104. If that
principle holds good for a partner as claimant it must equally hold good
for a partner as defendant.
345. The unreality of the position adopted in the Nauruan Memorial
can be demonstrated by posing a hypothetical situation. Supposing the

Trusteeship Agreement had contained a compromissory clause, assomedid, providirig for the reference to the International Court of disputes
arising under the Agreement between theAdministering Authority and a
Member State of the United Nations. 1sit conceivable that the Court
would have entertained a claim against Australia alone, rather than
against the three Governments as the Administering Authority? It is
submitted it would not. But if this isso, whyshould the situation change
because the jurisdiction is based on Article 36(2) of the Statute, rather
than Article 36(1)?Alternatively, and assuming the factual basis of the

claim to be the same as for the present claim, if Nauru claimed against
al1three Governments on the basis of such a compromissory clause,is it
conceivable that the Court would accept a plea by the United Kingdom
and NewZealand to be dismissedfromthe suit? Again, it issubmitted it
is not.
346. In both casesthe reason whythe answerwould be negativeisthat
the responsibility or liability is essentiallyjoint. For that reason a claim
against Australia alone would be ill-founded. And such an ill-founded

claim could not be transformed into a well-founded claim by the fortui-
tous but essential fact (see para.315 aboveand Chapter 3 below)that no
jurisdiction exists overthe United Kingdom and New Zealand.

Section II: If, contrary to the above submission, the Court does allow
the claim to be made against Australia alone, can such a claim be
made for the whole damage?

347. Theoretically, Nauru could claim against Australia either for a
part of the allegeddamage (athird part, or some other specifiedpropor-
tion), or for the whole damage. It isclear that Nauru does the latter. Yet
a claim against Australia for the whole damage can only lie on one of
two possible bases.
Either
(a) on the basis that Australia is solely responsible because Australia is

the sole cause of the damage. This Nauru does not, and cannot,
argue.
or
(b) on the basis that Australia is not the sole cause, but is nevertheless
liable for the wholedamage on some theory of "passive solidarity".

1t is clear that the Nauruan claim is on this second basis. Inevitably,
therefore, lhis assumption of "passive solidarity" or "joint and several"
liability presupposes, in turn, that Australia has a right of recourse, a
right to compel a contribution towards its liability,from its two other
Partners. As indicated in Chapter 1 above, an enforceable right of
contribution is essential to any regime of joint and severalliability.
348. Wliat must now be considered is the consequence of this for the
Court's jurisdiction in the present case. The issue thus raised is, in

Australia's submission, precisely the issue faced by the Court in the
Monetary Gold case (ICJ Reports 1954, p.19). CHAPTER 3

THE ABSENCEOFJURlSDlCTlON WITHOUTTHE CONSENT
OF A THlRD STATE

Section 1.The Principle and itsimplications
349. A fundamental principle of international adjudication is that
this Court can only determine the rights and obligations of States with
their consent. This consent must be expressor involvethe participation
of the relevant State or States in the proceedings. Where resolution of a

dispute necessarily involvesa determination of the rights or obligations
of a third State whichhas not consented to the exerciseof jurisdiction by
the Court, the Court cannot proceed to hear and determine the dispute.
350. As the Court said in the Monetory Gold case (ICJReports 1954,
p.19 at 1x33):

"Where, as in the present case, the vital issueto be settled concerns
the international responsibility of a third State, the Court cannot
without the consent of that third State, givea decision on that issue
binding upon any State, either the third State, or any of the parties
before it".
In the Monetory Gold case the Court explained the task itwas called
upon to perform in that case as follows:

"The first Submission in the Application centres around a claim by
Italy against Albania, a claim to indernnification for an alleged
wrong. Italy believesthat she possesses a right against Albania for
the redress of an international wrong which, according to Italy,
Albania has committed against her. In order, therefore, to determine
whether Italy is entitled to receivethe gold, it is necessaryto deter-
mine whether Albania has committed any international wrong

against Italy,and whether sheis under an obligation to pay compen-
sation to her; and, if so, to determine also the amount of compen-
sation. In order to decidesuch questions, it isnecessaryto determine
whether the Albanian law of January 13th, 1945, was contrary to
international law. In the determination of these questions-
questions which relateto the lawful or unlawful character of certain
actions of Albania vis-a-visItaly-only two States, ltaly and Alba-
nia, are directly interested. Togo into the merits of such questions
would be to decide a dispute between ltaly and Albania.

In the present case, Albania's legal intetests would not only be
affected bya decision, but would form the verysubject-motter of the
decision. [l'objet même de ladite décision.] In such a case, the
Statute cannot be regarded, by implication, as authorising proceed-
ings to be continued in the absence of Albania" (at p.32, emphasis

added). 351. This case clearlyhas relevance. Inthe present case, anyadjudica-
tion upon the discharge of the trusteeship obligations under the Nauru
TrusteeshipAgreement must involvea determination of the international
responsibilityof al1three Governments formingthe Administering Auth-
ority. As indicated above(para.341) al1acts of administration in relation
to Nauru urider the Trusteeship were acts of al1 three Governments.
Hence, any decision on the international responsibility of Australia

based on breaches of the Trusteeship involvesalso as a "vital issue" the
international responsibilityof third States, New Zealand and the United
Kingdom, who werepart of the joint authority which exercisedadminis-
tration over the territory. They are not before the Court yet the responsi-
bility of such States together withthat of Australia "would form the very
subject mattcr of the decision" within the wordingof the Monetary Gold
case. This is an exceptional situation where a decision by the Court
would clearlyand inevitablytrench upon the legal rights of third States.

352. The truth of that assertion becomes clear when one imagines a
possible exerciseby Australia of its "right of recourse" against the
United Kingdomand NewZealand, a recourse which,as wehaveseen, is
implicit in the Nauruan theory of joint and severalliability.

353. Ifwe assumearguendo a judgment in this case against Australia,
then inescapably, the basis of any claim to recourse made by Australia
would be the judgment of the International Court holding Australia
liable for breaches of the obligations of the Administering Authority.
The Court's judgmentwould be theessential foundation of such a claim
of recourse or contribution. For the Court's judgment wouldcontain the
crucial finding of breach by the Administering Authority. And it would
be beyond question that the Administering Authority included al1three

Governmenrs. This demonstrates beyond doubt that the liabilitiesof the
United Kingdom and New Zealand would also be, to use the Court's
words, "the very subject matter of the decision". In respect of the
actions of the BPC this would also result from the 1987Agreement, as
interpreted by Nauru (para.639, Nauruan Memorial).

354. The decision in the Monetary Gold case had been preceded by
the decisionof the Permanent Court in the Statusof Eastern Carelia case
(1923PCIJ SeriesB, No.5 at p.27). In that case the Court said that the
request for ;anadvisory opinion amounted to the submission of adispute
betweenFinland and Russia. Russiahad opposed the involvementof the
Courtand the Court, consciousof the importance of consent, refused to
deal with the request. One major factor was the absence of critical
factual information owing to the non-participation of Russia. Similar
factual difficulties exist in the present case where New Zealand and the
United Kingdom are not before the Court and hence are not able to

provide critical factual information. In this regard, Australia draws
attention to the fact that in the Nauruan Memorial records from both
United Kingdom and New Zealand archives and sources are referred to and quoted (eg paras.110, 113-114).Yetneither of the other two States
are present beforethe Court to respond tothe accuracyof the aIlegations
made in reliance on those documents. As has beenexplained by the late
President Nagendra Singh:

"It is indeed an elementary and basic principle of judicial propriety
which governs the exerciseof the judicial function, particularly in
inter-state disputes, that no court of lawcan adjudicate on the rights
and responsibilities of a third State (a) without giving that State a
hearing; and (b) without obtaining its clear-consent" (ICJ Reports
1973 at p.373).

355. Yet a further factor in this case is that it involves treaty obli-
gations. Australia contends that there exists a recognised principle of
international law that rights and obligations of a third State arising
directly under a treaty or as a consequence of treaty obligations cannot
be determined in the absence of the consent of that State.
356. By way of preliminary, it is necessary to distinguish situations

that involve a tribunal in the interpretation of a multilateral treaty as
part of its adjudication of a dispute that involvessolelytwo States. Such
a decision may affect the position of a third State in the sense that a
decision will no doubt have significance for a third State so far as the
decision involves an interpretation of a treaty provision by which that
third State is bound. Such a decision will not, however, concern the
actual determination of specific legal rights or entitlements of a third
State vis-a-visa party to the dispute before the Court.

357. The situation where a tribunal as part of its determination of a
dispute must interpret a multilateral treaty in a way that requires it to
pass on the actions of a third State and whether they are in conformity
with international law is a quite different situation. It is in the latter
situation that the rule requiring consent operates. Such a situation arises
in the present case. As indicated already, itisnot possible to separate the
relevantactions of Australia from those of the United Kingdomand New
Zealand.

358. There are two cases heard by the Central American Court of
Justice which recognisethe principle that a court should refrain from
passing on the legality of actions of one State where to do so would
require it to also pass on the actions of a third State: Costa Rica v
Nicaragua (1916), text in (1917) 11American Journal of Inlernalional
Law 181; El Salvador v Nicaragua (1917), text in (1917) 11American
Journal of International inw 674. In Costa Rica v Nicaragua, the
plaintiff State had heard of a secrettreaty made in 1913betweenNicara-
gua and the United States for the possible construction of an intero-
ceanic canal through Nicaraguan territory. It wasCosta Rica'sviewthat
this arrangement was in breach of treaties between Costa Rica and
Nicaragua and of the Cleveland Award betweenthe two countries which

required consultation by Nicaragua with Costa Rica before such a treatybetween Nicaragua and a third State could be entered into. The Court
upheld the Costa Rican complaint, declaring that the "Government of
Nicaragua has violated, to the injury of Costa Rica, the rights conferred
upon the latter" by the relevant treaties. However, it rejected the request
of Costa Rica that the treaty between Nicaragua and the United States be
declared nuIl and void. As the tribunal explained:
"To judge of the validity or invalidityof the acts of a contracting
party not subject to the jurisdiction of the Court; to make findings
respecting its conduct and render a decision which would completely

and definitely embrace it-a party that had noshare in the litiga-
tion, or legal occasion to be heard-is not the mission of the court,
which, c~~nsciousof its high duty, desires to confine itself within the
scope of its particular powers" (at p.228).
359. The present case involves the same principle. Nauru alleges that
Australia through its administration of Nauru under the Trusteeship
violated certain treaty and general international law obligations. YetNew
Zealand and the United Kingdom participated in that common venture
and in no relevant sense acted differently from Australia. Any action of

Australia or either of the other two Governments in relation to the
Trusteeship is equally imputable to the other two Governments. Any
decision in rf:lation tothe obligations of Australia must "completely and
definitely enibrace" the other two Governments. It is no answer for
Nauru to say that it only seeks a finding as to the obligations of
Australia. The Court cannot ignore the factual and legal situation which
formsthe basis of the Nauruan claim and which isnow before the Court.
That clearly indicates that the three Governments are inextricably and
equally involved in the one set of facts that form the Nauruan claim.
Australia never acted in pursuit of its own exclusive interests, it acted
throughout as agent for the three Partner Governments in pursuance of
their common interests. At best, Australia could be held to have repre-
sented the two other Governments, but "en vertu des principes généraux

sur la répresentation, les actes accomplis par le mandataire dans les
limites de son mandat doivent être considérés comme accomplis par le
mandant lui-même"(D Anzilotti, "La responsabilité internationale des
Etats à raison des dommages subis par des étrangers", 1906 Revue
générald ee droit internationalpublic, p. Il); and "le sujet représentant
n'est pas liépar les activitésjuridiques qu'il a accomplies dans l'exercice
de son pouvoir de représentation" (R Daoudi, Lareprésentationendroit
internationolpublic(1980) p.264; see also pp.272 ff). Australia therefore
cannot be hcld responsible for the acts it carried out on behalf of the two
other Governments.

360. Nauru has itself recognised that it considers the legal position of
New Zealarid and the United Kingdom is identical on the basis of a
common set of facts by its assertion of a legal basof claim in identical
terms agairist al1 three Governments (see para.42 of Nauruan Appli-
cation). It :sent identical diplomatic notes to al1 three Governments in December 1988in the lead up tothe instigation of the present proceeding
against Australia. It has confirmed its position bysending identical notes
to both New Zealand and the United Kingdom after the institution of
proceedings against Australia which restated the Nauruan position that
each of the United Kingdom and New Zealand

"in their capacity as one of the three States involved inand party to
the Mandate and Trusteeship overNauru was also responsible for
the breaches of those Agreements and of general international law"
(see Numbers 29 and 30 of Annex 80, Vo1.4,Nauruan Memorial).

Section II: The right of intervention does not eliminate the need for
consent

361. Article 63 of the Statute of the Court provides for a right of
intervention for Statesother than those concerned as parties to an action
when the construction of a Convention to which such other States are
parties is in question. Even ifNewZealand and United Kingdom havea
right under this provisionto intervene inthis case, they havenot done so,
nor can the Court compel them to do so. The existence of a right to
intervene cannot detract from the fundamental requirement of consent.

As the cases indicate, there are severelimits on the apparent right which
this Article in factconfers (Milifary and Paramilitary Activities in and
against Nicoragua. Declaration of Intervention, ICJ Reports 1984
p.215). It cannot in any event detract from the requirement of consent
before the Court can hear a case directly involving the rights and
obligations of third States (Monetary Gold case, ICJ Reports 1954, at
p.32). The same situation arises in relation to Article 62 which givesa
third State whichconsiders it has an interest of a legal nature involved in
a casethe right to seek permissionto intervene.The fact that a State does
not seekto interveneunder Article 62does not allowthe Court to ignore
the absence of consent. On the contrary, lack of action to intervene

suggests that there is clearly no consent to the jurisdiction in this case.
362. This important principle was recently reiteratedby the Court in
the Case Concerning the Land, Island and Maritime Fronlier Dispute,
Decisionof the Chamber of the Court, 13September 1990,when itsaid,
at paragraphs 54 and 55:

".. . a State whichconsiders that its legalinterestmaybe affectedby
a decision in a case has the choice, to interveneor not to intervene;
and if it does not, proceedings may continue, and that State is
protected by Article 59 of the Statute (ICJ Reporfs 1984, p.26.
para.42). The Court's reply in the Monetory Gold case to the argu-
ment addressed to it was as follows:

'Albaniahas not submitted a request to the Court to be permitted
to intervene. In the present case, Albania's legal interests would
not only be affected by a decision, but would form the very subject-matter of the decision. In such a case, the Statute cannot
be regarded, by implication, as authorising proceedings to be
continuiedin the absence of Albania' .. ..
55. Thus the Court's finding was that, while the presence in the
Statute of Article 62 might impliedlyauthorize continuance of the
proceedirigs in the absence of a State whose 'interests of a legal
nature' might be 'affected', this did not justify continuance of
proceedings in the absence of a State whose international responsi-
bility woi~ldbe 'the very subject-matter of the decision'. The Court

did not need to decide what the position would have been had
Albania applied for permission to intervene under Article 62."

363. In fai:t it is this absence of a power comparable to that which
exists under municipal systems to compel intervention or joinder of a
third party that makesit more important that the Courtadopt a rigorous
approach to the requirement of consent which will protect the legal
rights of third States. The failure to seek to intervene under either
Articles 62and 63 cannot be taken as evidence that any State does not

consider that its interests would be directly affected by the decision
(compare paras.74 and 87of Military and Paramilitary Activities in and
against Nicaragua, Jurisdiction and Admissibility, Judgment, ICJ Re-
ports 1984 aLpp.425 and 430-431). The fact that international disputes
may be increasingly multilateral in nature is no reason to ignore the
fundamental international lawprinciples of sovereigntyof Statesand the
requirement of consent to adjudication.

364. The Australian Government also rejects the argument that the

existenceof Article 59of the Statute, which provides that a decision of
the Court has no binding force exceptbetween the parties and in respect
of that particular case, can overcomethe requirement of consent before
the rights o:Ta third State can be adjudicated upon by the Court (cf
para.630, Nauruan Memorial). For such an argument assumes that it is
only as a Party to the actual case that the legal rights or interests of a
State may be affected. Such a viewis, in practice, unrealistic and failsto
take sufficient account of the authority and respect which isaccorded to
the Court's judgments. If, arguendo, one imagines a situation in which
the Court finds a breach of the Trusteeship Agreementby the Adminis-
tering Authority-even though Australia is the sole respondent in the
case-the assumption that, by virtue of Article 59, the United Kingdom
and New Zealand are unaffected is unrealistic. In any subsequent claim

for recoveryor contribution, brought by Australia against the other two
Partner Governments, it cannot be thought that the Court's judgment
would be disrnissedas irrelevant to the question of the liability of those
two Governments. Whether pursued at the diplomatic level, or in an
arbitral proceeding, the Court's finding of breach by the Administering
Authority would be conclusive. 365. Once again, the point is not that the two States would beinter-
ested inthe solution, but that anyjudgment by the Court on the present
case would necessarilydecide on their responsibility.Todecide on one is
to decide in relation to the two others.

366. Now,in the situation created by an inadmissibleApplication, the
Court is asked to exercisejurisdiction in a case which clearly meets the
Monetary Gold test for declining that jurisdiction. Itis difficult to deny
that New Zealand and the United Kingdom would not only be affected
by the decision, but their eventual liability would form the very subject
,matter of the Court's decision. PARTIV

ADDITIONALCLAIMSMADE FOR

FIRSTTIMEIN THE
MEMORIALCONCERNINGTHE OVERSEAS
ASSETSOF BPC 367. In the Nauruan Memorial a new claim is made by Nauru. This
does not appear to relateto the question of rehabilitation but appears to
bean independent claimto certain financial assetsof BPC disposed of in
1987pursuant toan agreement between Australia, United Kingdom and
NewZealand (paras.469-484, Nauruan Memorial). Nauru allegesthat it
has a legal interest in these assets but does not indicate the legal basisfor
such a claim beyondthe existenceof the alleged legal interest.

368. Australia denies that there is a legal dispute between Australia
and Nauru, within the meaning of Article 3q2) of the Statute of the
Court, in relation tothe claimby Nauru for certain of the overseas assets
of the BPC. The relevant diplomatic correspondence in relation to this
claimisset out in paragraphs 471-476 of theNauruan Memorial. Acopy

of the letter from President DeRoburt to the Australian ForeignMinister
of 4 May 1987referred to in paragraph 474 of the Nauruan Memorial is
reproduced in Annex 13.
369. The facts show that there has beenno formal claim by Nauru to

these assetsnor any discussionsor negotiations in relation tothe claimto
these assets. Toconstitute a dispute there has to be a "disagreement on a
point of lawor fact, a conflict of legalviewsor of interestsbetween two
persons" (Mavrommatis Palestine Concessions case, PCIJ Series A,
No.2, p.11). A mereassertion isnot sufficient (Headquarters Agreement
Advisory Opinion case, ICJ Reports 1988, p. 12at p.27).

370. In the present case, the diplomatic correspondence concerning
the BPC assets shows no more than an inquiry by Nauru as to whether
the BPC was tobe woundup and a request for information and that it be
consulted. This is followedby expressionof regretthat the winding up is
proceeding and a request that the funds and other documents be kept
intact pendingthe conclusion of a Commission of Inquiry establishedby
Nauru. When Nauru again raised the issue with Australia in May 1987
(para.474, Nauruan Memorial and letter of 4 May 1987,Annex13)and

again in July 1987there is no indication of a conflict of viewsbut rather
an indication that the question should be further discussed. Australia in
its response in June 1987(Annex 80, No.14, Vo1.4,Nauruan Memorial)
replied in a factual way that indicated it saw no reason for Nauruan
interest in the assets. At no time isany legal basisforthe claim set out by
Nauru. No further communication on this issue has been receivedfrom
Nauru until the claim in the Memorial.

371. The possible claim by Nauru against Australia to the BPC over-
seas assets must be regarded as having first been raised in 1987at the
earliest. The issue had not been raised prior to the January 1987Notes
from the Nauruan Department of Exfernal Affairs to the Australian
High Commission. For the reasons already outlined Australia does not
consider that the subsequent diplomatic exchanges give rise to a legal
dispute but rather a situation where Nauru has indicated concern aboutan issueand indicated that it would pursue it at another time. This does
not create a dispute.

372. At no time did Nauru indicate the nature of its interest which
supported the claim other than that the assets weresaid to be derived in
part from operations in Nauru. At no time did it indicate that its views
were being expressed in order to create a situation where they were
positively opposed by those of Australia. The reference to leaving the
matter to be pursued at another time or place (letterof 23July-para.476,
Nauruan Memorial) does not indicate that any "positive opposition" to
the claim had yet emerged between Nauru and Australia so as Io consti-
tute a dispute (South WestAfricu case, ICJ Reports 1962 p.328, quoted
in Headquarters Agreement Advisory Opinion case, ICJ Reports 1988,
p.12 at p.2;'). There is not therefore a legal dispute in relation to this

element of the,Nauruan claim as outlined in the Nauruan Memorial.
373. This claim is further precluded from determination, even if a
dispute wen: held to exist, for the followingreasons. An Application is

required by Article 38 of the Rules of the Court to "specify the precise
nature of the claim". The Nauruan Application contained no reference
to the claim to the assets of the BPC. It is not permissible for Nauru,
when lodging its Memorial, to add a completelynew basis of claim that
is unrelated to the original claim of failure to rehabilitate. The claim is
not made as a remedial claim for breach of the obligations previously
outlined but asan independent claim. It may be contrasted in this regard
with the specific claim for reparation in respectof the payment for BPC
assets purchased with Nauruan funds (see paras.496-500, Nauruan
Memorial), which is remedial only.

374. A newclaimsuch as that made in relation to certain of the assets
of the BPC seeks to transform the dispute brought before the Court by
the original Application into another dispute which is different inchar-
acter from that orieinallv submitted. This situation is clearlv different
fromthe addition of a grLund of jurisdiction not originally identified in

the Application. The Court has held this latter situation to be permissi-
ble: Military and Paramilitary Activities in Nicaragua (Jurisdiction)
case, ICJ fi'eports1984, at p.427. It clearly is not permissible to add to
the substantive claims made. There istherefore al1the differencebetween
arguments ("moyens" in French) and claims-the first can be modified
or added to at any time, but not the second. The reservationof a right to
"supplemeiit or amend" the Application (para.50 thereof) does not
overcome this procedural obstacle.

375. Evenif the Court wereto hold that a dispute existsin relation to
this claim, and if Nauru wereallowedto specify the precisenature of the
claim, the defective nature of the claim would he al1too apparent. The
assets of the BPC did not belong to Nauru and werefreelydisposable by
the Partner Governments. The lack of any legal interest by Nauru in theassets the subject of this new claim is apparent. The claim is therefore
inadmissible for this reason as well.
376. The value of the total funds available for distribution amongst
BPC Partner Governments in 1987 was approximately $57.9 million. It

appears that a proportion of the funds could have come from the $21
million received from Nauru from the sale to it of the BPC assets on
Nauru, in accordance with the terms of the 1967 Phosphate Agreement
(but that is different from the funds being derived from actual oper-
ations on Nauru). In relation to that sum, there were, however,a number
of loans and other outgoings to be paid. There was ultimately a surplus
of approximately $10 million available for distribution to the BPC
Partner Governments in 1972. However, this money was invested by BPC
in conjunction with other assets. In 1987al1BPC assets weredistributed
among the Partner Governments in accordance with the terms of the

1987Agreement.
377. Nauru can show no legal interest in such assets, which belonged
to an instrumentality of the three Partner Governments and in relation to
which Nauru had no legal or other entitlement. Nauru simply asserts
that the 1987Agreement constitutes "an unequivocal recognition of the
Nauruan interest" in the BPC assets (para.482, Nauruan Memorial). It

asserts that the reference in the Agreement to the BPC had the conse-
quence of referring also "to the legal concomitant of the existence of the
Commissioners and the administration of Nauru during the currency of
the Trusteeship" (para.481, Nauruan Memorial). Yet, even if this were
so, it does not establish an adequate Nauruan interest in the particular
claim to the 1987 assets. Unlike the Nauruan claims in relation to the
performance of the Trusteeship Agreement, in relation to which Austra-
lia concedes that Nauru has a legal interest, there is no similar basis for a
claim to the 1987 assets.

378. These assets belong to an instrumentality established by agree-
ment between three Governments and in no way can Nauru be said to
have any legal claim directly on such assets. The fact that it can point to
no particular legal interest in this regard is itself evidence of the absence
of such interest. The fact that the assets may have derived in part from
Nauruan sources, in particular, from the purchase in 1967by Nauru of
BPC assets on Nauru, is irrelevant. In purchasing the assets Nauru
accepted that they belonged legally to BPC. Having paid a fair and

mutually agreed price for the assets, Nauru retained no legal interest in
what happened to the money so paid. Accordingly, there is no basis for
the Nauruan claim to the overseas assets of the BPC.
379. In any event, even if Nauru wereheld to have a legal interest, the
claim would remain inadmissible and the Court would lack jurisdiction

for the more general reasons articulated in relation to theother Nauruan
claims. In particular, Nauru cannot avoid the fact that its claim directly
implicates the rights and interests of the other two Governments party tothe 1987Agreement. For instance, it sent similar Diplomatic Notes to
those it sent to Australia to both the United Kingdom and NewZealand
on this issue. In its Note of 30January 1987Nauru requested "the three
partner governments" to keep the funds intact (see Annex 80, Nos.10
and 11, Vo1.4,Nauruan Memorial). The fact that the Nauruan claim is
limited to the Australian allocation of the 1987 distribution cannot
overcome this. PARTV

PROCEDURALAND DISCRETIONARYOBJECTIONS 380. Thebàsiccontentionof Australiain this Partis thatthevarious
Nauruanclaims againstAustraliaare inadmissible and should nob te
consideredfor reasonsof judicialpropriety,and theCourtshouldexer-
cise its discretion appropriat. . declineto hear theclaims.Similarly, in the Stevenson case, the Tribunal said:
"When a claim is internationally presented for the first time after a
long lapse of time, there arise both a presumption and a fact. The
presumption, more or lessstrong according to the attending circum-
stances, isthat there issome lack of honesty in the claim, either that
there wasnevera basis for it or that it has been paid. The fact isthat

bythe delay inmaking the claimthe opposing party-in this casethe
Government-is preventedfrom accumulating the evidence on its
part which would opposethe claim, and on this fact arises another
presumption that it could have been adduced. In such a case the
delay of the claimant, if it did not establish the presumption just
referred to, would work injustice and inequity in its relation to the
respondent Government" (IX UNRIAA 385, 386).
384. The Institute of International Law at its 1925 Session in the
Hague has also recognised that "prescription libératoire" is a general

principle of law.The relevant resolution read:
"Des considérations pratiquesd'ordre, de stabilitéet de paix, depuis
longtemps retenues par la jurisprudence arbitrale, doivent faire
ranger la prescription libératoiredes obligations entre Etats parmi
les principes générauxde droit reconnus par les nations civilisées
.. ." (Annuaire, 33rd Session, 1925, p.559).

385. The rationale which supports the existence of the principle in
domestic lawisthe same in international law,namely,that there be some
end to the possibility of litigation (King, "Prescription of Claims in
International Law" (1934) XV British Yearbookof International Lnw
p.82 at p.93). Essentially,the principle is concerned to ensure a defen-
dant is not placed in a position of unfair disadvantage by being faced
with stale claims. The principle is based on difficulties of proof and the
difficulty of determining claimswheretheir determination as a matter of
law is complicated by the passage of time.

386. Unlikethe position in domestic systems of law where there are
usually statutory prescriptions of particular limitation periods for differ-
ent causes of action, international law contains no relevant treaty or
other provisionprescribingparticular limitationperiods. It isa matter of
discretion by an international tribunal to determine an appropriate limi-
tation period in the circumstances of each case. Nevertheless,analogies
can be drawn from domestic lawin order to assisttheCourt to determine
an appropriate limitation period. Rousseau, for instance, says:

"C'est unprincipe trèsgénéralemena tppliqué parla jurisprudence
que l'irrecevabilitédes réclamationstardives, présentées par exam-
ple, dix, quinze ou vingt ans après la survenance du dommage"
(Droit International Public, Précis Dalloz, (1lth ed 1987)p.116.

In the Gentini case, the umpire recognisedthat in everycountry periods
of limitation havebeen fixed within whichactions could not be brought. "These laws of universal application were not the arbitrary acts of
power, but instituted because of the necessities of mankind, and
were thi: outgrowth of a general feeling that equity demanded their
enactment; for very early it was perceived that with the lapse of time
the defendant, through death of witnesses and destructionof vouch-
ers, became less able to meet demands against him, and the danger
of consequent injustice increased, while no hardship was imposed
upon the claimant in requiring him within a reasonable time to

institute his suit"(X UNRIAA at 557).

Section II. Previous claims by Nauru have not asserted a legal claim
and hence, do no1 preclude an argument hased on delay

387. It is important to appreciate the history of the present claims.
The issue of rehabilitation was discussed as part of the independence

negotiations and, as indicated in PartII of these Preliminary Objections,
in the view of Australia any claim was settled by the termination of the
Trusteeship. Even if that was not so, Nauru has not prosecuted its claim
consistently since then.
388. Nauru raised the issue of limited rehabilitation to build an air-
strip in December 1968. A reading of the relevant letter (Annex 76,
Vo1.4,Nauruan Memorial) discloses that it is no more than a request for

assistance rhat might regularly be made by one government to another.
In fact, by its reference to treating rehabilitation "integrally" it confirms
the contextions of Australia that the settlement at the time of indepen-
dencc in rclarion to the phosphate industry was a comprchensive settle-
mcni ihat r:mbraced al1Nauruan ~.laims.includinr that io rehabiliiation.
The Australian response reiterated the position of the Partner Govern-
ments concerning rehabilitation, in order to put their position that a
sufficiently generous comprehensive settlement had heen reached clear
beyond doubt. The letter then addressed specifically the request as a
request for technical assistance.

389. From 1968 until 1983Nauru made no formal statement or de-
mand to Australia in relation to its present claims. No assertion of a legal
entitlement was made. In particular, no assertion based on breach of the
Trusteeship Agreement was made.

390. In 1983 the Nauruan President wrote to the Australian Prime
Minister (Annex 78, Vo1.4,Nauruan Memorial). But again, the letter is
no more than a request for sympathetic hearing of Nauru's position
concerning the importance of rehabilitation. He refers in his letter toa
future formal presentation of a Nauruan request. This letter cannot be
taken as a formal raising by Nauru of its present legal claims. There is no
reference ro any suggestion of a legally based claim-any request appears
to be no niore than a request for sympathetic consideration of a particu-
lar development need. 391. Even if the 1983letter represents a relevant raising of the Nau-
ruan claims it is still 16 years after agreement was reached on indepen-
dence and the termination of the Trusteeship and, more particularly, on
the terms of the settlement of al1the phosphate industry issues. This in
Australia's view isa delay that is fatal to the present Nauruan claim.
392. But, more importantly in Australia'sview,it is not until Decem-

ber 1988that Nauru can be said to have formally raised with Australia
and the other former Administering Powers its position that responsi-
bility for rehabilitation of phosphate lands worked-out prior to 1 July
1967remained the responsibility of the three former Partner Govern-
ments as a matter of law.That is21 years from when the matter waslast
considered by the United Nations and, in the viewof Australia and the
other Partner Governments, settled.
393. Nauru in its Notes of 20 December 1988to the three Partner

Governments refers to the position "which has been consistently taken
by the Government of Nauru since independence, and which was taken
by the elected representativesof the Nauruan people before indepen-
dence" (Annex 80, Nos.22, 23 and 24, Vo1.4,Nauruan Memorial). Yet,
as the diplomatic record shows, whatever Nauru considers its position,
the fact is that Nauru did nothing to assert any claim of legal right
against the Partner Governments for more than 21years afterthe matter
was considered definitively in the United Nations. After that date the
Partner Governments could legitimately haveassumed that the Nauruan
claim was settled definitively by termination of the Trusteeship Agree-
ment with the approval of the supervisory authority. To now allow

Nauru to reactivate a stale claim can only work severe prejudice to
Australia. The Court should exerciseits discretion to decline to hear the
claims. Further, this failure by Nauru to pursue this claim for such a
lengthy period indicates that Nauru itself considered the claim to have
been settled.
394. This is particularly so given that Nauru failed throughout the
United Nations consideration of the issue to enunciate any claim based

on an alleged breach of international law. The relevant United Nations
supervisory body pronounced on the matter now the subject of a claim
and itself failedto make any findings of breach of law or suggest that
there was any outstanding legal issue as between Australia and Nauru
concerning compliance with the Trusteeship Agreement. As a result of
the passageof time since 1968Australia legitimatelycould haveassumed
that it was not liable as a matter of law in relation to its past actions
some twenty yearsafter its involvement in Nauru came toan end.

Section III. The prejudice now faced by Australia in meeting the
Nauruan claim
395. The prejudice that would be suffered by Australia includes the
dispersal or loss of critical evidence and the difficulty of assemblingrelevant material that datesnot just to 1968but goes back to the start of
at least the Trusteeship period in 1947. It is noted that Nauru in fact,
seeks to draw major inferences from evidence dating from the period of
the Mandate (see eg paras.63 to 68 of Nauruan Memorial). This raises
further significant evidential difficulties. This highlights the major prej-
udice that would be suffered by Australia if Nauru were now to be
allowed to grosecute claims based on legal arguments not made prior to
independence.

396. Apart from the evidential difficulties, it must be emphasized
again that the legal claims of Nauru must be appreciated and assessed in
accordance with the law in force at the time of thealleged breaches. This
means that any development in customary international law or general
principles of law since 1964is entirely irrelevant to the determination of
the Nauruaii claim. As a result of the significant delay in the assertion of
a legal claim, it is difficult to now properly appreciate the relevant
standards and expectations that might have arisen under the trusteeship
system in the 1960sand earlier. The Trusteeship Council does not meet;
No territories remain under the ordinary trusteeship system. There is no
recent evidence or practice by which to assess whether the performance

of a trusteeship agreement is satisfactory as a matter of law.
397. Yet this is what the Nauruan claims require of this Court. To
require the Court to embark on such an exercise would cause severe
prejudice to the defendant State. It would prejudice the very idea of
secure legal settlements reached as part ofthe decolonisation process. It
would challenge the very notion of finality and legal security which a
State in a position like Australia could expect to arise on termination of
the Trusteeijhip.

Section IV. The Choice of an Appropriale Limitation Period for this
Case

398. Given the circumstances and history surrounding the Nauruan
claim, it is contended thata period of over 20 years since independence is
greater than any reasonable limitation period appropriate for this case.
Given the fact that the claims relate to breaches of the Trusteeship
Agreement, it is submitted that, assuming the claims were still justiciable
despite the termination of the Trusteeship, they should have been made
within a short period of time following termination. Otherwise, to admit
the claims of Nauru in this càse would be to invite al1former trusteeship
and other colonial territories to bring claims against former colonial

powers mainy years after independence settlements were reached. To
allow such claims, including the claims of Nauru made in this case,
would be ro place former Administering Authorities in a position of
unfair disadvantage. An Administering Authority, having discharged its
responsibilities by bringing a territory to independence, must be pro-
tected froni claims some time after independence that werenot subject toexpress reservation or notice by the United Nations at the time of
independence. In this case, for the reasons set out above, the Nauruan
claim must be taken to have been waivedat independence.

399. For al1these reasons, Australia submits that al1the claims by
Nauru should not be considered by the Court in exerciseof its discretion
to decline to hear stale claims where prejudice to the defendant would
arise. SUBMISSIONS

On the basis of the facts and law presented in these Preliminary Objec-
tions, the Government ofAustralia requests the Court to adjudge and
declare that the Application by Nauru is inadmissible and that the Court
lacksjurisdiction to hear the claims made by Nauru foror anyofthe
reasons set out in these Preliminary Objections.

(Signed) GAVAN GRIFFITH
Agent of the Governrnenfof Austmlia

December 1990 166

ANNEXES

Page
VOLUMEII

A. Historical.Documents
Ministerial Statement on Nauru, 8 September 1922,made by
1.
Australian Prime Minister, Rt Hon. S. M. Bruce .......... 5
2. Agreement made between the Chiefs of Nauru and the British
Phosphate Commissioners, 1August 1927 ................ 6
3. Submission, 4 October 1955, "Nauru: Phosphate Royalties"
by R. hlarsh, Department of Territories, to Minister forTerri-
tories ................................................ 9
4. Letter, 12October 1960,from Minister for Territoriesto Head
Chief of Nauru, attaching Proposals of Partner Governments
on Rest:ttlement ....................................... 14
5. Summary of Discussions between representatives ofNauru
Local (3overnment Council and Department of Territories,
held in Canberra 27-30 July and 12-14 August 1964 ....... 20
6. Press Sfatement, 20August 1964,by Minister for Territorieson
1964Discussions with Nauruans ........................ 25
7. Report of the Working Party appointed under 1966 Agreed
Minute with annexes, dated October 1%6 ................ 29
8. Ministerial Statement to the House of Representatives,24 Oc-
tober 1967,by the Minister for Territories ................ 61
9. Nauru Phosphate Agreement Ordinance 1968 attaching as
Schedule Agreement relating to the Nauru Island Phosphate
Industry 1967 ......................................... 65
10. Nauru Phosphate Royalties (Payment and Investment) Ordi-
nance 1968 ........................................... 87
11. Nauru Phosphate Royalties Trust Ordinance 1968 .......... 90
12. 1naugui:alMeeting of LegislativeAssemblyof Nauru, 31Janu-
ary 1968,pp.E-17 .................................... 97
13. Letter, 4 May 1987, from President of Nauru to Australian
Foreign Minister ...................................... 114

B. Rehabilitation Documents

14. 1954CSIRO Report on Present and Potential Land Use on
Nauru, by Phillis and Haatjens ......................... 116
15. Minutes, 21October 1959and 20 November 1959,Department
of Territories on discussion with CSIRO as to developments
since 1954. ........................................... 140
16. Minute, 28 October 1960, of Department of Territories re-
questing consultation with CSIRO on the rehabilitation of
worked out phosphate lands and minute, 2 November 1960,
recordiiigresult of conversation with Dr E. Phillis of CSIRO 14131. Cable 1.81426,6 December 1967.from the Australian Mission
to the United Nations, New Yorkto the Department of Exter-
na1 Affairs, Canberra, containing full text of the Statement
made in the Fourth Cornmittee by the Australian Representa-
tive, Mi.K. Rogers, on 6 December 1967 ................. 268

VOLUMEIII

Annex 32. ~'Thisis the World'sRichest Nation-All of it!"
(:NationalGeographic, Vol. 150, No. 3, September
1976,pp. 344-353). ANNEXES TO PRELIMINARY OBJECT~QNS 171

Mernorandum of agreement rnado at Adminiutration Head-quartera,

Nauru, rki~ firstùay of August, 1927. Letwesn -

The Head Chief Raimon ofNauru.
The Dcputy Htad Chief Detudamo of Nauru,

Ths Chief Bop of Mcnen District;
The Chief Akuhr of Yarrcn District;
The ChiefDeigareuw ofBac District;

Tho Chcf Dabo si Aiwo Di~iricr;
The Chlei Tsiminita of Derilgomodu Mstrlct;
The Chisf Eoaio of Nibok Matrict;
The ChieI Dowaitat of Uaboc Di. trick;

The Chief Amwario of Baitii District,
The Chief Gaunibwe of Ewa District;
Ths Chicf Denea of Anetam District,

Tho Chld Scotty 01 Anabar Msttict;
The ChiefMweija of Ijuw District;
The Chi-f Delieragea of Anibast Ustrict: and
The Chid Eobob ofBuada District, in the Jsland of Nauru,

repreaénting the land-owners of the Islandof Nauru of the one part
and The British Phosphate Gomrnissionera (horeinalter cailed the
CommisrioaarbJ ofthe other part.

PHOSPHATE-BEARING LANDS

Phosphate-baaring lande may be tcased to theComrni~rioners ,
subjcctto Lhc follming condition*:

(a) The Commiaaionera tu bave the right -

to leaic any phoaphate-heanng land on the laland of
(1)
Nauru, ta mine ihe phosphate ihereon ro any depth
deslred. and tu use or export phosphate:

(ii) to remove any trtcli on any phoaphate-beniing land
leaaed for minlng purpoaea,

(iii) to rcmove, eubjoct to the approv;rl of Lhc Adminiatrator
and the owner. which approval *hall motbe unreaiorisbly

wlthhcld,any trcca on any other phosphate-bearing land
requiscd by the Ccmrriissioners to be cleatcd for use
incanncxion with the operations of the Cornmisei~nern,

(lu) of way over any unworked, prtly worked or worked
out pliosphare-bearin lagnd rtquired by iha Commiseionera
for or in connexion wlth theoperations of the Commiaafoners.
subjcct to Lht npproval of tht Adminisrrator, and the ownei.

which approval ahall nat be unreasonably withhcld.

Tbeddministrator shall dctcrmine what lands shall be

clasaed as phoephatc -bearing landa for the purpdsea of El), (2). (3)
and (4) of thia rub-section.

(b) The Comniiesionere ahall pay -

(i) a lump hum at me raceof f40 pes acre lwith a minimum
payment of f 5 for any such ,niailer area) for sny phouphate-

bearlng land lcased; CERTAIN PHOSPHATELANDS IN NAURU

(ii) a royalty of ?id. per ton ofphosphate exportcd accordlng

to the cextif~ed weight of thequaniity shlpped, ofwhich -

4d.per ton ahal1 be paid to the Nautuan

Mmer(m) concerned,

lad. per ton ahall be paid trithe Adrnidsttator to
bt used üolely for the bcnefit RI the Nauruan people;

2d. per ton abal1 be paid to the AdmLiiatrator to be
held intrust fortha landowner(~) and inveatcd for

a pariod of 20 years at compound interast. At the
end of 20 years the then capital to rernain inveetcd
and the intereat to be paid each balf year to the
pereonon whoee behalf it was invçsted or if deceasad,

to his (or her) chilrlren ur ta wh~ni~oever hc (or ahe)
may have witled it.

The ra*r epacified inii) and (ii) ofthis >uh-sectlrin .hall

have tffect Tor a period nor exceoding 20 yearo on and from the 1st
day ofJuly, 1427, but the royalty 01 4d. per ton to the Nsuruan landowners
shall be adjustod for the .second,third and iourth five-yeariy periods
of thihiagreemant by increadng or dccreasing it pro rata to any increaue

os decreaseof the f.0. b. ptice of Nauru Phosphate sold by the
Commisaioners to the UnitedKingdom, Auçtralia and Near Zealand for
the Lith, 11thand 16th years of thia ayreemeiit çonipartd with such

price for the Iirst year oi thia agretment, vie., ai therateof ad.
pcr ton incrsaue or decrcaoe of royalty for cveryle. per ton increase
or docrease of Lhe pricc.

(c) Ab mon a* practicable al1 warked out Iand not requlred for or
in connexion with the opsrationa of the Commib~ioners ahall revert
to the owner(z) concerned.

NON-PHOSPHATE BEAMNG LANDS

The Commisvionezs rnay. subject to the appsoval of the
Admniatrator and the owner(8). which sppro~l shall mat be unrcaaonably

withheld, leaae suchnon-phosphate-bearing landson the lsland of Nauru
aa rriaybe rcquired by the Cordssioeers for or in connexion with the
operations of the Commis~lorierir, and to removo any treea from the
land so leased, 6ubjtct tothe following conditinnu :

The Cornmiruioners shall pay -

(1) a rental at the rate of i3 per acre pcr annm (wlth a
rmnimum rcntal of f 1 per nnnum for any yuch smallcr
arcal for any non-phoopbate-bearingland leaued according
to theforegoing, and

(2) compeniiation in respect of Crees removcd, in accordance
with the lollowing schedule -

Coconut trcte each 2s. Gd. to 25s. according togrowth.
Pandanus Lreea each 23. to 16s. accofdrng to growtl3.
Tomano treev each 2s. to 20~. according ta growth;
~\lri~oiitrees cach 23. to 10s. according to growth;

The rates apecified In (1) and (2) el thia sub-aection .hall
have sffcct for a period not axceoding 20 years on and from the let

day of July 1927.pl (3) ANNEXES TO PRELIMINARY OBJECTIONS

Signed for and on behali of the landownera ofthe Ieland of
Nauru -

DAIMON, Head Chief of Nauru,
DETUDAMO. Deputy Hcad Chicf of Nauru
BOP, Chief of Menen District.
AKUBOR. Chiaf of Yarrea District.
DEIGAREOW, Chiei ofBoe District.
DABE. Chief of Aiwo District,

TSIMINITA, Chiciof Ucdgomodu District,
EOAiO, Chief of Nfbok Dirrtrict.
WWNTSI, Chicf of Ua&e District.
AMWANO, Chief of BaitslLhutrict.
GAUNIBWE, Chiefof hwa Metrict.

DENER, Chief of Anetan District,
SCOTTY, Chief of Anabar Matrict,
MWWIA, Chief of Ijuw Dletrict,
DEIFSRAGZA. Chief ofAnibare Diatrlct,
EOBOB, Chief of Buada District.

Wm. Harris.

Signed for and os behailofLha Brlti~h Phosphate Cemsifuaioncru -

A. HAROLD GAZE, Chief Rcpreaentadro of
theBritish Phoephate Cornndeaionere

Witneaa ta signature -

Approved -

W .A. NEWMAN. Adminitrtrator of the Inland of Nauru.

MELDOURNE.
4th February 1947 CERTAIPHOSPHATELANDS IN NAURU

NAURUPHOSPHAT EGREEMEN TRDINANC1E968
ATTACHINASSCHEDULEAGREEMENT
RELATINTOTHE NAURUISLANDPHOSPHATINDUSTR 967 ANNEXES TO PRELIMINARY OBJECTIONS

TE3 SmITORY OP NAURU

No, 3 of 1968

Relating to the ownershipand control of the'FhasghateInrluatry.

1, THE GOTTZ?NOR-GMERAL in and over the Comon~iealth

of Australia, acting wrth advice of the Tederal Xxecutive

Council , hereby nake the folloviing Ordinanceunder the

IJauru Act 1965.

Liinister of State for Territories.

NAüRU IBO SXUTC AGTLE4iY3T? 02SIH.GTCZ 19 68

Short title. 1. This ~rdinance may be cited as the Hamu

'Ihosphate Agreement Ordinq 1968.*

Ilefinitions. 2. In this Ordixlance -

"the Agreement" aeans the B,greenent a copy of which

is set out in the Scheüuleto th$ Ordinance;

"the Corsoration" means the Hawu Ehoaphate

* Aotified in the Territ.org of Nauru Gazette on 29 Jandac7

1963. CERTAIN PHOSPI-IATELANDS IN NAURU
(2) [661

Corporatioil being the corparartion of that nae

reierred to in the Agreeaent.

&tr# into 3. The Council shall be deerried tohave been empower
Agreenent.
to enter into the Agreement.

Carrging out 4.- (2.) In add~tion to the poivers canferred on the
of Agreement.
Councilby the Nauru Lacal GovernmentCouncilOrdinance

1951-1967, the Council 13 emponereù to 60 al1 things that

it is required or autlzosized to do under the iigreement

or that are necessaryto be done for tne carryisy oui

of the Agreement.

(2.) A QovJer conferredon the Corncil by the

last grecedingsub-section ahal1 be exercisedin accordari

nith the provisions of the IJauru Local Goverment Cowic~J

Ord~nance 1951-1967 as if the power ne-re coriferred by tha
Ord~naizce .

(3.) Tt is the duty of the Council to perfom

the obligations accey-bed by the Council under the

-\g rement .

Establishment 5.- 1 The Couacil may, bg rules made in accordar
of riauru
Phosphate rvitlzthe Nauru Local ûovernlient iiouncil Ordinance 1951 -
Corporation,
1907 -

(a) establish,theCor;>oration in accordan(

with the i~greerilent; and

(b) confer on the Corporationsucli powers

and functions as are necessnry for th^
pe~forqance by the Corporatlan of Its

pvers and functlonsunder the Agreetut

(2,) The Corsoration so es.tcbl~shed -

(a) shall be a body cori>orate, with

perpetual successlong

(b) shall have a comen seal; i671(3) ANNEXES TO PRELIMINARY OBJECTIONS 177

(c) nay acquire, hold and diasoseof

real 2nd personal property;

(a) may sue and be suecl in its corporato

name; and

Ce) has the ather gowers and may exercise

the functions conferred on it under

this Ordinmce.

(3.) Al1 courta, judges and persans acting

judicially nhall take judicial notice of the eormon seal

of the Corporation slffixed to a docw~ent and shall

presme that it was duly affixed.

(4%) The giawer of the Council %O confer powers

and functionson the Corporation includes power, by

niles 9ade Ln accordance ïnth the Nauru Local Goverment

CouncilOrdinance 1951-1967, to varg or add to the poviers

and functions af the Corporation.

VaLidation. 6. The gapent Oy the Council in pursuance of the

Agreement of an anourit in respect of the purcbase price

for the cagital assets of the phosphate industry at Nauru

before the date on which this Ordinmce cosles into operation

shall be deened to have been lavtfully niade.

Section 3. CERTAINPHOSPHATE LANDS INNAURU

AGREDrnYT

relating to the

NAURUISLAND FHûSPHAikTE IEmSYRY

1967Lw (1) ANNEXES TO PKELIMINARY OBJECTIONS

THIS AG~l~IYiP is made the Fourteenth day

of Wove~qber, One thousand nine hmdred and sixty-

seven bettveen Tm NAURU LOCAI. GOVEPJT!I~~NCTOUNCIL,

the body corporatc established by the 1qaumi

Local Govei-nment Council Ordinace 1951-1 965

(in tkis agreement cdled ,'the Co~mcil" ) of the

one part and TKE GOWLtmT CF Tm COi?QION?'!EALTH

OP tlUSTP&Ih, !?FI GO:VEMKEIITOF NET ZEI1LAIJDad

THE GOVEF34'MEE ONT TKE WITED ICIHGDlbI OF GREAT

BRIIRIK MD NORTKEKT IWLJ'JID (in this agreement

called '"the Partner Goverments") of the othes

pas*.

KKERXASby Heads of Agreement signed at

Canberra on the fifteenth dag of June, 1967, the

representatirpes of 'che Council md of the ?artner

Goverments agree d uporr arrangements for the

future oneration of -the pl-iosphateindustry on

Nauru :

.4XDYiilEIEAS it t-$ascontemplated by the Heads

of Agreement thaf a formal agreement would be

entered into to give elfect to those acrzngements

and that appropria-te action woulC be taken in due

course to eîf ect neceasary legislative changes Sut:

that the parties viould in the meantirne act in confomity

with the intention of the Heads of Agreement : CERTAIN PHOSPHATELANDS 1N NAURU [a k701

ITOW IT IS T-!EFEXY BSREE3by the parties as

fcillown :-

Inter- T.-( 1.1 In thks agreeriient, unless tne contsary
pretatiçrn.
intention ap;iears -

"the Comissioners" means the Board of

Comission~rs Inovin as the British Phosphate

~omiisioners establishedby the Pastner

Governmentspursuantto an agreement dated
the second day of Jaly, 1919;

''the CosporaUiontl meâns the Nauru Phosghzte

Corporation provided for 'cy clause 12 of this

agseerneni ;

"the Councill1 ~nclrides any successor of the

Coucil I~a-~iilg relevant powers and functions

in relation to the govem,ent of the Island

of Kauzu;

"the three year period1I means the peried of tkee
years corrmenci~g on the first day of Juiy,

1967;

"year" means a finmcid year camïenclrig on the

fisst d2y of July and "the first year" , "the

second yeml' and "the thirà yearif nean the

first, second and third years, respectively,

of t3e tkiree ycar periofi. ANNEXES TO PRELIMINARY OBJECTIONS 181

(2. ) Except ivhere the context o.therivise

requires, referencee in this agreement ta sums of

moriey relstc to dustraliancurrency.

Implement - 2 ( Y ) The Partner Governrnents ad the Council
ation of
&.greement. aclnc7:~ledge that it may for the purposes of giving

Legal efficacy to the provisiocs of this agreement

be necessary for legislative or other action to be

taken on their respectiveparts for the validation

or implementation of thls agreement but they agree

that pending the taking of aqy action that is

neceasary they will, in so far as is practicable,

act ln confom~ty with the provisionsof this

agreement.

(2. ) The Partmer Governrnents and the

Cowicil shall iake al1 i'cssonable an& appropriate

action, includlng the sponsoring of legisl~~tlon,

cn their respective parts to prov~de for the

validation, inglcnen-tution and ogeration of this

agresment.

hctions 3. ?lie Partner Govcrnmentsshall make such
of the Corn-
missloizers. provisioizs md arrangemeniaas are neressary for

the performmce bÿ the Con~izsionersin accordance

vrith the provis~ons of th~s agreement of the functians

that it is grovided by this ercenent shall 5e

psrfomed by the Co~~~p~~ssiari~rs.

Fimctions 4.-(1.) S~bject to the provisions of this
of the
Corporation. agreement, the Corncil nhall he responsiblefor the CERTAIN PHOSPHATE LANDS IN NAURU (4) ~721

performanceby the Corporation of the funetions

thet pursuant to this agreementare allocated to

the Corpoïztion.

(2.) UntiL such time as the Corporation

is cstahlisbed,the Cowicil sball itself carry out,

the hnctions of the Corporation undef and in

accordancemith tho provisionsof this agreement

an? such acts, matters and things as it is provided

in this agreement are to be done by or in relation

to the Corporat~on may for ?bat purpose be done

by or In relation to the Couricil.

PART II. - SlTPPEY OP PSOSPFATE

Supply of 5.-(1.) Phosphate fron the deposits on the
Phosphate.
Island of riauru shall be supplied exclusively to

the PartnerGovemments.

(2.) The phosphate shall 'nesupplie? at

the rats of two million tons per vlnum or as near

thereto as may be practicoble, anci the Partner

GavemenYs ni11 provide an assured market in such

niaimer as they may aesignate, a5 the price ascertained

from time to tme in accordance with the provisions

of this agreement.

Price of 6.-(1.) The price for phosphate supplied urider
Phosphate.
this agreementduring esch year after the thirtieth

day of June, 1960, shil be the basic price in

respect of that year adjustcd ha applying to that

basic price the index of phosphate prices applicable

to that gear calculated as provided in the First1 1731(5) ANNEXES TO PRELIMINARY OBJECTIONS

l ScheciuLe to thfs agreement.

2, LI rdlu-bi~n to pPLos;l?cte uti2glicd

dinrlilgeach year of the three year period, the

basic price for the purposes of this clause shdl

ùe Elevendollars ($11.00) per ton f.0.b. at Nauru,

providcdthat, if the purchasci pice for the

capital assets purchascd under clause 7 of this

agreenentha$ been paid in full before the end of

the second year the basic price in respect of the

third year and subsequentyears skia11 be Twelve

dollars ($12.00).

PART III. - CAPITAL ASSETS

Sale af 7. The PartnerGovernments shall sel1 to the
Cap~tal
Assets. Council and the Council shall purrhase frorn the

Partner Governments the capital aasets of the

phosphate industryat Nauru that are vested in the

Comlaçioners on behaLf of the Partner Govements .

Purchase -1) The purchase price for the capital
Price .
assets shall be the sm that reprcsentç the value

of the assets as at the first day of July, 1967,

md for this purpose the assets shall be valuee

at original cost less deprcciation at a rate

consistent with the econornic life of the asset.

The valuation of the capital assets
(2, )
for the purposes of this clauae ahall be made md

deternined by a group of people consisting of equel CERTAIN PHOSPHATELANDS 1~ NAURU (6)Pl

numbers of represeritatives of the Council md of

the Commissioners.

Pzyment of -1) Subjectto this clause, the purchase
hirchase
Price. pric~ for the cagital asçets, togetherwith interest

thereon as ~rovidedin the next succeeding clause,

shjll he gayable'ogthe Coucil by yuarterlyL-istal-

ments each af Seven hundred and fifty thousand

dollars ($750,000) .

(2.) The first instalrnent $hallbecome

payable on the thirtiethday af Septernber, 1967,

and subsequent-instelments on the las% day of each

succeeding quartcr thereafterut11 the ivhole of the
prchase prlce and interest ihereon has been paid.

(2.) The Cou1ci.1 may at -y tiirie-&y the

whol" or ?~:y. part of the unliaid balance of the

purchase price.

(4.) irofwithstanài~ the preceding provisions

of tnis clause, the svholc of the purchase price md

interesttheLeon shll be paid by the Council beforc

the end of the tkiree ycar period.

Interest. 10.-(1.) Intcrest crt the rzte of six ger centum

I6$) per a?um sl-iall accrue on and from the firat day

of Jdy, 1967, or. the balance for the tirne being unpaid

of the purchase price for thc capitel asscts.

2. The interest shall be calculetedas at 175 7) ANNEXES TO PRELlMlNAKY OBJECTIONS 185

each quarter datc on rvhich an insealment is payable

undes sub-clause (1.) of the last preccding clause

and the amoiint so calculated shdl comprise part

of the instslmentpayable 0x1the quarter datc uiider

that sub-clause .

Title to Il. -(1. ) The propertyIn the capital asset s
Capital
Assets. shall pass to the Corncilat such tine after the

payment of the first instalmerit of the purchase

price as the Councilmay request or, in the event

that a request is not aadt?, upon the payment of the

irhuie of the purchase -rice and intesest thereon.

(2. ) The Councsl shall, when making the

requcst relerrcd to in sub-clause (1.) of ihss clause

npecifya date far the request to take effect that

aîlows a raasonable p~~i~d of ~O~LCB to the ?artnez

Governxents to give offcct to the request.

(3.) The Pertmcr Goveriunents ahall on or as

soon as reasonably practicable &tes the date on wnsch

the gropertg in the capital assets passes to the

Counc~l arrange for such acts znd documents to be

done or esecuted as may bs necesçary to give effect

tb the Fasslng 01 the propcrtÿ.

(4.) On and from the date on which the

propsrty 1x1 the capital assetn ?asses to the Corncil,

the Co'wcll. shall assume risk and 11abillt;l for, ud

shall Lie rxsponsible for tho payment, ebscwance, CERTAINPHOSPHATE LANDS IN NAURU (8) ~761

performance and dischorge of all debt s,

liabilities and obligations attached or

relatingto the capital zssets.

(5.) The provisions OP tkis agreement shali,

notwàthstaizding the eff ect and operation of this
clause, continue to apply to 2nd in relation to the

capital assets.

FART IV. - MANAGIMENT BRRAWGEkIZiYTS

Es-tablish- 12.-( 1.) As soon as reasonablypracticable e
men* of the
Carporat ion. corporation shall be established to be known a3 "the
Nauru Phosphate Corporation. "

(2.) The Corporation shall be established

and its composition ~11311be as determined by the
Counc il.

The Corporation shall have such powers
(3
and func-tions zs 3re necessary for the performance
by or in relntion to it of the ncts and mattera

arlsing out of thif ilgreement, including the functions
set out in the Second Schedule to this agreement.

Management 13.-(1.1 The Comnissionersshall manage and

~ ~ ~ ~ ; ~ ~ ~ ~ esupervise phosphate operations et lawu wtil the end
of the third year grovided thc-t, if the purchase

price f~r the capital assets of the phosphate industry
has not been paid in full by ihe end of the third

year, the Commissionersshall continue to manage and
supervise the phosphate operat ions mtil the pwchase

price has been paia in full or until such other t+me
as rnay be agreed between the parties.

( 2.) The management and supervision of the

phosphate operations shall on and fsom the date upon ANNEXES TO PRELIMINARYOBJECTIONS 187

which they cease to be carried ou* by the Commissioners
pass to 'nd bc the responsibility of -the Corporation,

and the Corporation shall thereupon be entitled to
the rights and benef its and shall assume the liabil-

itles and obligations arisillg out of or in connexion
mith the conduct of the operations.

Punct ions Duringsuch time 25 the Commissioners
of the 4.- I )
Commissionere. continue to manage and supervisephosphate oper?tions
at Yauru, the Commissioners -

(a) shaXl do al1 such acts, matters
and things as ere neceasary for the

operation of the phosphate industry
at Nauru: and

(b) shallhave direct responsibiliiy for

day-to-day operations and shall be
free fram any lnt erference in the

conduct of t hose operat ions.

(2. ) The poners and fvnctions to be cn~ied
out by the Comn~ssionerspursuan-t to sub-clause ( 1. )

of this clauseshsll i~iclude the functions set out
in the Thira Schedule to this agreement.

Consultctions 15. -( 1) There sh11 during the three year
an
Honagement. period be consultation and CO-operct i-~e action b et~een
the pûrtics or authorities nominated by them respect-

ively to exsrnine and ascertaln the arrangements th2t
might be made for an orderly and planned transfes of

management authority from the Commissioners to the
Corporation at the end of the three year pesiod.

( 2.) Consultation undes thls clause shall

take place at least amually.

(3- ) The objective for the purpos~sof this
clause shzllbe to identify and as far as practicable CERTA~N PHOSPHATELANDS 1~ NAURU I1011781

to take advance actionto remedyproblems that might
arise af ter the transf er of managernent au-tihorlty either

in respect of the management by the Corporation of the
phosphate operat ions at Nauru or in respect of the

intearation of f hose operctions nith the actlvities
of the Commissioners.

(4. ) If the parties agree that it is desirabl~

in tems of that objective to tske particular measmes
in advance, they $hallput those neasmes into eff ect

but any messures thot inay le taken before the transfer
of euthority or intended to be taken after the transfer

of authority shall be planned oad carriedout so a3 not
to prejudice the efficient operation of the phosphate

industry at Nauru,

PART Y- - FINANCIAL ARRB~~GRLTDTTS

Payment of 16.-1 1.) The net proceeds of phosphate
Proceeds' operations at Nauru during such time a a -the Cornmisstoners

continue to manage and supervise those opesat ions sh~ll
be paid %O the Corporation.

( 2.) The net proceeds shallbe calculated
by the Commissionerson. a quarterly basia and the amaunt

so calculnted, Leas provision made for depreciotion as
provided in clause 19 of thfs agreement, shall be paid

by the Com~ssioners to the Corpor?cion within such a
period from the end of each guarter as the Commissioners

and the Corporation agree is reasonable.

(3. ) The amount so paid, less appropriate
charges, shall be oaid by the Corporation to the

Council, which shall be respcrnsible for Its applic~tion
and disposition, including the discharge of ang

liaùilities or claims in respect of phosphate, that
are net taken into accoun-t; in calculating the net

proceeds.1 179](11) ANNEXES TO PRELIMINAKYOBJECTIONS 189
1

Calc ulation 17. In calculaihg the net proceeds of
, Proceeds. phosphate operstions at Nauru the Comnissioners sbll irom

the proceeds from those phosphate operations deduct -

(2) the operating costs incurred 'oÿ
the Comnissroners in relation to

the phosptiate indüstrjr at Hawu;

(b) such costs of prov~ding cepital items
required for the phosphate industry

at Nauru as are not met oct of de-
preciation provisions;

(c) instaltnents payable ir, accorda me aith

clzuse 9 of tkis agreement for the
capital asset s;

(d) any taxes or othes charges levied in

hTauru on the Commissioners their
phosphate operat ions.

Administ rat lon 18. Mile the Psrtner Government s continue
Costs.
te be responsibl~ for -the sdministration of Naliru the
costs of administration, as well as the items referred

to ln clause 17 of thls agreament, shall, in so far
as they are not met by local revenues, be deducted

from proceeds of ghosphate operztionç at !Tauru in
calculnt i-i, the net proceeds.

Provis ion 19. -( 1.) The Commissioners during such
Cepreciat ion. tine as t hey continue to ncnag e the phosphate operatlons

a% Nauru shall accwnulate in a special prov~sion for
the account of the Corporation aepseciation allowanceson

installations 2nd plant repuired for t!!oaa opesations.

2 ) The depreciation allowances shall be
made at such amouiits or rates as are frcim time to time

detm'nlned by the Coinmissioners ln conjmct ion iiith
the Corporstion. CERTAINPI-IOSPHATELANDS IN NAURU (12) [EOl

(3.) The provision shall have ckarged against

it the costs of providlng ,capi-kal items.

( 4. ) Interestat the rate of six per
centum (6$) per annwn calculated on the quarterly

balances shall be csedited to the provisionby the
Commissioners.

PARTVI. - GMZRAL

Servic ing 20. During auch time as the Commissioners
drrsng enelzta
continue to manage the phosphst e operat ions at Nawu

the Commissionersshall CO-op~~late with the Council

in the provisionof servicesto the Nauruan commwiity

in such manzer and on such conditions as are from time
to time agreed upon between the Commissianers and the

Council.

Consult- 21.-(1.) In adrl.ition to the consultations
ations.
provided for by clause 15 of this agreement,therè
shall be consultationsbetween the Commi ssionersand

the Corporation regarding the operation of this agreement

at least arinually during the continuance of this
agreement.

( 2 ) The Partner Governments and the Council

shall also consult annuallyor at such time or times a:
either part-ty may request regarding any aspect of this

agreement or its implementation.

Entry into 22. This agrernent shall be deerned to have
Porc e. coma into force on the first dag of July, 1967.

Durationof 23. This agreement ahall remsin in force in
Agreement.
respect of the whole of the three year period and,
sub ject to the next succaedirig clause, shal.1 continue
In force thereafter. [si] (13) ANNEXES TO PRELIMINARY OBJECTIONS 181

neview of 24.-( 1. ) Xither party maYi by giviw notice
AGreemen-em to the other s reaaonable tirne, which ahall not be lesa

than three monthç, before the end of the secondyear, .
require thnt the provisions of Part II. be reviewedby

the parties.

(2.) A review so re?ui;ed shall be made as
soon as reasonably practicable and in ~ny event before

the end of the secondyear.

(3. ) If upon %he rsview agreement ia not
rea~heed between the partiez on the provisions to apply

to the supply of phosphate sftsr the three year period,
the provisionsof Part II. shall cease te apvly at the

end of the tkird year.

( 4.) If 3 review is not required during the
secand year, the provisions of Part II. shall ba

reviewed in a'ny subsequent year if either party so
requires and the provisions of sub-clauses ( a) and

(2.) of this clause shall, ~ith appropriate changes,
apply in relztion to a revdee so reouired.

(5. ) If upon guch n review agreement is not

reciched by the parties, the pmvis~onz of Part II.
shall cease ta apply at the end of the year immediately

fallowiq the ÿear in which notice of the revieiv was
given.

Law 25. This agreement shall be governed by
Applicable,
and construed in accordance with the law for the tirne
being in force in the Australian Capital Territory.

Notices. 26.-(1.) Any notice or other communication

under or for the purposes of thks agreement shall be
deemed to have been given or made by the Partner

Governments to the Council if it is in writing signed
by or in tlie name of the Secretory, Depart;rnent of

Territories, Canberra, A.C.T., and addressed and sent CERTAIN PHOSPHATELANDS IN NAURU (14)1821

to -the Head Chier and Chairman of the Nauru Local
Goverment Council at Nauru or V it is given or

made as otherwise arranged fkom t ime to the betviesn
the parLies.

Aiiynotice or o-ther communication
(2.)
under or for the pur?oses of this agreementshall be
deemed to have been given or made by the Council to

the Partner Governmentsif i-t: is in writing signed
by or in the ngme of the Head Chief and Chairman of

the Nauru Local Governrnent Council and addressed ond
sent to the Secretary, Depzrtmcnt of Territories,

Canberra, A.C.T., or if it is given or made as otherwise

arranged fram time to time between the parties.

THE SCHECULES.
FIRST SCHEWLE.

Clause 6.
Index of Phosphate Prices.

The index of phosphate prices applicable
-to a year s!?all be calculated from the phosphate

prices during the imedia-kely preceding year and as
soon as practicable after the end of the immed~ately

preceding year. Tt shall be c3lculated as fo1lows:-

1 1) The f ive Florida phosphate prices
quoted weekly in the "Cil, Taint and

Crw Reporter, The Chernical Marketing
Hewspaper" shall be averaged for eack

grade of phosphate separately.

(2) The five averzge prices so abtained
shall be simply averaged to yield

a single representztlvefigure for
the year. ANNEXES TO PRELIMTNARYOBJECT~ONS 193

(3 The representait ve figure ahall be set
out as an index with the year ending on

the thirtieth day of June, 1967, as the
base (= 100).

SECONDSCHECULE.

Clause 72.
Functions of the NauruPhosphate Corporation.

For the purposes of this agreement the

functions that are allocated to the flauru Phosphate
Corporatioiz shall inclu.de the following -

(a ) to receive Emn the Comissionera
periodic f inancial statement s and

other information as reouired by the
Corporation concerning the aorking

of the phosphate induçtry at Nauru;

(b) to receivefrom the Commissioners
payments of net proceedz in accordance

with claus~ 16 of this agreement;

(cl to pay to the Council proceeds received
by the corperztion, les3 appropriste

charges;

(à) .to concur in develcipment plans and pro-
duction programmes that have implications
for the phosphate industry in Nauru

extending beyond the three years of
operation of thia agreement ;

te) to concur in decisions on capital

expenditure programmes for the phosphate
industry in Nauru tht have no-t been

apgroved prior to the enteering into
of this agreement ; CERTAIN PHOSPHATELANDS INNAURU (16)[841

(f) to approve the sale of any aeeets of
the phosphate enterprise at ?Tauru;

to be consulted concerniw the annual
tg)
budgets relat ing to phosphate operatic

in Nauru.

THIRE SCHZDULE.
Clause 14.

Functiona of the British Phosphate Commissioners.

During such tirne as the Commissioners contj
to manage the phosphate operritions at Nauru the funct

ions of the Commissionersshellinclude the followirg

la) the management and supervision of al1
operat ions at Nauru;

(b) the trensmission to the Corporation

before the begùining of each year
for the pxrpose of the performance of

it s functions under this agreement of
foward developmental, finance and

operat ional budgets;

(c) the completion of such capital viorks
os are in progreçs when this agreenient

is deemed to hzve corne into force or
as are approved undex current program

(d) the provision of such movable plant a:

is re~uired for the conduct of the
phosphate operations;

(e) accountiy to the Corporation for net

proceeds in accordance with clause 16
of this agreement;[Es (17) ANNEXES TO PRELIMINARY OBJECTIONS 195

(f) the keeping of appropriate records
and account s;

(g) the renderingof regular progress

reports and audited annual trading
account s, balance sheet a and other

records;

(h) the purchase and supply of stores
and equipmenk;

(1) informing the Corporat %on of problems

arising fr~mthe management and
operation of the undertaking.196 CERTAINPHOSPHATE LANDS 1N NAURU (l8) [85]

IN \'IITNESSYKEREOF this agreement has been
signed on behzlf of the parties the dey and year

fisst above written.

For The Nauru Local
Government Counc il : .............................
Head Chiefand Chaiman of
the Yauru Local Government
Counc Tl.

For the Goverment of
The Comenwealth of
C. S. BARRES
Australia ..............................
7-linister of State for Territorie s

For the Government of
Neiv Zealand ..............................
High Commissioner,

For the Governmentof
Great Britain and
C. II. JGRWSTON
Northern Island ..............................
High Cammissioner. ANNEXES TO PRELIMINAKY OBJECTIONS

Annex26

ANEXAMIN TION ONAURU'SROCKPHOSPHATE INCO,WE.
PREPARE BDCENTRE FOK INTERNATIONAECONOMIC JS,L1990 CERTAIPHOSPHATELAND1NNAURU

AN EXAMINATIONOF NAURU'SROCK

PHOSPHATEINCOME

Paperprepared forthe Departmentof ForeignAffairs andTrade

July1990

Centrefor International Eco~~omics

Canberra~701(i) ANNEXES To PRELIMINARr owEmIoNs

CONTENTS

1. INTRODUCTlON

2. PHOSPHATE INCOME BEFOREINDEPENDENCE

2.1 Overview

2.2 Administration

2.3 The msr funds

7.4 Economicdevelopment

3 INCOMEAT INDEPENDENCE

3.1 Trustfunds

3.1 The ~iiiningconcessioii

3.3 Potentisl savings

4. PHOSPHATE INÇOME AFTER INDEPENDENCE

4.1 Overview

4.2 Royalries

3.3 Governrnentexpenditure

5. REHABILITATION AND ECONOMtC FUTURE

5.1 Rehribil~iaiicostsand propoï:ils

5 ? The economic future

Appendix A: Dataand sources

Appendir:B: Details of calcularions

References

CcnuforhicmaiioEcon~rnics200 CERTAINPHOSPHATELANDS INNAURU (ii) il711

TABLES

I Broad distributidiVauman phosphate income

2 Cornpaison of phosphateincome dismbution

3 Shm of govemmentexpendituredevoted tohealthand education

4
Selected cnidedeath rate1965

5 Cornparison of per capitaincome, 1967

6 Garnsto Nauru fromcharging 'world'prices

7 Revenue Ios snder alternatrvedenianresponses

8 Broad disrribution of phosphareincomeafter independence

9 Distribution of royaltypayments

10 Shareof govemment expendituredevoted tohealth and education

Al Destinationof phosphatexports

A7 Distributionof phosphaleexponincome beforeindependence
(Australianpounds)

A3 Distrbutiorofphosphate exporrinconiebeforeindependence (percenr)

Ail Adniinistratiorevenue and expenditure (Ausrralpounds)

A5 Paynienrstotrust funds befoindependence (Ausualianpounds)

A6 Republicof Naiirusunimary ofrevenue (Ausualisndollars)

A7 Republicof Nriurusurnmary of expenditure (Australiandollars)

01 CaIcula~ionof national income(Ausualianpaunds)

CcnucforInicmatioEconornics[172j(iii) ANNEXES TO PRELIMINARY OBJECTIONS

FIGURES

1 DestinationsofNauru'sphosphateexports

2 Nauni'sphosphateincorne befareindependence

3 Nauru's administratiorevenue

4 Nauru's administrationexpendirure

5 Royalty payments tomist funds

6 Distributioof phosphate incomeafter Nauru'sindependence:

average,1977-78 ro 1988-89

7 Average distributioof governmentexpenditure in Nauru,
1974-75to 1989-90

8 hss on AirNauru

9 Piioritieocnovemmenr

CcnacfoinrcmakioEoonomics202 CERTAtN PI-tOSPHATELANDS IN NAURU

1. INTRODUCTION

Phosphate is the source ofNauru's economicdevelopment. Other economic activities

on the isIandare eirher directly related ro phosphaternining, necessav tomaintain

the population, or serveas rnechanismsto distriburephosphateincome.

On a simple per capita basisthephosphare income seemsro have made the Nauruans

very wealthy. At independence,Nauru's percapita income was one ofthe highest in the
world (see section 2.4). Theasset on which rhis incomeis based, however, isrunning

down - most of the island has been mined (secdiagram beIow) - and phosphate
resewes will probably be exhausted within a few years. With a lack of other natural

resources, the futureofthe islandwill largelybe determineclby how theincorne froiri

the phospharehasken used.

The purpose of ihi siiidyrsto exanIlne Nauru's phosphare income and irsuse both
before and after independence. Seciion 2 discussesrhe level and disrribution of the-

phosphate income before independence. Phosphate mining broughr considerable

economic developmeni toNauru and the income the Nauruans received gave theni a
high srandard of living. Tlie share of spending on heallh and educationalong with

indicarors of health, were high by
internationalstandards.

Ar iiidepeiidence (section 3) rlie

Nauruanswere IeFtwirh IWO financial

asseis- rheaccumulaied funds rhar
had been çaved on their behalf in

trusts,and rheconcession to mine the
phosphate Eollowing independence

(seciion 4). the Nauruans began to

determine for themselves the manner
in which the phosphate incorne was

used. While information on this
period iç hard ro compile, available

Ccnvc forhiornaiional EconomicsIl741(2) ANNEXES ro PRELIMINARY OBJECTIONS 203

evidence suggesrs that the phosphate incorne has not always been well spent.

Educational and healthstandardshave fallen and largsums of money have been
wastedonitems suchasa nationaairline.

Rehabilitatiohascorneto besee nsan imponantelement ofNauru's economic future

(section5).However,rehabilitatiodoesnot initselguaranteetheeconomic futureof
the island.Thefuturewillbe Iargelyderemined by Nauni'sabilitytoattractforeign

directinvestment.204 CERTAINPHOSPHATELANDS IN NAURU (3) [1751

2. PHOSPHATE INCOME BEFOREINDEPENDENCE

Following the FirstW~rld War , aLeagueof Nations Mandate forNauru was given 10

Austrdia, New Zealand and Great Britain, These three counmes drew up the Naum
Island Agreement whiçh established ~heBritish Phosphate Commissioners (BPC) to

exploit the phosphate and sel1itto the three PartnerGovernrnents. In the 1920s, a
Naunian Royalty Trust Fund and a hndowners RoyalryTrusr Eund were setup forthe

benefitof the Nauruansand the Naurua nilndownersrespectively. TheBPC also took

onthe financial responsibiliry for acostsof adrninistering Nauru, including health,
education and public servicesfor Nauruans

Following ihe SecondWorld War, the Le~gue of Nations Mandate was converted to a
United Nations Trusteeshiandihe BPC re-established phosphate m~ning,As figure1

illustrates, lhroughout this period nof ihcphosphate was sold to Austrnlia- an

average of 63 per cent(table Al) Thus fram the beginning, Ausrrailawas a very
important rnarkerCorNauruan phosphaie.

Returns from the phosphate exports

Figur1:DestinationsNauru' pslitnpIiatt! paymentsby theBPC for the
exports
administration oftheisland;
I
royaltiespaid bythe BPÇ xnto trust

funds,and

royalties paid bthe BPC directly
to Naunian laridowners.

In addrrion, rhe Nauruans benefiled
. ... ... . .. . . .- . . . from phosphareactiviries through the
rw 1951 19561957 196oy,;ymcd:z.~
employmeni opportunities provided by
1 1
DU aourcT&~C~1 the BPC and the Adminisuation.

Ccnvc ioInicmaiimat Economics11761(4) ANNEXES TO PRELIM~NARY OBJECTIONS 205

Table 1 andfigure2 surnmarise the sizanddistributioof thegrossphosphate income

- tharis, therevenuefrom phosphate exports(dataare presentein tablA2). Ascan
be seen,inthebeginning ofthe periodmostof theincome was used toçoverBPC costs.

This isnot surprising as the phosphate industry had ro be aimost complerely

reconsmcted following the war. Throughour theperiod however, the amountspaidto

Table 1:Broad distribution of Nauruan phosphateincome

1917-48 1956-57 1966-67
O 46 Q
BPCcos& 96 86 35

Administration 2 9 20 .
TrustFunds 1 3 38

Paymentsto Iandowncrs 1 2 7
&taroucc. Thls A3

p. -. . -.

Fisure 2: Nauru'phosphaf e incornebeforeindepcndcnce

1 1948 1951 1954 1957 1960 19YearsnM June30

1
Dain sourcr:A2.lt

CenucforInternaiiEcomirnics[178] (6) ANNEXES TO PRELlMlNARYOBJECTIONS 207

considerably greater shareinroyalties.ComparedwithMakatea, the BPC paid Iess ta

govemment but muchmore in royalties, especiallyby 19667. Thus, the distributionof
phosphateincomeseems cornmensuratewith thedismbution adoptedelsewhere in the

world,even underdifferent rnining conditions.

2.2 Administration

Most administration revenue was pr~videdbycontributions from the BPC (figure 3).

This revenue was used to finance generalgovemmentexpenditure of which health and
education were a significant proportion, especially in larer years (figure 4).Over the

period, the sharesoftotal expenditure devored to health and education averaged 13and

14 percent respectively.This is highby world standards.as illustrated in table 3.

The highexpenditure on health gwe beneficial results. Naunian monaIity (in terms of

tliecrude death rate) fell froni 11per thousand over thepend 1947-48 to 1957-58to 6
per rhousand over the period 1958-59to 1967-68(Taylor and Thoma, 1983). While the

erirlierrare may have ken largely a resultof the effectsof the war, the rate in the Iatter

puiod W~S veq Iowby internar~onal standards, lower in fact than those of the Panner

GovernmentsAusrralia, New Zealand and~heUniredKinedom (rable 4).

T~blc3 Share ofgovernment expendiiurc Tabtc-i. Selectedcrude dcathrates, 1965
tlcilired to healih and educaiirin3

Heolili Educariun
Nauru 13 IS Ausrnalia
UniledKingdom
Ncr Zcaland

hw morne cconornics 17
Middlcincomc mnomies 15
LOU . comceconornics 15 6 Indusuialarkcicconomtcs 10
hliddlc incamccconomics 13 7 'Referioan avcntrom195859IO196748
Iridusinalmartel cconamics 5 10 SoiuctTaylomd Iboma (1983andWorldBank.(l985).
Iigurcr NaunircIcioaverage rhrrcs 1941-4Sio uibl20
LY66-51Qihcliguxr. cxch'cw Zcilandtr 11972
h'cw7~alandliguaifor1982.
~c~rrcTa:ilA.?.WorldI3anL.(loblc26

CcnircfoInerna~ionalEcanomics208 CERTAIN PHOSPHATELANDS IN NAURU (7)[1791

Figure 3:Nauru'sadministration revenue

1940 1951 19% 1957 1960 1963 1966
YmreW&ma30

LU0rowce:TablA4.

Figure 4: Nauru's adminisiration cxpenditure

1948 1951 1954 1957 1960 1963 1966
Yea end& &ne 3û

Dar.source: TablcA4.

CcnvcforI.icmational Economics[IBO](8) ANNEXES TO PRELlMINARY OBJECTIONS 209

2.3 The trust funds

Royalties werepaid by the BPC directlyro landowners and to a number of mistfunds.
These payments were made toensure the Nauruans received a retutn from the

phosphatemining and to provide for their currenand future needs.Throughout the

pericd,the royalty ratewere setby agreemenrbetweenthe BPC and theNauruans.The
royalty ratessteadiiyincreased over theperiod, indicatingthe responsiveness of the

BPCro Naunian requests.

Royalties were paid into four rrust funds. The Nauru RoyaIry Trust Fund was

esrabIishedfor the purposeof providingmoney ro be spentsolely forthebenefitof the
Nauruan people. This fund was essentially designed tbe spenteach year in order to

provide for the needs of the Nauruan people. In 1958-59 the Howing Fund was

separated from the Nauru Royalty Tru~r Fund. This fund was designed to finance
hciusingfor theNaunians.

The Nairru Landowners Royaly Tricrwas created in 1927 by an agreementwith die

Naunians. Royalties were paidtrltothisfund onkhalf of the landowner whenhis land

was mined.The royalties were invesrednd rhe interestcompounded for a periodof 15
yexs riftewhich the principal and interwrisdistnbuted ta the landowneor his heirs.

The NuiirironCoinrnuniryLoiig Terni Iiivesrn~cnrFund was esrablished in 1947 ro
provide for futureeconornic need3 nftlizNauruan people after thephosphate has mn

out The royalties paiinto the f~inwere to bz invested on behalf ofthecommunity
unrilthe year2000.

The value ofeachfund at 30June 1967w:is:

Nauru Royalty Tmst Fund 570 912
Housing TrustFund $56 652

bndowners Royalty Trust Fund $3O22 607

LongTerm Investmenr Eund $6 241 719
Total 59 391902210 CERTAIN PHOSPHATELANDS IN NAURU (9) [181]

Figure 5 showsthe value ofroyaltiespaidinteoach fund.

Figure 5:Royaltypaymentsto trustfunds

2.4 Economic development

Phosphate rnining allowed consider,ibleeconoiiiic developrnent on the islandfron~
which theNauruans clearty benefited. Incotne per capi(seeappendix B for derailsof

calculation)increas redidlybefaïe independence,2nd ai independence urasamong the
highest in thworld. Table 5 shows that iriçome per tapit3was as high asany of the

Partner Governments and that the average inconie over the five years before

independencewas considerably bigherrhanfor other Pacific islanarions.

Administration expenditure also generated high siandard of Eivinpas evidenced by
the data presen~indthe previous section.

CcnneforInicmatiohnomics1 [lR2j (lo) ANNEXES TO PRELIMINARY OBJECTIONS 211

Despite this,sume have arguedthatthe

Table5:Cornparisonof per capitincorne,1967 retums to the Naunianscouidhave kn

higher. Hughes (1964), the 1987
US%
Nauru Naunian Commission ofEnquiry and
atlndependcnce
lasr5yearsbforindcpcndcncca theNauruan Mernorialal1argue that the
BPC did not seIl phosphate to the
1 Ausualia ,,,,
NewZealand 120 Panner Governments at 'world' prices
UniredKingdom 2010
Fiii 340 and rhatif higher prices had been

SolomonIslandsb 180 charged, the subsequent increased

avcraoflarTiuc ycars hclorc indcpcndcncc uprcsrcd in could have been paid to the
1 1967doUarkRcfcnm L969
SourcerFoNauniscc ap~ndni3For olhcr muntIMI; Hughes for example,
(lP89). calculatesthe potential gainsin revenue

if French Polynesian or USA export

pnces had been charged for the Naurunp nhosphate. Table 6 presents Hughes'sresulrs.
These estimate an annual Ioss to Naum over the years 1949 ro 1963 of between E0.8

million and f6.1million.

-

Table 6: Gains to Nauru rrom charging 'ivorld'prices

FrenchPolynesia USaverage
eipnri price expnrt price

fAm EAm
17 0.8
2.5 2.1

3.1 2.3
5 1 2.4
3.7 2.8
36 2.4
5 1 2.8
6.1 3-3

5.5 1.a
4 4 2.3
5.1 2.2
4.6 2.1
5.2 2.5

6.1

CentrcforInrzmationd Economics212 CERTAIN PHOSPHATE LANDS IN NAURU (11) 11831

Anal ysis presented in rheNauruan Commission ofEnquiryestimatedrhetord ' losses'
to Nauru of underpricing forthe perid 1920-21 to 1966-67 to be £8 1million, or£168

million if the annual arnounrs are accumulated at an interest rateof6 pei cm\.

Calculanons in theNauruan Memarial,usinga different world price series,estirnate the
total lossover the period 1920-21w 1964-65 tabe£91 million, or if accumulated f 173

millian. (There is aconfusion in theMemanal as rhe text statethe loss tobe E172.6

million whilethetable used to source this numkr presents f 177.9 million,see pp. 306
7).

If realistic, esriniates of rhis magnitude are clearly signrficanr. A number of poinrs,
however, need IO be niade. First, the notion of a world price is very tenuous when

applied to commodities such as rockphosphate, which becauseof factors such as high

transpon costs,are mainly rraded within a limired region. Such commodities require ri
nearby market - M Iii~t111tlicase of Nauruanphosphate, Australiaprovided. Another

example is coal - Ausrraila does not receive a world pnce, rather a prlce ser by
negoriationand pricescandiffer substanrrallydepending on the location of the producer

and thepurchaser. Cerrainly rherewere oiher phosphate prices in other markets - such

as the Makatea price u~ed irithe Memorral analysis. Their applicability, however, 1s
doubtful.

Second, in the inrere~ts of cI:iriryis noted thntrhe merhod of inreresraccurnuln~ion
used in the Meniori:iIis uriçlerir Appendix B defines an appropnatemethcd. Applyin;

this tothefigures in theMeniorial(table 3.1,p. 307) y~elds an accurnulated lossof£163
million.This figiire\vil1bcuaed 4s a base casç in rhean;tlysisthatfollows.

Even if thenotioiioF:i 'ivorldprice'for phospliare is riccepted,ther1sa third probleni
wirh analysissucli35 th:ipreseritedin ihe Mernonal. The analysis prmeeds on a 'whai

if' basis.Itasks rhequesrion ~~J~IQwouEd imean forNauru va higher pnce hadbeen

charged? Unfortunately, the analysis answers this question in veiy Iimited manner. In
panicular, itassunies rhareven with considerably higher phosphate prices(of the order

OF200 percent higher in sonie years),the deniand - that15,quanrity sold- remains
unchanged This iç clearly unrealistic. Dernand responseç to large changes in pncesare

a well documented and very coninion phenoniena - rhecffects ofthe large increasesin

CcnucforlnlcmauonalEconomics11841(11) ANNEXES TO PRELIMlNhRYOBJECTIONS 213

oilpticesinthe 1970sare anillusintion of this.Accounring fordemand responsein the

analysisgives considerably differentresultasillusuatedin table7.

Table 7:Revenueloss underalternativedemand rmponses

Cumulative Cumulativeloss
Demand response los plusinterest
fAm fAm

Norespnse 91 163
-0.30 52 93
-0.50 32 59
-0.75 14 25
-1 00 0 O
SowceCalçulauobhc Gnirior Inumauoconomicr,<ccappHuIw dcinrla

Here,the demand response is defined asthe percentagechange in demand forevery 1

per cent change in pnce. Thus, a demand response of-0.3 means thar a 1 per cent

increase:inpnce Ieads to a0.3 per centdecrine in the qurintity demanded. Clearly the
magnitude of this demand responseis crucial Arone exrreme, -1 - where a 1 percent

increasein priceIeadsro a 1 percent declineinthe quantity dernanded - the effect of

theincrease in price is exactly offset by nreductinquantity demanded, sothat there
1sno overail gainin revenue. Wirh smaller deniand responses,there is some gain in

revenue but considerably less thanthno response case.

Insummay, analyseswhich arebased on conipursons ofthe price received by Nauru

wirh pnces inother distant,and differentniarketsand which donor take into account

thechange indernand in responseto higher rock phosphate pricesare iikelytogrossly
overestirnate theextent ta which phosphare revenue was depressed by the pricing

policiesof theBPC.

Ccnutfor Internati conomics214 CERTAIN PHOSPHATELANDS IN NAURU (13) Il853

3. INÇOME AT INDEPENDENCE

When Nauru obtained independence, it was left with two financial legacieThe first

wascheincome acçumulated in the mst funds,while the second was the concessionto
mine and exportphosphate. The financial Eegacyhm thisconcession was in rheform

of the future profits from the sale of phosphate - rnostIy to an assured market,
kustralia.

This sectionaddressesthree questions:

- What 1s the value today of thefunds saved oribehalf of the Naunians before

independence?

At ~ndependence w,hût wns thecapitalised valuof rherightto mine phosphare?

Fromrhese IWO sources ofincorne, howmuch would theNaunians have been able
to save and whar level of incorne would thisprovide after the exhauçtionof rhe

phosphate?

3.1 Trust funds

The value of thetrustfuridsai 30 June 1967 was presznted rnseciion 2.3. Of rhese, the

landowners rrustfund and ililong terniinvestmenr fund were designed to accurnula~e
over rime. Good nianagement of these funds should have yielded at least araie of

irirereequivalent LO thetlie sliorem governmenr bondrate While ather invesrn-ients
would have, In hindsight,yielded a greater return, rhisrateis guaranteed. Eroni

independence tothe presenttirne, theaverage shortternigovemmenr bond rate was 10

percent. Accurnulstinç the fiinds sindependence at this rare (assurningthat inter1st
only paid once per yenr 31 the end of rhe year)yieldsthe foIlowing estirnatesof the

cumenr (1990)value of the rrusts:

Landowners Royalty Tmst Fund $27065 350

Long Tcrm Investment Fund $55 890750

Total $82 455hW

Ccnucforintcmaticnbnomics216 CERTAIN PHOSPHATE LANDS INNAURU (15)il871

3.3 Potential savings

Someof the profits frophosphatemining after independenccourd have beensaved
inuust funds, adding to tlie amounts saved Qn behalf of the Nauruans before

independence. Indeed,before independence some 35 percent of phosphate expon
revenue was placedint oongertem invesrmenrfunds (theNaurulong term investrnent

fundandthe landownersroyalryuust fund). Assurningthisame proportioncontinued

IObe saved, and adding thefunds savedbefore independence (again assuming an
interestraof 10percent), thethe1995 valueof theaccurnula scvingswouldhave

ken $996million.

Assuming a Nauruünpopulütion of 6000 ln 1995, these savings amounttoaround
SI66000per h'auruan At an intererate of 10pecenl,annnal interestpaymentsfrom

this fund would generi3iperç~tpitinconie of SI6 600a year- onIy çlightly less
rhanAusmlia's currentper capitinconie.El881(16) ANNEXES TO PRELIMINARY OBJE~IONS

4. PHOSPHATE lNCOME AFTERINDEPENDENCE

Becauseof some problerns obtaininga complete and consistent data seon Nauru's
post-independence period, thi'schaptconcentrareon paintinga broad pictureof rhe

phosphateincome, cxamining in more detaithe areason which better information1s
üvailahle. Following independence, Australia remained the major destination for

Nauruanexports, with over thsee-quanersof rotal exporgoing to~uswl& in 1988-

89

Figure 6shows the average distribution of phosphate incorne for the 19ro-1988-
89 penod. TableX presenrs thedetailon which rhisaverage1s based.As cm be seen,

niostof theincome goes to governmenr - rheNauru Phosphate Corporation pays

dividendsto thegovernmenr iiits sole shmeholdc- and this shxe appearsto have

Figure6: Distribution UTphosphate incume afterNauru's independence: average,
1377-78 to1988-39

Ccntreror InlcrnEconomics218 CERTAINPHOSPHATE LANDS IN NAURU (17)[la91

Table.8: Broaddistribution of phosphateincorneafier independence

1977-78 1978-79 1978-80 1930- 8 1981-82 1988-89
B 5% 4ro O % 46

NPC cosrç 38 24 37 23 22 34
Royaltypaymen~ 62 54 32 29 28 28

Governmcni O 22 31 49 50 38
SourcCldumar (19SanNeuniPhosphCoiporauon.AnRrp~rr1988-BP

increas medr time.The.share ofroyalry payments,which includes payrnentç totrust
funds aswell aspaymentsmadedirect talandowners, has steadilydeclined over time.

4.2 Royalties

Table 9 summarisesthe distribrionof royalties after independence.The distrtionis

fairlyconstantrilthough there sonieindicationthatthe proponionof payments totrust

funds has deciiried.

The current value of thmsr funds(riat 30June 1989, seeNauru Phosphale Royalties

Trust,AtitiuaReport 1988-89)is as foIloirrs.

Long rem investment fund 5575245 134

Naunian Iandownersroyalry rrusrfund
SM1871032

Naunian housing fund 530 486

Nauru rehabiIitation fund $241 972 884

Table 9:Distribution or royaltypayrnents

1977-78 1978-79 1978-80 1980-81 1981-82
40 % % % %

Tnisr lunds 65 61 55 58 59
NLGC 24 27 31 30 28

Landowncrs 11 12 14 12 13
bwct:Ctodurnar (1982)

Ccnuc lor InicmauonalEconomics[lgO](18) ANNEXES TO PRELIMINARY OBJECTIONS

4.3 Governmentexpenditure

Figure7 illusuates thar rhelargest items government expenditure areAir Nauru and
debt servicing.The figure also shows that items such as health and education have

becornerelativelysmallcomponents of governmentexpenditure.

Healthand education

Incontrast to thepre-independence period, the proportion ofexpenditure devoted to
healthand education 1slow byinternarionalstandards,asindicatedin table 10.

There isevidence of senous morrality problems on Nauru. Frorn the 1968-69 to 1976-
77 pend to the 1976to 198I period,the Naunian crude deathrate increasedfrom 6 per

rhousandto 19 5 per tliousand(Taylor and Thorna, 1983).This increase isclramatic,

especially when placedin an internstional context. Nauru1sthe on1y counry 10 have
expenenced anincrease inthecrude death iateoverthisperid.

Figure 7:Average distribution of government expenditure in Nauru, 1974-73 to
1989-90

Heallh Educatmn

h~ Wft 'DCnvLdlm taMcA7

Centre fInlematiclcannrnics220 CERTAIN PkIOSPHATE LANDS IN NAURU (1% Il911

Table 10:Share of governrne extpenditure devotedtoheaIth and educationn

Health Education

% %
Nauru 2 3

Ausualia
United Kingdom
NewZealand

LOWincarne econornics 4 10
Middleincorneconomies 5 11
Indusrrimlarkctwonornics 13 5
' fguW ior Nauni rIOrvcmgc cxpfndirharcsïrom 1974io 15'89-90.wiralrcquivslcni I1986iharcs
Figutcr forocaintncr fo1986
~DWCCJTableA7 World Rank. (1983)23ublc

Educationis also a problern on Nauru,and the current system does not appcar tohave
generated a satisf3ctory standard of education. As the Nauruan1987Commission of

Inquirypointedout:

..the cxisrinsclioo1.rarcin:idcquatin si~tand facilitiand thc vas1majoniy orschool
children do noi appc:iLO tiavcrcccircd ciihcr rhc rcquircd siandaof cducaiionor rhc

cncouragcmcnt IO cnlhlc ihcm to procccd in10skills irainingro bccorne tradcsrn.cn.

icchniciansor r;pccr:iIni:icliiopcrritors.(Commrssionol Inquiry,p. 1166).

Air Nauru

Nauru niainrains its own airliiieAir Nauru, to provide transport between Australi:i.

oiherPacific islands :ili~:iu:ti.Air Nauru has proved to be an expensive undertaking

Itconsisicntly ni~kes ;i1:irgeloss - as shown in figure 8 - which average2 520
milliona year. The sigiiificançeof thislos çsan bt seen by expressing it as a proponion

ofthe governrnent's pliosph:iie revenue (that is,the 38 per cent of total phosphaie

income paid to the governnieiit). II averages 70 per cent of this revenue. The

governmentspriorities are revealed by the srark contrastbetweenthis and the amounrs
spenton health andeduciition (figure9).

The importanceof the loss on AI^Nauru cannot beunderstated. It arnounts to around

one third ofthe island'sphosphate export earnings - ahuge drain given the fact thar

CcnueforInicmetionhnornics[1921120) ANNEXES ro PRELIMINAuY oBJEm[oNs 221

Figure 8: Loss an Air Nauru

50 3 Millionsol dollars
1

Figure 9:Priorities of go\?ernmrni

Ourlaysas apercentage olphosphaieincarne:
average. 1974.75to 1987-88

Air Nauru boss Educarion Health

1 1
Ddaa-ai: lkrivd- ublu.AandA7.

CcnucforIntcma~ionl conornicç 222 CERTAINPHOSPHATE LANDS 1N NAURU C2I)[1933

the.phosphateisstartirtto nrn ouThisdrain isincorneforgone which,if accumulared

ar 10 per cent per year, would now amount ro $530 miElion. Journalistic licence

describesthislosswell:

AirNauru...might awellhavebccnfuelledbybuming %Tm bill(ForBes1940,p.50.)

Publicdebt

Hardfigures on public debt are hard toobtain, especially given the government's

secrecy.An indicationof rhelevel of debcarihowever be obtained from information
on debt servicing.The 1990-91budget predicrsdebtservicingtobesome $16 miIlion.

Assurningan interest rate of 15per cent,tsuggesrsa total debt of $100million. This
isgreate than thegovernmentvs average revenueGiven that mostgovernmenr revenue

carnes froni phosphate, andthe phospliareis running out, thisuggests potentially

serioupaynientproblemsin thefurure

1 CcnucforInrcmatioEconomicsIl941 (22) ANNEXES TO PRELIMINARY OBJECT~ONS

5. REHABILITATIONAND ECONOMICFUTURE

As pointed out inthe Naunian Commissionof Enquiq, the term rehabiliration has at

leastrwo shadesof meaning:

remrningthe landto its former (pre-mining)state,including revegetarion;or

reforming theland to a shape andcondition suitablefora nominated futureland

use.

The secondof these goes a lot further thathefirst. may involve the improvement of
the land in order to make it suirable for some envzsageduse. In this manner,

rehabilimtionis ofteseen as providing fortheeconornicfutureof Nauni.

5.1 Rehabilitation: coçtç and propoçals

Thsre have been a nuniber of investigarionsin10 rhe feasibilitof rehribiliratithe

mined phosphare laridon Nam-u In 1954. a repon by rheÇÇIRO concludsd rhat while

itwould be possibleto knock oves the liniesroiic pinnades left afrer mining, rhat
whrlr irwould even be posstble toimport hoil rhcrewas no cenainty th31rhis soi1

~vouldstliyon the surface. Further, uncenditity .!bridequaterainfall memt tlietwaS
nopracrical possibilitofwide scale useofthe niilidlands for agnculrurcOverall, an!

scliztne to rehabilirate the rniiilands was corisidered trbe too uncenain and too

expensive roallow such a scherne tobz a practiciproposition

In 1961, tlieBPC esriniared the cost of rehabilitntron- in rems of Içvelling the
pinlixles (by hlastingand shipping sailto Nauru - to beEl28 million. Also in 1964

the CSIRO providedadditional advice, reirerating their earlier conclusionrhat any

proposal to levethemined areas andcover them with suri would be too expensive tobe
ji~srifiedby the likely benefSrom such aprolect.

Ccnlrc [lnicmational Economicr224 CERTAIN PHOSPHATELANDS IN NAURU (23) il951

In1966 the so çalled Davey Cornmittee submitted a report on rehabiritation to the

AusualianGovernment and tothe Nauni Local Govemment Council. The committee
concluded that while it wouldbe technicallyfeasible torehabilitatethe mined lands by

refillingthem with soil, practical considerationwould rule thisouras impracticable.

The committee did conclude,however,that a limited fom ofrehabiiitation- making
some of the mined areas more atuactive for habitation and other publicpurposes -

would be priicticable.

The NauruanComniission of Inquiry conducted in 1987concluded that rehabilitnrion,

in the senseof restoring the mined landto somethingclose toits original sratwaç no1
onIy feasible but essenrial. This isrn conrrast to earlier examinations, apparently

because the Comrnissioli's investigations found tharthe pinnacles were easier to
denloiish than had been previously believed. The Commission estirnated thrit

rehabilitation of the niined lands woulcost $127,000per heclxe. This leads to arotal

costof rehabilitation of $215.9 niillion (1 700 hectares), which includes rhe cost of
rehabilirariontheland mined b'cforeindependence of 571.12 miHson (560 hectares).

Note that the Commission of Inquiry çontaIns an error, they repon rhisto be 572.12
million

Fwnds forrehabililafion

Itisrhe Ausaalian Governmzni's conrenrionthat the Parrner Governmen~slefi Nsurti.

bz, theconomic amüngements at independence, with sufricienrresources toundenake

rthabilitaiionOn independerice.h'auruestablished a reli~bilitaiionfund usingsonie or
theincorne available from rhese arrangements.By 30 June 1989,the value of thrs fund

uas 5741 972 884 (Nauru Phosphate Royalties Trust, AtinrialReparr 1988-891 This
more rhan covers the Nauruan Commission of Enquiv cost estimates of 5215.9 million

for rehabilitation of the enrire island.Ttwould also seem ro bear out Australia's
coniention that Nauru was left ina positionto finance rehabilitation from itsown

resources.il961(245 ANNEXES TO PRELIM~NARY OBJECTIONS

Proposed developmentç

In additionto its cost estimatethe Naunian Commission of Enquiry calledfora large
number of submissions from partles interested ithe futureeconomic development,

incIuding rehabilitarion, of NauruA number of submission were received and they

conraineca wide range of ambitious proposals.

An exarnpleof these is a proposal by rhe Overseas Projects Corporation of Victoria.
This pmposal involvesestablishment of hydroponicsand aquaculture, meat pr~essing,

animalhusbandry and a nurnber of orhertechnologyintensive activitiesThe practical
difficulties of these activit-es especiailyinan environment where water supply is

always uncenain - stem to have been overlooked. The ability to train the Iocal

population in a range of specinlist techniques, especially in the light of the
Commission's own comments (see section4.3) also seemto beignored.

The submission aiso considercd toiirtsrro be animportant componenr of the overall

developmenr straregy.The attitudetliisubmisstontakestowards taunsm istypical of
theunrealisric naturof some ol iiiproposals.The submission states thar Naum hns

considersble gotential fotouristdevelopment,claimingthat Featuressuchas the unique

landscape created by phosphate niiriinactivitiewould attracttounsrs.It ignores the
facrrhatNauru has no beaches. unpredictliblfishingand diving that isuninteresting

conipriretoother Paçific islands.

5.2 The economic future

There are reasons for pessiniisni about Nauru's economic future. Aparr frorn the
phosphate.Nauru appexs to have no other narunl resourceon whiçh tobaseindusuy.

Fishing is perhapsone possibility, but Nauru's recent experience does not provide
grounds for optimism. Anorher possibility is tourism. Nauru's clirnare is warm and

troprca- a major attractionta sonleThe island,however,has no kaches andcurrent

accommodation standards are far below those of other tropical tourist resorts.
Establishinga iourist industrywould require massive investment and major capital226 CERTAINPHOSPHATELANDS INNAURU (25) Cl971

works on theisland.Giventhe existence of other more attractivelocauons, itisunlikely
that Nauru could attracthe necessq fundsfor this form of investment.

But in many ways the problemsfacing Nauru, in terms of how toengineer sustained
economic development,are simplyan exeeme case of those confronting orher small

island nationsof the Pacific such as Kiribati and Western Samoa. While rhese srnall

nations can do nothing about their lack of natural resources, isolated geographic
location and small doniesticmarkets, they have ir in theirown powerto change things

forthe better.

Lack of narural resoiirces need not in itseif aeprobleni. The experience of resource

poor nations such as Mauritius are evidence of this. Such nations have, however,
resourçes in theirhuni:iricapital. Nauru unfortunately does not at present have the

advantage of human cripiifil.Educarionis poor,and it appearsthat rnost Nauruans are

nor educared to Ausrralianstandards. Further, man! skills have been lost as in general
theNauruanshave no1 been reqiiired to work.

But the positton is tiotin-edeemable The cbal\enge for Nauru is to create the right

domestic environrtienr for rrireigiienterpr-sero bring incapital, skilland know-how

while avoiding rlie debr aervicing oblizations of foreign borrowing. There is
considerable currztit itirer;rnlon_csrirerrrat1oridevelopmenr agencies in faciliiat~ng

the processof foreirn direcr investnlenrin sniall island nations. One proposai isthe
Sourh Pacific PrcijecrFriciliiy (SPPF) to be nianaged by the International Finance

Corporarion 'The role of tliSI'PF 1stoprovide project preparation services to faciliure
thedevelopmeniof viable sm,iII IO medium sized enterprises in thesecounmes.

Itwould niakegood seiisefor Nauru io çeekrhc risaisiancof the SPPFand other bodies
tohelp itattract foreign enterprise. /1981(26) ANNEXES TO PRELIMINARYOBJEnIONS

Appendix A:DATAAND SOURCES

The followingtablespresent thedatusedin the seport.She sourcesare:

AdministrationoftheTemtory ofNaum, Reporrro rhe GeneraIAssembly ofrke Unired
Nations,variousyears.

Rcpublicof Nauru,BudgetStaremenr,various years.

l
Republicof Nauru,Report ofrheDirectorofludir.va-iousyearr.
1
BritishPhosphateCornmissionersReports andAccounrs,vanous years.

Table Al: Destinatioof phosphateexports (tons)

Year ended
3une30 kustr~lin New Zealand UnitedKingdom
1948 179257 83 750 O
1949 513256 167490 O
229810 O
1950 779456
1951 693815 256 929 0
1952 592 675 469122 O
95; 758 831 468277 O
1954 669fA4 38 182 85WC
1955 663 580 423306 150350
1956 882025 4836 19 102150
1957 755538 391SR8 131050
1958 755 IX)Z 306478 105700
1959 70rl632 191956 201550
1960 705 200 339650 i82950
1961 783951 363570 191200
1962 961192 116 110 1&059
1963 981550 399300 277g00
1964 961 530 480650 2128W
1965 982 400 505550 205050
f966 818800 516650 1972133
1467 1 298600 487MXI 199950

CcnuefoInmationaEconomics228 CERTAIN PHOSPHATELANDS IN NAURU (271il991

Table A2: Distribution ofphosphate export incornebefore independence (Ausaalian
pounds)

Year ended ExpendEturo en Pagments to Payments to BPC
June 30 Exports administration trust Funds Landowners Costs

1948 527014 8 527 6 254 8 028 504205

1949 1 174287 29785 17715 12 194 i 114593
1950 1589594 37 443 25716 18329 1 508106

1951 1378 579 77 138 38980 16288 1246 173
15'52 1725 420 83701 rl2216 19289 1 580214

1953 1 994M5 153756 A8162 28398 1 763229
1954 1 931520 223 131 48 087 27d25 1 632877

1955 2 165 163 293 113 54 333 46397 1771 270
1956 2563640 2e8 856 63551 50465 7 205768

1957 2236 808 201 64s 58a75 35 653 1 941035
1958 2421 898 328 985 54467 36123 2032 320

1959 2 492361 330597 156143 3E916 1 966705
1960 2 830261 412052 101819 56 230 2 263160
1961 ?915W8 470 667 110691 79OS5 1223 655

1962 3391 634 494 415 181i5W 8186s 1 630742
1963 3981656 530524 203W 90645 3 157442

196.1 4 427 072 878 995 369679 89541 3 OYS857
1965 4 762 584 ii0704 110101 147853 3 805871

1966 4 329736 862 136 1M2 190 312 877 1140231
1967' 5355559 1061031 2037868 384 OS2 1 872638

Ai Ihiimcihc I9M67 irym rL!CIjniihauooi ualrnadcrhclricinlumiauam crpuruar nü ihco a*ailaThc
aciual valuc of fii1M 67 wasL939s 513nccaurc iilIhad riplanncdfor Iargmcrcasc in ducsm 1965.66
and1956.61fulroyaliiwcrcnotpid inihorysarrThcrcamounirrrrcpaidinlP67.68Noic alro ihcircwn IOth?
Lnircd hauona undcrraciurroyalGpa)mcnirbySI ycron 1hcicihrcsd~urtmcnc. iogclhcc, hlcivcihcbroad
drrrnbuiionphorphric carnirigr unchanpcd 229
[2001(28) ANNEXES TO PRELIMINRRYOBJECTIONS

Table A3:Distributionof phosphate export incornebefore independence Qmcent)

Year ended Expendiiureon PaymentsIo Papents to
June30 administration landowners BPC cosis
trustlunds
1948 2 1 1 96
1949 3 2 1 95
2 1 95
1950 2
1951 6 3 1 90
1952 5 2 1 92
1953 8 2 88
1954 12 2 85

1954 14 3 82
1956 IO 2 86
1957 9 3 87
1958 14 2 83
1959 6 79
4 80
1969
1961 6 76
1962 5 78

1965 13 4 3 '8O

1966 20 23 7 50
1967 20 38 7 35
Nale Pcircnugcsmay noio1WducIOmunding.

Table A4: Administration scvcnue and expenditure (Ausmlian pounds)

Yenrended
.une30 Other
1938 83378
1949 91 782

1950 53 S?
1951 1(M843
1452 117493
1953 142973
1954 184570
1955 219125

1956 2CQ655
1957 233 633
1958 268268
1959 252316
1960 305131
363845
1961
1962 280401
1963 474718
1964 514998
196.5 493159

1966 313091
1967 486.952

Çentr[orInternatil conomics230 CERTAINPHOSPHATELhNDS INNAURU (29) 12011

Table A5:Payrnents totrustfunds before independence in us di apounds)

Yearended Nauru royalty Longterm Landowners Totalpayment
June 34 trustfund Housing[und investmcnt trust rund tafunds

TableA6. Republic of Nauru, sunlniaryof revenue (Ausvaliadollars)

Y~nr NPC: Air Nauru Other Total

1974.75 22096362 1748032 4 872841 28707 255
1975.76 17 138003 ? 31?484 4731W 24181501
1976-77 IO 199130 2 7603G1 9683881 22613 375
1977-78 O 6018 1M 31407401 37425 505
1978-79 16250OuO i3000ooO 5959750 35209750

1979.60 28500000 6389 500 6 7M 019 41653 519
1980-SI 31000000 10884100 5 155900 57010 00D
1981-82 56MX) 000 74 876000 4501200 85327 200
1982.83 37000000 20 520600 60253800 117774400
1983.64 36000 400 14228600 52770709 101999 300

1981-85 25000OM) il119268 62184443 104303711
1985-86 37 514889 13971303 45476858 96993 050
1986-87 33000000 1090.1928 35224965 79 129893
1987-83 58000 000 14106300 8956500 61062 800

1988-89
1989-90 24 960000 36 928 800 26781000 88669800
1990-91 25 000Oai 33385800 6249MK3 65635 400/202100) ANNEXES TO PRELlMINARY OBJECTIONS 231

TableA7: Republic of Nauru, summary ofexpendlture (AusPaliandollars)

Year Health Educatlon AirNauru Publidebf Other Total

CcnucforIniemniionl Economics CERTAIN PHOSPHATE LANDS IN NAURU
232

APPENDIX 0: DETAILSOF CALCULATIONS

Thisappendix providesdetailsof cdcuIations presentedthereport.

8.1 Nationai income before independence

A number of estirnaresoNaunian national income haveben present edthe past,

however the details of theircalculationhavenot beenproviForthe currentandysis,
the nationaIincornof the Nauruanpeople in any givenyear is taketo be the funds

made availableorserasidefor Nauruansin rharyear- regardlessof whether they are

actuallyconsumed in thal year. Followin;thisnational income of the Nauruansis
cornposedof:

royaltypayments niadeto tmstfundsand made directtolandowners;

administra~ionexpenditurforthe benefitoNauruans;

Nauruan wage and salaryeürriingfrom theadministrarioand

Nauruan wage and salaryearningsfrom employment withtheBPC, the Naurulocal

Government Council, rtie NaurCo-operativeScciei yndself employment.

Administration expenditurt for the benefii of Nauruans is calculated as total
administration expenditurles5wages and salaries, niultipbyethe Nauruan share in

total population.

Nauruan wage and salüry earnings from the adn-iinisrration are calculated as

admin~stration wage priymeiits multiplied by the share of Nauruans in rotal
administrationemployment.

Earnings from other employment are calculntedas the numhr of males ernployed

multiplied$ythe male basicwage plus rhe numberof fenialesemployed muItip1ieby
thefemale basicwaçe.1 [2041(32) ANNEXES TO PRELIM INARYOBJECTIONS 233

Table B1 presentsau thedatanecessaq tocalculatenationaincomein thismanner.For

table 5 in the text.the incorne per capitais converted to US dollars using the

USIAusaalian exchangerate prevailingin1967 of1.12.

--

Table BI: CalcuIationof national income (Ausmlianpounds)
1
1962-63 1963-64 1964.65 1955-66 1966-67
Population
Naunian 2 558 2661 2734 2921 3011

To~al 4O81 4414 5 561 6018 5053

01Irer t~'auremployment
Males 128
Fcrnalcs 5

Basicwnge(onnual)
M~Ics 467
fcrnalcs 350
h'ariotincorne
Rayaliypayments 293689
Adrnin cxponNaunians 268988
Waçcsirorn ndmin. 184033
Olhcr wages 108277

Totak 854938
Incomc pewpiw 331
Incomcindollars 668
Dcilaior 14
Incomcin1966-67dollars 748

CcnirTorInicmn~iondkonomicç234 CERTAIN PHOSPHATELANDS IN NAURU

5.2 Accumulationof funds

When accumulating intere p atments on monetary8ows over tirne, iisimportant to

be clear on the exactmethod usedas different rnethods will yield different results. The
methodusedfor the analysis presented in section2.4 is:

where:

n is the numberof periods

Snis the accuniularedvalue of fundsatthe endof nperiods

A, isthe value of~hepaynlent in periodj

iisthe annual interesrate

qis rhe number of rimesper year thatinterestisaccumulated

For rheanalysis, irisrissuniedthatinterest is accumulated 4 timen year.

It should alsobe noted thiit inthe NriuruanMernorial analysis (p. 307), the 'negative'
loss of earnrng fr the first three years (ansing becausthe Nauruan price was higher

than the world price)does not appea to have been accumulated al 6 per cent as rhe
positive arnoiints were. Re;isons for this :iryninietrare not stated.If theMemonal

argument is robe tüken toitslogical exrrenie,these amounrsshould beaccumulatedas

rhey show thsi for these ye:irs,[lie BPwax payingnmre than the 'world'price, and so
adopting ihe 'world' price would have. initially meant lessrevenue for Nauru. If

accumulated, theseamountswould reduce thetolalby£2.8 million.

In the analysispresented in section2 4, rhese negative arnounts are not accumulated,

butare incliidedinthe.rotalin unaccumulatedforni. -

ANNEXES TO PRELEMINARY OBJECTlONS
[206](34)

€3.3Calculation of demand response

The demand responsespresented insection2.4 werecalculat ueing a simple,non-

linear constantelasticitydemequation:

I
QdQo =(PnlPo)q

whereQ,is die newdemand, Q,is the originaldemandP, isthe new pricPo isthe
originalpnceandqis the elasticofydemand (thais, theresponsivenessofdemandto

pncechanges - anegative nurnber).Givetheassumedchange inprice,thenew level

of demandisderivedusingthisformula,236 CERTAINPHOSPHATELANDS IN NAURU

REFERENCES

Clodumar,K. (1982).ReplrblofMauru,1982CountryRevim, rnirneo

Eorbes,C.(19901,'Foor linle nisIand, oodWeekend S,ydney 9lunep,p.45-50.

Hughes,H. (1964),'ThepIilicalcconomyofNaum',Eco~mic Record40, 508-34.

IMF [InternationalMonetaFund) (1989)Internario~Fi~nciaIStatisticYearbook1989,

WashingtonD, C.

Republic of Nauru, Commission of Inquiry into the Rchabilitationthe Worked-Out

PhosphaieLandsof Nauru(19SS),Rcporr,10vols.

- (1990),InicrnationCoun of JusiicCcnain PhosphareLandsinNauru, Mernorialofrhe
RepublicofNauru,Apnl

Taylor,R. 2ndThorna.K. (1983).A1aiiruanMortaliry 1976-19and a Reviewof Prcvious
Morraliy Data,SoulhPacifiÇornrn~ssioNoumea, New Çalcdonia, April.

World Bank(1965),WorId Dcvclopii~creport 1985OxfordUnjvcrsityPressNew York

- (1988j, WorldOcvclopmcnl Repor1988.OxfordUniversityPessNew York.