Counter-Memorial of the Government of Australia | INTERNATIONAL COURT OF JUSTICE

Document Number

6665

Document Type

written_pleading

Case

80 - Certain Phosphate Lands in Nauru (Nauru v. Australia)

Date of the Document

Mon, 03/29/1993 - 12:00

Document File

6665.pdf

INTERNATIONACLOURTOF.JUSTICE

CERTAIN PHOSPHATELANDINNAURU

(NAURUvAUSTRALIA)

COUNTER-MEMORIAL

OFTHE

GOVEKNMENT OFAUSTKALIA

29MARCH1993 Sstion I: What'is caseis abqut:ihccsscnceof ihçNaunianclaim .....................
SectionHI: Outlincof thisCounter-Mcmorial..................................7......................
PART 1

HlSTORlCAL ANDFACTUALBACKGROUND
Chapter 1: An hislorical overviewof the pre-Trusteeship period................................
Section1l: TheMandateocriodn ad.............................................3........................
.....
A 1914~a~iklation ...........................................13......................
....
B Grantof MandateoverNauru .................................13.......................
C. Administration undcrtheMandate ..................................................
SectionIII: TA Historyof theconcessionc................................................................
B The 1919Agreemen.. ........................................23.........................
C Thcmuliant position ..................................................................
ChapterSection1: unPoliticalandadministrativedvanccment...........................27.....................
......
SectionII: Socialadvancement ............................................32.....................
....
Chapler 3: Publie finance and royalliesunder the Trusteeshi...................................
Section1: Publicfinance .................................................36.................
...........
SectionIII: RcportingtotheUnitedNationson BPC.............................46.........................
Chapter4: The proposab for reseltlemenl and rehabilitalion .........................................
Section1: Considerationof rcscttlcmcntbythe
Parfne...vcmmenuand theUnitcdNations .......................1............
SectionII: Ae.Therchabilitationinvestigation..............................59................................
I TheCSlROinquiry .......................................59..........................
2 BPCestimates ............................................61....................
.....
4 Reccptionof lhcDavcyrepon.............................................................
B . UnitedNationsaltiludetonhabiliwtion........................7........
1.1961 ...............................................................
..............
2.1965 .....................................................2.............
...................
4.TrusiecshipCouncil.1967.....................................................................
5 S ial SessionTmsteeshipCouncil November 1967 ........83....
6.Etcd NationsGeneralAsscmbly .December1967 ...................
Chapler 5: The negolialion and outcomeof the 1967phosphate seIllemen1 ...........8.....
SectionII: Nauruaflanner Governmenu'discussions.Juneiluly 1966............90........
........
Sstion 111: ThePhosphatesettlement1967 ..................................92......................
A Policyrc-considerationbylhcPannerGovernmnu .............92.......
B Rcsud ncgotiationswilhtheNauruans.......................92..............
2.Phasc2: 9-20May 1967967..........................................................
3 Phasc3: 13-14lune 1967 .................................96....................
4.Thepurchaseof BPCasscü onNauru ..........................................
C . ThePhosphateAg
D. Thevalueofthe 1 PART II
THE ABSENCE OF ATENABLECLAlM
Chapter 1: Preliminary matters.................................................105..................
...............
Section1: Theelemenu of thedispute .....................................................
Sectionlt Theallegcdbasisof rcsponsibilit......................................................
SectionIII: The intenemporalissue..........................................2.......................
B .Applicationof theintenemporalprincipleIOthefacu............15.........................
..
SectionIV: RelationshipbehvŒntheTmstceshipand 1919Agreement .........I7....
Chapler 2: Novd Negaiions of bmch in relation tothe claim for
Section1:bilnie natureof theobligationsof theAdministeringAuthorit........20.................
A . Obligationsofresul.........................................0..........................
B . Domesticlawanalogies ......................................3........................
SectionII: Thechoiceof mans bytheAdministering Authority ..............129.
SectionIII: TrusteeshipAgnuncntc .........................................33...........................
SectionIV: Absenceof anyallegationof bmch prior Iotermination..................
SectionV: RelevanceandeffectofGeneralAsscmblyncommendations ........6.
SectionVI: The unconditionalmination oftheTmstceshippmludes
SectionVII: ThebcnefiUfromphosphateminingstces............................141..................
A .Introduction................................................1...................
...........
B .Royaltiesandmst funds .....................................3........................
C .nie valueof thephosphatesettlement.........................45....
SectionVIII:Conclusion....................................................55...............
...................
Chapter 3: Noveiallegaiionsof breoch hased upon international standards or
duties arising independenlly from Tmsteeshi.....................................
Section1:io.Thercwasfullcomplianccwiththe pnnciplesof.....................5.....
.......................................
selfdeterminationandpermanentsovenigntyover naturnl
rcsounxs .....................................................59............
.....................
A .TheUnitadNationswouldnothavepcmiincda bmch of
B. Australia'srecordwithreeardIOselfdeterminationis............9.....................
.....
exemplary ................................................165.................
..............
C .Ausualiarespectcdtheprincipleof permanentsovercignty
absolutely.................................................68.................
..............
SectionII: internationalla................................................5...................
.........
A . Dcnialofjustic...........................................175........................
....
B .Bah ofduliesof a pruiecessorStat.......................177...............
Chanter 4: Noveialleestions of breach nlTmsteeshin unrelated to.................179.........

Introductio..............................................................181......................................
Section1: Thm isnofactualbis for any of theseallegatio.................1......
A .in fact...................................................18........................
B. The aile@ faiiun IOexerciscgovernmntal aulhorityhas
no bans infwt ..............................................4.....................
.......
C .Theai!epi failuretopromotepoliticaladvancement has
no basisinfact..............................................6.....................
....... D. The aüegd failun w pmmotceconomic.social.
ducational andculturaladvanccmcnihas no basisin fact...........
E. Thc alicecd failun m.rcsocctlandrigh~shas no basis in
SectionII: The temination of the Tmsteeshipand thejudgmcni of the Cowi
pmludc theconsidcrationof allcgati?nsunrclatcdIothe
mhnhilitltion claim.............................................1...............
.
SectionIII: Thcconductof the UnitcdNationsbodiesduring the
TmsteeshipcxcludcsIhcpossibilityof any othcr ~..
supposcdG-ongdoing ..;........................................191.........................
PART In
THE REMEDIAL POSKION

Chapler 1: Nauru has disqualified ibll Tmmthe relier it seeh...........................8................................
Chauler 2: Australin. iî rerr>onrible.cannotbe liable on the fack lor the whole
of thedamage &im ed... :......................................................................
.........
Section I: No damagcsaremovcrablc in rcspcctof the prc-1947period ...........
SectionII: Ausdia wouldnot bc liable for the wholeof thc damagcs
claimed for thcTmsteeshipperiod ...............................2..4..................
A. TresponsibilitywilhAusualia in tact..............................................
B. Whatever Ausualia'smle on Naum.Ausualia actcd not
onlyfor itsclf butfor the UnitcdKingdomand New --.
Zealand.....................................................ZUb.........
..................
C. No onc Panner Governmentcouldmakeunilaicral
decisionsofmajor importanceIothc tenitory ..................20.7.......
D. The phosphateindusuy was ownedbyal1 LhreeStates.................
E. Acollectivewilhthe UnitcdKincdornand NcwZealandand ..........21....
Section III: The internationalcommunityandfiaum,ngardcd Ihc thnc
Statesas aiuallv...r-..........the tcrntor......................2...............
Chapler 3: The lqal mmequencesolshared responsibilily........................21..........
Scction1: Equitywouldmkcaccount ofthe rolcsof the Unitcd Kingdom.
NewZealandand thc Unitcd Nauons indecidingAusualia's
liability.......................................................214.............
.....................
SectionII: effectiverigh~sofcontribution...................................21.....................
SectionILI: loint and severalliabilityis nota pan of gcncral
internationallaw................................................2.....................
.......
Section IV: If Ausualia wcrcto bcarany liabilityat all. it wobed
~cssen~db~,thc failurcof thc UnitcdNalionsU,cxcrcise
adcquatcsupcrvisoryauthority ...................................220....................
SectionV: conducta........................................................LLL.........
.......................
SectionVI: Summation .....................................................226..........
.................
Submmions ...................................................................
..2..............................................
Annexes .......................................................................
.2................................................... Lit of~bbreviatissedinthisCounter-Mernorial
BPC BritishPhosphate Commissioners

CR VerbatimRecordofOralHearingsbefvretheinternationalCourt

CSIRO CommonwealthScientificandIndustrialResearchOrganisation

NEC NauruLocalGovemmentCouncil

NM NauniMemorialINTRODUCTION Seetion 1:What this caseisabout: the essenceof the Nauruan claim

1. The issuein thiscaseiswhetherAustraliaisrespoiuiblefor therehabilitation

of phosphatelandsonNauniminedpriorto July,1967.nie am minedprior to
that date comprised appmximately one-thirdof the phosphatelands. in effect,
therefore. asauni concedes, responsibilityfor rehabilitationof No-thirds of
the phosphatelands isa matterfor Naunialone(NM, para.207; CR91/19p.47).

The phosphate lands themselvescompriseaccordingto one Naunian statement
sixty sevenpercent of Nauni(LetterfromPresidentof Nauni,6 October 1983.
Annex 78. Vo1.4,NM) or 1700hectaresout of an areaof 2200 hectares (NM,
para.207).

2. 'Ihatresponsibilityforrehabilitationis theissindisputeisclearfromwhat
Nauni itself says; from what the Court has said; and from what the facts

themselvesshow.

3. The Applicationwhich institutedtheseproceedingsalleges"a dispute ..over
rehabilitationof certainphosphate lands[inNauni]workedout beforeNaunian
independence" (Application.p.4; also paras.40, 41. 42). Nauni claims that
Australia has legal responsibility to rehabilitate. or to provide the financial

rneans for the rehabilitationof,Naunian lands mined for phosphate prior to
1July 1967(Application,paras.45-49; NM,para.621;OralPleadingPreliminary
Objections.CR 91/18 p.10-11.17.21).

4. Nauni contendsthat rehabilitation was the onlymatteron whichthe Partner
Govemments and the Nauru Local Government Council(NLGC) could not
agreeprior to Naunianindependence.Sincethen the diplomaticcorrespondence

and other actions leadingtotheseproceedingshave proceededon the basis that
responsibilityforrehabilitationwasthe solematterof disagrcementbetweenthe
parties.Thus, in the 1983letter from the Presidentof Nauni to the Australian
Prime Minister, the Presidentreferredonly to the rehabilitation ofworked-out

phosphatelands(Annex78.Vo1.4,NM).It wasthisclaimthat Australia rejected
(Amex 79. Vo1.4,NM).indeed.it was the rehabilitationissuewhichled Nauni
to establish a Commissionof inquiry in 1986.The Commission was asked to
inquire into the nature and extent of responsibility for rehabilitation of
phosphate lands worked out prior to independence (Amex 80, No.4. Vo1.4.

NM). Nauru has itself said that the institutionof these proceedings was "a
consequence of Australia's failure to respond to the findings of [the
Commission's]report" (Annex80. No.28.Vo1.4,NM;see alsoCR91/20p.61).5. The Courthasalso recognisedthatthis case issolelyabout rehabilitation(see

particularly paras.21 and 30 of the.Preliminary Objections judgment. ICJ
Reports 1992. pp.250, 253). It was only given the vparticularcircwnstances of
the case" that any rights that Nauni might have had in connection with
rehabilitation of the lands remained unaffected by the termination of the

TrusteeshipAgreement.

6. The facts themselves also point to rehabilitation king the only issue in
dispute.The issueof responsibilityfor rehabilitationwasdebatedthroughoutthe

negotiation of the Canberra Agreement in 1967, and in the United Nations
discussions in the years immediatelypreceding independence. It is this claim
whichthe Court has decidedwasnoton the factswaivedby Naum during those

negotiationsand discussions.

7. One consequenceof the fact that rehabilitationis the only issuindispute is
that it limiu the maners whichcanbedealtwithin theseproceedings.Thus, this
case is not about whether Australia and the other States making up the

AdministeringAuthoritypaid Naurua sufficientamountin the form of royalties
for the phosphate duringtheperiodthe BritishPhosphateCommissioners(BPC)
mined the area. Nor does the Nauruanclaim for rehabilitationentitle the Court

to re-openthe termsof the CanberraAgreementwhichtransferredthe phosphate
industry to Nauru in order to determine its fairness. Nor can Naum invite the
Court to examine the royalties paid through the Mandate and Tmsteeship

periods and pmnounce on their adequacy.Nor is this case about whetherNauru
can afford to undertake rehabilitation. Naumsays that it has adequate funds to
do this if it wishes(CR 91/19p.53).Sothe issuesbecome:

1. Wastherea legaldutyto rehabilitate?(Ifnot.the matterends there.)

2. Ifso, wasthis dutyfulfilledeitlrer:

(a) by the general provision of funds.actual and prospective, made
for the Nauruansunderthe Canberra Agreement?

(b) was a specific earmarking of funds for this purpose required.

irrespective of the magnitude of funds available under the
Canberra Agreement? 3. If there was a duty, and if it was not fulfilled, what share of the

responsibilityshould attachto Australia?

8. The essenceof the Nauniancomplaintis that there wasan independentduty
to rehabilitate which theAdministering Authority failed to meet, because the
AdministeringAuthority didnot cany outa rehabilitationprogram.nor establish

a fund specifically committed to rehabilitationIn fact. given the shortness of
time between the Naunian decision to stay on the island and independence,
rehabilitationby thePartnerGovemmentsthemselveswas not possible.Instead,

but without conceding any duty to rehabilitate. the Administering Authority
transfemd various substantial funds and the wholephosphate industry to be
used as Nauni saw fit. including the task of rehabilitation if the Naunians so

decided. It was the incomefmm these fun& and the industry whichleft Nauni
in the position to be able to say today that it could cany out a rehabilitation
pmgram, if it so chose.Sothe fundswerein fact adequate.Nauni'scomplaintis

not that it was left unprovided for, but that neither BPC nor theAdministering
Authority gave it a fund specificallydesignared for rehabilitation so as to
complywith that specificobligation.

Section II:Definition ofrehabilitation

9. As already indicated. rehabilitation is the central issue. But what does
rehabilitationinvolve?Viewsdiffer overtime.The DaveyCommitteereport in
1966defmedthe issuein theseterms:

"Referred to in the past variously as 'restoring', 'resoiling'.

'regenerating', 'rehabilitating'. etct,he question apparentlyhad as its
objective some program of orderly treatment of those pans of the
island denuded of their topsoil and phosphate. This would pmvide

fertile àreas of landuitable for the gmwing of coconuts, pandanus,
tomano and other trees, and, in general. make for a more congenial
environment for the Naunians when the phosphate deposits were

exhausted." (Annex3,Vo1.3,NM.p.211)

10. This reflects the fact that during the Tnisteeship, rehabilitation was
largely understood as consisting of destroying the limestone pinnacles and
covering the remaining solid limestone with imported soil. At the time ihis

would have required an enormous expenditure.7he Committee had therefore
thought rehabilitationtobe impracticable.11. Much more recently a Nauruan Commissionof Inquiry. established in

1987, thoughtthat rehabilitationmeant:

"(a) returning the land to its former sye- or as near to the former
stateas is reasonablypractiwble -andthis includesrevegetation.
This concept usually relates to grasslands or forest of low

commercialvalue;

@) reforming the land to a shape and condition suitable for a
nominatedlanduse." (RepublicofNauru,Commissionof Inquiry

into theRehabilitationof Worked-OutPhosphateLandsof Nauru
Report,p. 1133.)

12. The Commission's Report shows. that the second had become a
possibility only because of the great increase in technical and scientific

knowledge since 1967. Not surprisingly, the Commission adopted it for the
purposes of its inquiry. (Australia has at no the acknowledged as true the
factual findiigs of the Cominissionnor the cornpetenceof the Commission to

make findings as to the responsibilityof Australia. It continues to reserve its
positionin this regard.)

13. The 1987 Commission did not consider that a specific portion of the
rnined-outlandcould te .ehabilitatedindependentlyof the restof the phosphate

lands. Itonsideredthatany rehabilitationprogm shouldbe part of a longterm
process of the implementation of a land use development policy for Nauru.
These recot&endations do not seem to have been heeded by Nauru in its

submissions in this caseor inany actionsof the NauruanGovemment. Further,
Nauru has not adopted the same view of what iscalled for in a rehabilitation
program. Although treating the report as aulhoritative, Nauru has defined

"rehabilitation" more narrowlythanthe Commission.Thus. in its oral pleadings
at the PreliminaryObjectionsstage,itwas saidthatrehabilitationwas:

'nie process carried out to the point prior to implementation of a
planned land use... In other words, rehabilitation wouldbe reforming

or returningtheminedout landsto a suitablestate to allow for a more
congenialenvironmentforthe Nauruanswhenthe phosphate deposits
willbe exhausted."(CR91/19p.10) in other words. for the purposesof this case. rehabilitationis seen by Nauru as

the preparationof the landfor someas yetunidentifiedplanned landuse.

14. It is important when considering the existence of any alleged duty to
rehabilitate to understand what the duty might embice. The Naunian claim
necessarily depends on a showing that any rehabilitation sought by it was

practicable during the trusteeshipand is practicabletoday. Australiadenies that
rehabilitation was practicable at anythe and thus cannot conceive of a legal
duty to undeitake somethingwhichis impractical.

Section III:OuUineof thisCounter-Mernorial

15. in its Memorial. Nauru refers to a very wide set of facts, covering the
whole administration of Nauru underboth the Mandate andTrusteeship. Much
of this material in Australia's view is irrelevant. Nevertheless. the Nauruan

claim that there is a duty to rehabilitatedoes dependon certain facts relating Io
the administrationof NauruunderTrusteeship,and the negotiationof the 1967
Agreementwherebythe phosphate industrywas transfemd IoNauru.

16. The claim for rehabilitation can be considered only by way of a
comprehensive examinationof the circumstances surmunding the decisions of
the Administering Authorityin agreementwith the Nauruanpeople to abandon
resettlement, to transfer the phosphate industryon the terms set out in the

Canbena Agreement,and to grant independence onthe terms agreed, including
transfer of responsibilityforal1Trust Funds. Althoughthe Court was provided
with an extensive analysis of the facts at the Preliminary Objections stage,

Australia considersit appropriateto set outgainfor the benefitof the Court the
salient facts and histoncal background. However, Australiahas not repmduced

as part of this Counter-Memorialthe documentaryannexesprovided as part of
the Preliminary Objections. Instead. this Counter-Memorial will provide
referencesto thosedocumentary annexes asappropnate.

17. Because this case is so fact-dependent. the first part of this

Counter-Memorial is devotedto anobjectivepresentationof the relevant facts.
This is in contrast to the somewhat coloured and prejudicial portrayal of the
facts given by Nauruin its Memorialand the inferencesdrawnfrom them. This
first Pari also notes someoccasions where the Nauruancontentionson the facts

are not accepted. So far as that Part does not directly contradict the Nauruan
contentions, it is not, however. 10 be deemed an admission of those facts.
Australiareservesitspositionin thisregard.18. nie Counter-Mernorialthen tums to examine in detail the legal issues
raised by thevarious Nauruanallegationsof breach of a duty to rehabilitate. It

first examines the alleged bases for the rehabilitation claim arising under the
Trusteeship Agreement and general international law. It then deals with the
various extraneous claims of breachesof internaiionallaw made by Nauru that
are wuelated to theclaimfor rehabilitation.

19. The Counter-Memorialconcludeswith a separateand wholly subsidiary

Part on the Remedial Position. The formal submissions tequest the Court to
rejectthe Naunianclaims. PART1
HISTORICALANDFACTUALBACKGROUND CHAPTER1

Section1: The period of German administration

20. Nauru first came under Europeancontrol in 1888. On 16April 1888 the
German Government placed Nauru within the Protectorate of the Marshall
Islands (NM,para.10-12). Nauru seeksto contrdsttheGermanadministrationof

the island with thatof theandatorypowerswhoassumed controlas a result of
WorldWar 1.It points, inparticular,to the supposed recogniby German law
of indigenousland fights (NM, para.13-16) and the requirement tcompensate
for damagetominedland(NM,paras.22-27).

21. Whenthe Germanrepresentativesurrenderedto Australianforces in 1914
the population of Nauru was reportedto be "30 Germans, 1700nativesand 500
Chinese" (109 BFSP632-3).The phosphateindustrywas in its infancy,the fiist

shipmenttakingplace in 1907.

22. The interests of the island population were givlittle consideration by
the Geman administration.In 1888, theImperia1~errnan~overnment granted
the Jaluit Gesellschaft a concessionwhich includedthe right toexploit guano

(phosphate) on the MarshallIslands and Nauru. Phosphate was not. however.
discovered on Nauru until 1900. In the same year, the Jaluit Gesellschaft
transfemd its right to exploit the phosphate to the Pacific Islands Company,

which later became the Pacific Phosphate Company, in retum for financial
benefitsfor itself.

23. The discovery of the phosphate gave land on the plateau of Nauru its
economic Significance.lt was toprovide the basis for more than a subsistence

economy. Viviani summed up the position concerning the inhabitants as
follows:

"In the agreements between the German Government, the Jaluit
Gesellschaft. and the Pacific Phosphate Company. only two clauses

referredto the inhabitantsof the island; onemade it necessaryfor the
miningcompany to give notice of commencementof operationsso ai
to allow 'the necessary measuresrequired in the interests of the

natives' toe taken. The other allowed tiieGesellschaft toassist the
company in 'any claims by the natives of the Island against the Company'. Concem for the Naunians was marked by its paucity.

emphasising that the phosphate concession was based, if not on
conquest,then onthe island'soccupation.

Although the company's managerdid not negotiate directly with the
Naunians. a myalty'of 1Rd per ton ofphosphateshippedwas paid by

theCompanyto individual landowners andhirther sums were paid for
thelease of landmhed andin compensationfor treesdestroyed. Inthe
six years fmm 1908to 1913, whenappmximately 630,000 tons were

shipped, Naunian landowners received less than £1,320 on a
commoditywhich was worthabout 30s per ton - a total of £945,000.
The payment of royalty hadan interestingside effect, for land on the
plateau, formerlyconsideredalmost worthless.became the subject of

argument between individual landowners. The disputes over
ownership arose because of the looseness of inheritance mles and
were further complicatedbecause the administrationhad ordered the

retum of land seizid in the ten-years' war to its rightful owners."
(N Viviani,Nauru (1970)p.34-5.)

24. The coming of European administrative control removed warfare as a
means whereby landresources were adjusted to major changes in population.

And with such control went a diminution of the authority of the traditional
inhabitantsover theirland.Thiswasa phenomenonapplicablenotjust in Nauni.
but throughout the Pacific, as well as in Australia and New Zealand. See R

Crocombe (ed), Lund Tenure in the Pacific(1971) p.8-12. in Australia, for
example, minerals generaiiy belonged exclusively to the Crown. The German
law applicable at the time similarly took phosphate out of the landowner's
control,(NM. para.24). although the German administration, like that of the

mandatory powers. continuedto recognise the interestsof individuallandowners
inparticularareasof land. Payments weremadeto the landownerunderGerman
law just assimilar payments continuedunder the mandate administration (see

paras.40 to 44 below). The German administration was not, as the Naunian
Memorial suggests (NM. para.26), more solicitous for the interests of the
Naunians than was that of the subsequent mandatepowers. While the mining
law of Germany applicable generally to the African and South Pacific

pmtectorates may have purportedto place someobligationon mine operatorsto
"immediatelyand permanenily"restoreminedland (NM, para.25).the reality is
that no rehabilitation took place under German administration, whatever the

forma1terms of law might have suggested. indeed.the Germanadministration showed little, or no concem for the Naunians in the few years itcontrolled

phosphate mining. Under the Mandate. theeconomic retum to the Naunians
increasedsignificantly(seepara.43below).

Section II: TheMandate period

A. 1914CAPITULATION

25. The Australian Govemment's direct involvement withNaum commenced
in 1914when Australian forces tookaction against Naum at the requestof the
Britishmperia1Govemment. The GermanGovemmentrepresentativeon Nauru

surrenderedon 9September1914.The isIandwas includedinthe capitulation of
German Pacific possessions dated17September 1914. AnAdministrator was
appointed for theislandby the HighCommissionerfor theWestem Pacific on

27 October 1914 followinginstnictionsfrom the UnitedKingdomSecretary of
State for the Colonies (109 BFSP 651). A civil administration under the
jurisdiction of the High Commissioner was establishedon 1January 1915but,
in accordance with the terms of the capitulation,local laws and customs were

continuedas faras practicable fortheirneking.

26. This indirectAustraliaiiinvolvement wasputon a different basis with the
grant of the Mandateand the conclusionof the 1919 Agreement between the
United Kingdom.AustraliaandNewZealand.

B.GRANTOFMANDATEOVERNAURU

27. Mandates were createdpursuantto Article 22 of the League of Nations
Covenant. in order to administerterritories formerlygovemed by the defeated
powers,and which,on past practice, might haveken annexedby the victorious

States. The feature of the mandate system was that the territories would not
in the ownership of any State, but were entmsted to "Mandatory States" to
administer onbehalfof the League.(The Mandates systemis summarisedin the

Soutli West Africa. (Prelintinary Objections). Judgntent.ICJ Reports 1962 at
p.329; see also Murray.Tlie United Nations TrusteesliipSystenz(1957) Ch.1.)
As part of the arrangements agreed on during negotiations on the Treaty of

Peace with Germany signed at Versailles on28 June 1919, a Mandate was
conferredon His BritannicMajestyin relationto Nauni. It was also agreedthat
thiswouldbe a "C"class Mandate.The allocationof Mandates was effectedby

the Allied Supreme Council in May 1919, before the Versailles Treaty wassigned. (Quincy Wright.Mandatesunderthe LeagueofNations (1930) p.43;
Duncan Haii,Mandates, Dependenciea sndTrusreeship(1948)pp.145-7.)

28. As iswell known,Article 22 rewgni. threeclassesof Mandate,which
have come to be referred to as "A" "B" and "C" class Mandates. The "A"
Mandatesare referredto in Article22.4as:

"certain communities formerly belonging to the Turkish Empire

[which]have reached astageof development where their existence as
independent nationscan be recognised subject to the rendering of
administrativedviceandassistanceby a Mandatoryuntilsuch timeas
theyareable to standalone.The wishesof thesecommunitiesmust be

a principalconsiderationintheeleclionof the Mandatory."

The "B" Mandatesreferto lessdevelopedtimtories (Art.22.5):

"other peoples.especiailythose of CentralAfrica;are at such a stage
that the Mandatory mustbe responsiblefor the administration of the

territorynderconditionswhich wiiiguaranteefreedomof conscience
and religion, subjectnly to the maintenance of public order and
morals; the prohibition of abuses such as the slave trade. the arms
trafficandthe liquortraffic.and the preventionof theestablishmentof

fortificationsorlitq andnaval bases andof militaiy trainingof the
natives otherhan forpolicepurposesandthe defenceof territoiy, and
will also secure equal opportunities for the trade and commerce of

otherMembersof the League."

29. This last requirementof equal trade oppomuiitiesbecameknown as "the
open door". The "C"classmandateswerecreated at theinsistenceof the British
Empire delegates at the Peace Conference to avoid the open door for

immigration and trade for cenain territories adjacent to Dominions (Quincy
Wright, MandatesundertheLeagueofNations (1930)pp.37.47; Duncan Hall.
Mandates,Dependenciesand Trusteeship. (1948) p.113); Charles Rousseau,
Droit internaiional public. Vol.11,(1974) p.383. The "C" Mandates are

describedas foilows(Art.22.6):

"There are territories such as South-West Africa and certain of the
South Pacific Islands, which. owing to the sparseness of their
population, or theirmallsize. or their remotenessfrom the centresof

civilisation, or their geographical contiguityto the territory of the Mandatory. and other circumstanks, can be best administeredunder
the laws of the Mandatory asintegralportions of its territory,subject

to the safeguards abovementionedin the interests of the indigenous
population."

30. The "open door" policy applicableto "A"or "B" class Mandatesdid not

apply to "C" class Mandates. This latter category,with its exclusion of the
"open door" and right of administrationas "integral portions"of the territory of
the Mandatorypower, was thus significantlydifferentfrom the other classesof

Mandate.

31. The actual terms of the MandateoverNauni, inelaborationof Article 22
of the Covenant. were adopted by the Councilof the League of Nations on
17December 1920(for textsee Amex 27, Vo1.4,NM).The Mandate confirmed

that it was a Mandate granted to "His Britamic Majesty". Australia was not
mentioned.Its involvement came asa resultof the 1919Agreement(see para.48
below).The termsof the Mandate dealt witha numberof specificissues.suchas

the slave trade and traffic in arms and ammunition (Art.3). military training
(Art.4). freedom of conscience and admission of missionaries (Art.5). The
Mandatory was given "full power of administration and legislation over the

territory subjecto the present Mandateas an integralportion of his territory"
(Art.2). The Mandatory wasto "promote to the utmost the material and moral
well-being and the social progress of the inhabitants"of Nauru.The Mandate
also contained provision for any disputebetween the Mandatoryand another

Member of the League to be referred to the PermanentCourt of International
Justice if it could notbe settledby negotiation(Art.7).

32. The Mandate was undertakenon the basis thatit would be exercised "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 provideda repon to the

Council of the League onthe pre-mandate period which provided information
about the islandsince 1915.The firstannualreport wasmade to the Council in
March 1922covering the period 17December1920to 3 1December 1921.The

1923 Agreement which amended the 1919 Agreement makes clear that such
reports would be "transmitted by the Administrator through theContracting
Govemment by which hehas been appointedto His Majesty'sGovemment in

London for presentation to the Council on behalf of the British Empire as
Mandatory" (clause4) (fortex1of 1923AgreementseeAmex 28. VOI:~ . M).33. The Mandate was not a Mandate grantedto Australia.Although Australia
provided the administrationforauru.andwas otherwiseinvolvedin decisions
conceming the island. it did so solely in its capacity as the designated

representative of the three Contracting.Govemments to the Nauni Island
Agreement 1919. The 1919Agreement createdan administrativeframewoik to
implement the Mandate granted to His Britannic Majesty. in accordance with

the Agreement,Australia consultedwiththe UnitedKingdomid New Zealand
on ail majormatters.

34. The right of the Mandatory to administer mandate territories such as
Nauruas "an integralportionof theirownterritory"is of particularsignificance.

Whatever the motives of the mandatorypowers in accepting the Mandate, the
fact is that" classmandateswereableto be administeredunderthe same laws
and administrative practices followed in the territory of the Administering

States. The Administering Authority was given "full powerof administration
and legislation"Art.2of Mandate)overthe temtory.as an integralportion of its
territory. The standards applicableto "C" class mandate of Naum differred
as a matter of law fromthoseapplicableto moreadvkced dependentterritories.

Moreover, the "material andmoral well king and the social progress of the
inhabitants"whichthe Mandatorywasto promote,if relevant,does not fa11tbe
judged by some ideal 1990'sstandardof disinterest.It falls to be judged by the

standardsandpractices appliedwithintheAdmùiiste~g Party at thetime.

C. ADMINISTRATIONUNDEKTHE MANDATE

35. Detailed reportson the administrationof Nauru duringthe Mandate were
supplied annually to the ieague of Nations.(Copiesof these reports, as well as

of the reportsuring the Trusteeshipperiod,were made available to the Court
prior to the Preliminary Objections hearing and remairi with the Court.) The
reports included informationon Ordinancesmade for the Territory. and. from
the 1923 reportonwards,containedfinancialaccountsof BPC.The reports were

stnictured 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 office until June 1927when he was rep1ace.dby

another Australian nominee. with the concurrence of the British and New
Zealand Governments.This sameprocedureoccurredon other occasions when
appointmentof a new Administratorwasnecessary.37. A Nauruan Advisory Council was establishedinJuly 1927. It consistedof
the Head Chief and Deputy Head Chief .andthe Chiefs ofeach of the fourteen
districts.This Counciladvisedthe Administrationin relationto a wide range of
matiers of concem to the Naunian people. Whiletthe Administrator reported

directiy to the AustralianGovemmentas the appointingGovemment, the other
two Govemmentsparty to the1919Agreement were kept fully informedof al1
major administrative decisions.

38. The viewsof theNaunianpeoplethemselvesas to the situationunder the
Mandate,whereby it was ailthree Govemmentsthat were responsiblefor their
welfare,is reflectedin thefollowingstatementby theHeadChiefreportedinthe

1932 annualreporton the Administrationof Nauruto the League of Nations.

"We Nauruans are very pmud of our island and our governmental
institutions. and we are very grateful to the League of Nationsfor
enabling us to work out our destiny under wise andbeneficient nile.

We know that, until such time as we are able to stand by ourselves
amid the strenuousconditionsof themodemworld,wemay rely upon
the pmtecting and sympatheticarms of the powerfulnations of Great

Britain, Australia and New Zealand. We have fuUconfidence in the
Mandatory systemof control, and we will ever be grateful for the
opportunities made available to us by the League of Nations of

gaining knowledge in educational matters and in local govemment
procedure." (p.20)

39. Because the Nauman claims do not relate tothe period of the Mandate
(para.240 below), it is unnecessary to provide a detailed account in this

Counter-Memorialof the Australian administrationof Nauni duringthis period,
although the ole of BPC and the concessionis consideredin Section IIIThis
Counter-Mernorialalso briefly addresses Naunian allegations conceming the

Lands Ordinances and the benefits derived during the mandate period from
phosphatemininginthe followingparagraphs.

40. The Nauruan Mernorial (paras.80-100 and 521-541) deals with the
phosphate mining in Nauru during the Mandateand the role of the BPC by

focussing on the Lands Ordinances of 1921 and 1927. The 1921 Lads
Ordinancewas, at the time,a significantstep fonvard:the royalty was increased
from the 112dper ton which had operatedunderthe Germanregime to 3d. The

consentof Nauruan landownerswas obtained tothe royaltyrates provided forin
the 1921 Ordinance,and it was agreed thatthose rates should apply for a sixyearperiod only. Accordingly,royalty rateswerereviewedin 1927and further

increasesin paymentsIoNauniansagreed(Annex2 to Preliminq Objections).

41. The royalty agreement of 1927 was concluded between the Naunian
landowners and the British PhosphateCommissioners(whose role is discussed
at para.50 below) and was implementedby the 1927 Lands Ordinance. The

report on Nauni submitted in 1927 by the Administering Authority to the
League of Nations records that representatives of the Naunian landowners
conveyed IOtheAdministratorthefollowingmessage:

"We would like to place on record an expression of our complete
satisfactionwith the ternisof the agreement recentlyentered intowith
the British PhosphateCommissionersand Ourappreciationof the care
which wastakenby the Admiiisuation in safeguardingthe interestsof

theNaunianlandowners."(1927Report,p.29)

The agreement reached in 1927 was intended to last 20 years. The formula
provided for five yearly reviewsbased on fob pricesee c1.4(b)of 1927 Lands

Ordinance,Annex36, Vo1.4.NM).

42. Subsequent reductionsin the price of phosphate, however, necessitated
further revision,as the partiesto the royalty agreementhad not contemplated a

fa11in royalties. Agreement was reached in 1938 on revised rates for the
1937-1947and 1947-1967periods(see 1939LandsOrdinance, Amex 38, Vo1.4,
NM). The 1938 annual report by the Administering Authority to the League

indicatesthe situationurroundingthe 1938negotiationsandwhat was agreedin
consequence. Relevant passagesread:

"in 1927,the price of phosphatefob Nautu 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 increasedfrom 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, theprice of phosphate
had fallento 14sper ton. If thetermsof the Agreementwerefollowed
the royalty wouldbe reduced from4 3Bd. per ton to 1 314dper ton.

This decrease in the rate was considered by al1 parties to be
inequitable and negotiations were commenced between the
Administrator, the British PhosphateCommissionersand the Chiefs representingthe Naunianlandownerswiththeobjectof fmdinga basis
acceptableto al1partiesfor variationof theAgreement.

After lengthy negotiations an inteiim Agreement was signed on
7th December. 1938, whereby the parties èoncerned agreed to the
followingvariationsin theAgreement:

1.The present Agreementto be extended untilthe 30th June.

1947:

2. Thefouowing alterationsin the terms of the Agreement to
have effect from 1stJuly. 1937.and to continueinforce until
30thJune, 1947:

1 IRd per tonto be paid tothe Administratorto be used solely
for thebenefitof theNaunianpeople(novariation).

2 1Rd per ton (instead of2d as at present) to be paid tothe
Administrator to be held in tnist for theandowner(s) and

investedfor a periodof twentyearsat compound interest.

4d per ton tobe paid to theNaunian landowner(s)(insteadof
13/4dper ton that wouldbe payableif the present Agreement

were not altered).The rate of 4d to be reviewed at the endof
five years from 1stJuly, 1937, and if the fob price of
phosphate is then in excess of 14s per ton. theroyalty of 4d

per ton to be increasedby1/4dperton forevery 1s.per ton by
which thefobpriceof phosphateexceeds 14sperton. ïhe rate
of royalty nottoexceed6dper tonat anytime."

43. As t6 the position in relationto fimancialbenefits for theNaunians from

phosphate miningduringthe Mandateperiod, the positionhas been summarised
as fouows:

"in the nineteen years in which tBPC workedthe phosphate up to

World War II Nauman royaltiesrose from 1/2dper ton in 1920to 8d
per ton in 1939.Of this 8d a ton.half wasa cashpayment, one quarter
was spent on works and education for the Naunian community and.

one quarter was heldintnist for landowners.The total royalty paidto
Naumans in 1939 was 5.1per cent of the fob price of Nauru
phosphate.Another4.1percent of the valueof thephosphatewaspaid by the BPC for administrationcostsand about half of this was spent
solely for Naunians(N Viviani,.Nauru(1970)p.72.)

44. Each of the Ordinances were made as a result of negotiation and
agreement with the Naunian landowners. Paymèntfor phosphate was made to

the individual landownersaswellas to a tnist fund investedfor the landowners.
And tq .ate of myalties paid was regularlyreviewed,both during the Mandate
period and subsequently.Individual landownersdid not, it is tnie, have a veto

overuse of phosphatelandfor miningbut thislegalregimewascornmonplaceat
the time. both in the Pacific and in Australia andNew Zealand. in this regard.
Naunian landownerswere in the samepositionas their Australiancounterparts.

Naunians did notcomplainduringthe Mandate periodof expropriationor make
any complaintas to the adequacyof the royalty return.

45. The Mandate systemwasaffectedby the outbreakof World War II, and
Naum was not immunefmm this.In December1940Germanraidersshclled the

phosphate plant andsank severalBritish andallied merchant vessels owned by
or under chartertothe BPC.Therewasno further Germanaction,and phosphate
continued tobe shipped.althoughat a reducedrate. InAugust 1942Nauni was
occupied by Japanese forces. The Australian Administrator and remaining

officiaiwere executed. Many Naumans were deportedto Truk. in September
1945the allied forcesretookthe island,whichrevertedto civilianadministration
in November 1945.Phosphate exportsdidnotresumeuntil1947 when repairs to

the phosphate works and portfacilitieshad been undertaken.The Naunians on
Tmk returned on 31 January 1946.The Nauruanssuffered greatly during this
period. (No allegations by Nauni against Australia relate to the period of
Japanese occupation.)

Section III: The 1919Agreement and the BPC concession

A. HISTORYOFTHECONCESSION

46. The BPC concessionon Nauru derived from twosources: its succession
to the concessionary rightsof theacific Phosphate Companyin 1920 and the
terms of the 1919Nauru Agreement concluded between the UnitedKingdom,

Australiaand NewZealand.

47. On 21 January 1888. prior to the establishmeni of a Protectorate, the
Imperia1 Government of Germany had granted to the German fim, Jaluit
Gesellschaft. the right,reralia, to exploit guano deposits in the MarshallIslandsandNauru (p.87,Ch.4.Vol.1.Part1,1988NauruCommissionof Inquiry
into the Rehabilitation of the Worked-out Phosphate Islands of Nauru). The

original 1888 Jaluit concession, ton to 1906. was assigned in 1900 to the
Pacific Islands Company which. in tum, was taken over by the Pacific
Phosphate Company (formedwith both British and German capital). In 1905

this concession,including the "exclusive right of exploiting" the phosphate
deposits.was continuedfor a periodof 94 yearsbegi~ing on 1April1906. thus
extendiig the rights under the concession to the y2000 (Amex 43, Vo1.4,
NM). The Pacific Phosphate Company also took over the extended Jaluit

concession in 1906 with the consent of the Imperia1German Govemment
(Amex 44,V01.4,NM).

48. On 2 July 1919the Govemmentsof the UnitedKingdom.Australia and

New Zealand concludedthe Nauru Island Agreementto make provisionfor the
administration of the island and the mining of phosphate (Annex 26.
Vo1.4.NM).The twopreambularparagraphs read:

"Whereasa Mandatefor the administrationof the Islandof Nauruhas

been conferredby the Allied and Associated powers uponthe British
Empireand suchMandatewiUcomeinto operation on thecominginto
forceof thereatyof PeacewithGermany,and

Whereas it is necessaryto makeprovisionfor the exercise of thesaid

Mandate and for theminingof thephosphatedepositson the island."

The Agreement then dealt with the administration and set up a ~oard of
Commissionersto be responsible for mining. Articles6.7 and 9 dealt with title

and rightsto phosphate.

"Article

The title to the phosphate depositson the islandof Nauru and to au
land, buildings,plant and equipmenton the islandused in connexion

with the working of the deposits. shall be vested in the
Commissioners.

Article7

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 interestis not dealt with by the Treaty of Peace)shallbe convertedinto a claim for compensation
at fair valuation.

Article 9

The deposits shall be worked and sold under the direction,
mahagement,and controlof the Commissionerssubjectto the tems of
this Agreement.

49. On 25 June 1920by an AgreementbehveenKing George V and Others
and the Pacific PhosphateCompany.the Govemmentsof the United Kigdom,
Australia and New Zealand bought out the Company(AM~X45, Vo1.4,NM).

nie five page preamble to the Agreement gave a historyof the Nauru (and
Ocean Island) concession and the 1919Nauru Agreement. Under Article 1 the
Companyagreed to sel1andtransferto thethreeGovemments"au the right title

and interest of the Company in the guano phosphate deposits in and upon
[OceanandNauru] Islands ..including:

"@) The full benefits of the Marshall Islands Concession and the

Geman Agreements so faronly as the same relate to the Island
of Nauru and al1the right title and interest of the Company in
such Concession and Agreementsso far as the same respectively
relate to theaid Island of Nauru for the whole of the residue of

the periodfor whichsuchconcessionis grantedbut subject to the
covenants stipulations and conditions therein and in the said
agreementscontained.

(c) The fuUbenefitsof au leasestenancies andother rights to or over
lands in thesaidIslandsunderlanddeedsor leasesmade between
native landowners of the said Islands and the Company and
belonging to the Company and registered in the Office of the

ResidentCommissionerfor the Gilbert and EUiceIslands Colony
at Ocean Island aforesaid and in the office of the Civil
Administratorat Nauru for al1the respective unexpiredresidues

of the tems of years thereby created and for al1the estate and
interest of the Company in the same premises subject to the
payments and royalties thereby reserved and the covenants and

conditions thereincontained." The a@d pnce was 3.5 million pounds. By an lndenture dated 31 December
1920 (Annex46, Vo1.4.NM)the Companyandthe threeGovemmentspassed to

the Board of Commissionersestablishedby the 1919Agreement"the whole of
theunderiakingand assetsof theCompanyon. ..theIslandof Nauni".

50. The BPC operated throughout the period from 1920 until 1967 as a
separatebody,distinct fromthe AdministrationonNauru.Whilstestablishedby

the three Govemments. the BPC was tieated throughout its life on Nauni as a
commercial entity. Under the supervision of the Administrator the BPC
negotiated directly with the Nauruans over the royalties toe paid to the

Nauruansfor most of the mandate andtrusteeshipperiod. Only in the few years
leading up to independence did the Partner Governments become active
participants in thensult~tionsand negotiations concerning the futureof the
phosphate industry. During the TrusteeshipFinancialinformation on the BPC

operations wasneverthelessprovidedto the UnitedNations. (This is discussed
inparagraphs 108to 119below.)

B; THE 1919AGREEMENT

51. The 1919Agreement dealtwithtwo issues:

(a) the administrationof Nauru; and

(b) phosphateminingon Nauru.

For the purposesof administration,an Administrator wasappointedwith power
to makeOrdinancesforthe peaŒ, orderandgoodgovemmentof the Island.The
initial appointment,by agreementof the threeGovemments.was to bemade by

Australia for a term ofive years and thereafter "in such manner as the three
Govemrnents.decide" (Art.1). It was also provided that "au expenses of the
administration" so far as not met by other revenues, weretoefrayed out of

the proceedsof the phosphates(An.2).

52. The 1919 Agreement was amendedin 1923 to clarify the relationship
betweenthe Administratorand the threeGovemments.ThisAgreementineffect
required the Administrator to refer Ordinances. andbe answerable. to the

Contracting Govemment by which he wasappointed (for text see Annex 28.
Vo1.4. NM). However, the Administrator'was to provide copies of any
ordinances. proclamations and regulations to the other two Contracting
Govemments. He was also to supply "such other information regarding the

administrationof the Islandasitherof theotherContractingGovemmentsshaUrequire" (Art.3).In 1965 these administrative arrangements were altcred by
furiher agreement, pursuant to which Legislativeand Executive Councils were
established(for text seeAnnex30.Vo1.4.NM;alsopara.68below).

53. The Board of Commissionerswhichwas to'beresponsiblefor phosphate

mining was comprised of ihree members, one appointedby each Govemment
party to the Agreement (Art.3). Each Govemment retained control over its
appoinQe as his appointment was during the pleasure of that Govemment

(Art.4). As already noted, under the Agreement title to phosphate deposits
vested in them; and the entire interest of the previous owner of the phosphate
concessionon Nauni. the ~acificPhosphateCompany,was convertedto a claim

for compensation(Arts.6and 7).

54. The Commissioners (who were known as the British Phosphate
Commissioners,and commonly calledBPC) wererequiredto work and dispose
of thephosphate:

"for the purposes of the agricultural requirements of the United
Kingdom, Australia and New Zealand. so far asthose requirements
extend" (Art.9).

The proportion in which eachGovemmentcould securephosphates was set out

in Article 14. Approval of al1 three Commissioners was necessary before
phosphatecould be sold or suppliedto any countryother than United Kingdom.
NewZealand and Australia(Art.10).

55. The Agreement also dealt with the pricing of phosphate (Art.11). This
requiredphosphatetobe:

"supplied to the United Kingdom. Australia andNew Zealand at the
same fob price, to befixed by the Commissionerson 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 otherurposes unanimouslyagreed on

by the Commissionersandothercharges."

At the time they wereconcluded. the1919and 1923Agreementswere regarded
as inter se arrangements between members of the British Empire. This
represented the then perceived unity of the Imperia1 Crown on which the

Mandate(and the consequent responsibility for thadministrationof Nauni)had been confemd. The agreements were not registered withthe Leagueof Nations

as treaties.

56. The 1919 Agreementas amended'continuedto govem the operation of
the BPC until 1967whencontrolof the phosphatés passedto Naurupursuantto

agreementwith Australia,theUnitedKingdomandNewZealand.

C. THERESULTANT POSITION

57. The actions of the BPC were principally those of a commercial trading
Company.The BPC acquired a commercialconcem fromthe Pacific Phosphate

Companyand succeeded to its entitlement Io mine phosphates.The Phosphate
Company was, in turn. the successor to the rights of the German Jaluit
Gesellschafî when it obtained those rights by assignmentin 1900. Neitherthe
concession to mine phosphates nor its acquisition were uniawful. ycquiring

by transferthe previouslyxistingrights oftheCompanyto mine phosphate, the
BPC did no1engage in expropriation. Nor did theactions of the three Partner
Govemments amount to expropriation.They took over a concession of a kind

that was not uncommonin the thencolonial situation throughout tworld (see
NM. paras.86.98.515).

58. Like any other commercial concem. the BPC had certain identifiable

commercial objects,in particular toell phosphate at aprice (subject to certain
requirements) to meet the agricultural requirementsof the United Kingdom.
Australia and NewZealand (Arts.9, 10and 11of the 1919Agreement.set out

above). Any phosphatesnot requiredby the threegovemmentswere to be sold
at the best price obtainable (An.11). The position of the three Govemments
under the 1919 Agreement is comparable to that of theowners of a private
trading concem whocreate that concemfor some particular tradingpurpose. In

the same way. the three Partner Govemments created the BPC as a largely
commercial entityto supply phosphateto their domestic markets. Whether or
not the Administration evertook an independent position,pposed to the vital

interests of the BPC, is immaterial(cf NM. para.541) unless Nauru can-also
show that by reason of some particular acts the Administration wasin fact in
breachof a relevant international obligation.This Nauoesnot do.

59. Nauni also setsoutat somelength thepoliticsof themakingof theihds

Ordinances(NM,paras.522 to 538).but the relevanceof this is not clear.Under
the original German concession the right to mine phosphate was given
absolutelyto the concession owner.The payments underthe Lands Ordinanceswere a recognition that the Nauru* people should be provided with some

greater benefits from phosphate mining than would otherwise have been
provided. Whether royalties were payable under the terms of the 1919
Agreement was debated within Australian govemment 'ircles (see NM.
paras.327-331. 369). The fact was, however, that royalties were paid at an

increasing rate throughout the Mandate and Tmsteeship and Nauru thereby
received significant economic benefitfmm thephosphate mining(see paras.87
to 107below).

60. The relationshipof the 1919Agreementandthe concessionto the Pariner

Governments' obligations under the Trusteeship is considered below (at
paras.285 to 290). The nature of the reports on the BPC made by the
Administering Authority to theUnited Nationsis also examined (paras.108 to

119). It is contended that there was no incompatibility between the 1919
Agreement and theTmsteeship. CHAPTER 2: NAURUUNDERTRUSTEESHIP

Section1: Political and administrative advancement

61. The political and administrative system. which was progressively
modified until the advent of independencein January 1968.isdescribed in the
annual reports'of the Administering Authority tothe United Nations. in the

reports of therusteeshipCounciland in the six reports of the UnitedNations
Visiting Missions. Broadlyspeakingthe territorial Administration washeaded
by an Administrator, appointed by the Australian Govemment with the

concurrence of the United ~ingdom and New Zealand Govemments. The
Administrator controileda numberof Departmentsmostly staffedby Nauruans.

62. Before World WarII the Administration wasadvised by the Nauruan
Councilof Chiefs.Thisbody, which was basedon Nauruan custom. was revived

after the war.In 1951it was replacedby the Nauru LocalGovemment Council
(NLGC) consisting of nine Counciliorselected for four years by ail Naunians
over 21. One Councillor was chosen as Head Chief. nie Council advised on

Nauruan mattersand maintained peace, order and goodgovemment amongthe
Nauruans.

63. A descriptionof the powersof the Council and its activitiesis availablein
the annual reports of the Administering Authority (which havpreviouslyken

madeavailable tothe Court) andinthe six reportsof theUnited Nations Visiting
Missions (see Annexes 7 to 12. Vo1.4,NM). For instance, the1959 Visiting
Missiondescrited itspowersas follows:

"The Council may advise the Administrationon any matter affecting
Nauruans. including the enactment of new ordinances, and has the
power. subject to approval of the Administrator.tomake rules. not
inconsistent with thelegislation of the Territory, for regulating the

conduct of its business and for the peace,order and welfare of the
Nauruans. Itmay alsoorganise, finance, and engagein any businessor
enterprise and provide or CO-operatewith the Administration in

providinganypublicor socialservice."(para.26)

As the social and economicdevelopmentof Nauru progressed,so did demands
for political advancement.The firstdirect Nauruan participationin the workof
the Trusteeship Council occurred in 1961. A Nauruanrepresentative attended

each sessionof theCouncilwhenthereporton Nauruwas consideredas adviserto the Special Representative of the Admiistering Authority. This continued
until independence.

64. The powers and functions of the NLGC were enlarged in 1963. As the
1965United Nations Visiting Mission said, this enlargement represented "an
advance in the political developmentof the Council and the Naunian people"

(para.13. Annex 12. Vo1.4, NM). Elections to the Council were held in
December 1951. 1955, 1959, 1963 and 1967. In 1955 Councillor Hammer
DeRoburtwas electedas HeadChief,a positionhe retaineduntil theabolitionof

the Councilin 1992.

65. As well, consistent with the obligations under the Trusteeship
Agreement, Naunians were increasinglyemployed in the Administration and
assumed senior positions The last report of the Administering Authority

(1966-1968)sets out their employmentatindependence.

66. The 1962 Visiting Mission considered the time had come for a
LegislativeCouncil,but recognisedthatbeforethisoccurredthere should be full
consultation with the Naunian people. Subsequently, the Nauruans. having

rejected resettlement,pressed in 1964forsuch a Council as a transitional step
leading to independence in 1967. BetweenOctober 1964 and February 1965
Australian policies toward Nauru undenvent a fundamental change. This

followed these Naunian representations,discussionsat the United Nations and
changes in personnel.In essence, theAustralianGovemmentdecided to propose
to the Govemments of the United Kingdom and New Zealand that further
discussionsproceed withthe Naunianswiththe objectof establishing in 1965a

kgislative Councilwith majorityNaunianrepresentation,self detemination in
about 1970. increased royaltiesand an offer of an eventual partnership in the
phosphate industry in whichthe Naunianswould receivenot less than an equal

shareof the fiancial benefit.

67. From 7-9 April 1965 officiaifromthe threePaitnerGovemments met to
workout an agreedapproachwhich.foUowingthefomal agreementof the three
Govemments,comprised:

-
an early offerof a LegislativeCouncilin 1965withwide powersin interna1
affairs@utexcludingdefence,extemalaffairsand the phosphate industiy)
and an Admiiistrator'sCouncil; -
consultation with theNauruansin 2 or 3 yearson the possibilityof further
movement towardsgreaterNaunianexecutive responsibility;

- resumption of royalties discussios i- an offerof a higher rate than that

refusedinJuly/August1964;

- negotiationson the phosphate industryincludingsomeformof partnership;
and

-
the concept of resettlementbe kept alive both in international discussion
and elsewbere.

68. As a result of discussions in Canberra in June 1965 with Nauruan

representativesit was agreed thata LegislativeCouncil and Executive Council
were tobe established. ïhe former was to have an elected Nauruanmajonty and
wide powers excluding only defence, extemal affairs and the phosphate

industry. An Advisory Committee was established consisting of Naunian
representatives (Head ChiefHammer DeRoburtand CounciUorBemicke with
Mr K E Walker as adviser) and Australian officials to advise on the

establishment of the proposed Legislative and Executive Councils. The
recommendations of the Committee were approved by theNLGC and the

PartnerGovernments. Beforelegislation couldbe introduced into the Australian
Parliament to provide for the new arrangements. however, it wansecessary for
amendmentsto bemadeto theNauruAgreementsof 1919and1923between the

Partner Govemments which provided for the administration of Nauru. These
amendments were effected in the Nauru Agreement signed in Canberra on
26 November 1965 bythe three Partner Governments (Amex 30, Vo1.4.NM).

Subsequently, legislation was introducedin the AustralianParliament in early
December 1965. On 18December Act 115 of 1965 to provide for the

Govemmentof the Territoryof Nauni receivedassent (Annex39. Vo1.4, NM).
The Legislativeand Executive Councils commenced to operatein 1966.

69. After the futureof the phosphate industry wassettled in 1966and 1967

attention again reverted to political advancement. This time the focus was
independence.A Working Partyon political matterswasset upon 15June 1967.
It comprisedProfessor Davidson,fas the Nauruanrepresentative, and Australian

officials.It metight times.The twodeiegationsmet in forma1sessionas pari of
the 1967negotiationson 23 August andHeadChief DeRoburtread a statement

'AusualiDmalidiUnivcsirnyw3sorlicrinvolveconstiluladvisc10WcslcrnSarnlu.lhcin which he again rejected associated status, but indicated a willingness to
discussfullindependenceanda treatyrelationshipwithAustralia,althoughsuch

a tmty would not have the al1embracingcharacterof that earlier proposed by
the Partner Govemments.He affirmedthat there should be no encroachmenton
Naunian sovereignty.

70. On 18October 1967the Nauruan delegationwas informedby Mr Bames,

the Minister for Territories, that the Partner Governments agreed tomeet the
Naunian requestfor fullindependence. The otherpointsconveyedrelated tothe
timing of independence,the transitionrrangementsand the terminationof the
Tmsteeship Agreement.On 24 October 1967,withthe agreementof HeadChief

DeRoburt,Mr Bames madea lengthystatementin theHouseof Representatives
in Canberra amouncing the decision (Annex 8 to Preliminary Objections). It
incorporatedajoint statementsubscribedto by the representatives who took part

in the talks.The tex1read inpart:

"Discussions on the constitutionalfutureof the island of Nauru have
beenproceedingbetweenrepresentativesofthe Naunianpeopleandof
thethree Govemments -Britain, New Zealand andAustralia - which
areat present responsibleunder United NationsTmsteeship. for the

administration of theislaid. ..The conclusions reached in those
discussions are recorded in a joint statement subscribed to by the
representativeswho took partin the talks.Thetext of the statementis:

"Discussions between representativesof the Naunian people

and kpresentatives of the Govemments of Australia, Britain
and New Zealand on theconstitutional futureof Nauni were
recently resumed.

At the earlier discussionsheld in June this year proposais by
the Naunian delegation seeking the agreement of the paitner

govemments to Nauni becoming an independent state on
3Ist January. 1968 were considered. At that time the
Govemments agreed îhat it wasappropriatethatbasic changes

should be made in the goven&ent of Nauni but they put
forward for consideration alternative arrangements under
which Australia would exercise responsibilities for extemal
affairs and defence but which would othenvise give the

Nauniansfull autonomy. The positionof the Nauniandklegationwas.however, that the

nature of the future links betw.een Nauru and the three
countrieswhich were now the AdministeringAuthonty should
be determined by agreement after independence had been

attained.The primaryobjectiveof the Nauruandelegation was
the attainmentforNauniof fuUandunfetteredsovereignty.

The partner govemmentsresponded that theywould respect
the viewsput fonvardby the NaunianDelegation.The partner

Govemments were therefore agreeableto meet the request of
theNaunian delegation for full and unqualified independence.

The date on which Nauni wiUkcome independent requires

consideration in thelight of the steps that are necessary to
enable the changeto temade.The partnerGovemmentshave
agreed to take the necessary steps to seek from the present

United Nations General Assembly a resolution for the
termination of the trusteeshipagreement upon independence
king achieved.

The agreementthat has been reachedis an historic one and is

offarreaching importance to theNaunianpeople. The choice
of full independence is theirs. We wish them well. If after
independence the Naunian Govemment wishesto continue

close links with Australia, as forecast by the Nauruan
delegation at these talks. the AustralianGovemment wiUbe
ready to respondandto considersyrnpathcticallyany requests

that maybe madefor assistance.

FromOctober 1967toJanuary 1968mostNaunianand Australianenergieswent
into the transitional administrative arrangements, the establishment and

deliberationsof a Constitutional Conventioto draft and approvethe permanent
constitution and elections ftheLegislativeAssembly.71. On 10 November 1967,after shortdebatesin both the AustralianHouse
of Representatives (26 October) andthe Senate (2 November). the Nauru

Independence Act 1967 was adopted. It provided,inter alia, that "on and after
Naum ~ndependenceDay, Australiashall not exeyise any power of legislation.
administration orjurisdictioninandoverNauru"(Annex40, Vo1.4,NM).

Section II:Socialadvancement

In theimmediate postwar periodthe major effort of the BPC went into
72.
reconstruction of the phosphate installations. It was not until 1949 that
phosphate production substantially increased and only in 1950 did exports
surpass the prewarlevel of 932,100 tonsin 1939.The extent of the devastation

wrought by the war was described in the report of the first (1950) United
Nations VisitingMission(Annex7 toPreliminaryObjections):

"1 1....Nauru was one of the Tenitories hardest hit by the last war.
ALIbuildings and installations on the island were destroyed

without exception ....

12. The problems of material rehabilitation facing the Australian
authorities aftertheir reoccupationof the island musthave been
considerable, especially as there were shortages of building

materialandlabour,notonlyin Nauru,but also inAustraliaitself
and other territoriesunderits control.Even now.when facilities
have been largely restored. much of the effort of the

Administrationis stiUconcentratedon reconstruction.

13. The problems involved in restoring the morale of the Nauruan
communityhave been no less considerable.but here also a large
measure of success has ben achieved.The Nauman population

is once again rapidly increasing. Nauruans are once again
planningfor the future..."

73. The Administration. in CO-operation with the BPC. restored theIsland's
social infrastructure.Thisincluded the constmctionin thelate 1940sof 250 new

houses for the Naunians. This was funded by the BPC in additional royalty
payable over fifteenyears to theAdministration(VisitingMissionReport 1950,
p.14). Once the devastation of war was overcome, attention tumed to social

advancement. 74. Social progress, particularly in'educationand health, maybe measured
from the annual reports on the administrationof the Territory made by the

AdministeringAuthority to the United Nations andby noting the comrnentsof
the six United Nations Visiting Missions.

75. At 30 January 1968the totalNaunianpopulation was 3,065(1607 males,

1458 fernales)comparedwith 1369at 31 December 1946; ie the populationhad
more than doubled. At independence 1549were in the age bracket 0-14 and
1051 between 5 and 14.At 30January 1968,1191Nauruanpupils were being

educated both in CO-educationalAdministration and Sacred Heart Mission
Schools at primary and secondary levels. Education, in accordance with
Nauruan wishes, was compulsoryfor Naunianchildrenfmm 6 to the end of the

school year in which they attained16.For Europeanchildren it was tetween 6
and 15.Secondary schoolcourses. 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 thaatsystemofscholarshipsand other forms
of assistanceprovided secondary. technical and higheerducationand vocational
training at overseas institutions, mainlyin Australia, for children who reached

the required standard. At 30 June 1967there were 105 students and trainees
studying overseds. of whom 77 were financedby the Administration and 28
were financedprivately. Two werestudyingin Papua and NewGuinea and the

rest in Australia. Approved training establishments included universities,
technical colleges. secondary schools and other institutions which provided
vocational traininguchas nursing,dressmakingand hairdressing.

76. The 1965 United Nations Visiting Mission, thleast before independence,

commented, interalia,on the educational systemin these tems (paras.54-57,
Annex 12.Vo1.4.NM).

"54. The Mission visited most of theschools on the island and was

very favourably impressed withthe standards maintained. the
facilities provided and the quality of teachers, buildings and
equipment.

55. The educationalsystem providesfor free, compulsoryeducation.

and, in so far as the indigenous peopleof the Trust Territoryare
concemed, has as its objectives:(a) the provisionof theeans
by which each child shall have the opportunity at al1relevant

ages of obtaining an educationcomparable in syllabus, content Gd standardswiththat availablein Australia;(b) the attainment
of a literate populationwith graduates in the arts, sciencesand

tradessufficientto meetthefutureneedsd the Naunians.

56. 'Iheextentof the achievementof these'objectivesmay begauged
by the foilowingfigures:

Naunian studentsin Australia

(a) Atuniversities
O> A)ttechnicalcolleges
(c)In teacher-trainingcoileges
(d) Nursesin training

(e) At secondaryschools(58 scholarship7,private) .6i
79

Naunian studentsin Nauni
(a) Atprimaryschools

(b)At secondaryschwls
(c) At the teacher-training centre
(d) Enmlledin adult educationclass

57. In considering these figures it mube remembered that over
half the Naunian population is under twenty years of age and
that the 118Chiiese andPacificIslandschildrenat schwl only

remain forshort periodsin Nauni."

77. A similar picture is shown in the reports on the Department of Public
Health. It maintained aeneral hospital at which al1treatment was free. (The
1965 United Nations Visiting Mission commended "theexcellent services it

provided to the community",para 80). The BPC in addition maintained a well
equipped hospital for their employees. The Administration bore the cost of
sending patients in need ofecialistcare, not availableon Nauni, to Australia
for treatment. In addition measures were undertaken on environmental

sanitation,immunisationandhealth education. Nutrition wasa special priority.
The last (1966-68) Administration report noted (p.36)that the Naunian diet
showed considerable impmvement,attributabletothe greater diversity of food

available, the general advancement insocial and economic conditions and theeffects of health education;and that no cases of vitamin deficiency were seen
duringtheperiodunderreview.

78. Some nine years before, the 1959United Nations Visiting Mission had
commented(para.62.Annex 10,Vo1.4,NM)that:

"on the whole, the Mission was very favourablyimpressed by the
medical facilities provided and the measures taken by the

Administration to care for the health of the people. as well as its
program for the training of Naunian men and women to assume
eventualresponsibilityin aii sectionsof the public health field."

79. At 30 January 1968,nine years later, this last point of greater Naunian

responsibility was illustrated by the fact that 96 Naunians were employed in
public health of whom six weremedicalpractitioners,36 werenurses (men and
women) and10were nursingaides.

80. Throughout the Tnisteeship. the United Nations expressed satisfaction

with the Administering Authority.Thus in 1961the Report of the Trusteeship
Council:

"notes withsatisfactionthe pmgress madein the Territoryduring the
year under review in various fields, through the efforts of both the

Administering Authorityand the aun ni aeople, particularly in the
field of public health, social securityand welfare services." (United
Nations, Report ofTrusteesliip Council, General AsseniblyOflcial

Records,16t1tSession. Suppl.No.4(A/4818),Part U.Ch.VI.para.1.)

81. Similarly, in the final 1967T~steeship Council Report on Nauni, it is
said:

"The Council notes that relations between the Administering

Authority and theepresentativesof theNauruanpeoplecontinueto be
cordial; thai economic.social and educational conditions continue to
be satisfactory;and that commendablepmgress has been made in the
Territory." (United Nations,Report of Trusteeship Council,General

Assembly Official Records, 22nd Session, Suppl. No.4 (A16704)
PartII,para.310;Annex28 toPreliminaryObjections.) CHAPTER 3

PUBLIC FINANCE ANDROYALTIES UNDERTHE TRUSTEESHIP

Section 1:Public finance

82. The Nauruan Memorialrefers to the systemof public finance on Nauru
and the façt that Australia didnotcontributeanyfundsof its own to provide for
the administration of Nauru (NM, paras.364-373). Itfails to mention that the

Nauruancommunitywas not called uponto pay incometax at any stage during
theTmsteeship. Nauruallegesthat the systemof publicfinanceadministeredby
Australiaduring the Tmsteeship involveda failure to exercise the degree and

form of govemmental authority in Nauru appropriate to the fulfilment of the
obligation of tmsteeship (pam365). The legal basis of this contention is
examined in Part II. Chapter 4 below. The following paragraphs provide

informationon the system ofpublic financewhichshow that thereis absolutely
no basis forNauru's complaintsconcemingthat system. One importantfeature
of that system,as mentionedalready,was thefact that the Nauman people were

not at anytimesubjectto incometax.

83. To assist its annual reviewof Nauruanadministrationthe Administering
Authority regularlygave the TmsteeshipCouncilinformationon the source of
funding for theTerritory administration.In the Tmsteeship Council report for

1958-9,the positionwassummarisedthus:

"All expenses of the Administrationare met by the British Phosphate
Commissioners.outof the pmceedsof phosphatesales.if notprovided
for by other revenue.urther revenue isobtainedfmm import duties,

postal.services and other sundry items. There is no direct taxation,
although theNaum LocalGovemmentCouncilhas certain powersto
levy taxes whichit has not yetexercised."(UnitedNations, Report of

Trusteeship Council. General Assenibly Officia1 Records, 14th
Session.Suppl.No.4(N4100 p.160.)

84. This position remained generally true for thewhole of the Tmsteeship

period.In the early years of theT~steeship some concern was expressed thdt
certain publicexpenditurewas chargedagainsttheNaunianRoyaltyTrust Fund.
There were also suggestions that the capitation tax shoulde replaccd by an
incometax. Underthis tax,eachmalepersonbetween 16and 60 was requiredto CHAPTER 3

PUBLIC FINANCE ANDROYALTIES UNDERTHE TRUSTEESHIP

Section 1:Public finance

not at anytimesubjectto incometax.

1958-9,the positionwassummarisedthus:

"All expenses of the Administrationare met by the British Phosphate
Commissioners.outof the pmceedsof phosphatesales.if notprovided
for by other revenue.urther revenue isobtainedfmm import duties,

postal.services and other sundry items. There is no direct taxation,
although theNaum LocalGovemmentCouncilhas certain powersto
levy taxes whichit has not yetexercised."(UnitedNations, Report of

Trusteeship Council. General Assenibly Officia1 Records, 14th
Session.Suppl.No.4(N4100 p.160.)

84. This position remained generally true for thewhole of the Tmsteeship

Europeans,40 shillings.

85. The Administering Authority responded to theseconcems. The capitation
tax wasabolished in 1951to thesatisfactionof theï'nisteeship Council (United
Nations, Report of TrusteesliipCouncil. General AssemblyOficial Records,

17thSession, Suppl No.4 (~~150) p.261. No substitutetax was imposed.And
in March 1952, there were a nwnber of changes made to public finance as a
result of which only certain Local Government Council expenditurewas to be

met from the Nauni Royalty T~st Fund. Fmm 1 July 1952, the BPC were
requiredto payto the administrationa sumequal to the wholeestimatedannual
expenditureof the administration,to the extent not metby other revenues.This

twk the place of theprevious 1sroyalty on eachton of phosphate exported (a
myalty separatefrom royaltiespaidto or for thebenefitof theNaunians).At the
same the. education and some other administrationexpenses previously paid

out of the au& RoyaltyTrust Fund were to be charged to the Administration
Account (United Nations. Report of TrusteestripCouncil, General Assembly
Oflcial Records,9thSession.Suppl.No.4 (Aiî680) p.272).The Tmst Fund was
then made available for expenditureby the LocalGovernmentCouncil, subject

to the approvalof ihe Adminisiration.

86. The financial arrangementsintroducedin 1952led some membersof the
Tmsteeship Council to express concem that BPC would acquire too much

influence over the budget for the Territory. In its 1957 Report the Council
suggested that the Administering Authority might review the position (United
Nations. Report of TrusteeskipCouncil. GeneralAssembly Oficial Records,

12th Session, Suppl. No.4 (Al3595) p.202). The Administering Authority
informed the Tmsteeship Council that it had considered the possibility of
changing the-system, but considered the system was in the Territory's best

interest (United Nations. Report of TrusteeshipCouncil, General Assembly
Oficial Records,13thSession. Suppl.No.4 (A/3822)p.98).The Councildid not
pursuethe issue.Attentioninsteadwasgivento the issueof royalties.

Section II:Royalties andtrust funds

87. As Nauni itself recognises (NM. paras.371-372). a major issue .in
tmsteeship discussions was the rates of royalty paid for the benefit of the
Naumans rather than the public fiance system itself. niroughout the 20 year

period from 1947 to 1967. the BPC paid royalties to Naunians. which were
substantiallyincreased from timeto time.hus.adjustmentswere madein 1947.1950, 1953. 1957,1960,1964, 1966and 1967followingnegotiationsbetween

the Naunians and the BPC. in the three years preceding independence, rates
became increasinglya matter directlydealt withby the Partner Governments
and the NLGC representatives. Royalty payments were made inaddition to

adjushnents neededto meet administrationcosts.The latter,under Article 2 of
the 1919 Nauni Agreement,were to k defiayedoutof theproceedsof the sales
ofthe phosphatesofaras they were notmetby otherrevenue.

88. The first postwar agreement concludedon 23 May 1947 between the

Nauman landowners. the Administration and the BPC provided that the
following royalties shouldbe paid: 6d forthe landowner.3d to the Naunian
RoyaltyTmst for thebenefitofaüNaunians.2dfor theLandownersinvesîment

Fund and 2dfor the new LongTerm CommunityinvesîmentFund (Report of
the Administering Authority for the period 1July 1948 to 30 June 1949,
pp.34-35). This was a total of 13d comparedto 8d paid at the stan of World

War Il.

89. The royaltiespaidto or forNauruansduringTmsteeship werepaidin the
followingways:

a. The Nauru Lundowners' Royalty Trust Fund. This was

established in 1927by agreement with theNaunians. Royalties
were paid into the fund everysix months on behalf of the
landowner whoseland was king worked andinvested by the

Administrationfor 20years.Until themid 1950sonly intereston
matured investmentwas paid to the landownersand 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 in the fundwas $A3,022,607(in 1993 values,
$A21million).z

b. Royaltypaid direci to landowners.Individual landowners were

paid a cash royaltyat the rategreedfrom time to time.For the
year ended 30 June 1967an amountof $A701954 was paid (in
1993values,$A4.9million).

Inordta vdm fmm 1967imlleci1993valusingrAusualmCDP deIlallhcymai io k
mvlliplicscw. 7thisthemcW uxd h UisCounicr-Memord. c.
The Nauru Royalty Trust Fund, instituted in 1927, provided
additionalfunds.for amenities and services to the Naunians. It
was mainly used from the 1950son to fund the activities of the
NLGC and some educational activities; During the year ended

30 June 1967payments amountedto SA307.774(in 1993values.
$A2.1million).

d. The Nauruan CommunityLong Term InvestnlentFund. was
established in 1947to provide for the economic future of the

Naunian people when the phosphate wasexhausted. At 30 June
1967the fundamounted to $A6,241,719(in 1993values $A43.4
million).

90. Paragraph 124of Volume1of theNaunianMemorialsays that:

"ratherless than 50% of the Royalties 'paid to Naunians' were paid
direct to theandowner:in the subsequent fifteenyears that figure was
reduced to about 20%. The remainderof the moneys paid by way of

royalty 'to Naunians'werepaid to funds invested and controlled by
the Australian Administration."

It must beemphasised that those funds were invested for the benefit of the
Naunian people. This reflectedthe wishesof the UnitedNations whosupponed

the vanous royalty increases,but indicated theirpreferencethat thebenefitsgo
principally to the Naunian Long Term uivestment Fund. not to the individual
landowners (see eg United Nations, Report of TrusteesliipCouncil.General

Assembly Oficial Records, Iltlr Session,Suppl. No.4 (An170) p.334). The
Fundswerecontinuedby the NaunianGovemmentafter independence.

91. The relevance to the various Naunian claims of the amount paid in

royalties is discussedbelowinPartII A.bnef reviewof whatactuallyoccurred
throughoutthe tmsteeshipis provided here.

92. Royalty rates rose significantly in the few years tefore independence.
This reflected a changing appreciationby the United Nations,Nauni and the

AdministeringAuthonty of whatwasan appropriatebasis for the calculationof
royalties.The experienceof Nauruin relationto the phosphateconcession was
no different from that elsewhere in the world at this time in relation to many

other mining concessions. This period saw the stan of a world wide era of
renegotiation.and in some casesnationalisation,of foreign mining concessions.The legal significance of this situation is developed later on in this
Counter-Memorial.

93. Apart fmm the period immediately beforeindependence,a review of the
royalties paid forauniansduring the Tmsteeship discloses a gradual increase

particularly in payments to the Naunian Community Long Term Investment
Fund.in 1948the totalroyaltiespaid werelsld. This increasedin 1950to ls.4d.
1955to ls.6d. 1958to ls.7d. 1959to 2s.7d. 1961to 3s.7d. 1963to 3s.8d. 1965

13s.6d,196617s.6d.and 1967,$4:50.3

94. As total export tonnage increased from the early 1960s from roughly
1.2m tons to 1.6m tons. and.the life of the phosphate mining industry was

gradually reduced, the Administering Authority ensured that the royalty
payments by BPC increased.The United Nations itselfwelcomed this gradual
increase.

95. in theearly 1950s.the Administering Authoritystatedthat royalties were

establishedhaving regard chieflyto the cumnt andfuture needsof the Naunian
population.They were not calculatedsimplyas a percentageof the export price
of phosphates. That is, the basis for royalties payments was not the price at

which phosphates were sold,but the needsof the Nauman people: see United
Nations. ReportofTrusteesliipCouncil, GeneralAssemblyOflcial Records.7111
Session, Suppl. No.4 (Al2150) p.261. In subsequent years, the Tmsteeship

Counciland VisitingMissions expressed somesympathywith theNaunian wish
to reeeive higher rates of royalties, although it made no specific
recommendationstothat effect.

96. Thus,the Council'sReportfor 1955:

"notes that the efficient developmentof the phosphate depositsisof
basic importance to the Territory's economy and thatthe policy

adopted by the Administering Authority has resulted in relative
prosperityfor the Island andits inhabitants.'the Councilnevertheless
emphasises the need for ensuring that the Nauruans receive the

maximum benefits from the exploitation of the Island's resources."
(United Nations, Report ofTrusteeshipCouncil. General Assembly
Oflcial Records, 10thSession,Suppl.No.4(At2933)p.224.) 97. In 1956the VisitingMissionindicatedthatthe desirefor higherroyalties
"deserves sympathy and consideition>nd that a "spirit of understanding and

appreciation should always guide the adjustment of royalty rates" (Annex 9,
vo1.4,NM, paras.87 and 89). The Visiting Mission and Tnisteeship Council
were thenconcernedthat royaltiesbe appliedto buildingup an adequatefundto

meet the cost of plans for the future well-king of the community. Australia
agreed with this view (United Nations, TrusteeslripCouncilOfficialRecords,
18thSession. Doc.TlSR.717,p.133-4).

98. The phosphatereturn receivedby Naunianswas fully disclosed. in 1956

theSpecialRepresentativefor the AdministenngAuthoritysaid:

"The annual report showed the quantityof phosphate exported from
Nauru, the fob price paid for it - from which, as the Guatemalan
representative had demonstrated (717thmeeting), the sale price per

ton could easily be calculated- the royalties paid per ton. and other
figures which together indicated thatpart of the valueper ton which
the Naunians received in direct or indirect benefits. 'ihe remainder

was accounted for entirelyby operatingexpenses,which were not al1
recordedin the annual report, andit was thedetailsof thoseexpenses
which the AdministeringAuthority didnot feel calledupon to reveal.
Such information could not reveal profits. for there were none; the

phosphate was sold at cost and thecost was the sum of the benefits
receivedby the Nauniansandtheworkingexpenses.

To decidewhethertheNauniansweregettingsubstantialbenefitsfrom

the phosphate industry it was necessary to assess the benefits they
received in the form of employment, free education, free health
services, free housing subjecttocost onlyof maintenance, land rents.
direct royalty payments, deferredroyalty payments, tnist funds and

directfuiancingof almostthe entirecostof theTerritorialgovernment
and the local government administration." (United Nations,
TrusteeshipCouncilOfficialRecords,18thSession. Doc.TlSR.720)

99. In 1957 Australia estimatedthat one-fifthof the cost of phosphate went

directly or indirectlyto Nauniansthemselves(837thmeeting. TC). in 1958hdia
estimatedthat the figurewas 19%.almostthe sameas theAustralianestimateof
the previousyear. Between1959and 1961theTrusteeshipCouncilsoughtmore

comprehensive information, sothat it might better assess the equitablenessof
the royalty rates.As a result. additional informationon royaltynegotiationswasgiven to it by the Administering Authority.At the sametime. royalty rates were

increased.a fact commendedby theCouncilwhichalso expressedthe view that
those increasesshouldbe appliedto the LongTem lnvestmentFund.

100. In its 1959ReporttheCouncilconcluded:

'nie Councilnoteswithsatisfaction thatconsequent onan agreement

reached in 1958 between theNauni Local Govemment Council and
the British Phosphate Commissioners. increases in the royaltyand
acreage paymentswere made retrospectivefrom 1July 1957and that,

in accordancewitli the policy endorsedat its twenty-second session,
the proceeds were applied mainly to the Naunian Community
Long-Terri InvestmentFund.

The Council. noting that general discussions on royalty rates were

held in Canberra in April 1959, between the British Phosphate
Commissionersand repiesentativesof the Nauniancommunityand of
the Department of Territories, hopes that the outcome of the

discussions will be satisfactory to the Naunians, commends the
Administering Authorityfor directly associating representatof the
Naunian community in a matter which so closely affects their

weU-beingand requests the Administering Authority toinform it of
the results of the discussions and to provide it with more
comprehensive informationon the operationsof the British Phosphate

Commissioners." (United Nations, Report of Trusteeship Council.
General Assembly Officiai Records. 14rh Session, Suppl. No.4
(N4100) p.160.)

101. And in 1960,theCouncilsaid:

"The Councilcommendsthe Administering Authorityfor the increase
in theroyaltyratepaiddirectto landowners.

ïhe Council notes the statementof the AdministeringAuthority that
the general review of royalty ratesbegun last year has reached the

stage where the submissionsof the British PhosphateCommissioners
and of theNauru LocalGovemmentCouncilarenowking examined.
The Council requests the Administering Authorityto fumish it with

appropriate information regarding the views submitted by the two
parties inorder that it mayreachabetterunderstandingof the matter. The Council reiteratesthe viewthat any increasesresultingfrom this
review should be applied mainly to the Naunian Community

Long-Term~nvestmentFund.

The Council. believingthat the information provided toit concerning
the operationsof the British PhosphateCommissionersin Nauni does
not enable it to express a considered opinionon the equitableness of

the royalty ratesking paid. reiterates its recommendation on this
subject adopted at ils twenty-fourth session thatthe Administering
Authority provide it with more comprehensive information." (United

Nations, Report of TrusfeeslzipCouncil, GeneralAssenlblyOficial
Records,l5tlrSession. Suppl.No.4(Al4404)p.155.)

102. The 1962Visiting Missioncarefullyexamined the royaltiesand increases

in benefits received byNauni (see Amex 11,NM).The Repon concluded that
"since the Tnisteeship was concluded the percentage benefit to theNaunians
against the value of phosphate at the pointof exports has risen fromjust under
4 per cent to 24 per cent (para.1Il). They commentedfurther that "the current

benefits enjoyedby theNaunians(tothevalue of 24percent of theexport value
of the phosphate) are substantial" (para.114). The 1962Tnisteeship Council
report said:

"Notingfrom the reportof the Visiting Mission thatthe rdteof royalty

derivedby the Naunianpeople from the phosphate has been increasing
over the years, the Counciltakes note of the statement of the special
representative of the Administering Authority that the matter of

increasing returns from the phosphate operations is a matter for
continuing negotiationbetween the Naunians, the BritishPhosphate
Commissioners and the govemment of the Territory. The Council is

confident that as a result of those negotiations, fair and adequate
benefitsfor theNaunians wiii bearrivedat." (United NationsReport
of Trusteeship Council, GeneralAssentbly Officia1Records, 17th

Session.Suppl.No.4(Al5204)p.41)

103. The 1963 Trusteeship Council Repon adopted a similarly restrained
appmach. In that year, Chief DeRobunhad complainedabout the unfaimess of
the royalty returneven though the~dministeringAuthonty had pointedout that

24% of the phosphate retumwas receivedby the Naunians.The Councildid no
more than note Chief DeRoben's complaint together with the Administering
Authority's response.althoughitdid raisethe possibility ofsomelocal Naunianequity in the BPC (United Nations. Report of Trusteesliip Council. General

Assembly Officia1 Records 18th Session, Suppl. No.4 (A15504)p.28). This
reflected the growing interest in such issues and in-doctrines like permanent
sovereigntyover natural resources.~onsistentl~yith this, from 1963onwards.

the Pace of change in Naun quickened. Royalties were again substantially
increasedand ultimatelythe whole phosphate industry wastransferredIoNauni.
This is covered in more detail elsewhere in this Counter-Memoria(see P.rt 1,

Chapter 5). It underlines the continually evolving position in Nauru. It is
incorrect to suggest as Nauni does that the BPC was inflexible and the
AdministeringAuthoritynot mindfulof theinterestsof the Naunianpeople.

104. In 1965 the Naunan leaders again complained Io the Visiting Mission

about the adequacyof royalty rates, a fact simply notedby the Mission which
expressedthe hope:

"that the two parties will come to an agreement about increased

royalties. andbelievestherewouldbe greatadvantageif the major part
of any such increases were tobe placed in the Naunian Community
LongTerm InvestmentFund, whereit would serve Io help assure the

future of thentireNauniancommunity."(para.49,hex 12,NM.)

105. Again, however. the Tmsteeship Council in 1965 acknowledged the
significant increases in royalty ratesultingfrom the 1965negotiations. The
Counciladoptedconclusionsand recommendationsthat canonly be describedas

positive and whichendorsed the positionof the Administering Authority.Thus
the recommendationrecordedthatthe Council"welcornes"the notableincrease;
and also "looks fonvard" to a report;"hopes" furthernegotiationswiUresolve a

problem and "believes" every effort will be made to find a solution in
conformity with the interests of theNaunian. This is not a statement which
indicated that thesupemisory body was concerned with the adequacy of the

reports made by the Administrative Authority or with its discharge of the
tnisteeshipobligationsin general.The fullrecommendationreadsas follows:

"fie Council notes that at the Canberra Conferenceit was agreed to

increase the phosphate royalty rates for964-65 to 13s.6d and for
1965-66to 17s.6d; to fix for 1965-66an extraction rate of 2 million
tons of phosphate; to establish at the earliest practicable date an

independenttechnicalcommitteeofexpertsto examinethequestionof
rehabilitatingtheworked-outmininglandon Nauni;and to discussthe future arrangements for the operition of the mining industry which
would includesomefom ofjoint enterprise.

The Council,notingthe recommendationof the 1965 Visiting Mission
that account should be taken of the Na~.nians'desire for more
favourable terms in the apportionment of profits frothe exploitation

of thephosphates, welcomes the notable increaseinroyaltyrates.

Noting the agreementon a slightlyhighcr extractionrate for 1965-66,
without prejudice to the Nauruan position in any subsequent
negotiation, the Council urges that agreement should be reached

between the representatives of the Nauruan people and the
Administering Authority on an extraction rate for future years on a
basis thatwillsafeguardthefuture interests of theNaunianpeople.

With regard to the futureanangements for theoperation of the mining
industry, theCouncil hopesthat this problem willalso be resolved to
the full satisfaction of the Nauruan people.

The Council lwks fonvard to the report of the expert committeeon

the question of the rehabilitation ofthe worked-out miningland: it
requests the FA0 to consider favourably the invitation to make
availablea representativetoserveonthiscommittee.

The Council notes that in relation to the ownership of phosphates at
Nauni. the representativesof the Naunians maintained their position
that the British Phosphate Commissioners could not validly workthe
phosphate on Nauni without theagreement of the Naunian people,

while the Australian delegation restated the view of the Partner
Govemments that the rights were legally vested in the British
Phosphate Commissioners.The Council hopes that the forthcoming

negotiations between the representativesof the Naunian people and
the Administering Authority will resolve this problem.The Council
believes that every effort will be made to adopt a solution in

conformitywith the interestsof theNauruan people."(United Nations,
Report of Trusteeship Council,GeneralAssembly Ofleial Records,
20tlrSession.Suppl.No.4 (Al6004)pp.49-50.)

106. The supervisoryfunctionof theTrusteeshipCouncilisemphasisedby the

character ofits recommendations throughout the reportingperiod.Thus. wherethe Council recommended higher royalty payments, it also usually

recommended that any such increases should be placed in the Long Term
Investment Fund. Australia concurredwiththis view. In1958.for instance, the
Council endorsed the policy of the AdministeripgAuthority that any increase
should apply mainly to the Naunian Community LongTem Investment Fund

(United Nations, Report of TrusteeshipCouncil, GeneralAssembly Oflcial
Records. 13tl1Session, Suppl. No.4 (A13822)para.62). The 1965 Visiting
Mission adopted a similar approach (para.49).The United Nations recognised

the need to make adequateprovision for the long term future of Nauru, as did
the AdmimisteringAuthority .

107. As an examination of the 1967 phosphate settlement and the financial
position of Nauru indicates, thewell-beingof the Nauruanpeople was carefully

ensured.

Section III:Reporting to the United Nations on BPC

108. Closely related to United Nations consideration of public finance and
royalties was the issueof the role ofthe BPC. Nauruhasalleged bat Australia.

on behalf of the AdministeringAuthority. failedto supplyadequate information
on the phosphate indusiry to the United Nations (NM, paras.284. 314-321,
334-354).This allegation is discussedin Part II Chapter4. The facts relating to

it are setoutbelow.

109. The United Nations was fully cognisant of the financial position
concemingthe phosphateindustryboth beforeand at thetimeof the termination
of the Tmsteeship. Throughout the reporting period Australia, as indicated

above,provided information on the quantumof royalties andthe fundsIo which
ihey were paid.as well as informationon the moneyscontributedby BPC to the
cost of administrationof Nauru.'Ihiswas set out in detail in each of the annual

reports of the Administrationto the TrusteeshipCouncil.The accounts of BPC
were annexedeach yearto thosereports.The recordsof the Trusteeship Council
show that theCouncil regularlyexamined the information providedas part of its
considerationof the adequacy anddistributionof the royalties.The Trusteeship

Council annual reports regularly note the volume of phosphate exported, its
value and the royalty payments. Visiting Missions also considered these
questions: see for instance, thedetailedexaminationof financialinformation in

the 1962VisitingMission Report. paiagraphs96-115;reproducedin A~ex 11.
Vo1.4.NM. 110. From time to time, prior to 1963, the Tmsteeship Council called for
greaterinformationon the royalty question(seeparas.95 to103above)and their

concernto have adequatefiancial information is anexcellent illustrationof the
effectiveness of thesupervisorymachineryof thelUnitedNations in relation to
the tmsteeship system.As a resultof thosecallsby theT~steeship Council.the

Administering Authority sought to provide increased information.Further, on
the Council's recommendation. regularannual consultatioiisbetweeii Nauruan
representativesand the BPC were commenced andthe Nauman delegation was
given access to professional advisers: and in accordance with calls for

sympathetic considerationof Naunian demands for higher royalties,the royalty
rates were gradually increased. Moreover,Nauni concedesthat the Council did
not repeat its recommendations for greater information after 1963 (NM.

para.353). This fact presumably meant that theneed had been met. by the
appropriate responseof the Administering Authority. Certainly. the reports of
the Council contain no finding that the Adminisiering'~uthority was acting
contraryto itsobligations.

111. Further. theTmsteeshipCouncil'searly concernabout the sufficiencyof
information,and the adequacyof royalty rates was laterreplacedwitha concern
about the negotiating process. In later years. the Tmsteeship Council was
primarily concerned that Nauruan representatives be given reasonable

opportunityto be involved in the setting of royalty rates and in decisions
involvingthe phosphate industry.

112. Thus the 1962Visiting Mission recommended annualmeetings between

representativesof theBPC and Naunian elected representatives.The first such
meeting took place in November 1963.The Tmsteeship Council in its 1964
Report expressedthe view that:

"The Council is confident that this initial contact between ihe

representatives of theNaunian Local Govemment Council and the
British Phosphate Commissioners will lead to a mutualunderstanding
and a betterand closerCO-operationbetween the parties concerne ....

The Council reiterates its belief that further consultations between
representatives of the British Phosphate Commissioners and the
Nauman elected representatives willbe instrumentalin ensuring the

equitable sharing of the proceeds of phosphate mining." (United
Nations, Report of TrusfeeshipCouncil, General Assenrbly Ofjicial
Records, 19thSession,Suppl.No.4(Al5804)para.249.)In subsequentyears there were ofcourie detailed negotiations betweenNaunian

representatives and Partner Governments over phosphate mining issues,
includiig royaltyrates. Adescriptionoftheseare seteut in Chapter5 below.

113. The Naunian Memorialpurportsto set out'the attitudeof the Australian

representative in 1953, 1956 and 1958 as to the provision of information
concerning the accountsof BPC (paras.543-545).However, these statementsare
quoted in isolationandfail to disclosethe quantityof significantinformationon
BPC activities in fact providedto theTmsteeshipCouncilby the Administering

Authority. In each AnnualReport the balancesheetand aceountsof BPC were
included. This indicated the fob price paid for phosphate and the volume of
phosphateexported fromNauni.Whattheaccountsdid notdetailwas thecostof

BPC's operations on Nauru as distinct from those on Ocean Island, also
conductedby BPC.It wasthis that prornptedtheTmsteeship Council in 1954to
request théAdmimisteringAuthorityto makeeveryeffortto provideinformation

concerning the separate financialoperationsof the BPC in respect of Nauni in
its nextannual report.This followedan Australianstatementthat there were no
separateBPC accountsin relationto Nauru.

114. in1955the Council adopted thefouowingrecommendation:

"The Council recalls ils previous recommendationsto the effect that
the Administering Authority should make available to it separate
fiancial accounts inrespectof theoperationsof the BritishPhosphate
Commissioners in Naum. The Council takes note of the replies to

these recommendations given by the Administering Authority
indicating the difficultieswhich it perceivescomplyingwith them.
and expresses the desire ihat the AdministeringAuthority in its next

and subsequent reports will provide the Council with the fullest
informationfeasibleon the phosphate operationin theIsland." (United
Nations. Report of TrusteesllipCouncil,General Assenibly OfJicial

Records,10thSession,Suppl.No.4(At2933)p.225.)

115. In response. the Administering Authority submitted additional
information on the phosphate mining operations. This prompted a
recommendationin 1957 as foliows:

"The Council. noting that proposais made by the Nauni Local
Government Council to increase theroyalty rates onphosphate are
nowbeing considered, notingfurtherthatthe Administering Authority is currently submitting informationon the operations of the British
Phosphate Commissioners, consideringon the other hand that full
information on theoperationsof the British PhosphateCommissioners

as specifically related to the island.of Nauru would be of great
assistance Io the Council for its assessment of the question,
recommends that the Administering Authority submit such

information 10 the fullestextentfeasible." (United Nations,Reporrof
TrusteeshipCouncil, GeneralAssemblyOfJicialRecords. 12thSession
Suppl.No.4 (AL3595)p.202.)

-116. The positionof theAdministeringAuthoritywasas follows:

"With regard to the subsidiary question of whether the Trusteeship
Council received sufficient information about the operations of the
British Phosphate Commissioners, the Administering Authority's

position was clear. The Council was fully entitled to information
conceming the quantity of phosphate produced on theisland and its
destination and value, and that information was submitted to the

Council. It was to befound in appendixVI1 and appendixXnl of the
annual report.The Administering Authorityfelt that in providingthat
information it was fuiiy complyingwith Article 5 of the Trusteeship

Agreement. The BritishPhosphate Commissionersoperated not only
in Nauru but also in Ocean lsland and Christmas Island,which were
not the concem of the Trusteeship Council. and it would be

impracticable to presentcompletely separate information relating to
Nauru phosphate alone. The Administering Authority could not
emphasise enough its belief that the Council did not need such

information and the disclosure of confidential accounts of the
Commissioners in order to perform its taskeffectively. The royalty
rates paid to or for the directefitof the Nauruanswere in no way

dependent on or influenced by the prices received for phosphate."
(United Nations, Trustceship Council Records, 18th Session, TISR
714, p.112).

117. As Appendix2 to the NauruanMemorialmakesclear. separateaccounts

for Nauru and Ocean lsland operationshave neverbeen publishedby BPC:See
Vol.1,NM.pp.268-279.As Nauru notes.in the confidentialBPC reports,Ocean
Island and Nauru accounts are presented on a combined basis (Vol.1. NM.

p.268). The respective tonnagesexportedfrom the two islands were, however,available. The Australian Governmentreserves its position on the accuracy of
the attempt byMr Walker for Nauni to-estimatea separatefob price for Nauni
(seeAppendix2, NM,pp.279-288).

118. Between 1959and 1960the Councilagaincalledfor morecomprehensive

information on the BPC. On each occasionthe AdministeringAuthority stated
that it would include informationin its Report on theoperationsof BPC to the

fùllest extent possibleIn the 1959 Report the special representative of the
Administering AuthoritynotedthatBPC:

"were responsible fordevelopmentof the phosphate industryin other
areas as we.U.much of their expenditurewas in the form of common

costs which it was not possible to breakdown withouta complexand
largely hypothetical system of costing analysis. ïhe important thing
was that the Naunians were deriving substantive and increasing

benefits from the operation of the phosphate industry." (United
Nations; Report of ~rus~eesliiCouncil, GeneralAssemblyOfJicial
Records.14thSession .uppl.No.4(N4100) para.94.)

119. As already noted, the Tnisteeship Council wasprincipally concerned in

the 1959-1961 period to have more information concerning BPC financial
operations to assess whethertheNaunianswerereceivingan equitable shareof
benefits. After 1962these calls nieded to be made no longer as provision was

made for regular consultationsbetween BPC and the NLGC. Asthe Council
said in 1964:

"further consultations between representatives of the British

Phosphate Commissionersand the Naunian elected representatives
willbe instrumentalin ensuringthe equitable sharingof the proceeds
of ph&phate mining." (United Nations, Report of Trusteeship

Council, GeneralAssemblyOfJicialRecords.19th Session, Suppl.
No.4 (N5804) p.249.)

From1965to 1967detailednegotiationstookplaceon thefuture administration
of the phosphate industry. which resultedin agreement onsignificantly higher

royalties.iese were reportedto the UnitedNations andare ex'aminedin detail
in Chapter5 below. CHAPTER 4

THE PROPOSALS FOR RESETTLEMENT AND REHABILITATION

120. Throughout the Tnisteeship the Administering Authoritywas conscious
of theeed to address the long term future of Nauni. given that the phosphate
deposits would one date exhausted.A numberof means to achieve this were
considered. Initially this took therm of consideration of resettlement

pmposals. with United Nationsndorsement and encouragement.At the same
time, examinationof thepossibilityof rehabilitationwasalso undertaken.When
~settlement was rejected by Nauni a further examination of rehabilitation

,wurred. Alternativemeansto securethe Naunians'futurewereadopted in the
phosphate settlement.This ensureaviable andwealthycommunityat the time
of indepeniience as pari of the comprehensive phosphate settlement. The

significance of these events is examined below: see Part II. Chapter 2 and
following.This Chapterexaminesthe efforts of the AdministeringAuthorityin
relationto resettlementand rehabilitation,and UnitedNationsattitudesthereto.

Section 1:Consideration of resettlement by the

Pareer Govemments and the United Nations

121. Resettlement.as the long term solution to the problems which wteld
faced in the future by those living on a worked out island, was recognised as
desirable by theartner Govemments. the Naunians and the United Nations at

an early stage. The 1953United Nationsisiting Mission reportsaid (para.13,
Annex 8,Vo1.4 N,M) that "the Mission, withoutwanting be dogmatic, is of
the opinion that resettlement in some other location. as expressed by the
Naunians themselves,may be the onlypermanentand definite solutionInthe

foilowingyears a numberof possiblesiteinandnear PapuaNew Guinea were
investigated by the Administering Authority, butne could meet the three
requirements considered necessary: employment.opportunities enabling the

Naunians Iomaintaintheir standardof living;a community which wouldaccept
the Naunians; and willingness on the part of the Naunians to mix with the
existingpeople.

122. Having regard to Parts II and III of this Counter-Memorial, -it is

appropriate to deal with the question of United Nations consideration of
resettlementofNaunians and rehabilitationof the island together.Concem with
resettlementand the rehabilitationofni has a longhistory of consideration in the Tnisteeship Council, where the choice between resettlement or
rehabilitation was regularly debated. This issue is dealt with in the Naunian

Memorialat paragraphs561-591.Thestoryof considefationof rehabilitationby
the Parnier Govemments is set out in detail in paragraphs 142 to 170 of this
Counter-Memorial.

123. The questionof rehabilitationor resettlementwas first raised in 1949. at
which time Australia indicatedthat financialprovision was king made for the

time when the phosphate deposits would be exhausted in 70 years (United
Nations. TrusteeslzipCouncilOficial Records, 5th Session.TISR.7). This took
the form of the introductionof a componentin the royalties.when adjusted in
1947,for a long term investmenthnd that could be used whether the Naunians

remained onNauni or movedto anotherisland.

124. The 1950 Visiting Mission commentedihat resettlement may offer the
only long term solution unless research reveals some alternative livelihood
(UnitedNations. TrusteesliipCouncilOficial Records,811S1ession, Suppl. No.3

(TI898)para.58; reproducedin Annex7, Vo1.4,NM).This was a widely shared
view at the time. The issue of resettlement and rehabilitation was raised in
discussion in the Trusteeship Council in 1951, 1952 and 1953 and concem
expressedfor the futureof the island.

125. This was not because the working-out of the phosphate lands would

deprive the Naunians of land which was economically essential for their
existence. On thecontrary.the phosphate landswere - apart from their value as
mineraldeposits - of minimal economicrelevance.The basic problemwasrather
that,given the increasing population and risingexpectations as regards living

standards, it was not thought likely that the island could accommodate the
.Naunians long-term - whether or not the worked-outphosphate lands could be
restoredto someformof productive.agriculturaluse.

126. In 1951the Tnisteeship Council expressedthe view thatit "considers it
advisable that studies of a technical nature shouldbe carried out in order to

determine the possibilityofmakinguse of worked-outphosphate land (United
Nations, GeneralAssemblyOfici01Records.611S 1ession.Suppl. No.4 (Al1856)
p.229). Yet the 1953 Visiting Mission said it "saw no other alternative to ihe
resettlementof the population elsewhere" (United Nations .rusteesltipCou~icil

Oficial Records, 12tl1Session, Suppl. No.2. para.13; reproduced in Amex 8.
Vo1.4.NM). The Council itself in 1953 recommended that theAdministering
Authority formulate plans for resettlement in consultation with Nauruans; it furtherrecommended that theAdministe~g Authoritygive considerationto the
views of the Visiting Mission regarding theestablishmentof a capital fund for

resettlement (UnitedNations,ReportofTrusteesliipCouncil,GeneralAssembly
OfficialRecords,8tlrSession,Suppl.No.4 (ALl427)p.113). In 1954this issueof
rehabilitation or resettlementwasagain the subject of considerable discussion

and the Council noted that the Administering Authority wasstudying plans for
gradua1resettlement (United Nations, Report of TrusteeshipCouncil,General
Assembly OfficialRecords.9thSession, Suppl.No.4 (A12680)p.265).

127. In 1955the Councilheard thatAustraliahad investigated the possibility

of resettlement on Woodlark Island. Papua New Guinea and that the search
continuedfor suitableislands.The Councilalsosuggestedfurther consideration
be given to the possibility of rehabilitation (United Nations, Report of

TrusteesliipCouncil,GeneralAssemblyOfficiaiRecords,10thSession. Suppl.
No.4 (AL2933)p.220). Australiaalso informedthe Council thatan expert study
@y the CSIRO) had found thatresoiling was "a practical impossibility". This
report is Annex 14to the PreliminaryObjectionsand is discussedin more detail

in paragraphs 142to 146below.Australia indicatedthat a need for resettlement
wasa consequenceof improved living standards andlikelypopulationpressures,
not phosphate mini& itself (United Nations, Trusfeeship Council Official

Records.16thSession, Doc.T/SR.613).

128. The 1956 Visiting Mission concluded on the basis of the CSIRO study
that there wasno practicalpossibilityof the widespreadutilisationof worked out
phosphate land for agriculture. that itelieved "there [was] no alternative to

resettlement after the phosphate deposits[were] exhausted" (United Nations.
Trusteeship Council Officiai Records, 18th Session, Suppl. No.4, para.51;
reproduced in Annex 9, Vo1.4,NM).The Councilthat year also recommended

that the search for a site continue and supported a Visiting Mission
recommendation that a standingjoint bodybe created "so that there wouldbe
continuous consultations with Naunian people, who would thus realise their

share of responsibility forsolving the problems of the future of the Nauruan
communityto a greaterdegree"(United Nations. Reportof TrusteeshipCouncil,
GeneralAssembly Oficial Records.11thSession. Suppl.No.4 (AL3170).p.325).
Australiaconfimed to the Councilwhat ithad alreadytoldthe VisitingMission,

namely that the Administering Authority would bear the cost of .any
resettlement: in its reportthe Council"welcome[d] the assurance given by the
Administering Authority that whatever funds willbe needed for the possibleresettlement of the Naumans. these funds willbe forthcoming as and when

required"(p.325).

129. Investigationof possible islandsff.PapuaandNew Guinea continuedin
1957and 1958. in 1959the Visiting Mission,in'lightof failure to find suitable
islands, recommended that "earnest consideration should be given to (the

Nauman community's)gradua1integrationinto the metropolitanterritoryof one
of thethike Administering Authorities" (United NationsTrusteeship Council
Oficial Records,24thSession, Suppl. No.4, para.24; reproduced in Annex 10,
Vo1.4,NM). The Councilrecommendedthat efforts continue to find a concrete

solution. An attempt by India and Paraguay to seek inclusion of a
recommendationin the CouncilReportthat furtherexamination bemade of the
possibility of rehabilitation was rejected 7:6 (United Nations.usteeship

Council OfficialRecords,2411SessionDoc.T/SR.1013).

130. On 12 October 1960 the Partner Govemments, following discussions
between themselves, offeredpermanent residenceand citizenship in Australia,
New Zealand or the UnitedKingdomto any Naumans who wished "totransfer

to those countries andarelikely tobe able to adapt themselves to life there"
(Annex4 to PreliminaryObjections). Itwas envisaged that the transfer should
take place gradually ovea period of 30 or more years and thatsome material
assistance to that end would be given. On 15 December 1960. the NLGC

rejectedthe offer on the groundsthat itdidnotafford thema new homelandand
that, byits very nature, the proposal would lead to the assimilation of the
Naumans into the metropolitan communities where they settled.The NLGC

instead asked for anotherisland in a temperate zone (AppendixA. A~ex 1,
1962UN VisitingMissionreport,reproducedin Amex 11.Vo1.4,NM).

131. Theissue was again raised in 1960 in the Tmsteeship Council. which
recommended that rehabilitation issues be kept under active consideration

(United Nations, Report of Trusteeship Council, GeneralAssenibly Official
Records,I5tliSession,Suppl.No.4(A14404) para.61).Australiaindicatedat the
time, however. that the CSIRO had informed them that there were no new

developments that would lead them to alter the conclusions concerning
rehabiiitation previouslyreached.

132. In 1961 Australiaprovideddetails of the proposal endorsed by the three
administering Govemments to allow Naumans to resettle in their countries

referredto in paragraph 130. wasnotedby the Councilthat the Nauruanswere
not yetprepared to accepthose proposaisas they "hope[d] that a place may be foundwheretheycouldcontinueto liveas a separatecommunityand retaintheir

identity asaunians" (United Nations..Report ofTrusteeshipCouncil,General
AssemblyOficial Records, 16tlrSession.Suppl.No.4(,4/4818) Ch.VIpara.18).
The Council also called on the Administering,Authority to obtain further
technicaladvice on rehabilitationand to consider the establishment of a pilot

project to assess thetechnicalandewnomic feasibilityof rehabilitation"bearing
in mind the possibilitythat someNauniansmay decideto remainon the island
in.the event of the resettlement of the community elsewhere" (para.18). It

appears that no pilot project was undertakenat this time. nie 1962 Visiting
Mission said:

"settlement ..in a newhomeis unavoidable ...[NJoone whohas seen
the wastelandof coral pinnaclescan believethat cultivableland could

be established over the top of it exceptat prohibitiveexpense. Even a
layman can see that. and it is to be noted that the suggestion for
rehabilitationof the landhasnevercome fromanyonewhohas visited
the island." (United Nations, Trusteeship Council Oficial Records,

29th Session, Suppl. No.2, para.65; reproduced in Annex 11, Vo1.4,
NM.)

133. The 1962 Visiting Mission concluded that, instead of looking for an

island. a single community cintre in Australia close to some centre of
populationmighthavebeen appropriate.

134. The 1962 Trusteeship Council report also said the time had come for
specificand detailedplans for resettlement.

135. ln early 1962 two Nauruan Councillors,one of whom was Head Chief

Hammer DeRoburt. inspected islands in the Torres Strait and Fraser Island,
whichis cloie to Maryborough on the eastcoastof Queensland.In August 1963.
the AustralianGovemment followinginvestigationsfromitsspeciallyappointed
Director of Nauruan Resettiementand consultationswith the United Kingdom

and New Zealand Govemments, offered the Naunians Curtis Island close to
Gladstone on the Queensland coast. with extended local govemment powers.
This offer was ultimatelyrejectedbecause the proposedpolitical arrangements

were unsatisfactory to theNaunians. The AustralianGovemment, for its part,
had made it clear as early as April 1962 that for constitutional reasons any
surrender of Australian sovereignty over any mainland or island location in

Australia which might be identifiedfor resettlementby Nauruans would raise
grave difficulties.136. While Australia was sympathetic to the Nauruan desire to retain their
identity, it was not. however.able foronstitutionalreasons to cede part of one

of its constituent states to fom an independent nation. whichwould have been
separated by only a very narrow channel from the Australian mainland. In the
hope, netertheless, that resettlement on Curtis Island on the tems proposed

might be possible. Australia commencednegotiationtso purchaseland on Curtis
Island.

137. At this time too theNaunian ResettlementSub-Committeeof the NLGC

submitted itsfirst proposals which would involve the creation of a sovereign
Naunian nation related to Australia by a treaty of friendship. (This was still
premisedon resettlementoutsideNauni.)

138. In 1963 Australia indicated to the Tnisteeship Council that Curtis and

Fraser Islands off theoastof Queenslandhad been investigatedby Naunians
and found suitable, subject toagreementwith Naunians on the future fom of
govemment. Australia indicated, however,that it did notonsider Fraser Island
offered economic prospectsand there were problemsof water supply.Australia

also indicatedthat althoughit could accept resettlementof Naunians as a group
on the islands.it couldnotrelinquishsovereigntyover the islands.DeRobun. as
an adviserto the SpecialRepresentativeof Nauni.indicatedthathe did notthink

Naunians would go back onthe basic decisionthat they be resettled elsewhere
(United Nations, Trusteesliip Council Officia1 Records. 30111Session,
T/SR.1205).

139. Australia set out details of a resettlementschemebased on Curtis Island
in its 1964 Report to the Trusteeship Council. The proposal would enable the
Naunians to manage their own affairs, the island constituting a distinct local

govemment area. The Administering Authoritywould provide al1the money
necessaryfor resettlement.(Fordetailssee UnitedNations. TrusteeslripCouncil
OfficialRecords,31srSession. Doc.T/SR.1232.) Butthis proposal was rejected
by Naunian representativesin July 1964.This was due to the inability to agree

on thedegreeof controlto be accorded theNauniancommunity.

140. In July and August 1964 discussions took place in Canberra between
Australian officials led by the Secretaryfor Territories, and the NLGC, led by

Head Chief DeRoburt, on the issues of resettlement. royalties, Naunian
independence by 1967, the rate of extraction and the ownership of phosphate
(Amex 5 to Preliminary Objections). Dr Helen Hughes, an economist at the

Australian National University, waspresent as an adviser to the Naunians onroyalties. Little agreement was reached: On20 August 1964. Mr Bames. the

Australian Minister forTemtories issued a comprehensive statement which.
intearlia, set out the differingpositionsof the AdministeringAuthorityand the
NLGCon Curtis Island (Annex 6 to Preliinary Objections).Relevantextracts
read:

"For some years past it had beenacceptedby the Nauman people. the
Australian Governmentand the United NationsTmsteeship Council
that resettlementof the Naumans in anotherplacewas essential for a

satisfactory solution to theroblems which would confront them.
when the phosphate deposits were exhausted before the end of the
century. if they remained onNauru.nie Islandwas remote and small
and would ultimately consist largely of worked outphosphate land:

the populationwas expandingand was accustomedto high standards
of living based on the phosphate industry. After inspection of a
number of possible locations, proposalshad beenworkedout in some

detail for resettlement on Curtis Island. Under these proposals the
Naumans would be given the freehold of Curtis Island. Pastoral,
agricultural, fishing and commercial activitieswould be established.

and the entire costs of resettlementincludinghousingand community
services such as electricity,water and sewerageetc would be met out
of funds pmvidedby theGovemmentsof Australia,New ïealand and

the United Kingdom. It was estimated that the cost wouldbe in the
regionof 10miilionpounds.

In the discussions the Naunian representatives said that they held

firmly to the view that the AustralianGovemment'sproposal would
not secure the future of the Naumansas a separate people but on the
contrarywould result in their absorptionin the Australiancommunity
as Australiancitizens.

Moreover after further consideringthe difficultiesof finding a place
for resettlement that wouldmeet enough of their requirements tobe
acceptable to the Nauman peopletheir Council had now formed the

view that they shouldno longerexpectthe AustralianGovemment to be responsible for Naunian resettlement and that theNaunian people
shouidstayon Nauniand notresettieatail.

The Australian representatives noted these views and said that the
Commonwealth Govemmentwould consider'themin the light of ail
the circumstances including the obligations placed on the

Adhinistering Authority by the United Nations Tnisteeship
Agreement and the recommendationsmade concerning resettlement
and related matters by the United Nations Tnisteeship Council.
However. theGovemmentwould continue wilh its investigationsand

negotiations with a view to the successful achievement of the
resettlement of theunianpeople.

Mr Barnes said that the Trusteeship Agreement for Nauni was

admiiisteredjointly by theGovemmentsof the UnitedKingdom,New
Zealand. and Australia. The Ausmlian Govemment would need to
consult these Govemments regarding the decision of the Nauruan
people not to persevere with resettlement.The three Govemments

would consider the positionin the light of theirobligationsunder the
TnisteeshipAgreement ...."

141. In April 1965Australia announced that,in view of the clear attitude of

Nauni, the particular resettlement proposaisinvolving Curtis Island shoube
dmpped and resettlementas a seriousoption lapsedat this point. However, the
Tnisteeship Council in June 1965neverthelessendorsed the view of the 1965
Visiting Mission that the ideaof resettlement should notbeabandoned, while

reaffirmingthe right of the peopleof Naumto self-governmentor independence
(United Nations. Report of TrusteeshipCouiicil, General AssenzblyOficial
Records.20thSession ,uppl.No.4 (A16004)para.324).Amongthe conclusions

and recommendationsof the Council were the following:

"The Councilnotes that, as the Administering Authority wunableto
satisfyullythe Naunians' conditions thatthebeable to resettleas an
independent people and thattheyshould have territorial sovereiginy

their new place of residence, and as therof Australiancitizenship
was unacceptable to the Naunians. they decided not toproceed with
theproposa1 for resettlement on Curtis Island and the Australian

Govemment has discontinued action onLis proposal. It funher notes that at the 1965 Canberra Conference the
representativesof theNaunianpeople and the AustralianGovemment

agreed that theAdministeringAuthorityin coogeration withNaunian
representatives would activelypursueany proposais that might give
promise of enabling the Nauruan people to resettle on a basis
acceptable to them and one which would preserve their national

identity.

The Council endorsesthe viewof the 1965VisitingMissionto Nauru
that the question of the futureof theunianpeoplehas ken closely
bound up with their search for an alternativehomeland and that the

idea of resettlement should not e abandoned, but that aurthereffort
to finda basis of agreementwould be desirable."

Hence, aslateas 1965resettlementwasstilla solution that had notbeen entirely

abandonedby the United~ations.

Section II:Rehabilitation

A. THEREHABILITATIONINVESTIGATIONS

1.TlieCSlROinquiry

142. The possibilityof regenerating theworkedout phosphatelandswas raised
in the post waryears by the United Nations. the dministering Authorityand the

Naunians.

143. The Tnisteeship Council, at its8th session (1951). recommended thatit
considered it "advisable that studies of a technical natureshoube carried out
in order to determine the possibility of making use of worked-out phosphate

land" (United Nations. Report of TrusieeshipCouncil. General Assen~bly
Ofjicid Records, 61hSession. Suppl. No.4 (A/1856), p.229). Such an inquiry
was subsequently initiated by the Australian Government in 1953 when it

commissionedto that endthe CommonwealthScientificand Industrial Research
Organisation (CSIRO)to reportin particularon:

(a) the area and locationof landuitablefor agriculturalpurposes;

(b) the crop or animal productionsystems which mightbe followed to make
the best use of the land, having regard to the environment and the settlementpatternof the islandandwithdue regardto self-sufficiencyand
commeicialfarming;

(c) the physical and economic possibihties of regenerating worked-out
phosphate land.so as to make it useful for agricultural purposes in the
.future;and

(d) recommendedresearchandexperimentalagriculturalpmjects whichmight
be undertaken.

144. The report (Annex 14 to Preliminary Objections) ran to 23 pages and
encompassed the geography. population,food supplies (past and present), land
use, climate, soils, problems of increasing the area of land suitable for

agriculture and possible agricultural systems with special reference to self
sufficiency.The last two sectionscontainedestimatesof hurnanpopulation that
might be supportedandmade five recommendationsconcerningimpmvementof

agriculture.TheCSIRO reportestimatedthat,evenapplying îhemost favourable
assumptions concerning the contributionof the phosphate lands to agriculture,
the island could support a population of no more than 3.000 at a somewhat

primitivelevel. That is, even if the worked-outland coube put to some form
of agricultural use, it was doubtful that the island would able to support
Nauni'sgmwingpopulationin anyevent.

145. With regard to rehabilitation of the worked-out phosphate lands. the

report foundas follows:

"Phosphate has been extractedfrom about25 percent of the available
area, and at the present rate of extraction, the whole area will have
been worked-over wit'hinthe next half century. The authors were

specifically requested to investigate the possibility of regenerating
theseworked outareasso as to make themuseful agriculturallandsfor
the future but as asult of îhis examinationhave formed the opinion

that the regenerationofthis landa practical impossibility.

The old German workings (pre World War 1) were inspected most
wefuiiy. These have now been abandonedfor about forty years.lt 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 presentdominatethe phosphatelands.There isno sign of any appreciableweatheringon the exNsed coral pinnacles,as might well
have ken anticipated from the presenceof prot~ding coral on the

unworked phosphate lands.

It would be possible to level this workedout land with the aid of
explosivesand heavy crushingequipment,and it wouldbe possible to

import soil, eg as backloading from the mainland. but there is no
certainty that the soil would stayon the surface and not be washed
down into the crushedcoral.Even if the plateau were tobe resurfaced

and maintainedin this manner,there wouldstiii be the question ofan
adequate water supply to supplement rainfall. Iisbelieved that any
such scheme would be fraught with so much uncenainty as to final

success,and wouldbeso expensive that itmay beruledout at once as
a practical proposition for the widescale utilisation ofhese lands.
(p.12)

No p&ctical possibilitywhatsoeveris seenof widescale utilisationof
worked out phosphate landsfor agriculture. Although it is possible
that some better usecan be made ofthese lands than at presentthere

wiUalways be the limitation imposedby dependence upon anenatic
rainfall."(p.13)

146. The report was brought tothe attention of theTrusteeship Council and
was referredto fromtime to tirnein its proceedings. In1959160,both orallyand

in writing, the CSIRO confirmed that in its view there had been iio
developments of any sort which wouldcause it to alter its 1954 conclusions
(Annexes 15 and 16 to Preliminary Objections). Dr Phillis, one of the two

authors of theCSIRO report.saidon 1November1960that"he sees no hope of
regenerating the worked out phosphateland on the Island, and even if the
phosphate was replaced with soi1the fact that the Islandwas subject to vety
severe drought and that freshwater reserveswere very limited (asascertained

since 1953) agriculture would not be possible" (Annex 16 to Preliminary
Objections).ThisconclusionwastransmittedtotheTrusteeshipCouncil.

2.BPCestintares

147. On 5 October 1964the BPC.in responseto a Depanment ofTerritories'
request of 14September 1961,sent amemorandumwhichcovered an estimateof the cost of restoring the worked-out areas after the pinnacles had ken

levelled by blasting. on thebasis of shippingsoi1from theclosest proximity to
the ports where phosphatewas presently dischargedby ships employed in the
trade (Annexes 17 and 18 to Preliminary .Objections). The reason for

approaching the BPCand thus reactivating thesubjectwas that, in announcing
their rejection of resettlement proposals. the NLGC had requested that their
worked out phosphate lands should be restored by backfilling with soil from

Australia. Head Chief Hammer DeRoburt was quoted in the BPC's
memorandum as saying that it was intendedto plant coconuts on the restored
mined areas with a view to maintainingthe gmwing population of Nauni after
the phosphate depositswere worked-out.

148. This 1964 study by BPC looked separately at the cost of levelling the
pimacles and of un~oadin~andtransporting soi1to the area to be reclaimed. It
envisaged blastingpinnaclesat a height one thirdabovetheirbase to roughfill the
space between and crushingsufficientiiiestone to leveland compact thearea. It

estimated this would cost 11,400pounds per acre or a total of 40 million pounds
for thetotal phosphatearea,estimated at 3500acres(1400hectares). inrelationto
replacement with soi1 the conclusion was that it would be economically

impossibleto replacethe wholeof the phosphate minedwithsoi1from an outside
source.This would require90 milliontons. which wouldmean backloading 3.75
million tons of soil a year for 25 years. The conclusion was that "the cos1of

procuring. shipping and landingsuch a quantityof soil at an estimated 3 pounds
18 shillings and 2d per ton would be beyond consideration". Nevertheless. it
estimated the total cost of procuring and shipping soi1and discharging and

spreading it over the whole phosphate areaat 88 million pounds. Levelling the
pinnacles would be 40 million pounds. in total, therefore, for levelling and
resoilig the wholeof the areaable to be mined,a sumof 128million poundswas
estimated.BPC envisagedthat this processwouldoccur over25 years. In today's

values. this represents aboutA1.8 billion in total. The Naunians were given a
copyof this letter.

149. On 14 December 1964CSlRO advice was also sought on the Naunian

request (Annex 19 to Preliminary Objections ). On 18 January 1965 it replied
(Amex 20 to Preliminary Objections):

'The proposal to levelout limestone pinnaclesand cover the worked-
out areas with four feet of imported soi1is of such high cost that it could notpossiblybejustifiedon ahygroundsfor thelikelyretum that
wouldaccrue fromsuchinvestment.

With the variable tainfail pattern at Nauru we are very doubtful if

coconut palms could be grown on areas treated in that way athigher
altitudeswherethe mots of the coconutpalms could nottap the water
table.Also,the population that coulbe supportedby coconutplanting

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 highexpenseuntil the narrowstrip of coastal
plains surroundhg the islandis intensively usedfor agriculture.

Because of the variability of the rainfall, the lack of suitable
underground waterfor irrigation and the isolatedlocation of Nauru

Island, we areunableto forese any typeof agriculture at areasonable
cost that could possibly give the Naunian population a standard of
living appreciablyabovethe subsistence level.

The phosphateareas apparentlyhave neverben productivelandsand

itappearsthat vegetation regenerationon worked-outareas is virtually
nil. Fresh water suppliesfor domesticand garden useappear to be a
majorproblem onthe island. A thought that hasoccurredto us is that

the mined areas consist of inertcoraland phosphate whichapparently
behave in a similarmanner to no-fines concrete. Would itbe feasible
and economic to seal some of these areas with bitumen or cement,

firstly to give catchmentsfor gatheringrainfau and secondly to store.
water for domestic and garden use?If this is feasible thewater could
be initially used for domesticand garden useby the present relatively

large population and when mining is completed, for small scale
intensive irrigation for foodopproductionby Naunians.Importation
of soi1of only one foot depth may be worth considering for these
small, intensively gardened areas. You might consider that this

suggestion belongs in the crazy field, butwe considerit far less crazy
than thepmposaltoresoilthe major partof theisland.

If the Nauruans wish to foreseea reasonable standardof living in the.

future, we do not consider there is any reasonable alternative Io
resettlementinanotherlocation."150. The BPC late; commented (letter of 10 Febmary 1965, Annex 23 Io

Preliminary Objections) that the CSIRO suggestion to seal. worked out
phosphatelandfor water catchment purposesappearedimpracticable.

151. On 20 January 1965the BPChad, at the réquestof the Depanment of

Temtones, made an estimateof the cost of shippingsoil from Faum. an island
in theSolomons (Annex21 to Preliminary Objections). The exercise. which
BPC stressedwas hypothetical. concluded(p.2)that:

"the goveming factor in freightcost is the rateof discharge at Nauru
which wouldhave to be carried out with ships gear, that the use of

medium sizedbuik carriersmightbe mostfavourable andthat the cost
ofprocuringand shippingsoilfroman islandsuch as Faum would be
much the sameas fromnormaldischargingports in Australiaand New

Zealand."

152. A furiher BPC letter (Annex25 toPreliinary Objections),dated 2 April
1965, to the Department of ,~e';ritories on the cost of a pilot project in

regenerating the worked out phosphate land was discouraging in that it
concluded that a pilot operationwould yield little information in the way of
establishingcost. Itad:

"Our estimate of 36,570 pounds per acre (see our letter dated

5 October 1964)was based on a large scale operationully equipped
to obtain, receive, load, discharge, land and distribute thesoi1
includingthe laying of a specialset of mooringsat Nauru. Itassumed

the availability ofuitable soi1and of course the necessary labour
forcewas taken into account.

In operating a Pilot scheme none of these factors would pertain.
Assuming thatsuitablesoilcouldte obtainedcloseto, say,Melbourne

or Geelong (130,MWt)ons would be required for 20 acres) it would
need to be cartedby mad vehicle,dumpedon wharf, loadedby grabs
and discharged at Nauru with makeshift equipment into barges not

suitablefor carryingbulk matenal. Adequateshoredischarge facilities
do not exist at the Islandto off load thesoilfrom thebarges and ships
would need to moor at existing berths to the exclusion of ships

discharging general cargo andlor loading phosphate. Turn around
would thus be slowed down whichwouldreduce theeffective supply
ofphosphateand addtofreightcosts. Not in any respect could existing plant and labour handle such a
project efficiently. To attempt it on these lines would amount Io

attacking a mammoth project on a knife and fork basis and the cost
could be expected tobe as much as two or three times more than the
estimated cost of 36,570 pounds per acre which is based on a

thomughly plamed and mechanised operation.In such circumstances
it seems to us that a pilot operation would yieldtle in the way of
establishing cos-indeed rinlessways (unknownto us) can befound

of greatly reducingour presentestimates cost will in any case defeat
thepurposeof theexercise."

Today, thisestimate of 36,570pounds is the equivalentof $A512,000 per
acre. (Thereare 2.47acresto a hectare.)

3. TheDoveyCommirree

153. By May 1965 the Department of Territories concluded that its own
investigationshadestablishedthat the costof rehabilitationwould be so high as
to be uneconomic and that there were serious doubts about any worthwhile
results for agriculture due chiefly Io probable loss of soi1through the porous

coral base and the erratic rainfall. It also noted that the MonsantoCompany in
the United States had cooperated with the University of Tennessee in recent
yem in experimentson the use of mined phosphateland and thatthe Company
had commentedthat:

"where the phosphaticrnaterial is right at the surface of the ground
and practically al1the soi1is removed leaving onlyexposedbare rock
..This type of mined overland hasinsufficientsoi1left to releveland
the only way of puttingthisland intoits formerconditionwould to

move Soilin by tmcks fromsome other location.This we consider as
uneconornical and unrealistic as the cost woulde more than the
possible value of the land for agriculturalses" (Amex G to the

1965Recordof Negotiations. reproducedin Annex2, Vo1.3.NM).

154. On 10 June 1965. Mr Warwick Smith and Head Chief DeRoburt, in
discussions in Canberra on the future of Nauru, signed a summary of
conclusionswhich included thefouowingsection onrehabilitation(AnnexL to

the 1965Recordof Discussions.Annex 2, Vo1.3.NM): 'The Naunian delegation stated that it considered that there was a

responsibility on the partner govemments tolore at their cost the
land that had been mined. since they had had the benefit of the
phosphate. 'Ihe Australian delegation was"01 able on behalf of the
partner govemments to take any commitmentregardmgresponsibility

forany rehabilitationpropostheobjectivesandcosts of which were
unknownand theeffectivenessof whichwasuncertain.

It was agreed to establish at the earliest practicable date an

independent technicalcommitteeof expertsto examinethequestionof
rehabilitation.the costtometby the AdministeringAuthority."

About the same time the 1965 United Nations Visiting Mission to Nauni
published ils repon which. while it did not touch on rehabilitation in ils

conclusions.included(Annexii ) NLGCmemorandum on therehabilitationof
worked-outphosphate lands(Amex 12,Vo1.4.NM).

155. By the end of 1965 the members of the technical committee were
appointed.'Iheindividualmembers weremutuallyacceptableto the NUjC and

theAdmimisteringAuthority.Theycomprised:

Mr G E Davey ConsultingEngineer
(Chairman) Sydney,NSW

Prof JN Lewis Profof AgriculturalEconomics
Universityof New England
Amidale. NSW
MrW F Van Beers Soi1andLand ClassificationOficer,

FAO.ROME

156. The Cornmittee's terms of reference, as set out in the repori. were to
examine:

"(i) whether it would be technically feasible to refill the mined

phosphate areas with suitable soi1andior other materials from
extemal sources or to take other steps in order to render them
usablefor habitationpurposesand/orcultivationof anykind;

(ii) effective and reasonable ways of undertaking such restoration,
includingpossible sourcesof materialsuitablefor refiiiing; (iii) estimated costs of any practicable methods of achieving

restorationinanyeffectivedegree.

nie terms of referencealso instructedthe Committee, assumingit
appearedto be feasibleto achieverestorationalongthelinesreferred
to inthepamgraphabove,to:

(i) investigatethe waterresourcesofNauni;

(ii) examinefullythe possibilityof growingin the areasto be restored,
trees,vegetablesandotherplantsofa utilitariankind,having regard botto

what was donein thisway inthepastand whatmight be mostusefulto the
Naunianpeopleinthefuture."

157. The Committee's68 page report(reproducedas Amex 3, Vo1.3.NM)
was submittedin June 1966to the Australian Govemment and the NLGC It.
comprised10sectionsand 7 appendicesandwas theresultof submissionsand

consultations withthe NL.GC,the AustralianGovemment,BPCand othersas
weiiasa 10 &y visittoNauru.Thefiistconclusion (Section 2)wasasfollows:

"(i) that while it wouldbe technically feasible(withinthe narrow
defmitionof thatexpression)to refillthemined phosphateareas
of Nauruwithsuitablesoi1andlorother materials from external
sources.the verymanypractical considerations involvedruleout

suchanundertakingasimpracticable;"

158. The Daveyreportpmvidedinformationon "technicallyfeasible methods
of treatingworkedareas.thecostsandbenefitsofalternativetreatmentsandthe
implicationsofhuchactions"(p.8).Itsoughtto"outlinea setofmeasuresforthe
treatmentof worked-out phosphate areaswhich would be reasonableintermsof

thecosts involvedand thecontributionswhich would be madetowardsa sound
and flourishingeconomy".(p.8)

159. Section seven of the report containedan examinationof the Nauruan
economyafterexhaustionofthe phosphate.Itpointedtothe abilityof Naunito
sustain a high per capita income basedon income retum from phosphate

royalties.

160. Section eight examined possibilitiesfor treatmentof mined areas. It
consideredfivealternativeland treatments, recognising thtteendusedesired
and costs would largely determine the choice of alternatives. It ruled outcomplete refiiiiig by importedsoi1as not a ptacticablealternative.It examined
leveUingof pimacles and resoiling part or al1of the worked-out areas using

local and importedsoil. AppendixIII to the reportgave detailed cost estimates.
Dependig on the soi1depth, costs of fmm$94-240 million were estimated for
IeveUig and resoiling (p.53 of report).This is equivalent to $A658 million to

1.68billion today.The Committee pointed, however,to problemscaused by the
dope of the land which wouldrequirespecialanti-emsionmeasures.

161. The Cornmittee examined twoparticularprojects: constmction of a new
airstrip and construction ofawater catchment andstorage. If the two projects

were carried out together their cost would be respectively $A8 million and
$A18million.This is equivaientto$A56millionand$A126million today.

162. Fily, the Committeeexamined revegetationof exposedpimacle areas.
This would involve accelerating revegetation artificially such as by hand

planting. However. an accurate assessmentof benefits could only be obtained
afterexperimentalwork.

163. Having exarnined possible options, the Committee considered likely
benefits. It considered that "direct benefits (from resoiling) in the form of

additional agricultural production would be relatively very small" (p.37). It
concluded:

"the direct agricultural and residential benefits from resoiling the
worked out phosphate areas would be small in relation to the costs

involved. No future land use wouldoffset morethan a fraction of the
capitalcostsof resoilingland withimportcdsoil.It wouldtherefore be
unreasonable to incur expenditures of the magnitude involved in

resoiling the whole of the phosphate lands unless extremely high
values wereplaced on the achievementof intangibleobjectives ..The
Committee concludes,therefore.that even if resoilingof the whole of

the worked-out areaswith irnportedsoi1weretechnicallyfeasible ...it
would not makea contributionto economicand social life on Naum
cornmensuratewiththecosts involved"(p.39).

164. The Committeeconsidered itwould be possible to use the thin cover of
soi1 on the remaining undeveloped phosphate lands as part of landscaping

associatedwith levelling 600-700acresfor residentialuse (p.40). And levelling
without any resoiling of the remaining area could be undertaken at a cost of
$10.8 million (p.41).This isequivaientto$A70million today. 165. Its conclusionswere thata numberof facilities couldte constnicted,at a
totalcost of $A31 million (today.$A217million), which wouldpmvide a basis
for the usefuldevelopment of the islanThese includeda water supply.airport.

treatment of some 500 acres so that the land would be available for public
purposes and minor revegetation of the remainingarea. It also recommended
that steps be taken as soon as possible to plan the land use of the island
completely.

4. ReceplionoftheDaveyreport

166. On 20 June 1966, discussions were held between the Partner
Govemments and the Naunians about the future of the phosphate industry.
Whatever prospectsexisted for acceptingand implementingthe conclusions of
the Davey Report were destroyedby the Naunians themselves. Head Chief

DeRobun submitted a 20 page statement on the Davey Committee's report
which commended certain parts, and condemned those parts which did not
support theNaunian case on rehabilitation (Annex11 to the 1966 Record of
Negotiations. reproduced in Annex 4. Vo1.3, NM). The latter approach

predominated, with such section headings as "Signs of undue bias in the
Committee's report", "Assertions unsupported by the report" and "Factual
inaccuraciesinthe Report". Amongthe 17conclusions were that the Committee
had:

-
confirmed thejudgment of the NLGC thatit was "technicallyfeasible to
refiii mined phosphateareas with suitablesoi1anaor other materials from
extemalsources".

- confirmed that given a water supply and improvedcommunications the
Nauruanswouldenjoya very satisfactorylevelof livingon theisland.

- gone beyond its terms of reference when it presumed topronounce that

complete re-soilingwas technically feasiblebut "impracticable".
-
commendedthe proposalto build anairstripdesignedas a catchmentarea
for water.

- made a seriouserror of judgment in consideringonly the facilitiesneeded
to support apopulationof 10.000by the turn of the century.

167. On 28 June 1966 Mr Warwick Smith replied in a joint delegation

statement (Annex 16 10 the 1966 Record of Negotiations, reproduced inAmex 4,Vo1.3,NM). He stressed that the Partner Govemments had not yet

considered in detail either the Davey Committee- report or the Nauruan
statement.'IheCommittee's report,he said,followed twooffers of resettlement.
both declinedby the NLGC.He then traver&dpartsof the Nauruancomments,
deprecated attacks on the Committee'sintegrity and proposed a joint detailed

examination.

168. On 1 July 1966 Head Chief DeRoburt and Mr Warwick Smith signed
another abed minute which containeda lengthy paragraphon the relationship

of rehabilitation and resettlement costs tofinancial arrangements for the
phosphate industry (Annex 19to the 1966Record of Negotiations.reproduced
in Annex 4, Vo1.3. NM). Nauni linked the issue of rehabilitation to future
financialarrangements.Thestatementread:

'nie Nauruan view was that rehabilitationof Nauruwas a matter of
primary concem for the Naunian people. They indicated that they
were pursuing the rehabilitation proposals in the absence of any

acceptable proposal for resettlement. Thev said that thev should
receive the full financialbenefit from theohosohate industrv so that
t h a .
'IheJoint Delegationexplained that thetenefits to be receivedby the

Nauniancommunity fromtheproposed phosphate arrangement would,
it was envisagedbe adequateto provideforthe presentand long-term

securityof the Nauruan community includingan adequate continuing
incomewhenthe phosphatehas ken exhausted andwhen the costsof
any resettlementorrehabilitationhavebeenmet.'IheJoint Delegation
said they wouldbepreparedto considerthat,withii the frameworkof

a long-term agreement,arrangementsbe made for an agreed payment
into the long-term investmentfund,fromwhich thecosts or part of the
costs of rehabilitation couldet.It wasagreedthat the reportof the

Committee on Rehabilitation should be examined by the Working
Party" (emphasisadded).

169. The Working Party was chairedby Mr C E Reseigh, a senior officer of
the Australian Departmentof Territories,and includedtwo Naunians and their

financialadviser. lts report (Annex7 to Preliminary Objections) noted that
agreement could not be reached regarding consideration of the Davey
Committee findings. Head Chief DeRoburt criticised the failure of the

Department of Territories to present a detailed critique of the Davey report similar to the Naunian critique, repeated the Naunian view that rehabilitation
was the responsibility of the Partner Govemmentsandaid how they financed
that responsibility was up toem. Mr Reseigh emphasised (para.15) that the
Australian Govemmentwasnot sayingthat it didnot take anyresponsibilityfor

meeting the cost of rehabilitation,but that it woulddoby ensuring that the
payments to the Nauruans would be sufficiently generous to enable al1
expenditure necessary for the long term welfare of the Naunians. including

rehabilitationif they decideupon itbemet. He suggestedthat it woulbe of
use to look carefullyat the Davey report todetermine what rehabilitation.if any,
seemedsensible andproper to undertake.It would alsbeuseful to know what

theorder of magnitude of the cost of such a rehabilitationprogram wobe.
HeadChief DeRoburtreplied(para.16)that,as therewasno acknowledgmentof
the Partner Govemments' responsibility, he couldnot see that any advantage

wouldbe servedby the WorkingPartydiscussing the report. So.once again, the
Naumans elhinated any prospectof progressalong the lines suggested by the
Davey Committee.

170. On 18 April 1967 the report of the Working Party was discussed in

formal negotiationsbetween the Partner Govemmentsand the Naunians (SR5,
pp.85-89. Record of the 1967 Negotiations,Amex 5, Vo1.3,NM). It covered,
inter alia, the preparation of a price indicator, profitsharinin mineral
extracting.rehabilitation and theLongTerm InvestmentFund.On rehabilitation,

Mr Warwick Smith repeated that the Partner Govemments considered that
decisions on what action shoulde taken on rehabilitation waswholly a matter

for the Naumans. Thereafterthere is no mentionin the forma1negotiationswith
the Naunians of the Davey report although exchanges on the principle of
rehabilitationandresponsibilityniinuedfor anothermonth.

B. UNITEDNATIONSATIlTUDE TO REHABILITATION

171. As resettlement receded as a possibility. attention tumed within the
United Nations to rehabilitation. But, as theous studies referred to in the
previous section indicate, rehabilitationwasithout problems. In 1964the

Special Representative explained.in answer to questions from Liberia,why it
wasnot feasible:

"it would be extremely difficult and expensive to reclaim the land
from which the phosphatehad ken taken. The phosphate deposits occurred in plateaux around very hard limestone pimacles and
reached to a depth ofwenty to thiny feet. The pimacles occumd at

intervals of abouthreeor four yards, andtheirdiameter at the base
was ten or twelve feet. Inorder to recove,rthe land, it would be
necessary to blastdown the pinnaclesone by one, cnish the rock and

cover it with a sufficiently thick layer of fertile soi1imported from
Australja. But even if that weredone two insuperable difficulties
would remain. First. the ground on Nauru was very porous. When
there was any rain, whatever the amount, thewater passed quickly

through thelayers of earth and was heldonly by the pressure of the
salt water, whose density was greater.The extreme porosity meant
that the land woulde arid.Evenif certain crops coube grown,cash

crops would be out of the question.Secondly,the island wasremote
from any possible market and could be worked only on a basis of
subsistence agriculture. That was not what theNaunians wanted. It
was probably for thatreason that the peopleof the island had stated

that they wouldbe compelledto fiid a new home in order to survive
as a people" (United Nations,rusteesllipCourtcilOficial Records,
3lst Session,Doc.T/SR.1236).

172. The 1965 Visiting Mission noted the views of the 1962 Mission on

rehabilitation.That Mission had concludedthat:

"settlement..in a ricwhome isunavoidable...[Nloone who has seen
the wastelandof coralpimacles can believethat cultivableland could
beestablishedover the top ofit except at prohibitiveexpense. Even a

layman can see that, and it is to be noted that the suggestion for
rehabilitationof the landhasvercomefromanyonewhohas visited
the island" (United Nations,TrusteesllipCouncil Oficial Records,
29th Session, Suppl.No.2, para 65; reproducedin Amex II, Vo1.4,

NM).

173. The 1965Mission notcdtheenormousexpenseand difficultiessaid to be
involved but. not being experts. declined to make any recommendatjon.
Appended to the report. however.were memoranda submitted by the NLGC.

Also reproduced was a statement of the BPC with estimated cost of
rehabilitation (United Nations,Trusteeship Council Official Records. 32nd
Session, Suppl.o.2. reproducedin Amex 12,Vo1.4,NM). 174. In discussion in the Tnisteeship Council in June 1965, the Special
Representativeindicatedthat anexpertcommitteewouldbe establishedtomake
a fulI scale investigation. This proposal had arisen out of negotiations with
Nauru the same month and resultedin appointmentof the DaveyCommittee. A

USSR diaft resolution (TL.1098) inviting the Administering Authority. inter
alio,to restore the ground cover of the island was defeated in the Tmsteeship
Council (United Nations, TrusteeshipCouncilOfficia1Records.32nd Session,

Doc.T/SR 1269).

175. In the Fourth Committee in 1965, rehabilitation was againraised.The
Liberianrepresentativeintroduceda draft resolution onbehalfof the AfroIAsian
group, claimingthat the Naunianswerealreadycapableof full self-government

and independence,which should be granted to them. Fuither, Australia should
restore the island byetuming soi1in phosphatevessels which now amved in
Nauni empty and that,pe cost of so doing wouldbe 12millionpounds (today.

$A84 million) (United Nations, General Assembly Officia1 Records.
20thSession, Fourtli Committee. Doc.A/C.4/SR.1591). Mr McCarthy, the
Australian representative. replied by saying that the draft resolution did not
reflect the true circumstances,and that it was onlyby exploitingthe phosphates

that theaunianscould liveso well (United Nations.GeneralAssemblyOficial
Records,20111 Session,FourihConinzittee . oc.NC.4/SR.1593).

176. Subject to some amendments,the Afro-Asianresolution was adopted in

the Committeeby 61-0-19.11requestedthatthe AdministenngAuthonty fix the
earliest possible date. but not later than 31 January 1968, for Naunian
independence and "that immediate steps be taken by the Administering
Authonty towards restonng the islandof Nauni for habitation by the Naunian

people as a sovereign nation" (United Nations. General Assembly oficial
Records,2011S 1ession.FourthCommittee,Doc.NC.4lL.825). (Thematterof the
habitability of the island is discussed funher in Part II, Chapter 3.) On

21 December 1965 resolution 211l(XX) was adopted in plenary by 84-0-25
(Australia.NZ, UK,US,otherWestemandLatinAmeficanStates).

177. In July 1966the TrusteeshipCouncilwas infonned thatthe Davey.port

had ken received by Australia the previous month and it was now being
examined. It wouldbe madeavailableto the Council.Head ChiefDeRoburtalso
addressed the meeting.nie text of hisstatementis set out at paragraph 186ofthe Naunian Memorial.It assertedthat the AdministeringAuthority shouldbear

responsibilityfor rehabilitationof onehirdof the island.

178. In its report the Council made specific mention of rehabilitation. The
conclusionson this pointreadas foUows:

'nie CouncilrecallsthattheGeneralAssembly,by itsresolution2111

(XXj. requested that immediatesteps be taken by the Administering
Authority towards restoringthe island of Nauru for habitation by the
Nauruan people as a sovereignnation and notes that aninvestigation

into the feasibility of restoring the worked outland hasen carried
out by a Committee of Experts, includinga representative of FAO;
appointedby the Administering Authority.

7he Council notes thestatementof the representativeof the people of

Naum that the responsibilityfor rehabilitatingthe island,inso far as it
is the ~dministerin~ Authority's, remains with the Administering
Authority. Ifit shouldtum out that Nauru gels its own independence

inJanuary 1968,from thenon the responsibilitywill 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
Naunianpeople.

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 islso noted thatthe 1962Visiting Missionremarked that no
one who had seenthewastelandpinnaclescould believe thatcultivable

landcould be establishedthereonexceptatprohibitiveexpense.

The Council requeststhe Administering Authorityto make the report
of theComminee of Experts onthe Rehabilitationof the worked out

mining land available to its members as soon as possible and
recommendsthat itbe studiedas soon as possibleduringthe course of
conversationsbetween the Administering Authorityand the delegates
of the peopleofNauni. The Council recalls resolution 1803(XVII) concerning permanent

sovereignty over natural resources and invites the attention of the
Administering Authority to itsprovisions.

The Council notes the statemcntof the Administering Authority that

the discussions between the joint delegation and the Naunian
delegation in CanberrawiUcontinueto be infusedby what the Head
Chief called 'a spirit of understanding' a positive, most heartening
and most encouraging 'response and attitude'." (United Nations,

Report of TrusteeshipCouncil,General AssemblyOflcial Records,
21stSession,Suppl.No.4(N6304) Part II,para.408.)

179. The Council in this recommendation also noted that further joint

discussions wereto be held to deal with the questionof rehabilitation andthe
future operation of the phosphate industry. The Council hoped that these
discussionswouldresolvebothproblems:

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

180. Liberia had unsuccessfully sought to include in the report of the

Trusteeship Council astatement to theeffect that "if the Committeeof Experts
considersrehabilitation is feasible, Council recommends that the Administering
Authority should take immediate steps towards restoring Nauru" (see United

Nations, Report of TrusteesliipCouncil, GeneralAssembly Oflcial Records,
2Ist Session,Suppl.No.4(A16304)para.426).A furtherLikrian atternptto get
a similarresolution adoptedby theTmsteeshipCouncilin July 1966alsofailed

(United Nations, Trusteeship Council Officia1 Records, 33rd Session,
Doc.T/SR.1296).

181. It is clear that the Council wasfully aware of the Nauruanclaims during

the negotiations on the future of thephosphate industry. includingtheir claims
as to responsibilityfor rehabilitation.se were set outin the preambleto the
conclusionsand recommendationsof theCouncil.The questioiiof rehabilitation

was seen as part of the overall negotiations on thefuture of the phosphate
industry. There is no suggestion that rehabilitation was a prerequisite to
independencc or that failure to rchabilitate would involve a breach of a
trusteeship obligation. Thesole concernwas thatthe overall settlement secure

Nauruan rights andknefits as a whole.182. ïhe FourthCommitteeagain consideredNauni in December 1966at the

21st General Assembly. The Australian Representative referred (1663th
meeting. 9 December 1966)to the various plans for the future of the Nauruan
people including resettlement and the Davey report whilst the Liberian

representative (Miss Brooks) took issue with several of the Tmsteeship
Council'sconclusions. Miss Brooks raised again the question of ownership of
the phosphate. independenceby 31 January 1968and her confidence that the
Administering Authority would contribute to restoring the worked-out

phosphate lands (United Nations, General Assembly Official Records. 21st
Session, Fourtfi Committee, Doc.A/C.4/SR.1663.) A Liberian resolution
(Doc.A/C.4/L.851)was intmduced which hadthreemainrecommendations:

- that Australiafix the earliestpossible date.not laterthan 31 January 1968,
for Naunian independence;

- that the Administering Authority transfer controlover operation of the

phosphate industryto the Naunianpeople;

- that the Administering Authoritytake immediatesteps, irrespectiveof the
costs involved. towards restoring Nauru to habitation by the Nauruan
peopleas a sovereign nation.

183. The original resolution (Doc.AIC.4lL.851) had confined its

recommendation on rehabilitation to a situation "should the Committee of
Experts consider that rehabilitation of the worked-out land is feasib.hese
words were however deleted in a Corrigendum -A/C.4iL.851/Corr 1. This
resolution was adopted in Committeeby a vote 58-3-13 and on 20 December

1966 in plenaryby a vote 85-2 (Australia,UK)- 27 (NZ). For text of resolution
2226(XXI),seeAnnex 16,Volume4. NM.

184. The Australian representative,speakingin explanationof his vote in the
Fourth Committee said that it was "not correct to say that the phosphate

operations had spoiled previouslyfertile land. for the land was rock andld
notbe used for agriculturalpurposes".Given that the negotiationswere deferred
until 1967at the requestof the Naunianleaders. he regretted that theCommittee
hadadopted sucha resolution at thattime.

185. The delegateof China alsosaid thatsinceNaunihad not responded to the
DaveyCommittee: "he did not considerthat any recommendationshould have beenmade
on thequestionof the rehabilitationof the worked-outland."

The amended resolutionwas adoptedby the Fou& Committeeon 15 December
1966(United Nations, GeneralAssenlblyOficial Records,21stSession.Fourrli
Cornmittee,Doc.A/C.4/SR.1672.)

4.TrusteeshipCouncil. 1967

186. The 34th session of the Tmsteeship Council (29 May -30 June 1967)

againexaminedNauru.It was attendedby Mr Reseighas SpecialRepresentative
and Head Chief DeRoburt.The issue of thefuture of the island was considered
at some length in theTrusteeshipCouncil.Mr Reseigh mentioned,in the course

of an account of conditions in the Territory, the 1966 Davey report on
rehabilitation:

"the Administering Authority considered that theCommittee had
made a painstaking review of the problcm which made a valuable

contribution to the solution of the probleni, but the final decision
rested with the Nauruan people. The new financial arrangements
which had been madefor the phosphate industry should enable the

Nauruan people to take the necessary measures for their future"
(United Nations.TrusieesfiipCouncilOficiul Records.34tfiSession,
Doc.TISR.1313).

He also describedthe phosphate agreement reachedon 15June and the political

discussions which had commenced in Australia following conclusion of the
negotiations onphosphate.The latter would be contiiiuedafter the Trusteeship
Councilsession.

187. ~ead Chief DeRobun felt the only important pointon which thcre was

real disagreement was the question of the rehabilitation of the worked-out
mining lands. The Nauruans believed that the Partner Govemments should
accept responsibilityfor rehabilitating land workedbefore July 1967, while
the Nauruans wouldaccept respoiisibility for land workedafter that date,us

assumingtwo-thirds oftheresponsibility. (United NationsTrusteeslripCouncil
Oficial Records.3411S1ession Doc.T/SR.1313.)

188. In answerto questions andinthe genenl debate Mr Rcseighrepeaied the
Partner Governments' view on rehabilitation. nie lengthy statement bears

carefulstudy. Hesaid:"The basic position of the Administering Authority regarding the
restorationof worked-out landwas, firstiy,that there mustbe adequate
resources to provide for the future of the Naunian people, and.

secondly,that theNaunianpeoplethemselvqsshoulddecidewhat was
to be done. Taking up the second point, he recalled that various
proposais had been made for the resettlementf theNaunians,but that

they had not ken found acceptableby the Naunian representatives.
The Naunians had decided thattheywishedto remainon the island.It
was possible, however. that a future Naunian Govemment or

individual Naunians would subsequently decide in favour of
resettlement elsewhere.The choicemusttherefore be left open and the
choice as to whether resources wereto be utilized for rehabilitating
worked-out areao sr securingthe futurein other ways should alsbe

leftto the Naunians.

With regard to measures to be taken for the treatment of worked-out
areas,the matterhad been consideredby a Committee of Experts.The

experts were people with high qualifications and the Nauruan
representatives had approved their appointment. The Chairman had
beenone of the best qualifiedngineersinAustralia, nominatedby the

appropriate professionalbody in Australia, and other members had
been a professor of agricultural economics. and a soi1 expert of
Belgian nationality nominated by the Food and Agriculture

Organization. None of the members had been employees of or
connected with the Australian govemment service. He was sorry that
the Naunian representatives had reflected on the objectivity of the

experts. But in any case. it would not have been proper for the
Administering Authority to act unilateralyn the basisof the report.

As Io when the stepsrequiredsliouldbe taken, it would seem to him
wise to leave open the maximum options regarding the use of

available resources. If mined land was not neededand might not be
needed for decades. it would seem better, rather tlian devoting
resources to its rehabilitation immediately, to layresourcesaside

at interestandundertakethe treatmentof theland as needs developed.

With regard to the useof resources, it seemedto him quite unrealistic to
consider the questionof treatmentof worked-out land withoutconsidering

the benefits of alternative uses of the resources, such as investment at interestor investmentin Naunianenterprisesneedingcapital.The concem
of the Administering Authority in the discussions which had just been
completedhad beenthat the resources available-tothe Naunian community
should be adequate. Inconsidering thatmat!er,there were manyquestions

which had to be taken into account,includingthe continuingneeds of the
Naunians when the phosphates were exhaustedand income from their
extraction ceased.Al1those aspects had been consideredas carefully as

possible by the Administering Authorityin theetdementmade. Underthe
agreement reached, payments 10or for the Naunians wouldamount to the
equivalent of about$US21 million during the coming financialyear. ïhe

Naunians had a number of needs that they would wishto meet, iiicluding
payments to the long-term investment fund which wad sesigned to secure
an income for the Naunians after the phosphates were exhausted.

Nevertheless,the sum representedabout $US40,MH)for each family over
and above itseamings.The Administering Authorityhad placedbefore the
N~UN Local Government Council a suggestion regarding the gradua1

levelling of the island and its covering with soi1where necessary. It was
estimated that the cost would te some $US2million per annum. If the
Naunian community continued to contribute tothe long-term fund at the

present rate. and if the price-cost relationship remainedas at present, the
fund would totalabout $US400 million by the time the phosphates were
exhausted. It would thus receive anannual income from investmentsof

about $US24 million per annum. The Administering Authority believed
that that settlement would give the Nauruan people a reasonable
opportunity to safeguard their future, whether onNauni or elsewhere."

(United Nations, Trusteeskip Council Oficial Records, 34111Session.
Doc.TISR.1314.)

189. MrDeRoburt was questionedby the representativeof the United Siates
on a numberof issues.The followingrecords someof that exchange.

"Mr McHcnry (United Siatcs of America) asked whether Nauruaiis
lived on the unworked phosphate landsor farmedthem. Mr DeRoburt
(Adviser to the Special Representative) replied thatpreviously the

Naunian population had livedexclusivelyoff whatthey could pickor
fish and that the trees growingon the phosphate plateau had provided'
them with material to build their homes. However,since the deposits

had begun tobe worked and the population had derived benefits from them, the Naunians no longer livedon the phosphatelands or fatmed

them...

Mr McHenry (United States of America)said it was recognisedthat
theNaunians wanted tostay on their island,éspeciallyin view of the
difficulties ofettiing elsewhere. However. theNaumans might for
'
some reason be obliged to change their minds one day. He asked
whether, thatking so.itwaswiseat thepresent timetoembarkon the
rehabilitation ofl the worked-outlandsand whetherit would not be
preferable to do as other countries had done and foilow a more

conservativeminingprocess.

Mr DeRoburt (Adviser to the Special Representative) said that the
question hadbeen raisedon severaloccasionsby the representativesof

the PartnerGovemments.The Nauni LocalGovemmentCouncilhad
considered thematter at length and its reply was to be found in the
documents which had been circulated to the members of the
Tnisteeship Council. There were several ways of canying out the

rehabilitationprogram but the point wasthat whatever was done
would be costly.TheNauru LocalGovemrnentCouncil wouldhave to
take care not to squander the profits it would derive from the
phosphate industry- its only source ofincorn- if it was not10be in

difficultywhen the time came to rehabilitate lands."

190. The delegatefor Francealsosaid:

"Sound managementof the capital that wouldaccumulatebefore the
phosphate deposits were exhausted should enable the Nauruan

community to live comfortably on Nauni or, if it so decided,
elsewhere. His delegation welcomed Head Chief DeRoburt's
statementthat theNaunian leaders wereendeavouringto create work

that could ateast panially replace phosphateextraction. It regretted,
however, that agreement had not yebteen possibleon the question of
rehabilitating the worked-outland. Nevertheless,the situation was
generally satisfactory, and his delegation wassure that theTerritory

would take its final decision on its future in total freedom and in
complete conformitywithitsaspirations."

191. The UnitedStatessaid: "His delegationbelieved that the dominant influence otfhe phosphate

industry on al1 aspects of NauniYsfuture should be the subject of
careful and urgent consideration, andithad thereforeben encouraged
to leam from the Head Chief thatattention,was being given to the

possibility of diversifying the Nauruan economy. However,
consideration should also be given to certain variables in that
economy; for scientific progress, which could help to solve the

Naunian water supply problem, could also reduce the need for
phosphate.It was difficult. therefore, to predict withaintywhether
future generationsof Naumanswould wish toremainon the island,as
the present generation did. mat problem inevitably affected the

question who should rehabilitate the worked-outland, and more
particularly whether,when and at what rate rehabilitation shouldbe
carried out. His delegation therefore hoped that representativesof

the Naunian people would consider those questions carefully, both
before and after the expected political changes in the Territory."
(United Nations.TrusfeeslripCouncilOfjiciaIRecords,34th Session,

Doc.TlSR.1316.)

192. Mr Reseigh, in his closing statement on 23 June 1967 regretted that
agreement hadnot ken arrivedat on the treatmentof the worked-out lands. He
gave details of a plan under which $A12 million per annum (today,

$A84million) would be paid into a special fund to meet the costs of a new
airport and livingspace until the wholeof the miningarea had ken treated. He
said that the responsibility of the PartnerGovemments was to see that the

financial resourceswouldbe availableso that theh'iaunianscould give effect to
their decisions conceming their own future and affirmed that the Partner
Governments could not have been more generous in their financial

arrangements. For example. they weresellingthe assets of the BPCat historic
ratherthan commercialcost andit hadken decidedto give the Naumans 100%
of the net proceeds of the phosphate at fair value, although the practice of

sharingnet profits inmost othersimilarenterprises was50150.He added that the
agreedarrangementshad takeninto account theextractivenatureof the industry
and the small size of the island. (United Nations,TrusfeesliipCouncil Officia1
Records.34111 Session,Doc.T/SR.1317.)

193. At the 1320th meetingof the TnisteeshipCouncil,a Liberian resolution
(TIL.1132) that recommended thatNauni become an independent republic by
31 January 1968;that the conclusion ofa treaty of friendship should not be apreconditionto independence; andthat'theAdministering Authorityshould take

immediate steps to restore the island for habitation. wasdefeated 2(Liberia,
USSR)-5-1 (China) (United Nations. TrusteeshipCourtcilOficial Records,
34th Session,Doc.TISR.1320).

194. The Chapterof the 1967reportof the TrusteeshipCouncilon Nauru is set

out inAmcx 28 to the Preliminary Objections.The Councilin its report noted
the proposals for the futureof Nauru that had been putfonvard in discussions
between the Partner Govemments and Nauruan representatives. This led the

Council to:

"note(s) with satisfaction îhat the 1967 Canberra discussions were
held in a favourableatmosphere.The Council, however,regrets that
the parties were unable to complete theirdiscussions due to lack of

time but notes that theyundertookto study thevarious proposals and
to resume discussionsat an early date.The Council isconfident that
these discussionswill take placein thesame spirit ofcooperationand

expresses earnest hope that agreement will be reached to the
satisfaction of both parties. The Council is gratified tonote that the
Administering Authority has expressed ils sympithetic attitude in

connexion with the Naunians wish to realise their political ambitions
by 31 January 1968."(United Nations,Reportof TrusteeshipCouncil,
GeneralAssemblyOficial Records,22ndSession,Suppl.4 (Al6704).

Part II,para.322.)

195. In relation to rehabilitation. this was considered under the general
heading of economic advancement. The Council rehearsed at length the
previous consideration of this matter by the Council and the views of the

relevant Parties. The views of the PartnerGovemmentsand of Nauru were set
out at length: (See United Nations,Report of TrusteesliipCouncil, General
Assenibly Officia1Records, 22nd Session. Suppl. No.4 (A16704)'Part II,

paras.378-390).It is useful to set out the full text of the conclusion reachedby
the Council in relationo thephosphate settlement:

"The Council. recalling its belief that every effort will be made to
adopt a solution to the phosphate question in conformity with the

rights and interestsof the Nauruanpeople. notes withsatisfactionthat
an agreementwas reachedin Canberrain 1967between the Nauruans
and the Administering Authority. whereby the ownership c.ontrol and

management of the phosphate industry will be transferred to the Naunians by 1July 1970.The Cotuicilfurthernotes wiih satisfaction
thai transitional arrangements provide for a substantial increase in
phosphate royaltiesand forthe increasedparticipationof the Naunians
in theoperationof the industry.

The Councilnotes thattheAdministe~g Authority has distributedthe
report of the Committee of Experts on the rehabilitation of the
worked-outland in accordancewith the Council'srecommendationat

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 Nauni with suitable soi1ancilorother materials
fromexternalsources,theverymanypracticalconsiderations involved
nile out such an undertakingas impracticable'.At the same time the

report provides alternative means of treating the mined land. The
Council further notes that the Naunians have voiced strong
reservations to this report and, interalia, stated that the Nauni Local

Govemment Council believesthat the landalready worked should be
restoredby the AdministeringAuthorityto its original condition.The
Council notes further the statement of the Administering Authority
that the financialarrangementsagreedupon with respect to phosphate

took into consideration al1 future needs of the Naunian people.
includingpossiblerehabilitationof landalreadyworked.

The Council, regretting ihat differences continue to exist on the

question of rehabilitation, expresses eamest hope that it will be
possible~to find a solution to the satisfaction of both parties."
(para.403)

5. SpecialSession,TrusteeslripCouncil,Noventber1967

196. A special session of the Tnisteeship Council, to terminate the 1947

Agreement for Nauni. was held on 22 November 1967.Head Chief DeRoburt,
assisted by Professor Davidson, representedNauru.The recordsof the meeting
of theT~steeship Council meetingare reproducedin Amex 29 to Preliminary

Objections.197. Head ChiefDeRoburt'sspeechon 22 November 1967wasgenerousin its

praise of Australiaand the otherPanner Govemments.

"Australia had administered the island of Nauni for almost half a
century.About twogenerationsof Naunianshad takenfive decadesto

arrive at their present situation. Fifty years was notan unduly short
period for a homogeneous group of a few thousand people with a
singk culture and heritage. onelanguageandone religion,to leam to
managetheir own affairs.Australiantutelageof thosepeople,which it

also exercised also onbehalfof the othertwoartnerGovemmentsof
New Zealand and the United Kingdom, had ken effective. Those
govemmemts could be proud oftheir achievementson Nauni and he

wished tothank them,on behalf of the peopleof Nauni, for the many
benefitsreceived."

198. Towards the end of the speech. Head Chief DeRoburt raised

rehabilitation:

'There was onesubject, however.on whichthere wasstill a difference
of opinion -responsibility for the rehabilitation ofphosphate lands.
The Naunian people fully accepted responsibility in respect of land

mined subsequentlyto 1 July 1967,since under the new agreement
they were receiving the net proceeof the sale of phosphate.Prior to
that date. however. they had not received the net proceeds itdwas

therefore their contention thatthe three Govemments should bear
responsibilityfor the rehabilitation of land mined priotro 1July 1967.
That was not an issue relevant to the terminationof the Tmsteeship

Agreement,nor did the Naunianswish to make it a matter for United
Nations discussion. He merely wished to place on record that the
NaunianGovemmentwouldcontinueto seekwhatwas, in the opinion
of the Naunian people. a just settlement of their claims." (United

Nations,TrusteesIrilCouncilOficial Records, 1311~ Special Session,
Doc.TISR.1323;reproducedinAM~X29 to PreliminaryObjections.)

199. At the conclusion of the session the Council uiianimously adopted

resolution 2149 (S-XIII) oii 22 November 1967 whichrecommended"that the
General Assemblyat its twenty-second sessionresolve, in agreement with the
Administering Authority. that theTnisteeship Agreement for the Territory of
NauruapprovedbytheGeneralAssembtyon 1November 1947shall ceaseto kin force upon the accessionof Nauruto independenceon31January 1968"(text

inAnnex 19,Vo1.4.NM).

6.~nited~ationsGeneralAssembly,December 1967

200. In 1967the FourthCommitteehad to considernot just thenormalannual
report of the Trusteeship Councilon Naurubut also the outcomeof the Special

Session of the Council in November 1967. recommending independencefor
Nauru. The SummaryRecords are reproduced in Annex 30 to the Preliminary
Objections.Mr K H Rogersof theAustralian delegation madea comprehensive
statement on 6 December 1967 on thehistory of Nauruand its administration

under the Mandate and Trusteeship, its economy, social conditionsand the
recentlyconcludedphosphate and politicalsettlements(United NationsGeneral
Assembly, Officia1 Records, 22nd Session, Fourth Committee,

Doc.A/C.4/SR.1739:Annex 30 to PreliminaryObjections;full text reproduced
in Annex 31 to the Preliminary Objections).He alsoobserved in passing that
"the Nauruans had enjoyed an enviable prosperity.The per caoita income a!
30 June 1966 had ken over $US1,800, higher than the per caoitq income of

Australia and one of the highestn the world". On the phosphate industryhe
said,as repmducedinthe summaryrecords:

"For most of 1967 the representatives of Nauru and Australia had
been discussing the futurof Nauru and the phosphate industry and

had reached happyagreementson bothquestions.Nauru would attain
full andnqualifiedindependence, without limitationsof anykind, on
31Sanuary1968.nie phosphateenterprisewould be purchasedby the

Nauru Local Govemment Counciland would come completelyunder
its control and management in three years' time. The agreement
provided for the supply of 2 million tonsof phosphate per year at a
price ofUS12.10per ton fob which would mean an annualretum to

theNaunians of $15 million. The Nauruan authorities would set up
the Nauru Phosphate Corporation,which would take charge of the
phosphate industry in 1970, providedthat the agreed payments had

been completed by then. If the price of phosphate and the coof
production remained in the same relationship as at present and the
Naunians continuedto put asidethe sameproportionof their fundsas
in the previousyear, theywouldbuildupa fund which.in twenty-five years, would stand at approximately $400 million.4in that way the
economic well-king of the population would be ensured once the

phosphate deposits were exhausted." (Annex-30 to Preliminary
Objections.)

201. HeadChief DeRoburtspokeatthe samemeeting andafterdescribig the
situation and the history ofuni. he commentedon the events of recent years

andthe futurein theseterms:

"Thase [historicall experiences had intensified the Naumans'
consciousnessof their identity asa separatepeople andhad increased

their determinationtote free and independent.Those were the social
or cultural reasonswhy thedecisions taken by the Naunians and the

AdministeringAuthority were the only ones whichcould rightlyhave
been taken.ïhey were the reasonsfor thedecisionthat he wassure the
Committee would shortly be taking in regard to the Tmsteeship

Agreement.

in oiherrespects. thecase wasno less strong.Duringmost of 1967,as
had been mentioned, work had ken under way to prepare the

necessary political and administrative structure. Economically.
Nauni'sposition wassirongbecauseof its good fortune in possessing
large deposits of high-grade phosphate. That economic base, of

course, presentedits own problems. One whichworriedthe Naunians
derived fromthe fact that landfromwhich phosphatehad been mined
would be totally unusable. Consequently, although it would be an

expensiveoperdtion,thatland would have to be reliabilitatedand steps
were alreadyking takento buildup funds to be used for thatpurpose.

That phosphatewas a wastingasset was. initself,a probleni; in about
twenty-five years'lime the supply wouldbe exhausted. The revenue
which Nauni had received in the past and would receiveduring the

next twenty-five yearswould.however.make it possible to solve the
problem. Already some of the revenue was being allocated to
development projects,so that Nauruwouldhave substantial alternative

sources of work andof income long before the phosphatehad ken
used up. Inaddition, amuchlargerproportionof its income wasbeing
placed in along-term investment fund, so that. whateverhappened,

SecUICCIESluJy.Anncr10Rclirninq Objocii.hih cmniw Uiimmc (romphorphalcmiiiing
gcncnicdsiindcpcndcncc. future generations would be provided for. In short, the Nauruans
wanted independenceand wereconfidentthat they hadthe resources
withwhichto sustainit." (paras.19in20)

202. On 7 December 1967thedraftresolution.as'amendedand furtherorally

revised,was adoptedunanimouslyby theCornmittee.It containedno reference
to rehabilitation. On 19 December 1967,at its 1641st plenary session, the
General Assemblyformallyadopted resolution2347(XXII)(text inAnnex 17.
Vo1.4,NM).Itsprincipaloperativeparagraphread:

"Resolves accordingly, in agreement with the Administering

Authority, thatthe TrusteeshipAgreementfor the Territoryof Nauru
approvedby the GeneralAssemblyon 1 November1947shall cease
to be in force upon the accession of Nauru 10 independence on
31January 1968." CHAPTER 5

THE NEGOTIATION ANDOUTCOMEOF THE 1967
PHOSPHATESETTLEMENT

Section1:1965

203. One of the central issuesin thiscase is the nature ofthe provision made
by the Administering Authorityfor thehireof the Naunian people. Centralto
this is the 1967 settlement reached on the phosphate industry. This Chapter

examinesthe negotiationof that agreement and the agreementelf.

204. Negotiationson thephosphate issuecommencedineamest in 1965.They
wereheld inCanberra from 31Mayto 10June 1965(Annex2, Vo1.3.NM).The
negotiations took place between thePartner Govemments and the Naunian

representativesledby HeadChiefDeRobun.

205. DeRoburt was assisted by two other Councillors and three expatriate
advisers (2 economic, 1legal). (One of the economic advisers was
Mr K E Waker who in Appendix 2, Volume 1, Naunian Memorial mentions

that from1965 Io 1971he was involvedin allof thenegotiations between Nauru
and the partner Govemments that dealtwithphosphate,financial and political
matters. Since November 1983he has been the Honorary Naunian Consul,

Sydney .)

206. The discussions covered both politicalarrangementsand the phosphate
industry. Among the documents tabled were papersby Nauni and the Partner
Govemments setting out their positionon the ownershipof the phosphatesee

Annexes A and J respectively of the Recordof Discussions, Annex 2, Vo1.3.
NM 122and'p.177).

207. On 10June 1965aSummaryof Conclusions wassigncdby both parties.
In summaryit:

- provided that as a step towards selfdetermination a Legislative Council

and anExecutiveCouncil were to be established.The former was to have
an electedNaunian majority and wide powersexcluding only defence,
extemal affairsandthephosphate industry.

- contained a statementby the Nauniansthat they wanted 31 January 1968

as the target date for independence andateinentby the Administering CHAPTER 5

THE NEGOTIATION ANDOUTCOMEOF THE 1967
PHOSPHATESETTLEMENT

Section1:1965

examinesthe negotiationof that agreement and the agreementelf.

representativesledby HeadChiefDeRobun.

Sydney .)

Annexes A and J respectively of the Recordof Discussions, Annex 2, Vo1.3.
NM 122and'p.177).

207. On 10June 1965aSummaryof Conclusions wassigncdby both parties.
In summaryit:

- provided that as a step towards selfdetermination a Legislative Council

and anExecutiveCouncil were to be established.The former was to have
an electedNaunian majority and wide powersexcluding only defence,
extemal affairsandthephosphate industry.

- contained a statementby the Nauniansthat they wanted 31 January 1968

as the target date for independence andateinentby the Administering Authority that it considered thatfunher discussionsshould take place in
1968 after two or three years' experience regarding thepossibility of

furthermovement towards greaterNauntanexecutive responsibility.
-
provided that future arrangements for the phosphate industry including
some fonn of partnershiporjoint enterprise were tobe discussed in 1966
after theLegislative Council had been established and was operatiiig
effectively.

-
provided thatmyaltiesfor 1965166were tobe 1716perton andfor 1964165
1316ton;ad referendum,with theformerking basedon an extraction rates
of 2m tons per annum "subject to the assurance of the Australian
delegation that thisacceptance was without prejudice to any Naunian

requests for a reduction in the rates of extraction after 1967168."mese
proposed royalty rates wereput to the UnitedKingdomand NewZealand
Govemmentsfortheir agreement,whichwasgiven.)

- set out the views of the Naunian delegation thatit considered that"there

was a responsibilityon theparinerGovemmentsto restoreat their cost the
land thathad been mined.sincethey hadhad the benefitof the phosphate.
And alsocontaineda statementby the Australian delegationthat itwas not
able on behalf of the pariner Goveniments to take any commitment
regardingresponsibilityfor any rehabilitationproposalsthe objectivesand

costs of which were unknown and the effectiveness of which was
uncertain."

- contained anagreementtoestablishanindependenttechnicalcornmitteeof
experts toexaminerehabilitation.

-
recorded. the differing views of the Nauruans and the Administering
Authority on the ownershipof phosphate mining rights. The Nauntans
argued that the BPC could not validlywork the phosphate without the
agreement of the Naunian people, whereas the Australiandelegation held

that theightswerelegallyvestedinthe British Phosphate Commissioners.

208. The summaryof conclusions isset outas Annex L to the 1965Recordof
Negotiations reproducedin Annex 2.Volume 3,NMp.194.

209. Following the 1965 talks. the Australian Department of Territories
prepared. with advice from the BPC, a package of proposals to put to the

Nauntans on long term arrangementsfor the future conduct of the phosphateindustry on Nauni and the level of royalties to be paid pending such

arrangementsking accepted and put inplace.Theseproposalswere considered
by the Australian Govemmentwhich decided, subjcct to the agreement of the
United Kingdom and NewZealandGovemments, thata set of proposalsbe put
Io the Naunians under which the phosphate industry would be operated by the

Partner Govemments and the Naunians; the arrangements should ensure the
continued supply of Nauruan phosphate to the Partner Govemments; the
Naunians were to have full participationin the conduct of operations; and the

Naunians were to receive not lessthan50%of the financialbenefit. From 27 to
30 April 1966discussions took place betweenofficiaisof the threegovemments
in preparation for the talks with the Nauruans. The meeting endorsed the

proposed approach on the phosphate industry, which was then presented tothe
Naunians innegotiations commencinginJune 1966.

Section II:NauruanIPartner Governments' Discussions,JunefJuly 1966

210. Naunian/Partner Govemments'discussions were hcld over 12 sessions

from 14 June to 1 July 1966. Mr Warwick Smith led for the Partner
Govemments and Head Chief DeRobun for the Naunians. (The Record of
Negotiations iscontainedin Amex 4, Vo1.3,NM.)

211. The Partner Govemments' opening statement on 14 June 1966 put

foward general principles which might serve as the basis of a long term
agreement. It proposed the establishmentof a Nauni Phosphate Commission,
the fixing of the level ofexports, fiiancial arrangements providingni with

not lessthan 50% of the benefits with a substantialamount to be paid into a
long-term fund and an assurance that the wholeof the Nauni output wouldbe
available to the Partner Govemments. Theopening Naunian statement rejected

partnership.with the BPC,said that the beneficialinterest in phosphate should
accnie to theNaunians, but that the BPC couldoperate the phosphate industry
as managing agentswith both parties agreeingon a long termcontracton price,

full payment of profits with BPC receivingnlya management Teeand purchase
by Nauni of theBPC ownedassetson the islands. Inthe followingdiscussioiis
most exchanges centred on pricing policy.The Davcy Committee'sreport on

rehabilitation wasalsoexamined (paras.166 to 167above).

212. On 1 July 1966 the two delegation leaderssigned an agreed minute
representing the outcome of the negotiations(NM, Vo1.3.p.405). It provided
thatNaunian phosphate shouldbevalued at$A12.00perton for thepurposesof

any fiiancial arrangements,the differing positionson which it was noted had been set outinthe openingstatementsof the two delegations.The issue was to

be exarninedfurther in a WorkingGroup,which wouldalso examinethe types
of arrangementsin force invariousparts of the worldfor sharing the financial
benefit of phosphate mining operations.It was eyisaged that the BPC would
serve as agents for the operationof thedustryat Nauni. The Minute ncorded

the differingpositions of the two delegationson rehabilitatNaurusaid tlzat
they shouldreceive thefull financial benefitof thephospliate so that there
wouldbefundsavailableto relzabilifafe thewlloleisland.TheJoint Delegation.

the Minute noted, explained that the benefits from the proposed phosphate
arrangements would be adequate to provide for the long-term security of the
Naunian people, including a continuing income after the costs of any

resettlement or rehabilitation. Each delegation maintained their respective
positionson phosphaterights asstatedin the 1965 discussions.Nauni proposed
the purchaseofthe capitalassetsof BPC, but thePartnerGovemmentsproposed
ihat the assets should continue tobe vestedin BPC.It wasalso agreed thattaks

should resume inOctoberor November 1966 after the Working Partyhad met.
In the event, these taiks did not resume until after the consultations in 1967
betweenthe Partner Govemments.

Section IIIThe phosphate settlement 1967

A. POLICY RE-CONSIDERATION BYTHEPARTNERGOVERNMENTS

213. In the last quarter of 1966 alid the first quarter of 1967 the Partner
Govemments reconsidered their proposais in respect of the future of Nauni
before resuming the suspended discussionswith the Naunians. Broadly.~the

view of the three Governments was that they should aim to reconcile the
political advancementof the Naunians with reasonablesecurity of supplies of
Naunian phosphate. They agreed that the phosphate rights exercised by the

Partner Governments might be extinguished and BPC assets on Nauru
transferredto theNaunians at an agreed price, asthe Naunians themselveshad
requestedon 14June 1966 (seepara.211).Anyphosphate settlement wouldalso
have to cover al1outstanding questions. leavingthe Partner Govemments with

no responsibilityfor such matters as resettlement orre-filling of mined areas.
The Naunians could determine theirown future and becomeindependent in
1968if that wastheir wish.The transfer of al1the rightsin the phosphate was

viewed as a guid pro quo for the assumptionby Nauni of responsibility for
rehabilitation. Thisis confirmed by the real value of the 1967 settlement in
Naunian Lands.See Pan II, Chapter2,SectionVI1of thisCounter-Memorial. B. RESUMEDNEGOTIATIONSWlTHTHE NAURUANS

214. From 12 April to 15 June discussions resumed with the Nauruans in

Canberra.Therecordof the 1967 negotiations,@ereinafi "1967 Negotiations")
is reproduced inAnnex 5,Volume3, NM. (Page numbersrefer to the numbers
used in thenegotiationrecordappearing atthe topof thepage.)There were two

breaks from 22 April to 9 May and from 20 May to 13June to enable the
Partner Govemments to reconsidertheir negotiatingstanceon the future of the
phosphate industry. Most inter-delegation discussionsin these two months

centred on the industry. Onlythreesessions were devoted to political matters.
The phosphate negotiations culminated in aHeads of Agreement on 15June
1967, which is not in dispute.The followingaccount therefore emphasises the
outcome of the negotiations. particularly on the issues of rehabilitation and

transferof the phosphate industry.

1.Phase 1: 12-20April1967

215. The Partner Govemments opened negotiations on 12 April with a
statement that outlined thestagereachedwhen the taks were adjoumed in July

1966(SRI, pp.99-101, 1967Negotiations) (seepara.212above).

216. Nauru submitteda statement(Nauruan Document6711,pp.144-153,1967
Negotiations) preparedby theireconomic advisers, Philip Shrapnel andCo Pty

Ltd of Sydney. It had two key elements: First. the Partner Governments'
interests in the phosphate shouldbeonfmedto supply and price. andsecondly
al1other matters affecting the industryshouldbethe exclusive concem of the
Naunian people. Further, theprimarycriterionfor appmisingvarious proposais

was to be the welfareof the Naunianpeople.It was said that "The needs of the
Nauruan people centre around their longterm future on Nauni. In order to
remainon Nauni the islandmustbe rehabilitatedin a manner satisfactoryto the

Naunian people".

217. Mr WarwickSmithstatedthatthe PartnerGovemmentshad reconsidered
their position and developed a fresh approach,especially on phosphate rights
and the sale of capital assets. Thiswas subject.as part of anall settlement,

to acceptanceby the Nauruansof the principlethattheir futurebenefits from the
phosphate wouldbe adequate to providefor their needsincludingrehabilitation
(or resettlement). 218. On 18April the report ofthe Rehabilitation (Davey)Committeeset up in

1966 was discussed (SR5, pp.87-89. 1967 Negotiations), with Mr Reseigh
noting that agreementcould not be reached in the Working Party regardingits
consideration. Mr Warwick Smithsaid that he had gathered that the Naunians

thought thatitcouldbe usefulfor thejoint delegation to indicateitsviewson the
Reportinan informalway.This hethendid.Hesaid:

"The Parmer Govemments considered that decisionson what action
should be taken regarding rehabilitationwas wholly a matter for the

Naunians. The Panner Govemmentshad said they wouldexpect that
the amount accniing to the Naunian people fromphosphate income
would be adequate for the future needs of the Naunian community

includingrehabilitation."

219. On 19 April Head Chief DcRoburt made and submitted three lengthy
statements on rehabilitation, financial considerationsand management of the
industry(Naunian Documents67/2 - 6714,pp.136-143,1967 Negotiations). On

the first issue, the Naunian delegation, hesaid, had argued from the beginning
that the responsibility for restoring theland already mined rested with the
PartnerGovemments.The Naunianneedforproperrehabilitation ofNauni was.

he said, a direct result of the breakdownof iiegotiations for resettlernent. He
said:

'The Nauruans themsclves proposed resettlement as king a solution
that would be better for al1partiesconcemcd,and hadsucha solution

been achieved there would by now have been a partnership
arrangement yielding considerable benefitsto both sides. However.
thefailureof theresettlement proposals toprovidea securefuture and

preserve the national identity ofthe Nauruan people has left us no
alternative except an expensive rehabilitation projectfor which we
ncedevery pennywe canget." (p.141)

220. The followingday (20April) MrWarwickSmithreplied(SR7,pp.80-82,

1967Negotiations).The decisioiito abandonthe rescttlemeiitproposals. hesaid.
was a decision by the Naunians,not one that was forced upon themand, in so
deciding,they had rejectedproposals which were sound and practicable.It was

the viewof the PartnerGovemmentsthat decisions regardingrehabilitationwere
mattersfor theNauniansand that thePartnerGovemments'proposalsin respect
of thefinancialarrangenientsprovided adequatemeansto carryout whateverre-

development of the mined areas might prove to be necessary. Mr WarwickSmith also denied that there was any widely accepted obligation to restore
mined lands to their original conditionandthen tried unsuccessfuUyto get the
Naunians to discuss specific re-development projeets which the Naunians
claimed would cost $240million.This was rejected and the following day the

negotiations were adjoumed until9 May to enable the PartnerGovernments to
reconsidertheir position.

2. Phase 2: 9-20May 1967

221. Following reconsideration by the Partner Governments of their
negotiatingstance. thenextphase was almosttotallydevotedto the future of the
industry on Nauni. On 10 May a Joint Delegationproposal (Joint Delegation

Document 6712,pp.158-161,1967Negotiations) was putto the Nau~anS which
substantiallymet their positiononcontrolof the industry.The paper. however.
contained one paragraph (9) on rehabilitation, namely that "the partner

govemments consider that the proposedfinancial arrangements on phosphate
cover the future needs of the Naunian community including rehabilitation or
resettlement".

222. On 12 May Head Chief DeRoburt asked (SR12. pp.62-5, 1967

Negotiations) whether he was right to assume that on the question of
independence there were nodifferencesbetween thePartner Governrnents and
the Naunians except on the timing of independence. Mr Warwick Smith. in

reply,said that the Joint Delegationwas able to talkabout political advance in
only a preliminary way. It was simplynot ready to talkin depth about political
advance because its attention had been concentrated on the not unrelated

question of phosphate whichhad yet to be settled in a &mkr of respects. The
Partner Governmentshad agreed to discuss political issuesduring the current
series of taiks. but before he could reply tothe HeadChief, he wanted to know

whathe meantby independence.

223. Chief DcRoburt responded by reading a 15 page statement (Naunian
Document 6711,pp.119-133, 1967Negotiations) onpolitical and constitutional
changes whichhad been preparedby hisnewlyappointedconstitutionaladviser,

Pmfessor J W Davidson.MrWarwick Smithsaid the Naunian statement would
be studied and then asked if the Naunianshad consideredthe various possible

outcomes of self-detemination and whetherit could offer any comments on its
reasons for choosing the particularoposa1(sovereignindependence)then put
forward. He also asked how the process of self-determination was to be

ascertained, to which Head Chief DeRoburt replied that it would be donethrough the elected members of 'the NLGC (SR12, pp.63-64. 1967
Negotiations).

224. From 16 May to 14 June negotiations again retumed to the phosphate

industry. Mr Warwick Smith, in a long statemeriton the industryon 16 May,
said that on the question of rehabiliiation the PartnerGovemments maintained
that it was not for them to decide what shoulte done; this was a decision for

theNaunians. Fiancial arrangements could besuch as to permit the Nauruans
to do what they wished, within reasonable limitsi,n the way of rehabilitation.
As part of the total arrangement the Joint Delegation would liketo see the

Naunians withdraw their claims in respect of rehabilitation(SR13. p.56, 1967
Negotiations).The following session (SR14, pp.46-52, 1967 Negotiations)he
asked whether the Nauruans would press their view that the Partner

Governments had responsibility for rehabilitation despite the financial
arrangements made. The summary record (para.27) notes that "during the
following discussion it emerged that theNauruans would still maintain their

claim on the Partner Govemmentsin respect of rehabilitationof areas mined in
the past,even if the Partner Govemmentsdidnot pressfor the withdrawalof the
claim in a formal marner such as in an agreement". Mr Warwick Smith also

offered immigrationrights to Australia and New Zealand, to which the Head
Chief repliedthat theNaunianshadgiven upthenotion ofresettlement.

225. On 18 May Head Chief DeRoburt raisedagain his concern that the
political questions were not king discussed and 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 same meeting Mr Shrapnel read an
11page statement(NaunianDocument6718,pp.108-118,1967 Negotiations),in

response to that of the Joint Delegation of 10 May. This covered guaranteed
supply, agreed price. capital assets, phosphate rights, rehabilitation, the
management of the industry and financialarrangements.It was suggested that

the ParînerGovemmentsshouldsel1thecapitalassetson Nauruto the NLGC.

226. On 19 May Head ChiefDeRoburtrequestedthe Partner Governmenrsto
consider another document (Nauruan Document 6719, pp.106-7, 1967
Negotiations) on the phosphate industryand, in responsetoasuggestion from

the Partner Govemments. said that the Nauruans would not relateimmigration
to rehabilitation. The relations with the Partner Governments on immigration
would have to be just like those the Partner Governments had with other

govemments (SR18,pp.32-33, 1967Negotiations).227. On 20 May the negotiations wereadjoumed until June as no agreement

could be reached on matters relating to the phosphate industry, with the
Nauruans insisting.interalia, on king given completecontrol of management
and operation of the industry on theisland no later than three years after the

signingof an agreement.

3.Pltase 3: 13-14June 1967

228. On 13and 14June. followingthe agreement of the UnitedKingdomand
New ZealandGovemments,the negotiations withthe Nauruanson the future of

the phosphate industry were concluded. There was again no mention of
rehabilitationeither in the fourmmaryrecordsor in the Heads of Agreement.
On 15-June the Headsof Agreement was initialledby bothparties.Its scopewas

set out in a press statement issued that day by the Minister for Territories
(reproducedat p.1, 1967Negotiations,Annex5.Vo1.3.NM)whichread:

"Representatives of the NauruLocal Govemment Council and the
Govemments of Australia, New Zealand and Britainhave agreed to

arrangements for the future operation of the phosphate industryon
Nauru and on the terms under which phosphate on Nauru will be
suppliedto the threecountries forthe nextthreeyears.

Announcing this today the Minister for.Territories, Mr Bames, said

that the Naum Local Govemment Councilwill buy the assets of the
British Phosphate Commissioners aNt auruwithin the next three years
on an agreed basis of valuation and terms of payment. Preliminary

estimatesput a value on thessets of the orderof $20 million.During
the three years the British Phosphate Commissioners will be
responsible for day to day management of the industry at Nauru.If

paymentfor the assetshas ken completedby theend of the third year
the complete ownership and operation of the phosphate industry at
Nauru will become the responsibility of the Nauru Phosphate
Corporation which theNaunianspropose to establish.

Phosphate willbe suppliedto the British PhosphateCommissionersat
the rate of two million tonser year. 7he basic price will be $11 per
ton in each of the three years providedthatif theassetshave ken paid.

for in full by 30th June 1969the basic price in the third yearwill be
$12 per ton. The basic price willbe varied so as to reflect market
conditions according to an agreed formula. After al1 costs of productionand of administrationof Naumhavebeenmet the figureof

$1 1would representa retumto theNaunians ofabout$6 per ton.

Mr Barnessaid that itis opentoeitherof the partiein 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 theya* subsequentlyaltered at twelve
months'notice.

The royalty payments which have hitherto been made for phosphate

from Nauru have ken fixed ai $4.50 per ton for 1966167.Royalty
payments in future years willbe supersededby the arrangements set
out above."

4. TliepurcliaseofBPCassets on Nauru

229. Paragraphs496 to 500of Volume1 of the Naunian Memorialdeal with
"reparation in respect of the paymentfor BPC assets purchased with Nauruan
funds".ïhe substance of theclaimisthat the$A21mpaidby Naurufor the BPC

assetson Nauru"were madeon sufferance"(para.497)and that:

"498. In the viewof the Govemment of Nauru,the forcedpurchase of
access to its ownnatural resources wasa furthersegmentin the long

line of inequitable treatment at the hands of the Australian
Government and its collaborators. The payment cornpounded the
unjust enrichment resulting from the economic management of

phosphate affairs in the tmsteeshipperiod and before. It wasextracted
during the very sensitive period priorto independence in lanuary
1968,andone of severalunusual features wasthepayment requiredby

the outgoing authonty for the capitalssets of the British Phosphate
Commissioners onthe island: see the provisionson capital assets iii
Arts.7to 11of the Agreementof 1967."

Given the prominence given to this issue by Nauru. Australia considers it

necessary at thisstageto set outtheactual historical record.

230. The question was first raised in 1966, not 1967, in the contex! of
discussionson the future arrangementsfor the phosphate industry. On14June

1966the PartnerGovemments, in an openingstatement (Amex 3 to the 1966
Record of Negotiations, reproduced in Annex 4, Vo1.3.NM), proposed an
associationagreement. with the Nauniansreceiving50% of the benefits. At nopoint in the 5 page statement was there any mention made about Nauni
purchasing the assets. At the same meeting the Naunian delegation presented

and circulated a 6 page opening statement (Annex 4 to the 1966 Record of
Negotiations). Its substance was rejection of pa,nnership. The BPC should
instead operate the phosphate industry in the capacity of managing agents

"under contnct with the Naunian people with present matters of contention
(extraction rate. calculation ofingprice etc) king definedby the contract".
The statement then set out six basic principles which should underlie the

agreement on the managing agentrelationship. Principle (d) of the Naunian
statementread:

"(d) Purchase ofBPC - ownedCaoitalEoui~ment

The Naunianpeopleconsiderthat itis consistentwith their moraland

legalrights as owners of the phosphate deposits that tshould also
own the capital equipmentused by the BPC in mining phosphate on
Nauru. It is therefore proposed that the Naunian people should

purchase this equipment from the BPC at a mutually agreed price.
Since the Naunian people do not have the financial resources to
undertake the payment immediately it is further proposed that
payment be made over aperiod of ten years with theannual amount:

being viewed asa charge onprofits. Once the initial purchase sen
completed it is expectedchattheBPC wiUlook to theNaunian people
forsuchreplacementof thecapitalequipmcntas may be required."

Thus. the pmposalto purchase theassetscame from theNaumansthemselves.

231. On 1July 1966an agreed minute was signedby Mr WarwickSmith and
Head Chief DeRobun (Annex 19 to the 1966 Record of Negotiations). It
containedthèfollowingpangraph

"Caoital Assets

The Nauman DeleaationDrooosedtheourchaseof the caoital of the
BPC at Nauni. the intention being that paymenbt e made for these assets
out of the financial benefits that the Nauruan peoplereceived from the

industryover a period of tenyears and thathese assetbe made available
to theBPC for theoperationsat Nauni. TheJoint Delegation indicated that
it was partof the Partnervcrnments'proposalfora long-termagreement that the capital assetswouldcontinueto be vestedin the BritishPhosphate
Commissioners" (emphasisadded).

232. in the 1967 NaunianPamer Goveeents' negotiations, the sale of the

BPC assets was mentioned in the Naunian opening statement (Naunian
Document6711,pp.144-153. 1967Negotiations.reproducedin Amex 5. Vo1.3
NM). On17April 1967the purchaseof assetswas discussed.A Naunian paper
of 14 April 1967on the "Constitutionand Role of the Extracting Authority at

Nauni" was îabled whichincorporatedthe sentencethat "theassetsof the BPC
would be purchased by the Naunians and held by the [Naunian] corporation.
paying over ten years with ownership passing before or soon after
independence" (WorkingPaper1,p.164.1967 Negotiations).

233. Mr Warwick Smith after acknowledgingthat the Paruier Govemments
had in 1966wantedthe assetsto continuetlxvestedin the BPC,said that "the
Partner Govemments were agreeablenow to the sale of the assets as part of a
mutually acceptable total arrangement but agreementwould depend on the

future arrangements for the phosphate industry" (SR4, pp.90-93. 1967
Negotiations). In this andollowing meetings there were discussions about
splittingthe assets (rejectedby the Naunians),theirvaluation, how they wereto

be paid for and when ownership would pass. but at no stage was there any
suggestion by theNaunians that they were king forced to make an offer for
them. Indeed on 18 May 1967 a Naunian Delegation document "Phosphate
Proposalsby Naunian Delegation" -repeatedin paragraph5 tliat "the Naunian

Delegation submitsthat the PartnerGovemmentsshould sel1the capital assets
of the phosphate industry atNauru to the Nauni LocalGovernmentCounci..."
(Naunian Document6718,pp.108-118, 1967Negotiations).On 15June 1967a
Heads of Agreement in respect of theauni Phosphate Agreement wassigned

by the Partner Governmentsandthe Head Chief.Paragraph6 dealt withcapital
assets,statingthat "the PartnerGovemmentsundertaketo sel1and the Naunian
LocalGovemmentCouncilundertakesto buy thecapitalassetsof thephosphate

industryatNauru" and set out certain arrangemenin relation to those assets.
On 14November 1967 theseprovisionswere formalisedin Parii lf the Nauru
Phosphate Agreement (AM~X6, Vo1.3,NM). Itis thus incorrect to say. as the
Nauruan Memorial puts it (para.498). that there was a "forced purchase of

access to its ownnatural resources" and that the agreement "was extraited
during the very sensitive period immediately priorto independencein January
1968". nie purchaseof the assetswasproposedby the Nauniansthemselveson
14June 1966.ie 17monthsbefore thefmal agreementwassigned. C.TliePhosphateAgreement

234. On 14November1967the PhosphateAgreement)vassigned in Canberra.

Itis reproduced as a schedule to the Nauru PliospliateAgreementOrdinance
1968, set out in Amex 9 to the PrelimmaryObjections.It formalisedthe Heads
of PhosphateAgreement initiauedon 15June 1967.The mainprovisionswere:

- Nayru phosphate would be supplied exclusively to the Partner
Govemmentsat a rateof 2 million tonsperannum.

- The pricewouldVaryfmm yearto yearaccordingto an agreedindex.

- For the first three years the basicprice wouldbe $Al1 per ton fob Nauru

and if theNaunian purchaseof BPCassetswas paid in full before 31 July
1970the basic prie for the thirdand subsequentyear would be $A12 per
ton.

- The Partner GovemmentswouldseUto the NLGCthe capitalassets of the
BPC onNauru.

- The assets would be valued at original price less depreciation at a rate

consistent with the economic life of the assets. A joint team would
establishthe valueof theassets.

- The NLGC would commencequarterlypaymentsfor the assets of no less
than $750.000, commencing on30 September 1967with interestaccruing
at the rateof 6% ontheunpaid balance.

- The NLGC would set up a body to be known as the Nauru Phosphate

Corpordtionto managethephosphateonbehalfof the NLGC.
- For the first three years of the agreement the BPC would continue to

managethe phosphate installationsonNauru.

- During the three year period therewouldbe consultationsfor the transfer
of management authority from the BPC to the Nauru Phosphate
Corporationat theend of thethird year.

- The Agreementwouldenter intoforcefrom 1July 1967and would remah
in force for three years and thereafter indefinitely subject to certain

conditions.As with the Heads of Agreement there was no mention of rehabilitation.
Subsequently, it was agreed that the, value of the BPC assets would be
$A21million.ThatsumwashiUypaidby 18April1969.

D. Tl~evalueof tli1967 settlementfo theNauruans

235. The real value of the 1967 settlement to the Naunians is discussed in
Pan IIChapter2, SectionVII,of this Counter-MemorialT . he Naunian financidl
situation at independence is also considered in that part of the

Counter-Memotial. As well as the eatlier study prepared at the time of the
PreliminaryObjectionsby the Centrefor International Econornics(Annex26 to
the Preliminary Objections). Australia includes with this Counter-Memorial a

further study on the valueof the phosphateindusfrythat wouldhave ken paid
by a purchaser in 1967 (Amex 1 to this Counter-Memotial). The analysis
contained in thesedocumentsshowsthe 1967phosphatesettlementwas, in fact,

vety genemus to the Naunians.Furtherdiscussionof thismatter is postponedto
the nextPan of thisCounter-Memorial. PARTII

THEABSENCEOFATENABLECLAIM CHAPTER 1

PRELIMINARY MAïTERS

Section 1:The elements of the dispute

236. In its judgment of 26 June 1992, the Court rejected Australia's
preliminaryobjectionsthattheNauruanrehabilitation claimhad been waived,or
settled. when the Naunian Tmsteeship Agreementof 1947 was tenninated by
the United Nations General Assembly (ICJ Reports 1992. pp.247 and 253.

paras.13 and 30). Accordingly. the claim concerning responsibility for
rehabilitationcornesbefore the Court for adjudication on the merits.

237. The claim which the Courtis now todecide is thus quite specific. It is
only a claim for rehabilitation(seeparas.2t8 above).It does not involve(and

cannot support).judicial investigationof allegations by Nauru that Australia
failed to complygenerallywithits obligationswithrespectIo the administration
of the Temtory. The Court itselfhas recognised this.As the Court observed in

its judgment of 26 June 1992, resolution 2347(XXII) of 19 December 1967
(tenninating the Tmsteeship) was a resolutionof "defmitive legaleffect" (ICJ
Reports 1992,p.251,para.23).It wasonlygiventhe"particularcircumstancesof

the case", that the Court held that the "rights Nauru might have had in
connection with the rehabilitation ofthelands remained unaffected" (ibid.
p.253,para.30).

238. Although the claim for rehabilitationis a limited one, Nauni fails to

establish any adequate legal basis for it. In its search for such a basis, Nauru
relies primarily on Articles and 5 of the Nauru Tmsteeship Agreement of
1947, and Article 76 of the United Nations Charter (NM, para.243). But it

cannotpoint to anyprovisionin theseinstmmentswhichspecificallyenjoins an
Administenng Authorityto restore lands used for mining during the period of
trusteeship. or any like provision. for none exists. instead, Naum says that the

alleged duty arose from "the existence of the tmsteeship" "in the particular
circumstancesof Nauru"(NM,para.290).

239. Nauru thus admitsthat its claim is basedon inferencefrom certainquite
general obligations and is almost entirely fact-dependent. Despite 1his;Naum

does not identify and marshal the facts or evidence on which it relies in any
orderly way. Its case against Australia depends on broad generalisations and
vague. but nonetheless highly prejudicial, impressions.Nauni's allegations solack particularityihat it is,on occasions,virtuaiiyimpossiblefor Australiato do

more than guess the casewhichitmust answer. Forexample, in referringto the
basis for the alleged duty to rehabilitate,au~refers to two matters - the
existence of an indigenous community pn the island as a unit of

self-determination, and the island's eventual uninhabitability if phosphate
mining bntinued i-efmitely (NM,para.290).But referenceto these matters is
unhelpful: as Nauru's coming to independence in 1968 shows, the Nauruan

communityhas successfullyexercisedits right toself-detemination. And since
then it has lived on the islandin continued prosperity andhas itself chosen to
mine (without there beinganyrehabilitation) more landthan was mined priorto

independence.Having regard to these facts it is impossible tosee the supposed
duîy as "selfevident". Hence..thesecircumstancesalonecannot found the basis
of Nauru's claim againstAustralia. Australia is forcedto gatherthe case against

it as kst it cm.

240. Certain matters alleged byNauru are clearly irrelevant to the specific
claim for rehabilitation with which the Courtis concerned. These include
allegations relatingto thepre-Trusteeshipperiod. ForNauni says that it "does

not make any claim in respect of breaches of the Mandate as such" (NM,
para.287). Yet throughoutits written andoral pleadings. Nauruhas sought to
rely on, and gives undue prominence to, the alleged misconduct of the

Mandatory Powers. includingAustralia.duringthe periodin which Nauru wasa
Mandated Territory. For example, it is said by Nauruthat during the Mandate,
the Australian administrationon Nauru was motivdtedsolely by the desire for
Australian economic gain (NM, paras.29-35). But this allegation, though

intended to prejudiceAustrdlia'scase, cannotk at al1relevant toa claimsaidto
ariseat alaterdate, ie,duringthesubsequent Trusteeship.

241. There are other similaraliegations(eg NM, paras.56, 63, 78). But these

highly coloured allegations must be disregarded, for they do not arise for
determinationin this case. Evenif the Court were tofind Australia responsible
in some way for suchacts.any such responsibilitywouldnecessarilybelimited

to the post-1947 Trusteeship period. SeeartIIIChapter2, Section 1. Section II:The alleged buis of responsibility

242. Nauruaiiegesthat:

(i) Australia'sprincipalobject in the administrationof the Trusteeship was to
exploit Nauruanphosphatefor the benefit of the agncultural requirements
of Australia. New Zealandandthe UnitedKingdom(NM.paras.284,332).

(ii) During the Trusteeship. the 1919 Agreement and the Lands Ordinance

1921(as amended)wereoperatedtoestablisha system whichexpropnated
the rights of Naunian landowners without adequate compensation.
According toNauru.the effectof the "legalregime overall,andthe de facto

position of the BPC" was that"the entire island and its resources" were
placedat Australia's "effective disposition" (NM, paras.284.323, 397); and
the resulting legal regime"was fundamentallyopposed tothe giving of an
appropriate degree of respect to the land rights of the indigenous

inhabitants".In particular,Nauni allegesthat the interestof the individual
landownerwasplaced atthedisposalof theBPC "subject tothe paymentof
'royalties' whichwere not the process of genuine negotiation'at am's

length' and which were in any case unrelated to the real value' of the
resources being disposedof' (NM. para.397;see also paras.284.299.321,
371). Further,according toNauni. there wasa failureto return worked-out

phosphate areas to landowners without undue delay and an absence of
adequate procedure for deciding complaints arising from the unjustified
retention of landby the BPC(NM,para.399).

(iii) During the Trusteeship,there wasa substantialfailure toprovide funds for

the normal purposes of administration.In particular, according to Nauru,
public financial arrangementsfor Nauru were constituted entirely by the
financial returns from phosphate mining (NM, paras.123. 125. 284,

368-70). nie incomeof the BPC was not treated as public revenuen,or was
it taxed as profitsof a tradingpany(NM,paras.336,373).

(iv) During the Tmsteeship, the Administering Authorityfailed to make full
and fair reports on the economic affairs of Nauru and the phosphate

industry to the United Nations. Thefindings of the Trusteeship Council
were "flawedby seriouserrorsof fact inducedby themisrepresentationsof
the Administering Authority" (NM, paras.281,284,315-6.320-1, 339).(v) During the Trusteeship.there was a failure on Australia's partto exercise
the degree and form of govemmental authority appropriate to the

'obligationsof Tmsteeship(NM. paras.284.365).

243. But these claims, though also clearly intended to prejudice Australia's
case, have no directrelationshipto the issueof responsibilityfor rehabilitation.

mis was the only issue regardedas unsettledat the the of termination of the
Tmsteeship and whichtherefore survivedthe dispositiveact of termination by
the GeneralAssembly.See ICJReports 1992.p.253.

244. Nauru's specific claimfor rehabilitation cannot warrant a wholesale

attack on, and judicial inquiry into, the entire United Nations Tmsteeship
administrationon Naum. It cannotby thiscase cail intoquestion the entiretyof
the colonial past. Given the dispositive act of the General Assembly in

terminating the Tmsteeship, there can be no question that the three Partner
Govemments discharged fully their obligationsto the United Nations. In this
case, the only relevantquestion concemsbreachof analleged obligationwhich

required action in the formof rehabilitation,or some obligationwhich required
the Administering Authority to make specific financial provision for

rehabilitation.

245. Nauru's auegationsconcemingthe BPCare relevant,if at all. only in so
far as Australias said to haveincurredresponsibilityfor breachof the supposed
obligation,by reasonof certainacts oromissionsof the BPC. In this comection.

Nauru is bound to establish that. in acting under the intemational instruments
relating to the BPC which bound the three PartnerGovemments (in particular,
the 1919Agreement), Australia breached thesupposed obligation involving

actionto rehabiiitate.or themakimgof fmancialprovisionfor rehabilitation.

246. Nauni does not, it must beemphasised, provide many details of the
asserted legal basis ofits claim that.by virtue of the legal and administrative

arrangements for the Nauruan phosphate industry, Australia incurred
responsibility to rehabilitate, orrovide specific funds for rehabilitation. In
earlier oralpleadings.itassertedthatAustralia should.as a matterof faimess,be

required to rehabilitate lands worked out during the Tmsteeship (CR 91/18,
p.28). But this alone does not establish a legal basis for its claim. Uncertain
notionsof faimess cannottake theplace ofacceptedlegal pnnciple, particularly
where the dispute concems a Trusteeship Agreement brought to an end

apparentlywith thecomplete satisfactionof the UnitedNations. 247. Nauru seeks to manufacture from Articles 3and 5 of the Tnisteeship

Agreementand Article 76 of the Charter anobligation which simply does not
exist.There isnothinginthe Tnisteeship Agreementor the Charterwhich would
have prevented Austmlia from allowinga venpre. like the BPC, to operate in

the Tnisteeship Territory on the basisset out in the 1919 Agreement without
undertakingsomerehabilitationproject.

248. Itis not enoughmerely to state asNaunihas donethat Australia failed to
pmmote the political and economic advancementof the Territory, contrary to

Article76of the Charter,or Articles3and5(2)(b)of theTrusteeshipAgreement
(NM, paras.377, 392). Such a statementcalls for analysis of a kind altogether
lacking in the Naunian Memorial.Nauni does not show how Australia's acts

and omissions might haveconstituted a breach of such general obligations of
result. Forxample, Nauru complainsthat the BPC phosphate-derivedincome
was never taxed (NM.paras.336. 373). Under the 1919Agreement, however,

theBPC's revenue wasused to fund the Naunianadministration.The BPC was
not pemitted to take Naunian phosphate without making any return to the
Naunian community. On the contrary, it was required to make a substantial

retum.There is.therefore,no apparent substance to thiscomplaint.

249. In the nextChapter, it wiUbe shown that theobligations.arising under
Article 76 of the Charter, and the relevant Tnisteeship provisions, are
obligationsof result(forexample.to promote theeconomic advancementof the

Nauruan people).The Administering Authority(including Australia)was given
a discretion as to the choice of means by which the obligations were to be
discharged. Neither the Tnisteeship Agreement nor the Charter refers to any

obligation to rehabilitate, or toovide the financial means for rehabilitation.
And Nauni does not suggestthat Australiaincurredinternational responsibility
simply by permitting the BPC to mine phosphate on Nauni during the
Tmsteeshipperiod.

250. As the following Chapter also shows, until 1965 it was thoughtby the
Naunians. the Administering Authority and the United Nations thatthe most
appropriate way Io secure the long-ten future of the Naunian people was by

way of resettlement. Rehabilitationwas not then considered.tobe a practicable
option (and therecannot have been a duty on the part of the Administering
Authorityto do somethingwhichwas thenbelievedimpracticable).

251. Towards the end of 1964. however, the Naunians decided to reject

resettlement as an option. so that the Administering Authority wasobliged toconsideraltemativemeansto pmvidefor theirlong-termfuture.The questionof

rehabilitation wasfurther investigated andwas again found not Io be feasible.
Expert scientific inquiry could not yieldany assured. practicable method of
rehabilitation. Evenifsucha meihodhad beenfound, therewouldhave beentoo
little time for the Administering Authority to undertake any rehabilitation

scheme before Nauru itself became independent.As the Naunians' own more
recent inquiry has shown, even with advances in scientific and technical
know-how. no useful rehabilitationschemecan pmceed until a comprehensive

land-use plan has been formulated.See PartIII, Chapter 1.Such a plan had not
been fonnulated by the Naunians prior to independence and has not been
formulated since.

252. The next Chapter will show that it was in this context that the

Administering Authority's preferred means was to make sufficient financial
provision for the Nauruan people that they might undertake to rehabilitate the
worked-outphosphatelands. if this happened to becomepracticable and if they

so chose. Adequate financial provision was, therefore. made by the
Administering Authority, by means of the 1967 Canberra Agreement. See
Pan II. Chapter 2,Section VII. ïhe question therefore becomes whether ornot

this choice of means was an abuse of the discretionary powers given to the
Administering Authority under the Trusteeship Agreementand the Charter, so
as Ioconstitutea breach of a dutyarising underthose international instruments.

The duty was, of course, the general duty under Article 76 to promote the
advancementthe inhabitants,notthe dutyaUegedby Nauruto rehabilitate.

253. As the following Chapter shows. the terms of the 1967 Canberra
Agreement were fully reviewed by the Trusteeship Council and the General

Assembly. The evidence shows that neither the Trusteeship Council nor the
General Assembly considered that the choice of means selected by the
AdministeringAuthority was inappropriate, much less improperlymotivated. It

was after that review that the General Assemblydecided to terminate the 1947
TrusteeshipAgreementand to grantthe Nauruansfull independenceandcontrol
of their own affairs. The onlypossible basis for challengeby Nauruis that the
1967 Canberra Agreement did not constitute a bona fide exercise of power,

because the financial provision made by it was totally inadequate. But this
clearly is not thecase (Chapte2, SectionVII). Indeed,Nauru itself admiis that
it has sufficientfunds toundertake rehabilitation. 254. In effect,Nauru'sclaimis that theAdministering Authorityought to have

given it a fund which was specificallycommittedto rehabilitation.irrespective
of the generalfuiancialprovisionmade availableto Nauruunder the Canberra
Agreement. This claim is not only unreasonaoe, it is altogether incompatible

with the general discretionentrustedto the Administering Authorityunder the
TmsteeshipAgreement and the Charter.

255. Besides the T~steeship Agreement andthe Charter, Nauru also alleges
that it has other legal bases for its claim in associated principles of general

international law; in particular, the principles of self-determination and
permanent sovereigntyovernatural wealth and resources (NM, paras.44-5.419).
Theseprinciples cannot, howeverb . e invoked tochangethe obligationsimposed

by the Charter and the Tnisteeship Agreement. See Part II,Chapter 3 below.
Even if guides to the interpretation ofthose obligations, their application is
subjectto the notion of "intertemporallaw". discussedin the next section.

256. In any event,the factsleavelittlescopefor theoperdtionof the principles
of self-determination and permanent sovereignty. The mining of Naunian
phosphate was constantly under review by the relevant organs of United

Nations. It lookplace not only with their consent,but also with that of the
Naunian people. Prior to 1965.neither the United Nationsnor the Naunians
gave any serious thought to the possibilityof rehabilitation.By independence,
the AdministeringAuthority had transferred au interest. and control over. the

phosphate industry to the Nauruans (on terms most favourable to them). See
Part II, Chapter 2. Section VII. Indeed, since 1968. Nauru itselfhas chosen to
continue to mine at an even greater rate, without rehabilitating the lS.urely.

principles of self-determination and permanent sovereignty over natural
resources cannot impose a higher obligation of conduct on the Administering
Authority than Nauni has thought appropriate to accept for itself. These

principles are simply not relevant to the question, "who bears the cost of
rehabilitation?"

257. Apart from principles of self-determination and permanentsovereignty
over natural resources, Nauru also relies on doctrines of denial of justice

/ato sensu and abuse of rights (NM. paras.439, 449). as well as the so-called
duties of a predecessor State.Notwithstanding the apparent breadth of these
grounds, they cannotenlarge the dispute beyond whatis already claimed - a

declarationas Io responsibilityfor rehabilitation.None of theaUegationsmadein relation to these supposed bases of claim touch or concern this issue. See
PartII,Chapter3.

258. In any event,the allegationsmadeby Naum in this context (examinedin
Part II ,hapter 3) are entirely inconsistentkith the judgments made by the

relevant United Nations organsduring,or at the terminationof, the Tmsteeship
Agreement. Generally speaking,these organs commented most favourablyon
the efforts of theAdministering Authorily to discharge its duties as such.

Furthermore.as Chapter 3also shows.Nauni'sassertionsconcerningthe scope
and application ofthese doctrineshave little or no authoritative support.These
asserteddoctrinesareincapableof providingseparatecausesof action.

SectionIII:The intertemporal issue

A.THELEGALPRlNClPLE

259. The determinationof thevalidityof theNaunianclaimsmustbe made by
referenceIothe stateof internationallawat the the the relevantacts in question
were committed and the facts that gave rise to the alleged breaches of

internationallaw occurred. This is a fundamental proposition which mus1
remain at the forefront of considerationof the legal issues raised in this case.
The Court itself has already recognised theneedto ensurethat Nauru's delayin

seising the Court does not cause prejudice to Australia with regard to
determinationof the applicablelaw(ICJ Reporrs 1992,p.255.para.36).

260. As pmclaimedby Max Huber in the IslanofPalnuis case:

"a juridical fact must be appreciated in'the light of the law

contemporarywith it. and not of the lawinforce at the time when a
dispute in regardto it arises orlsto be settled." ((1928)2 UNRIAA
831at 845)

Aswas also said in thatcase:

"As regards the questionwhich ofdifferentlegalsystemsprevailingat
successive periods is to be applied in a panicular case (the so-called
intertemporallaw)a distinctionmus1be madebetween thecreation of
rights and the existence of rights.Theme principle whichsubjects

the act creativeof a rightto thelawinforceat the time the rightanses,
demands that the existence of the right, in other words its continued manifestation,shall followthe conditions requiredby the evolutionof

law." (Ibid)

Inthiscase, therefore,Naurunot onlyhas to establish theexistenceof a right to
rehabilitation atsome stageuringtheTmsteeship,it has to showthat that right

continuedto exist and that itllexiststoday.

261. Inorder to determinethe wrongfulnessof an act of a State it is essential
tojudge that conducton thebasis of thelaw as its interpreted and applied at
the limethe aiiegedlyunlawfulconductwasperformed.Tojudge the conductof

Australia in the light of the law as it may haveevolved subsequentlywoulbe
an attempt to apply the new law retroactively, in violation of fundamental
principles ofjustice.

262. This intertemporal principlehas ken proclaimed and codified by the
International Law Commission's draft articles on State Responsibility.
Article 18reads:

"An act of the State which is not in conformitywith what is required

of it by an international obligation constitutes a breach of that
obligation only if the act was performed at the time when the
obligationwasin forcefor thatState."

263. In thecommentary to this Article theILC supported the mle with the

consideration that "the principle that an individualnot be held criminally
liable for an act which was not prohibited at thetime when he committed it
(nullum crinien sine Iege praevia) is a general rule of al1legal systems". In

finding that the principle appliesin international law, the report adds that it
providesa safeguardfor all subjects of law"since itenablesthem to establishin
advance what iheir conduct shouldbe if they wishto avoid a penal sanction or

having to pay compensation for damage caused to others" (119761YBILC,
Part.U,Vo1.U.p.90).

264. The applicationof the principle to tortious andcriminal responsibilityis
recognisedby H Lauterpacht,International law, Vol.1,the General Part. p.133;

G Schwaizenberger,International LAW as AppliedbyInrernational Courts and
Tribunals. Vol.1,(1957)p.24. A relatedprinciple applies in relation to treaties,
to the effectthat theyill not normallybinda party in relation to an act or fact

which took place before the date of entry into force of the treaty (Vienna
Conventionon the Lawof Treaties,Art.28).265. A further aspectof the intertemporal principleis its application to terms

used in treaties.As the InternationalLawCommissionrecognised"the effect of
changes in the law upon a treaty is rather a question of the application of the
new law to the treat-a questionof themodificiitionof thenile laid downin the

treaty by a later legal mle rather than one of the interpretation of the terms"
([19641YBILC 1964,Vo1.U.p.203).

266. The 1971 Namibia advisory opinion may at first glance appear to
contradict this p~inciple. In that case the Court stated that "viewing the

institutions of 1919, the Court must. whenconsidering Mandate obligations.
take into considerationthe changeswhichhaveoccurredin the superveninghalf
century, and its interpretation cannot remain unaffected by the subsequent

development of law" (ICJ Reports 1971. p.31, para.53). The Court stated that
the concepts of the Mandate, including that of the "sacred tmst" "were not
static. but were bydefimitionevolutionary"(ibid). However, in any attempt to

apply that decision.to this case. it must be recalled that the Court was then
judging the contemporaryconduct of South Africa which continued to apply
apartheid in 1971 in the territoryof Namibia anddid not report to the General
Assembly.Here,the situationisentirely different.

267. Nauni wants the Courttojudge not the conductof a State at the time of
judgment based on continuingbehaviour, but theconduct of the Administering
Authorityovera lengthyperiodpriorto 1967.Theywantthis conductjudgcd by

reference Io legal concepts which were evolving throughout the time the
relevant conduct took place and some of which have evolved corisiderably
subsequently.Claimsarisingoutof conductthat tookplaceas longago as 1947

cannot be determined on the basis of emergent principles of international Iaw
that were not established by 1967 or, even if established by then, were not
applicableto al1the earlierconduct.Even ifin thiscase the Court considersthat

certain obligationsunder the Tmsteeship or general international law evolved
with subsequent development of the law, this does not mean that such
developments of the law apply to earlier acts committed prior to the
developmentof the law.To do so would clearlybe contraryto the statementof

the mle by Judge Huber concemingthelegal appreciationof facts.

268. The application of later legal mles to treaty provisions relevant.in this
case is discussed in greateretail elsewherein this Counter-Mernorial.At this

stageAustralia simplyreaffirmsthattheapplicationof a treaty,in the same way
as the determinationof international responsibility, musthave regard to the law in force at the time the relevantacts were committed.And the fact that one is
dealingwith aTnisteeshiparrangementdoes notaffectthis conclusion.

269. The AustralianGovemmentrejectsthe implicationin variousparts of the
Nauruan Memorial(seeeg NM.paras.422429) that theCOUR shoulddetermine

the legal claimsby referenceto developmentsin moral. social and legal values
subsequentIotheeventswhichgaverise to theclaimsalleged.

B. APPLICATIONOFTHE INTERTEMPORAL

PRINCIPLE TO THEFACTS

270. The Nauruan claim relates to the alleged failure of Australia to make
adequate provisionfor the restoration of tareamined for phosphate prior to
1967.It is clear that thevariousgroundson whichNauru seeks to rely relate Io

actions over the twenty year periodfrom 1947Io 1967,not simply the position
as at 1967.

271. It is the conduct of the Administering Authority throughout the

Trusteeshipwhich,it is alleged,gave rise to a breachof a duty to rehabilitate.or
to provide the financial means to enable rehabilitation to take place. Whether
such an obligation existed and was breacheddepends on the legal principles
applicable throughout the whole trusteeship period, and only on those

principles.

272. Even if, as the Namibia case suggests (see para.266above). and Nauru
itself submits (NM,para.423ff),it is appropriateIo interpretthe Charterand the

Trusteeship Agreementitself in adynamicway, this does not enable the Court
Iointerpretthoseprovisionson thebasisof the lawas it hasevolvedsince 1967.
For to do thatwould be to misunderstandthe nature of the obligation alleged
and the-basis for it:t is alleged that there was an obligation to rehabilitate

mined areasarisingoutof the Trusteeshipas such.And thican only be because
at the timeof independence some trusteeship obligation had nten fulfilled.

273. The claim made by Nauru against Australia is. insubstance, that when

the Nauruans rejected resettlement at the end of 1964, the Administering
Authoritybecame obligedto rehabilitate.Forclearlytlierecould be no question
of rehabilitation if theland was. with the consent of the inhabitants, to be
abandoned. It wasonly whenthe Nauruansmadethedecisionto remain thatthe

question of rehabilitationreally arose. From the perspective of the United
Nations and the Administering Authority. the Administering Authority wasunder an obligationto provide for the welfareof the Naunian people. Priorto

1964, the United Nations,the Administering Authorityand the Naunians were
al1agreed that resettlement wasthe best means tofuifil this obligation. It was

not until the Naunians rejected resettlement {hatrehabilitation was seriously
considered as an alternative. Asalready noted, however, the Administering

Authority regarded rehabilitationas impracticableand, in any event, time did
not permit the.AdministeringAuthority tocany out actual rehabilitation.in this
cimumstance, the Administering Authority hadno alternative but to make

adequate financial provision for the future of the Naunian community.
intertemporal principles would require these circumstances to be taken into

account.

274. Inlight of these facts. the real question raisedby Nauni is whether the
arrangementsmade by the 1967 Canberra Agreementwere in fact a bona fida

exercise of the discretion of the Administering Authority. In these
circumstances, the onus is on Nauni to show either that the 1967 Canberra

Agreement was totally iiiadequate, or that the funds made available to the
Naunians by that Agreement somehow excluded financial provision for
rehabilitation.

275. Nauni cannot avoid thisconclusion by relying on generai principles of
international law, such as principles of self-determination or permanent

sovereignty overnatural resoumesas theymight be applied toa situationtoday.
Similarly. intertemporal law prevents recourse. in this case, to the newer.
post-1967 notions of the "polluter pays principle", or the notion that an

extractiveindustrymust re-instate an area mined. In relation ttohe latter, there
was al the time no such generally acknowledged duty in Australia, United

Kingdom or New Zealand or elsewhere. For instance,in French law aduty to
rehabilitate did not appear in the MiningCode until 1977 (loi 110.77-620of
16June 1977, Art.20 amending Art.835). See also the situation in Togo

describedin Alaglo."Togo, its geopotential andattempisfor land-use planning"
in P Amdt and G W Lyttig (eds)MineralResources Extraclion,Envirorimenral

ProleclionandLund Use Planning in IlleIndusrrialandDevelopingCounlries,
pp.260 ff. This indicates that rehabilitation of minedphosphate areas did not

occur. Nor is there evidence of any duty to rehabilitate mined-out lands in
international environmental instrumentsadopted before 1967.To apply these

Aniclc83nouvwu:"LImmisc.6win.ommmentdesris a~coledesitcrci laïlatepu
lesvavaelpz lesinsWlationimicdure daik&.vucdci'cxploiwetdelarecherche.
pcuielrcprwrh,euecstobli@uirc lcus &swrriéres". notions here would be Io apply retrospectivelyIo the Administering Authority
values, standards and obligations to which it was not subject at the relevant
time.

276. Finally, as alreadynoted. Naum makesno claim of breach in respect of

the Mandateperiod. It followsthatNaum'sclaimis in respectofphosphateland
mined out during the Tmsteeship only, excluding the area of the island mined
prior Io 1947.(Approximatelytwenty-fivepet centof pre-independencemining

occurred &fore the Tmsteeship was established in 1947.) Ifthe case were
othenvise,the AdministeringAuthorityundertheTmsteeshipAgreementwould
incut an obligation in respectof acts for which it was not asch responsible,

undertaken under a quite different legal regime. This would also introduce
elementsof retrospectivityincompatiblewithintertemporal law.

Section IV: Relationship between the Trusteeship und 1919Agreement

277. Before turning to examine the natureof the tmsteeship obligations,it is
necessary to deal with one other matter raised by Naum. the relationship

between the 1919 Agreement and the Trusteeship. Nauni contends that the
supposed violations of the tmsteeship obligations by Australia "in vinually
every case flow from the system inherited in 1947" (NM.para.286; see also

para.283). This refers particularly to the regime established by the 1919
Agreement.Australianotes that the statusquo under the 1919Agreementwas
known to the United Nations at the time of the adoption of the Tmsteeship

Agreement. Therewasno suggestionin that latter Agreement thatthe previous
arrangements governing the phosphate industry (and made under the 1919
Agreement) were in any way incompatiblewith ke tmsteeship system which

wasa continuationof thebasicmandate principleof the"sacredtrust".

278. Australiarejectsfor the reasons already set out(paras.240to 242 above)
theNaunian suggestionthateventsduringthe Mandate period havesome "legal
and evidential significance" forthese proceedings (NM. para.287). Inthese

proceedings it is only conduct during and particularly at the end of the
Tmsteeship that is relevant.ne Nauruan contention in relation to evidence
from the Mandate period contlicts,inanyevent.withother partsof the Nauruan

Memorialthat seekto relysolelyonevidencefrom 1965-1967(NM,pam.274).

279. The Coun must look atthe evidence before it covering the Trusteeship
period. Thisincludesthe provisionsof the 1919Agreementso fat as they were
relevant to thephosphate mining duringthatperiod.It is clearly impennissible,the United Nationshad intendedto imposesucha limitation"(reproducedin
Vo1.3.NM, p.188-9).

282. Australiadoesnotconsideritnecessarytotakeapositionon theNauman
contentionthat the tmsteeship principleshave thestatusofjus cogens (NM,
para.254). Asindicated,Ausidia doesnotseektosay that the1919Agreement

overrides the trusteeship system.And there canbe no suggestionthat the
TmsteeshipAgreementitselfis in someway inconsistentwiththe alleged jus
cogens principles. For that would beto make a nonsense of the whole
trusteeship system. So one is left with the need to apply the trusteeship

principles of the Charter and the specific obligationsof the Trusteeship
Agreementtothefactsofthecase.Nodecisiononthestatusoftheseprinciples
and obligations as jus cogens is, therefore, necessary. Australiadoes not.
therefore.respondfurthertothisparticularclaim. CHAPTER 2

NOVEL ALLEGATIONS OF BREACH IN RELATION

TO THE CLAIMFOR REHABILITATION
DERIVING FROM TRUSTEESHIP

Section 1:The nature of the obligations of the Administering Authority

283. Any considerationof the claimthat thereis a dutyto rehabilitateflowing

fromt&steeship obligationsmusthave regard tothe natureof thoseobligations.
Australia does not deny that legalobligationsdo in certain circumstancesanse

under the tmsteeship system.The Court in the 1971Nomibia advisory opinion
indicated in relation to the Mandate that "definite legal obligations" arose

designed for the attainment of the object and purpose of the Mandate (ICJ
Reports 1971, p.30). And Australiadoesnot deny that this general proposition

ais0appliestothe NaumTmsteeshipAgreement.7

284. But it is the terms of the Charter and the particular Trusteeship
Agreement which must alone determine the content of any obligations which

anse from those instruments.

A. OBLIGATIONSOFRESULT

285. The obligations that arise under Article76 of the Charter are defined in
terms of the "objectives" to be achieved (whatcan be termed obligations of

result: see Report of the intemationalLaw Commission, 119771 YBILC Vo1.n
Part 2 at pp.18-30).The obligationsarenot defined in terms which specify the

precise means to be employed by the Administering Authority to achieve a
specified result. In consequence. the Administering Authority is left with

considerable discretion as to the choiceof means, provided the end result is
achieved. This is significantin the present case, for therecan be no doubt that

the ultimate result envisagedby the tmsteeship system was achieved: N~UN
hecame independent and the people prospered. And at no stage did the

'Ausmiia. aithctimcofconclusionof theTmrlacshipAmrncnl foi Nnum.cmccdcdhnt Anicle
76id) of lhcChmr irnplral r bindiiigoblWC,iiGovemrncnü -nireconsute
"ln rcplytoqucsiiau miUidelcpLionrof Ian<Chu. thcAusValimdclcgaldfimr
ihii Ani76id)fUrOwncr ismepicd byUicDclqa~im of Ausmiia. New Z3ndUic
UnitedKinadoLUabinlinnoblinaim~ùmIo & Tmieeshili Amrncnt forNauru.il beinn
dso noilhiinrmr~~uiih"lhe lwsof Anicl76(dthewelixcof lheinhabihiiau;f
is of pmmouni ~unriJcralionandobligation"(UürintrAscnlblyOBiri<ilHtcords. CHAPTER 2

NOVEL ALLEGATIONS OF BREACH IN RELATION

TO THE CLAIMFOR REHABILITATION
DERIVING FROM TRUSTEESHIP

Section 1:The nature of the obligations of the Administering Authority

283. Any considerationof the claimthat thereis a dutyto rehabilitateflowing
fromt&steeship obligationsmusthave regard tothe natureof thoseobligations.

Australia does not deny that legalobligationsdo in certain circumstancesanse
under the tmsteeship system.The Court in the 1971Nomibia advisory opinion

indicated in relation to the Mandate that "definite legal obligations" arose
designed for the attainment of the object and purpose of the Mandate (ICJ

Reports 1971, p.30). And Australiadoesnot deny that this general proposition
ais0appliestothe NaumTmsteeshipAgreement.7

284. But it is the terms of the Charter and the particular Trusteeship
Agreement which must alone determine the content of any obligations which
anse from those instruments.

A. OBLIGATIONSOFRESULT

285. The obligations that arise under Article76 of the Charter are defined in

terms of the "objectives" to be achieved (whatcan be termed obligations of
result: see Report of the intemationalLaw Commission, 119771 YBILC Vo1.n

Part 2 at pp.18-30).The obligationsarenot defined in terms which specify the
precise means to be employed by the Administering Authority to achieve a

specified result. In consequence. the Administering Authority is left with
considerable discretion as to the choiceof means, provided the end result is
achieved. This is significantin the present case, for therecan be no doubt that

the ultimate result envisagedby the tmsteeship system was achieved: N~UN
hecame independent and the people prospered. And at no stage did the

'Ausmiia. aithctimcofconclusionof theTmrlacshipAmrncnl foi Nnum.cmccdcdhnt Anicle
76id) of lhcChmr irnplral r bindiiigoblWC,iiGovemrncnülhc reconsute
"ln rcplytoqucsiiau miUidelcpLionrof Ian<lhu. thcAusValimdclcgadfimr
ihii Ani76id)fUrOwncr imepicd byUicDclqa~im of Ausmiia. New Z3ndUic
UnitedKinadoma binlinnoblinaim~ùmIo & Tmieeshili Amrncnt forNauru.il beinn
dso noilhiinrmr~~uiih"lhe lwsof Anicl76(dthewelixcof lheinhabihiau;of

is of pmmouni ~unriJcralionandobligation"(UürintrAscnlblyOBiri<ilHtcords. supervisorybodies within theUnited Nationsexpressthe viewthat, in itschoice
ofmeans.the Administering Authoritywas inbreachof itslegalobligations(see
Part1,Chapter4 above).

286. The internationalLaw Commissionhas'recogniseda distinctionbetween
"obligations ofeans" and "obligationsof result". This distinction is reflected
in draft Articles 20and 21of the articleson State responsibilityadoptedby the

Commission in 1977. There is nothing in the relevant trusteeship obligations
which requires a particular courseof conductby the Administering Authority.
They are rather quintessential obligationsofresult. Theyrequire. for instance.
the promotion of thewell-king of the inhabitants. 7he means by which an
Administering m ut h acohivitsthatis a matterfor itsown choice.

287. As theinternationalLawCommissionrecognisedin itscommentarythere

are some obligationsof result where,even if the initialchoiceof means has not
achieved the required result, a Statemay avoid a breach of the obligation by
subsequentadoptionof alternativemeans(seedraftArt.21(2)).This may involve
achieving the result required or in some cases. where the nature, purpose and

field of applicationof the obligationallows.an equivalentresult. (See generally
the commentaryto the ILC Draft Art.21 [1977]YBILCVol.ll, Part2 pp.18-30;
also reproducedin 1Brownlie,StareResponsibiliîy(1983)pp.254-276).See also
the Sixth Report on State responsibility by Professor Ago, [19771 YBILC.
Vol.11,Pari 1.pp.8-20.

288. Nauru seeks to find a breach of trusteeship in certain actions of the

Administering Authority(NM,para.289-302).But indoingthis Naum overlooks
the fact that the obligations contained inrticle'76 of the Charter and the
Trusteeship Agreement are obligations of result.None of those provisions
required-Australiato act in any particularway to meet the obligations. Rather,

the Tmsteeship Agreement.in patticular,recognised that theobligations on the
Administering Authority to "promote", for instance, advancement of the
inhabitantsor to assure to thehabitantsan increasingshare in the servicesof
the tenitory were tobe met by action chosen by the Administering Authority

having regard to the "circumstances of the Tenitory" or the "particular
circumstances of theTenitory and itspeople" (ArtJ(2)(b).and (c) respectively
of the TmsteeshipAgreement).As weU.Arîicle3 of the TmsteeshipAgreement
required the Administering Authority to administer the territory "inuch a
manneras toachieve" the basic objectivesof the trusteeship.289. ItfoUowsthat the failuretorehabilitatecannotin itselfconstitutea breach
of any international tmsteeship obligation. given the absence of any such

specificrequirementin thetrusteeshipprovisionsrNaum mus1establish that, by
Australianactionsand conduct infailig.to rehabilitate, andgiven the alternative
means adopted, Australia in some way failed to achieve an outcome required

under the Tmsteeship. Unless it can do this no possible breach could be
established.

290. More importantly,even if it could be establishedthat Australia's actions
fmm time Io time failed tomeeta tnisteeshipobligationrequiringrehabilitation,

Naum mus1also show that the failure to achieve the result required by that
obligation continued as at independence despite the adoption of alternative
means to achieve the obligations of result, namely the favourable phosphate

settlement which included the complete transfer to Nauru of the phosphate
industry and thetmst funds then in existence. Becausethe relevant obligations
are obligations of result, subsequent conduct was clearly envisaged in the
circumstancesas allowing a tmsteeship StateIo achieve the results required of

it.(See draft Article 21(2) of theILC draft Articles on State responsibility.)
Naum would stili,therefore, have toshowthat thelems on which independence
was granted failed to achievea resultequivalentto that resultwhich previously

may have been considered to require rehabilitation or a fund specifically
committedto rehabilitation.

291. Bytheir supervisionand recommendations United Nations bodies could
clearly indicate to an Administering Authoritywhat action was necessary to

meet a particular tmsteeshipobligation.And in Australia's case.it paid careful
regardto the recommendationsof the United Nations andadjusted ils behaviour
accordingly (see paras.92 to 106for examples). It is for this reason important

thatany.considerationof Australian responsibilityfor rehabilitationhave regard
no1 Io individual acts during the tmsteeship but Io the situation as at
independence when Australia relinquished any further administrative
responsibility. Evenif particularactionsuringthe Administrationdid not fully

meet tmsteeship obligations, it is only if a relevant breachcan be established
having regard to the situation at independence that aurucould succeed. And it
can only do this if it can successfully show that, insteadof rehabilitation, the

ultimate means chosenby the Administering Authority to ensure the well-king
of Naum did notinfact satisfy the relevant obligation.n reality thismeansthat
Naum must show that the means chosen by the Administering Authority - the

provision of finance under the 1967 arrangements -were totally inadequate to achieve rehabilitation.But this cannotbe so. Nauruadmits it has the financial

means. For this reason. Australiastrongly denies that N~UNcan establish a
breachon the facts quiteapart from thedifficultiethatexist in establishingany
legalbases for ils claim.IneffectNaumclaimsthat it was entitledto eamarked

funds, assigned specifically to rehabilitation and irrespective of the general
wealth of the Naumans underthe 1967 arrangements.This is not only patently
unreasonable, but it is unsupportableas a restriction on the general discretion

entrustedto the Administering Authority.

B. DOMESTICLAWANALOGIES

292. Another important considerationis that. in considering thenature of the
obligations of the Administering Authority,it is the actual provisions of the
Charter and Trustceship Agreement to which the Court must have regard.

Australia rejects the attemt y Naumto importinto these treaty provisionsthe
whole set of legal rights and dulies connected withthe notion of a "tmst" iri
domesticlaw, particularlythe common law.To do that is to mistake completely

the fundamental elementsof the United NationsTmsteeship System. Domestic
law analogies have limited value in this area. The Court recognised the
difficulty in equating domestic systems with the international mandate and

tmsteeship systemin the Status of SouthWestAfrica (Advisory Opinion) (ICJ
Reports 1950. p.132):

"The Leaguewas not, asallegedby that Govemment [South Africa]a .
'mandator'in the sensein which thisterm is usedin the national law

of certain States. It had only assumed an international function of
supervision and control.The 'Mandate' had only thenameincommon
with the severalnotionsof mandateinnational law.The object of the

Mandate regulated by international mles far exceeded that of
contractual relations regulatedby national law. The Mandate was
created, in the interest of the inhabitants of the territory. and of

humanity in general, as an international institution with an
inlemational object -a sacred tmstof civilisation.It is therefore not
possible to draw any conclusion by analogy from the notions of
mandate in national law or from any other legal conception of that

law."

293. Similarly, Judge McNair in his separate opinion in that case pointed to
the inappropriatenessof seekingto apply private law institutionsdirectly to an

international institution. Heid: "What is the duty ofan intemationaltribunalwhen confmnted with a
new legal institution the object and terminology of which are
reminiscentof the mles andinstitutionsof privatelaw?To whatextent
is itusefulor necessaryto examinewhatqay atfirst sightappearto be

relevant analogies in private law systems and draw help and
inspiration fmm them? International law has recmited and continues
to recmit many of its mles and institutions from private systems of

law. Article38(i)(c) of the Statute of the Courtbars witness that îhis
pmcess is still active. and il wibe noted thatthis article authorises
the Court to 'apply...(c) the general principlesof law recognisedby

civilized nations'. The way in which internationallaw bomowsfrom
this source isnot bymeansof importingprivatelaw institutions 'lock.

stockand barrer, ready-madeand fullyequippedwitha set of mles. It
would bedifficult to reconcilesuch a process with the application of
'the general principlesof law'. In my opinion. the true view of the
dutyof internationaltribunalsinthis matteris to regard anyfeahiresor

terminology which are reminiscent of the mles and institutions of
private law as an indication of policy and principles rather than as
directiyimporting rhesenilesand instihitions"(p.148).

294. It is importantto note theuse to whichJudge McNair would putprivate
law analogies:it wasonlyas "an indicationof policy and principles".It wasnot
to importthe privatelaw niles andinstitutions.The "internationalinstitution"of

tmsteeship must be defined by reference to its own mles. Australia therefore
rejects completely the relevanceof the Appendix by Professor Honort?in the
Naunian Memorial.That Appendixexamines in somedetail tmst and trust-like

institutions indomestic legal systems and makes the mistake warned of by
Judge McNair of seeking to import directly the content of private law mles
applicableto a particulardomesticlaw concept.in addition,the Appendixlooks

selectively at only one relevant analogy, that of the "trust". The
inappmpriatenessof selectingthis analogy is highlightcdby anexamination of
mandates established under Article 22 of the Covenant. the predecessor to the
United Nations tmsteeshipsystem.As wasrecognisedby QuincyWright in his

1933 study of mandates, resort to domestic law analogies in relation to
Article 22 of the Covenantwas made difficultby the fact th&three wordswith
different legal meaningwere used: mandate, tutelage and tmst. He concluded

that therewas littleevidencethatthe word"trust" was used in a technicalsense;
by contrast. there was considerable evidence that the word "mandate" was so
used. (MandatesunderrlieLeague of Narions(1933)pp.375-390,esp at 377).It wouldbe equallya mistake toreadthereferenceto "tmst" inthe United Nations
Charter in a technical,rivate law sense as referringto "tmst" in the common
law. Nauni points to no evidence that it should be so constmed. Nor do the
negotiations ofthese provisions atthe time of the San Francisco Conference

support the conclusion for which Nauru contends.As is said by Kelsen, an
'tnstitutionofpublic, especiallyof international, notofpnvate, law isintended"
(H Kelsen, The Law ofrheUnitedNations (1951)p.566). And as Lauterpacht,

who was sympatheticto use of domesticlaw analogiesin internationallaw said
of the Mandate system. "(T)he technicalities, exceptions and historical
pecuIianties of any given system of private law have no application in the

interpretation of mandates." (Private Law Sources and Analogies in
International Law (1927) p.200; see also C Rousseau, Droit international
public. Vol.II(1974) p.380.)

295. Even if one examinesthe Honoré appendix. with a view to seeing if any

policy and principles might be imported intothe international institution. one
finds little assistance. The conclusion of the Appendix isthat there is a
"pervasive use of protective institutions" in domestic law systems. Persons

holdingan office underthese institutionsare normauy subjectto supervisionby
some other body, often a court. But it is difficultto generaliseas to the precise
duties of a tmstee. As Honoréacknowledges(Appendix para.20. Vol.1, NM.

p.361, NM) the terms of the tmst instrument set outthe power and duty of the
tmstee and nomdlly these ternis can Varyso long as they are not unlawful or
contrabonosmores. This reinforcesthe fact that the tmsteeship systemcreated
by the Charter depended very much on the terms of individual tmsteeship

agreementsto determine the precise obligations of an AdministeringAuthority.
The Charter also established anelaborate systemof supervision,the "securities
for performance" already mentionedT . othisextentone mightacknowledgethat

the tmsteèshipsystemisanalogous to protective institutionsinprivate law.

296. Naum seeks in addition, however,to importon to the intemationalplane
a general"duty of loyalty"andan "intense" fiduciaryduty applicableinal1tmst
situations, which itis said requires theadministrationof the trust solely in the

interest of the beneficiaries (Honoré Appendipxara.21, Vo1.l.NM, p.361). But
torely solely onthe intense fiduciarydutyapplicable totmstees indomesticlaw
is to statethe notionof fiduciary duty tooabsolutely.AsWrightsaid:

"The terms 'trust' and 'entmsted' were used to emphasize the
fiduciary characterof the relationsofboth League andmandatory to the mandated peoples rather than to import into the institution the

Englishlawof stricttrusts."(p.389)

297. And as is stated in a leading Ausgalian text: "The trust is a fiduciary
relation, butevery fiduciary relation is not a irust" (Jacobs' Law of Trusts
(5th ed 1986).p.10). A fiduciary dutyoperatesin a widerange of situationsand

varies in its content depending on the situation. One can in certain
circumstances have a fiduciary duty without at the same the king precluded

from pursuing one's owninterest. For instance, in a number of English cases
limitson theapplicationto a fiduciaryof theprinciplethat a personmust notput
himself in a position where interest and duty conflict have been recognised.
Hanbury and'Maudsley,ModernEquiry(12thed 1985).say:

"But it is not safe to make the attractive over-simplificationof saying
that a fiduciarymust always account for au gains whichcome to him
by reasonof his fiduciary position."(p.577)

This emphasises the need for caution in any attempt to generalise and draw

absolute rules that should apply to the actionsof a tmsteeship authority on the
internationallaw plane.

298. The need for caution in tmnslating rules from the private law area into

international law is underlined by the essentially different nature of the
relationship.In a private law trust one is nomally dealing with a business or
personal relationship involving limited and identified property or assets. By

contrast,under a tnisleeshipunderthe Charterone is dealingwith thedischarge
of a complete range of governmental functions' on behalf of a whole
selfdetemination unit. ïXe two situationsare not comparable.In this context it
needs to be rememberedthat it is the dutiesof the Administering Authorityas

trusteethaiare alleged tobe breached.It is not alleged that theBPC itself wasa
tmstee. In fact. Nauni says that the BPC is in the same position as any private
trading enterprise.Yet itappearsto aUegethatthebenefitsgainedby the Partner

Govemments through their ownership of the BPC in some way should be
equated with and treatedas actionsin conflict with a fiduciary duty imposedon
them in their capacityas administratorsof the territory. This is to confuse two
separate roles. Throughoutthe MandateandTmsteeship the different role~and

responsibilities of the three Govemments as Administering Authority and as
owners of the BPC were recognised and accepted. For Nauru to suggest
otherwise is to ignore the way in which the United Nations treated the

operations of the BPC (see paras.108 to 119 above). To read the trusteeship provisionsas carryingthe corollarythat the mandateor trusteepowers could not
benefit from the resources of the territories in question ihrough a commercial

entity would be to ignore the widespread practice of Administering Powers
under both the League and the UnitedNations. Inthe case of Nauru, the lack of
any logical basis for sayingthat suchan arrangementinfringed some fiduciary

duty which thus supportsan obligation to rehabilitateis highlightedby a review
of thesalientfacts.

299. The grant and extension of mineral concessions to foreign concems in
mandateand trustterritorieswasan accepted featureof their administration.The

League of Nations in particular accepted the practice of the Partner
Govemmentsin relationto Nauru.As Professor Quincy Wrightsaid speakingof
Nauru:

"Does the principle of gratuitous administration prohibit the
mandatoryfrom engagingin businessfor profit in the mandatedarea?
Apparently not. The Commission has distinguished between the
mandatory govemmentinthat capacity andinthe capacityof a private

entrepreneur." (Wright,MandatesundertheLeagueofNations (1933)
at pp.453-4.)

300. Nauni in effect atternpts to impose some additional obligation on the

exploitation of Nauni's resources in order to found a duty to rehabilitate. It
attempts'to impose obligations which would have the effect that an
Administering Authority couldnot promote the economic advancement of a

trusttemtory through exploitationof its resources,or could oniy exploitsubject
to prohibitive conditions.This attempt to createsoméidealmode1of a "sacred
trust"getsno support from an examination of the trusteeshipsystem inpractice.

301. In the context of United Nationstmsteeship, one can conclude that the

basic notionof a "sacred trust" mayweUinvolvecertain fiduciary duties onan
Administering Authority. And it is this general principle. rather than any
specific nile applicable to a trustee as such. that might be imported into

international law. The content andnature of such a fiduciary duty can Vary
considerably.Its contentcanoniy be determinedby a considerationof the actual
circumstancesgoveming the relationship.And if one examines the situati.onin

this case, the onlyreasonable conclusion that one can reach is that while the
natureof the trusteeship relationship imposed an obligatio have regard to the
interestsof the peopleof Nauru,as reflectedinArticle76 of the Charterand theTnisteeship Agreement,it did not impose a duty to act solely in the former's
interest.

302. The "open door" embodied in the,former "A" and "B" mandates is not
absoluteunderthe trusteeshipsystem.It is:

"subordinatedby the Charter andTnist Agreementsto the interestsof
the inhabitants...The Charter provides (Art.76(d)) that 'equal

treatment in social, economic. and commercial matters for al1
Membersof the United Nationsand their nationals'(and also for the
lattern the 'administrationofjustice') shalibe 'without prejudice'Io
'political, economic, social and educational advancement of the

inhabitantsof the trustmitories'as weUas theother basicobjectives.
This is an important changewhichgives the AdministeringAuthority
much more freedom of action to safeguard the interests of the
populationwhich may coincidein certaincaseswith itsown interest."

(Duncan Hall. TheTrusteesliipSysten~(1947)24 BYBIL33.68).

303. The Administering Authority secured from the BPC thecosts of the
administration of Nauru, as well as royalty payments. It emphasised to the
UnitedNationsthe differencebetween itsresponsibilitiesfor administrationand
the commercial role of the BPC (see para.306 above). And given this. the

AdministeringAuthority pmperlymet its dutyto have regardto the interestsof
the Nauruans in ensuring that the royalties and administration expenses were
pmvided from the BPC operations. Australiarejects the Naunian assertion that
the exclusiveobject of the Administering Authoritywas the exploitation of the

phosphate deposits for their own benefit. There was no necessary
incompatibility. in any event. between its interest in exploitation of the
phosphat-e and the Nauruan interest in development of employment
opportunitiesand thegeneralprosperitybat miningbrought.The well-beingof
the Naunian people was conscientiouslyensured in terms of social, economic

and political advancement.This was guaranteedby the financial aspects of the
phosphate agreement and the transfer of the trust funds (see paras.242 to 243
above).

304. The Nauruan argument if upheld must mean that aur isunot only
accusing Australia of a breach of trust, but also accusing the United Nations

itself of not king diligent enough. Because, if the preceding argument is not
accepted and domestic law "tmst" analogiesare considered directlyrelevant. it
is clear that the real "trustee". with the obligations which are said tobe incumbenton such a person, is not the Administering Authoritybut the United
Nations itself.The Administering Authority wasno more than a representative

or delegateof the United Nations. (SeeM Glele-Ahanhanzo,"Article76" in J-P
Cotet A PeUet, LaCliarredesNationsUnies (2nded 1991)pp.1113-1127).

305. The Administering Authority was accountableto the United Nations from

which its authority over the territory derived.art from obligations owedto
other Member States (which are not in question here). the obligations of a
tnistee~hippower were matters for review andjudgment by the supewisory

organs of the United Nations. Yet there were only recommendations and
nothing more made in this regardin relation to the rehabilitation ofthe mined
areas of Nauru (see paras.171 to 202 above). If Nauru is to allege a breach by
Australia of some tnisteeship obligation it at the same time effectively

condemns the United Nations and the whole supewisory mechanisms used to
reviewtheperformanceof an Administering Authority.

SectionII: The choiceof means by the Administering Authority

306. Becausethe relevant trusteeship obligationare obligationsof msult.the

choice of means necessary to meet those obligations remained with the
Administering Authority. Variousfactors infiuencedthe choicethat wasin fact
made.

307. The phosphate mining itselfwhichtookplaceundera concession heldby
the British Phosphate Commissioners cannob te describedas inconsistent with
the TmsteeshipAgreement,for itclearlywasnot. Naum itselfdoesnot question

the mining pcr se, for it alleges only a duty to rehabilitate. The question is
whether. inorderIocomply with the tnisteeship obligationss.uchmining had to
be accompaniedby rehabilitation.

308. Priorto 1964, as hasken indicated(paras.121to 141). resettlement was

seen by the Naunians, the United Nations and theAdministering Authorityas
the most appropriate way in which to ensure the future well-being of the
Naunian people. All the efforts of the Administering Authority were
concentratedonthis.

309. Given that resettlement wasthe preferred solution. rehabilitation.was
until that time not an option that made any sense. To insur the cost of
rehabilitation would havebeento wastefinancialand other resources thatwould

be needed for other purposes, including the establishment ofa new homeland.Rehabilitation was also regarded as of uncertain benefit given the lack of
rainfall,the risk ofany replacementsoi1king washed awayand the prohibitive

cos1of transporthg replacementsoi1to Nauni. These issues had ken carefully
examined in CSIRO and BPC studiesbetween 1954 and 1965and are referred
to in greaterdetail in paragraphs 143to157 above. As the 1954CSIRO report

said, for instance, "no practical possibility whatsoeveris seen of wide scale
utilisation of worked out phosphate lands for agriculture" (Preliminary
Objections,Vo1.U.p.129).

310. The United Nations shared the scepticism as to the usefulness of
rehabilitation.In the 1962 Visiting Mission report, for instance. it was
concluded that "settlement...in a new home is unavoidable" (see paras.1-21to
141 above for a detailed examinationof United Nations consideration of this

issue).

311. Up until1964,when the optionof resettlementwas abandoned (although
not entirely by the United Nationsand the Parmer Govemments), there was a

generalacceptancethatgivenlikelypopulationgrowthandthe inabilityto make
the phosphate lands productive. rehabilitationwas not a viable option. It is
impossibleforNauru tocontendin these circumstances thatrehabilitationwas a

necessary means to comply with the trusteeship obligations. ïhe trusteeship
obligations were king met and wereexpected Io be met by a choice of means
otherthan rehabilitation.

312. After 1964 the choice of means necessary to fulfil the trusteeship

obligationswas dictatedby additionalfactors.The Nauruansdecided to stay on
the island.heyalso demandedindependencenolaterthan 1968.Clearly.it was
not possible in that time for the Administering Authority to undertake

rehabilitation. Afurther. comprehensivestudy of this issue was undenaken by
the DaveyCommittee.It too concludedthat comprehensiverehabilitationof al1
mined areas "while technically feasible" was "impracticable" given the very

many practical considerationsinvolved. Anexamination of the conclusions of
the Committeehas beenprovidedinparagraphs153to 165above.

313. While certain uses of mined-outland could be contemplated(such as an
airstrip or water storage). the Committee emphasised the need for long-term

land use planning.It alsopointedto thefact that:

"elsewhere in the world phosphate mining appears not to have been
subject to the same kind of regulatory requirements for land restorationor rehabilitationas other kinds of mining operation. his
is undoubtedly because the difficulties and costs involved make
treatment of worked out phosphate landsgenerally uneconomic.~."

(p.27;reproducedin Vo1.3,NM.p.237).

314. Hence, there is no basis for Nauni to say that rehabilitation was the
normal way in which phosphate mines weretreated. Rehabilitation, in the

circumstances of Nauru, wasonly an issue that arose from the fact that the
phosphate lands occupieda significantproportionof the land mass ofNauni and
in circumstanceswhere the option of resettlement was nottakenup.

315. It should also be recognised that rehabilitation would not restore

somethingthat previously had beenofgreatvalue.As theDavey reportsaid:

"The plateau area had in the past not been intensively used by the
Nauruan people. The whole population formerly residedand still
resides on the narrow strip of low coconut lands surrounding the

island, comprising some998 acres, andin the relatively fertilebasinof
about 154 acres surrounding the Buada Lagoon. a small lake at
approxirnatelysea level. The phosphate lands carried a vegetative

cover ranging from sparsely growingand stunted trees to denser
stands of tomano and wild almond with some coconut trees and
pandanus in favoured areas. The main former use of the phosphate
lands -as a sourceof timberfor c*oes and thatching materialsfor hut

constnictionand asa reservefor the huntingof birds. the only form of
wild life on the island are scarcelyrelevantto the presenteconornic
circumstances andway oflife of the Nauruanpiople. The limited food

produced on the uncultivated uplands obviously never made a
significant contributionto thesubsistenceof the Nauruans.The very
porous, thinly soiled phosphate lands wouldundoubtedly havebeen
the first and rnost seriously affectedin the recurringdrought periods.

and in any event the output on the coastal fringe in favourable years
would have ken inadequate for consumption requirements. Today
there is no sign that unmined landon the slopesof the plateauisking

used for any form of productive activityexcept for a very small area
which is undercultivation asa vegetablegarden by Chinesemembers
of theBPCworkforce ...

The concern of the Naunians over the denuded condition of the

phosphate-bearinglands after rnining is notso rnuch because of any loss of currently useful production there but because of loss of

opportunities for future utilization of these areas for habitation,
agriculture or other purposes. It was estimated that these reduced
opportunities would become a more serious restraint upon the

Nauruan economy as population density on the island increases
substantiallyabovepresent levels.Difficulties wouldalso occur when
ankif reduced dependence upon imported foodstuffs became
necessaryor desirable"(p.9-10,Vo1.3,NM,p.219).

316. Given the continuing uncertainty as to the economic feasibility of
rehabilitation and the fact that the form ofany rehabilitation would needto
dependvery much on the choiceof the Naunianpeopleas to land usepriorities,

the Administering Authority took a proper decision. 1t decided that any
obligations it had under the Tnisteeship to promote the well-being of the
Naunians couldbe met by financial pmvision which would enablethe Naunians

to carry out rehabilitationin the futureif they so decided.The financial means
provided were substantial and adequate for this purpose. They included the
Trust Funds in existence at the time of independence.This included the Long

Term Investmeut Fund designed specificallyto provide for the economic future
of theNaunian people whenthephosphates were exhausted.the value of which
stood at over A$6 million on 30 June 1967($A42 million in 1993 values). In

addition, the PartnerGovemments relinquishedcompletely the interestsof BPC
in the phosphate deposits(a scttlement worth $A90 million in 1967 or $630
million in 1993 values). A fuller analysis of this settlement indicating the
benefitsreceivedby Nauni iscontainedinthe SectionVI1of this Chapter.

317. The 1967 settlcment was made after a careful re-examination of the
whole question of rehabilitation. Once resettlement was abandoned, the
Administering Authority in good faith further reviewed the feasibility of

rehabilitation.The Davey Commitieereported.It concluded thatcomprehensive
rehabilitation in the sense soughtby Nauni was not feasible.1sit suggested by
Naum that an obligation to rehabilitate existed whetheror not it was feasible

and in the interests of the inhabitants? Such an obligation would not appear
consistent with the fundamental tmsteeshipprinciple to promote thewcll-being
of the inhabitants. It wouldbe expending money that couldotherwise be spent

on the welfareof the inhabitantson a futileercise.

318. It wasin these circumstancesthat the PartnerGovemments eniered into
the negotiationson thefutureof the phosphateindustry.And it was witha view to enabling Nauni itself todetermine what courseof action to take in relationto
rehabilitation that theomprehensivesettlement was agreed to by the Partner

Govemments. IfNauni was to achieve the independencewhich it wanted by
1968there was clearly no oppominityto undeFe further sîudies into whether
rehabilitation was the best way inwhich to promoteand pmtect the long term

interests and well-being of the Naunian people. The Partner Govemments did
not deny their responsibility toensure the weli king of the Naunian people.
They were clearly mindful of it and at independence left them very well

provided. And as the Nauni Commission of Inquiry report indicates, Nauru
itselfas done little to pursue rehabilitation. As that report further indicates.
rehabilitationis not a question simplyof restoring land,but of Nauni deciding

as a people on the particular form of land use that it is desired to achieve
throughrehabilitation.The Daveyreporthadalsorecognisedthis.

Section III:Absenceof any specific provision
to rehabilitate in the Trusteeship Agreement

319. The Naunian allegationsconcemingrehabilitation,if the Court considers
it open to examine them in substance. cannot rely on any specific provision
conceming rehabilitationin the Tmsteeship Agreement or Chapter XII of the

Chaiter.This is significantgiventhatNauniconsidersthese instrumentsprovide
"the primary causesof actionon whichNauni relies" (NM, para.243).Nauru is
forcedto contendthat an obligationto rehabilitatearises out of the existenceof

the tmsteeship "in the particular circumstances of Nauni" (NM. para.290).
Regard,says Nauni. mustbe had to:

"the basic purposesof the tnisteeshipsystem.That systemwould lack
substance altogetherif its principles werenot inimicalto the physical

destniction of the homeland of the people of a trust territory"
(p&.294).

320. Australia does not denythat it had duties of a general kind arising from
Article 76 of the Charter.But. as theNaunian Memorialdemonstrates. whileit

is easy to makegeneralassertionsbasedon suchbroad undertakings,it is more
difficult to point to theegal and factual basis upon which any requirement to
rehabilitate could bemade outin this case. For. asNauni recognises,on!y one-

third of the phosphate landsweremined during the tnisteeship. The mining of
that area clearly did not make the island uninhabitable and the mining was
carried out wiih the consent of the Naunians and to their benefit. Nauni itself

has chosen to mine the remainingtwo-thirdsof the phosphatelands and yethasnot foundit necessaryto undertake any rehabilitationitself in ordertoensure the
island remains inhabitable. Naum has continued to prosper asan independent

State with a high rate of population increase. This-indicates that Nauru is not
really serious about rehabilitation, butis seeking some financial gain at
Australia'sexpense.

321. As Judge Shahabuddeenhas recognised."part of the problem concems
the corcectappreciationof Naum'scase" (ICJReporrs1992, p.282). And Naum
itself does not assist. Judge Shahabuddeenoutlines what he understands tbe

the essence of theNauniancase.niis isthat Australia:

"failed to exercisethesecomprehensivegovemmentalpoweis so as to
regulatethe phosphate industryinsucha way asto securethe interests
of the people of -Nauni... [Tlhere was a failure to institute the

necessary regulatory measures to ensure the rehabilitation of
worked-out areas.not in the case of miningin any country.but in the
case of large-scale open-cast mining in the miniscule area of this

particularTmst Territory.The consequenw, according to Nauni, was
that theerritorybecame,or was in dangerof becoming.incapableof
servingas the nationalhome ofthe people of Naum, contrary to the

fundamental objectives of the Tmsteeship Agreement and of the
Charterof the United Nations"(p.282).

322. If this is the real Naunian claim it follows from this formulation of the
claim that the only provision of Article76 of the Charter that is relevant is

Article 76@). This provides that one of the basic objectives of the tmsteeship
systemis:

"to promote the political, economic, social, and educational
advancement of the inhabitants of the tmst territories, and their

progressive development towardsself-governmentor independenceas
may be appropriate to the particular circumstances of each territory
and its peoples and the freely expressed wishes of the peoples

concemed, and as maybe providedby the termsof each tmsteeship
agreement."

323. It is not apparenthow a requirementto tehabilitatecan arise from &ch a

broad objective. Nor can one read into such an obligation of result any
requirement to pursue particular actions such as rehabilitation. There are no
otherprovisionsof the Charter which appeartobe relevant.327. While the Coun has concluded that at the time of independence the

question of rehabilitation of the phosphate lands had not been settled (ICJ
Reports 1992.254, para.33).that in no way is thesame as a finding that Nauru
had alleged prior to independencethat the fajlure to rehabilitate constituted a

breach of the trusteeship. And as anyexamination of statementsby Nauru on
this issue prior to independence shows, there wasno aiiegation of breach of
trusteeship.A legal basis for the alleged claim was not stated. It waspresented

by Nauruas no more thana moralclaimand that is how Australia understoodit
until these proceedings. Nauru itself has recognised thateven now its claim is
basedon what itconsidersfairandequitable(CR91/18,p.28).

328. The two United Nations resolutions that called for rehabilitation

(resolutions21Il(XX1) and 2226(XX1))contained nosuggestion of breach of
the Tmsteeship Agreement (paras.176 to 183 above). They simply
recommended certainactionby the Administering Authorityin the same wayas

recommendations were made to other administering authorities on a whole
range of tmsteeship issues by both the General Assembly but also more
particularly theTrusteeshipCouncil.

329. It is only followingthe Commissionof Inquiryreport in 1988that Nauru

startedto claim that Australiahadbreached itstrusteeshipobligationsby failing
to cany out a rehabilitationprogram.Until then, there was never any statement
to indicate that Nauru consideid its demands on the Partner ~ovemments as

anything other than a moral claim. Yet if Australia and the other Partner
Govemmentswere in breach of trusteeship obligationsby failing to rehabilitate,
Nauru would have said so from the begiming when the claim was first made

andparticularlyin UnitedNationsfomms. Yet it did not. One can onlyconclude
that Nauru until recentlyneverconsidered thattherehad in fact been any breach
of trusteeshipobligations.

Section V: Relevance and effectof General Assembly recoinmendations

330. The significance of the fact that certain General Assembly resolutions
referred to rehabilitationfails to be detemined in light of the obligations of the
Administering Authority. Thefact that a resolution calls for particular action

cannot in itselfbe taken as indicating thatfailureto complyhounts to breach
of Trusteeship obligations. As noted above, these were obligations of result.
There were many UnitedNations resolutions relatingto particular Trusteeships.

Suchresolutionswereno morethanrecommendatory,so that failureto adoptthe
recommendedcourse did not amountto breachof any internationalobligations.The importantîhiig was to effect the required result.The only obligation owed
by the Administering Authorityin respect ofhese resolutions was to consider
them in good faith.

331. As Judge Lauterpachtsaid in the 1955AdvisoryOpinion onSou111 West

Africa (ICJReports 1955, p.66at p.116):

'nie TmsteeshipAgreementsdo not pmvide for a legal obligationof
the Administering Authority to comply with the decisions of the
organsof the United Nationsin thematterof trusteeship.Thus there is

no legal obligation,on the pariof theAdministering Authority,to give
effect toa recommendation of the General Assembly to adopt or
depart from a particular course of legislation or any particular

administrative measure. The legal obligation resting on the
Administering Authority is to administer the Trust Territory in
accordancewiththe principlesof the Charterandthe provisionsof the

Tmsteeship Agreement, but not necessarily in accordance with any
specific recommendation of the General Assembly or of the
TmsteeshipCouncil."

332. Judge Lauterpacht examined the practiceof States administering Trust

Territories to demonstratethat suchStateshaveassertedtheir right not to accept
recommendations of the Tmsteeship Council andthe General Assembly, and
that this right "has never been seriously challenger (at 116). Nau~ is one

example,quotedby Judge Lauterpacht:

"When theTmsteeshipCouncilrecommendedin respectof Nauruthat
the long term royalty investment funds should not necessarily be
limited to Australian Govemment securities, but shoulbe invested

freely in the best interest of the Naumans. the Administering
Authority explained why it was unable to act upon the
recommendation (A/933, OfJicial Records, Four111Session. Suppl.

No.4, p.77;Al1306, Fifr~Session,Suppl. No.4, p.134)"(ICJ Reports
1955 at 117.)

333. Australiawasrequiredto takeaccountof the resolutions onrehabilitation
(which it did). but it was under no obligation to give effect io the

recommendations on rehabilitation contained inthem. In fact. Australia gave
serious consideration to the various recommendations of the Trusteeship
Council and those of the General Assembly andexplained its reasons for notacting on the recommendations (see Judge Lauterpacht in the 1955 advisory
opinion.ICI Reports 1955 at p.119-120).These reasons have been outlined in

some detail above (see especially paras.171 and 188). (As Chapter 4 below
shows there can thereforebe no separateallqgationthat Australia has failed to
comply with some independent duty in relation to its accountability to the

United Nations.) The United Nations itself made no finding that Australia
abused py duty in this regard. As Part1has shown, there were sound reasons
for Australia choosing not to set about rehabilitating Nauru's worked-out

phosphate lands before independence. There was no technical solution that
could have been implementedin a way that was economicauy sensible. It was
alsorecognisedat the timethat any rehabilitationwouldneed to be the result of
a land use plancoveringthe whole island and not just thatarea alreadymined.

in these circumstances,theAdministering Authoritychose alternativemeans to
rehabilitation. Onecannot, therefore,derive a breach of tmst obligations from
the fact that recommendations on rehabilitation were made by the General

Assemb:y.

334. As well as the General Assembly. the Visiting Missions and the
Trusteeship Council thmughout the period regularly discussed the issue of
rehabilitation(seeparas.171and following) andthis is reflectedin their reports.

Not once is any finding made in those reports, nordo they contain any serious
suggestion, that failure by the Administering Authority to rehabilitatewould
amountto a breach of trusteeshipobligations.

Section VI: The unconditional termination of the Trusteeship
precludes any cornplaint of breach of the Trusteeship Agreement

335. in its judgment of June 1992,the Court held that, having regard to the
particular circumstances,"therights Nauru might have hadin connection with

rehabilitation of the landsremain[ed] unaffected by the termination of the
Trusteeship by the General Assembly" (ICJ Reports 1992, p.253, para.30).
Australia nolonger contendsthattheCourtdoesnot havejurisdiction to hearthe

Nauman claim. Nor does Australiacontend any longerthat Nauru's claim for
rehabilitationsinadmissiblein its entirety.

336. In the same judgment, the Court also held that'General Assembly
resolution 2347(XXII) of 19December 1967had "definitive legal effect" and

that the Tmsteeship Agreement wasterminated on that date (p.251, para.23).
Clearlyenough,thischangedthe statusof theTerritory.It also meant that, since
that date, there has beenno basis on whichto challengean aUegedfailureby the Administering Authority to comply with its obligations with respect to the
administrationof the Tenitory. This is becausethe termination ofa Tmsteeship
Agreement is the ultimate actof supervisionby the United Nations. Itsignifies

either that theAdministering Authorityhas committcdso seriousa breach thatit
is disqualified from acting further in that behalf, or that the Administering
Authonty has fulfilledits obligationsso well that thereisnothing leftitto do
otherthan respect the people's exercisof their right to self-determination.

337. In Naum's case, thereis no doubt that theGeneral Assembly terminated
the Tmsteeship on the ground thatthe Administering Authorityhad discharged
its task so well that there wasnothing further for it to do, save abide by the
Naunians' act of self-determination. In so doing. it made a conclusive

pronouncementon the conduct of an Administering Authority withrespectto ils
trusteeship obligations. There can be no question of the United Nations'
competencein this regard. Inthe Namibia case. the Courtsaid:

"the United Nations...acting &rough its competent organs,must be

seen above al1as the supervisory institutio,ompetentto pronounce.
inthat capacity. on the conduct of the mandatorywith respectto its
international obligations, and competent to act accordingly." (ICJ
Reports 1971.at pp.49-50.)

338. There is no difference in this respect betweenthe United Nations as a
successor body 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 16 and 85 of the

Charter.

339. Thus. when the United Nations decided thatb .ecause the Administerin-!
Authorityhad completeditstask, theNaunianTrusteeship should be brought to
an end. it disposed of al1the legal issuesconcerningthe administrationof the

Trusteeship by the ~dministerin~ Authority - "at least, those relating to the
basic tnisteeshipobligations as distinct from individuarlightsof United Nations
members. such as for example to equality of treatment" (J Crawford, The

Creation ofStatesinInfernarionalLaw(1979)p.342).

340. As a resuit, Nauru cannot successfuliyargue that, by failing to exercise
itsgovemmentalpowers so as to providefor a rehabilitationschemeon Nauru,
Australia breached obligations arising under the Trusteeship Agreement with
respect to the administration of the Trusteeship.It apparently seeks to makethesearguments(CR91l20,p.83;CR91R2.p.45).but theyare foreclosedby the
prior pronouncement of the United Nations, acting through the General

Assembly.To succeed.therefore.Naurumustshow that its rehabilitation claim
arises from general international law-and not from obligations under the
Tmsteeship Agreement with respect to tmsteeship administration.It must be
these general internationallaw rights, if any, whichthe Court holds unaffected

by the General Assembly's decisionto tenninate the Trusteeship.(The status of
Nauru'sclaimat generalinternational lawis dealt with inChapter3.)

341. It will be recalled that the General Assembly wellknew that Nauru and

the Administering Authority differed on thequestion of responsibility for
rehabilitation (ICJ Reports 1992,p.253, para.30). The position may have been
different had the Assembly,in terminating the Trusteeship, also reserved the

questionof rehabilitation.or imposeda conditionconcerningthe performanceof
any related and outstanding obligation. It did not. The unqualified terms of
resolution 2347(XX11),making no reference to rehabilitation whatsoever,are
consistent only with the Assembly's pronouncement thatal1the obligations of

the Administering Authority with respect to the administration of the
Trusteeship had been met. In this situation, termination must be taken as
determinative and afinis litium to any assertionof failure to comply with the

obligations concerningthe Territory'sadministration.The resulting situation is
explainedby one writerin the followingterms:

"the answer would seem to be that theAssembly's function hereis a
determinative one - that it is designated by the Charter to decide

particular matters of political fact, applying principles of self-
determination implicit in the Trusteeship instruments.It is obviously
necessary,as Judge WellingtonKoo pointedout, that in these matters

there be some finis litiunz"(JCrawford, The Creution of States in
InternationalLaw (1979)pp.343-4).

342. This analysiscarrieswithit theconsequencethat upon tennination of the
Nauruan Trusteeship, therewas no longer any basis on whichto question the

performance of obligations conceming Australia's administration under the
Tmsteeship Agreement. Moreover, theunconditional termination is compelling
evidencethat the United Nations considered thattherehadbeen no breachof the

Trusteeship Agreement, though the Administering Authority had declinedto
accept thcresponsibilityfor rehabilitationwhichNaurusoughtto thmst uponit. 343. Of course.as notedabove.thererernainsthe question whether, atgeneral

internationallaw. N~UNhad any otherentitlement.See Chapter3 below. But if
the responsibilities of supervisionexercised by the United Nations bodies are
not to be ignored, it must unquestionablybe recognised that termination
unconditionally of the Tmsteeshipnow precludes any second-guessing,or re-

examination,of the actionof the United NationsGeneralAssembly witha view
to finding somebreachof trusteeshipobligationsneverpreviously identified.

Section VU: The benefits from phosphate mining

A. INTRODUCTION

344. Evenif one takes a bmad view of thetnisteeshipobligatiors which Naum
asserts support a requirement to rehabilitate, Naum mustill demonstrate that
there was a breach of those obligations. Inconsidering whether there is any
factual basis for the Nauman allegation of breach, the benefits receivedby

Naum from phosphate mining and particularlythe 1967 phosphate agreement
mus1 be examined.Thisshows thereisno basisfor the Naumanclaim.

345. Phosphate mining on Naum transfomed the island from an isolated

subsistence community to one whose inhabitants had adequate financial and
otherresourcesto become andremaina modem independentState. It remaineda
comrnunity where the returnfrom phosphate meant that, fter 1951,direct taxes

on the Naunian people were unnecessary (see para.84 above). This Chapler
examines the benefits from the phosphate industry receivedby Naum prior to
independenceand as pan of the independencesettlement. It also examines the

economicand financial consequences of phosphate mining.

346. That the phosphate operations broughtthe island prosperity is evident
from comments by United Nations Visiting Missions.The 1965 Visiting
Mission saidfor instance:

"Thanks to the phosphate, this tiny island lost in mid-ocean has

houses,schoolsand hospitals which coulbe theenvy of places witha
very ancientcivilization. Its citizens pay no taxes. Because of these
favourableconditions andthespiritof mutualassistancecharacteristic

of the inhabitants, povertys virtually unknown in Naum. There is a
high standard of living: necessities and even many luxuries are
imported. The stores and shops are well stocked with goods. Few

people walkin this Territory, whichhas an areaof8 114square miles and a circumferenceof 12miles: there are over 1,000motor vehicles
(not to mention bicycles) fora total population of 4,914,ncluding

2,661 Nauruans(at 30 lune 1964)"(para.2.Annex 12.Vo1.4, NM).

347. This was not a new phenornenon.Eatlier Visiting Missions expressed
similarviews:

"That the Nauruans have derived considerable benefit from the
industry is at once obvious to anyone visiting theTemtory. On the
whole.the Mission found theNauruans better clothed.in better health.
better nourished and better educated than is usual at this time in

Pacific Island territories."ara.42. 1953 Visiting Mission report,
Annex 7, Vo1.4,NM.)

and

"the mining of phosphate has brought to the Nauruans greater

prosperity and better social servicesthan are enjoyed by any other
community of similar six in the Pacific region" (para.18. 1956
VisitingMission report,Annex 9. Vo1.4.NM).

Throughout the period of the Mandate and Tmsteeship, the provision of
administrationexpensesfrom the proceedsof the phosphate operations led to a
communitythat waswell providedfor in tems of health.educationand welfare

and that paid virtuaily no taxes. The absence of taxes is particularly pertinent
having regard to Nauru'sallegationsconcemingthe absence of adequate public
fundiig by theAdministeringAuthority.

348. In thisthe role of thBPC was important.

'nie roleof the British Phosphate Commissionersin the Territorywas

related prirnarily to the phosphate enterprise, which was the sole
reason for theresenceof theirNaurumanagement.The direct effects
of the enterprise on the Nauruan community were, first, financial

benefitsthroughroyalties,surfacerightspayments, freesocial services
and free or subsidised publictilities; and second. opportunities for
employment of Nauruans within the Commissioners' N~UN

management.Incidentalbenefitsincludedthe frequentdiversionof the
management's resourcesto public works andhousing projects for the
Nauruan community,and a share in the use of various facilities, such

asa cheap shipping service for which they were reimbursed by the Administrationor the Nauru bal GovernmentCouncil as the case
mightbe.

Although the Commissioners provided nearlyaii the funds for the
Administrationbudget,they hadno powers indetennining it sontent.

'Iheymay haveken invitedtogiveadviceonsomeitem."(Reporton
theAdministrationof Nauru.1966-68.p.17)

349. Nauru complainsthat the revenuederivedby the BPC fmm phosphate

mining was neither taxed, nortreatedas public revenue(NM. para.336). But
thiswas more thanoffsetbythe factthatthe phosphate income of the BPC paid
entirelyfora veryhighstandardof administration. whilst theNauruanspaidno

taxatau (seePart 1.Chapter3).

350. While the Naunianswcrewellprovidedfor as a resultof the phosphate
operations, there was also a large expatriatecommunityprincipallyto provide
labour to work in the phosphate operations. The patternemerged from early

dayswherebytheNaunians.whoreceiveddirect income and otherbenefitsfrom
thoseoperations, didnotfind itnecessarytoseekemploymentin the phosphate
industry. Non-Nauruansmade up aroundhalf of the island populationduring

mostof theperiodunderMandateandTrusteeship.8

B:ROYALTIESANDTRUSTFUNDS

351. Throughout theTrusteeship,royalties werepaid to a number of trust
funds. Thedetails of these have been set out above (para.89).in response to

changing needs and expectations, the amount paid in royalties gradually
increased,and rose significantlintheyearspriortoindependence(seeparas.92
to 105). As at 30 June 1967 the amounts standing to the creditof the two

principaltrustfundswere substantial.Theywereas follows:

NauruLandownersRoyaltyTmstFund $A3,022,607.00

(in1993values$A21million)

Nauru LongTermInvestmentFund $A6.241.719.49

(in 1993values$A43.4million)

Popubtionfigrna- inihmpxlsof [email protected]
alroTablcIOthe1965Rcpma1theViitiMissioINauniAnnex12.Vo1.4aunim
Mcmorid.There wasalso a sumin the RoyaltyTmst Fund of$A307,774($A2.1millionin
1993values)and payments continuedto be madeto individuallandowners(see
para.89above).Therewas,therefore,almost$AlOmiliion ($A70million in
1993values) in trustfunds.

352. The PartnerGovemments,in the yearsafter resettlementwas abandoned,
ensured that significant amounts were paid to the Long Term Fund. It was
intended that that Fund would be availablewhen the phosphate ran out, to te

spent on projects of benefit to the Nauman people, including possible
rehabilitation projects ifhey so chose. Accumulating the funds available at
independence by reference to the short term govemment bond rate yields an

estimateby 1995of some$A136million(seeCIEstudy,Preliinary Objections
Vol.11. p.186). The Tmst Funds were passed to Nauruan control on
independencefor this reason.To effectthis, Ordinanceswere madejust prior to
independenceto put Naumanadministrationconcemingthe phosphate royalties

on a satisfactorybasis. The Nauru Phosphate Royalties TrustOrdinance 1968
and theNauru Phosphate Royalties (Paymentand Investment)Ordinance 1968
were among the Ordinances enacted in the few days prior to independence.

These Ordinances appearas Annexes 10and 11to the Preliminary Objections.
These Ordinances were designed to reflect the new arrangements for the
paymentof royaltiesafter 1July 1967as a resultof the 1967Agreement.

353. At the same time,the phosphate agreementwas givenlegislativeeffect in
the NauruPhosphateAgreementOrdinance 1968.The Trust Ordinanceformally
established theLong TermInvestmentFundand the LandownersRoyaltyTrust
Fund,subject to the controlof the RoyaltiesTmst. in place of theirexistence as

trust fundsunder thecontml of the Administrator.The RoyaltiesTmst set up by
the first Ordinancewas createdas a separatelegalperson with responsibilityto
administerthe tmst funds which it has continuedto do until the present(see its

1988-89Report, Annex29 to Preliminary Objections).

354. In the other Ordinance,the RoyaltiesOrdinance, detailed provisionwas
made for a numter of different trust funds. including a Development Fund,
Housing Fund and Rehabilitation Fund. The amountspayable to the various

funds set out in the Ordinance reflected the wishes of the Head Chief and
Chairman of the Naum Local Govemment Council. Establishment of these
additional Funds reflected the priorities of the new Nauruan Government.

Hence,while a separateRehabilitationFundwasnow establishedand a separate
allocation made to it, this was the result of a decision by the Nauruan Govemmentto identify this issue as one which wouldrequirespecialprovision.
In the same waya separateDevelopmentFund was created.So faras the Partner

Govemments were concemed, the Long TemInvestment Fund had been
establishedto meet the needs, howeveridentified,of the Nauruan community
when the phosphate was exhausted, and this could include expenditure on

rehabilitationif that was what theuruanswanted.It was a fund available for
rehabilitation or for other future needs, dependingon what Nauruchose to do
withit.

355. The existence ofthese Funds. with theirexisting balancesand prospects

ofcontinuingpaymentsinto them, ensured thatafter independencethe Nauruan
people wouldbe in a positiontomaketheirown decisionsas to how to develop
their country, and that they would have the financial means with which to

undertakewhatever reasonable development decisions they made.

C:THEVALUEOFTHE PHOSPHATESE'iTLEMENT

356. An assessrnent of the benefits received by Nauni must include an
examinationof the benefits receivedas aresultof the Phosphate Agreementof

1967. To understand the significance of this agreement it is necessary to
understand fully the course of the negotiationsleading to its conclusion. This
kas ken recountedinoutlineinChapter 5of Part1above.This sectionwillrefer
to certainelementsinthosenegotiationsinmoredetail.

357. The settlement involved,inparticular:

(a) the purchaseof the BPCassetsby Nauruat afavourable price; and

(b) the relinquishmentof any continuing BPCinterest in the phosphat- there
waqto be no further share in the profitsnor any management role for the
BPC oncethe assetswerepurchased.

358. This outcomerepresenteda significantconcessionfrom what the Partner
Govemmentsconsidered to be their reasonable entitlements.These concessions
were made on the basis that Naum would assume al1responsibilities for the

island's future including responsibility forany future rehabilitation if that was
consideredappropriate.The Court has found that Naurudid not waive iis claim
with respect to rehabilitation. But the 1967Agreement and the negotiations
preceding it show very clearly that Nauru has acted quite unreasonably in

seeking topursue it. It was clearlyonly one element in the negotiations.Each
sidemade anumberof concessions andit wascenainly seen by bothsidesat thetimeasjust one elementinthe Nauniannegotiating position.An examinationof
thenegotiationsconfinnsthis.

359. ~he circumstances in which Nauru agreed to purchase the assets have
been outlinedinparas.229to 233above.Thefinalpriceagreed tobe paid for the
assets was $21 million. A paper prepared at the time by the Department of
Territories, based on BPC information, sets out some figures which show that

the prie was fixed on a basis entirely favourableto Nauru, ie at "original cost
less depreciationat a rate consistentwiththe economiclifeof the asset" (c1.8(1)
Canbem Agreement).The paper is Annex 2 to thisCounter-Memorial,It shows
at 30 June 1966assets at cost of $25million, a book valueof $15 million and

apProximatereplacement value of $44 million. The paper indicates, however,
that if the BPC negotiatedwith an incomingerator"on a commercial basis it
would regard $30,000,000 to $32,000,000as a minimum value for the assets

represented above. on the basis of a takeover as a going concern". See also
Record of Negotiations, 21 April 1967, Vo1.3, NM.p.493. The Partner
Govemments did not sel1 the assets as if there was a normal commercial
transaction.Theprice waspartof theoverallpackageof benefitsking provided

to Nauni.

360. A reviewof the negotiations showsthat it had beenthe expectationof the
Partner Govemments that they would continue to receive some share of the
proceeds from the phosphate. whetherin the form of a share of profitsor in the

form of a managementfee. And this was not unreasonable given that the BPC
had concession rights over the phosphateto the year 2000. In 1966Nauni had
accepted that the BPC should be the managing agents of the phosphate
operation. for which BPC would receiveafee. But Nauru changed its position

the following year and said instead that a Nauruan Phosphate Corporation
should operatetheentire industry.

361. The position reached at the stari of the 1967 negotiations is set out in
AppendixII to therecordsof themeeting of12April 1967(Vo1.3,NM.p.518-9).

The new Nauruan positionwas outlined in their opening statementat the 1967
GU< (NauruanDelegation6711,Vo1.3,NM.p.559 fi).Importantpassagesare as
foliows:

"Given the urgent need for fundsto rehabilitateNauru and to provide

for the Nauniancommunitywhenthe phosphateis exhaustedit is vital
that the Nauruan people receive the maximum possible financial
retum on their phosphate.At the time when the Council prepared its362. Nauni itself in this statement linkedboihrehabilitation andfuture control
of the phosphate industry. And this reflects the fact that the negotiations
between the PartnerGovemmentsand the Nauniansdcmonstratethat the matters

of the phosphate industry and rehabilitation were discussed.and dealt with
together. as part oan overall settlement.When the Partner Governments gave
up their claim for a share of the phosphate revenue, they did so on the
understanding that Nauru would assume full responsibility over al1 maiten

connccted with the phosphate industry.This is evident from a penisal of the
recordsof the 1967 meetings (see, for instance, 20 April 1967, Vo1.3,NM,

pp.495-6). In particular, the Partner Governments considered the financial
arrangements involvingthe phosphate industryas relevant tothe rehabilitation
claim.They said:

"[Tlhe decision to abandonthe resettlement proposals wasa decision

by the Naunians, not one that was forced uponthem, and that in so
deciding they were rejecting proposals which were sound and
practicable.That decision was taken by the Naunians, and it was the

view of the Partner Governments that decisions regarding
rehabilitation were also matterfor theNaunians and thatthe Partner
Govemments'proposalsin respect of financialarrangementsprovided

adequate means to cany out whatever redevelopment of the mined
areasmightprovetobe necessary."(Vo1.3,NM.pp.495-96.)

363. Despite this,the Joint Delegation proposed that without prejudice to their

respective positions the two delegations might look at the needs for
rehabilitation which Nauni said required a substantial sum. The Naunians,
however, refused todiscussparticular rehabilitationneeds and stuck with their

general position that"out interests are best served by maintaining the general
position-that the future of the Nautuan people depends on getting as much as
possible from the remainingphosphateon the island" (see Nautuan Delegation

6715,Vo1.3.NM,p.497).On 10May 1967whentalksretumed to this issueafter
a break, thePartnerGovernmentsrestated their position (JointDelegation 6712.
Vo1.3,NM, pp.573-75).This included the statement: "Thepartner govemments

considerthat the proposedfinancialarrangementson phosphate cover thefuture
needs of the Naunian community including rehabilitation or resettlement". It is
again clear that the financial arrangements andrehabilitation continued to be

linked. Nauni respoiidedin a statement(Naunian delegation 6716,Vo1.3.NM.
p.549). This includedthe statement:"we have ken placed in a position where our basicneedsfor sumivalcanonlybe metby receivingthe fuU fuiancialretum

from the operationof thendustry".

364. The Naunians soughta positionof maximum globalbenefit.They did not
ask forany separate allocationof funds.any special "earmarking" of funds for

rehabilitation. Given that they had not developed a rehahilitation plan. that
decision is understandable:for identifiable, specificprojects would have been
scrutinisedby the Partner Govemments tosee whether they wouldbe likely to

cos1 the specific sum sought by the Naunians. So, in tnith. neither side
contemplated an eannarkedsum. It is surprishg to fuid that. today.the core of
Nauni'scomplaintis thatno specificsum waseannarked.

365. On 16 May a further discussion took place on the phosphate

arrangements. The Partner Govemments also continued to argue that some
shariig arrangementwas appropriatehaving regardto the 1966Workiig Group
Report 0'01.3, NM, pp.468-9). The WorkingParty Report produced following

the 1966 round of negotiationsbetween thePamer Govemments and Nauni is
set out asAM~X7 to the PreliminaryObjections. The 1966Report considered
financial arrangements in force invarious parts of the world for sharing the
benefit of phosphateminingoperations.It pointed to two different approaches:

shareof profitsbetween operatingcompaniesandgovemmentsand the retum of
profit on shareholders' funds.he Australian representativesconsideredthat the
availablematerial suggesteda 5050 sharingbetweenGovemmentas the owner

and the commercial enterprise as operator was a not unreasonable general
principleto be drawnfrom thematerial(para.12of the Report).

366. At the 16 May discussions. the ~ecretar~; speaking for the Partner

Govemments said:

'The Joint Delegation thought that there was scopefor reaching a
sharing agreementin fuiancialarrangementsnie Naunian Delegation
now claimed that the fullroceeds of phosphate wereneeded due to

rehabilitation,thenvise the Delegation seemed to accept that a
sharing arrangement would be the normal practice." (Vo1.3, NM,
p.469)

367. The Head Chief said that "went a long way towards describing the

Naunian positionbut not entirely"(seeVo1.3.NM.p.469).Aftercommentingon
the valuationofassetsa furtherset offigureson sharingwas put fonvard by thePartner Governments(Joint Delegation6713.Vo1.3,NM. p.572). This proposed

a 75%to 25% split betweenNauniandPmer Governments.

368. On 17 May 1967. in response.,to continued Nauruan insistence on
Naunian management, the Partner Govemments made a further proposal
whereby the sharing arrangementwould be replaced by a system involving a

lower price for the phosphate while BPC continued as agents of a Nauni
Phosphate Corporation.The proposalwaspart of a package which it was made
clear comprised: "a price of 110shillingswith the entire proceeds going to the

Naunians ..capitalassetsvalueof $30million paidfor over an agreed periodat
6%: management arrangements [involving managementby BPC subject to a
Nauni Phosphate Corporation (as setout in Joint Delegation6714,Vo1.3.NM.

p.569)I. an understanding on rehabilitation under which Nauni would not
continue to press this subject and linked with rights of immigration into
Australiaand NewZealand"(seeSR.15.Vo1.3.NM.pp.459-460).

369. The Naunian response took the formof a lengthy statement (Naunian

Delegation67/8, Vo1.3,NM. p.523ff)whichrejected thePartner Govemments'
position on phosphate rights and rehabilitationand suggested a lower purchase
price for the assets.e Naunians argued thatit was only fair that they receive

all thefuture economicbenefitfromthe phosphateif theywereto be responsible
foral1rehabilitation,particularlyin the light of figureswhich theysaid showed
the Partner Govemmentshad receiveda Ggnificantlygreater return in the past

than that which wasfair (seepara.26-29of ND 6718).(See also SR.16, 18May
1967, Vo1.3,NM. pp.453-5.)There was no suggestion here that Nauni would
assumeonlylimited responsibilityforany rehabilitation.

370. On 19 May further Naunianproposalsweremade (ND 6719,Vo1.3,NM.

pp.521-2) which sought managementby the BPC limited to Iwo years. They
also rejected the link between rehabilitationand immigration that the Partner
Govemmentshad made (Vo1.3.NM, p.447).The PartnerGovemments accepted

the Naunian proposalson assets(about$20 million). Theycontinued, however,
to haveprelems with the Naunianmanagementproposals(SR.18). On 20 May
the finalaunian proposalfor three years' managementby BPC was made and
it was agreed this would be referred to the Partner Govemments. When

negotiations resumed on 13 lune the Partner Governments had accepted the
basic proposalsincluding the purchase period proposedin May by Nauni and

attentiontumedto pointsof detailaboutwhentitleto the assetswould pass.This then led to the Headsof Agreementking signedon 15June 1967(Vo1.3,NM,
.p.41Off).

371. The fial seftlement clearly was a package arrangement. This muchis
apparent from the courseof the negotiations.There were, istrue. some areas

where the two sides remained in disagreement.These included rehabilitation
where Nauru would notgive any explicit release to the Partner Governments,
and phosphate rightswhereNauru refuse. to recogniseexplicitly that any such

rights were held by the PartnerGovemments.The Partner Govemments while
not relinquishing their clearly stated position were prepared in good faith to
conclude an agreement which would provide Nauni with the full economic

benefit of the phosphateindustry.The Partner Govemments gaveup a share of
the profits(or managementfee)which wouldhavecontinued until the year2000
(when BPC's rights underthe concessionended).Basedon figures pmvided by

Nauru, this wouldhave amountedto at least$A60million (para.20of ND 67B;
see Vo1.3,NM. p.530). An estirnate of the discounted cash flow estimates of
profitslost by BPC by relinquishment is $A90 million (or in today's values

$A630million) if one valuesthephosphateas a goingconcernwhichNauruhad
to aquire on commercialterms (see Annex 1). Andthis is not an unreasonable
assumption. Nauru had no nght at international law to acquire the whole
phosphate industry fornothing. It was acceptedat the time thatired rights

did notsimply disappearwith the independenceof a new nation:D P O'Comell.
Siare Successionin Municipal and InternarionalLaw (1967) Vol.1, Ch.13;
J H W Venijl. InternarionalLaw in HisroricalPerspecrive (1974) Vol.VII,

p.196-202. Capitalassetswerealsosold for$A21million insteadof their market
value of approximately$A30million.

372. In other words, an examinationof the financial aspectsof the settlement
shows that the Partner Governments gave up over $A100 million

($A700million today) whichwouldhave ken theirs in any purely commercial
transaction. It is simply not truetothat Australiadong with the other two
Govemmentsdid not makeparticularandsufficientpmvision forNauru'sfuture

whenthe 1967Agreementwasconcluded.

373. Nauru at the time used figures of $A90million as the cost of the
rehabilitation toemet by Partner Governments.This was one third OF a total
cost of$A240 million. which was thenotional figure calculated by the Davey

Committee as the cost of resoiling to a depth of 4 foot of 3500 acres fie the
whole of the phosphate lands).But this sortof rehabilitationwas found by theDavey Committee to be impracticable. Itrecommended works amounting to

$A31 million. And this wasin relation to thewhole island, and notjust the area
rnined by the BPC. On this basis it is quite apparent why the Partner
Govemments considered the financial settlepent as a whole was more than
adequate to compensatethe Nauniansfor their assumptionof responsibility for

rehabilitation of the whole island.

374. Nauni in 1967,and in its Memorialagain. has argued that the fact that
Australia and the other Partner Govemments had received phosphate at low

royalty rates isn someway relevantto the fairnessof the phosphate settlement
and in particular responsibility for rehabilitation (seeunian comments in
1967 where an estimate is made for lost income of $160 million (ND 6718,

para.20, Vo1.3,NM, p.530). and more recently Appendix2 to the Memorial
(Vol.1. NM, p.306). where an estimate of 91 million pounds is made for lost
income).

375. But this is not relevant.First, the Naunian claim before this Coun is a

claim that there was an obligation to rehabilitate, not a claimo recover the
differencebetween actual and optimal royalty ratesS.econdly,in any event, its
clearly impermissible to apply standards of"fair return" that rnay have been

applicable in 1967 and to suggest that they can be applied retrospectively to
1920.See Pan 11,Chapter 1, Section 3above. Yet this is whatNauni seeks to
do. (The legal irrelevancyof the claim in this respect is dealt with in Part II.

Chapter 3 below.)For presentpurposes,it must be stressedthat these figures are
irrelevant to any assessment of the fairness of the phosphate settlement in
relationto the issueof rehabilitation.

D: FINANCIALSITUATIONATTIMEOF INDEPENDENCE

376. Àustralia considered thatat independence thePartner Govemments had
given Nauni adequate financial resources toprovide a secure future for the
island.It took the view thatit was for Nauni to decide how it wished to spend

the then accumulated royalty funds and the income from the phosphate
operations,of whichtheywould receivethe fuUbenefit.After the BPC assetson
Nauni had been purchased. the BPC hadno remaining interest iii the Naunian
phosphate.

377. This complete relinquishment of any further interest amounted to a
renunciationof rights over the phosphate thatnder the original concessiontan
to the year 2000. This enabled Nauni to pet the full economic benefit of the phosphate. which Australiaat the time estimated would, over 25 years, enable

Naum to build up a fund of $430million to ensure the economicwell-king of
the population (United Nations, General Assembly Oficial Records, 22nd
Session,Four111Committee,Doc.A/C.4/5R1739).

378. As the Administering Authority contemplated, and as has in fact
occurred. Naum has had the benefit of considerable phosphate incomesince
independence which, properly managed, should have provided a substantial
income for Nauni and put it in a position where its future was secure. The

dispositionof fundsmade by the thm PartnerGovemmentsaUowedfor this. It
is worth noting statementsmade in the few years prior to independence that
indicate the wealth then available to the small Naunian population. In 1965.

Australiatold theFourth Committeethat it estimatedthe proposed royaltiesand
an extractionrateof 2 million tonsa yearmeantthat theaunianswouldreceive
theequivalent of some$4 miUiona year.

"As a result of those royalties, the average income of the island,

according the recentUnitedNationssurveywas the secondhighest in
the world surpassed only by the United States" (United Nations,
General Assembly Ojj7cialRecords,20111Session,FourtfrConimittee,

Doc.A/C.4/SR.1588.)

379. In1967,Australiatold the FourthCommitteethat during the years of the
Tmsteeship the Naunianshadenjoyedanenviableprosperity:

"The per capita income at 30 lune 1966 had ken over US$1,800,

higher than the per capita incomeof Australiaand one of the highest
in the world."

380. And. the representativeof Australiacontinued,in explainingthe outcome
of the 1967phosphate negotiations:

"The agreement provided for the supply of 2 million tons of
phosphate per year at theprice of $US12.10per ton fob which would
mean an annual retum to the Naunians of $15 million. The Naunian
authorities would set up the Nauni Phosphate Corporatio....Ifthe

price of phosphate and cost of production remained in the same
rdationship as at presentand the Naunianscontinuedto 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 $400million.In that waythe economicweUking of

the populationwouldbe ensured once the phosphate deposits were
exhausted"(UnitedNations.GeneralAssernMy Oficial Records,22nd

Session.FourtlrCornmirtee,Doc.A/C.4/SR.1739).

381. This economicwell-king was recognisedin an article that appearedin

the magazineNational Geographic in September 1976 entitled "Thisis the
World'sRichestNation - AUofIt!" (Annex 32tothe PreliminaryObjections).

382. TheAustralian Departmeno tf ForeignAffairsandTradecommissionedan

independentstudywhichexaminesNauru'sincome fromphosphate both before
andafter independence(Annex26 to PreliminaryObjections).'It confirmsthat

at independenceNauru's percapitaincomewasoneof thehighest in the world.
Following independence, while informationis hard to compile, the study

concludesthat "availableevidencesuggeststhatthe phosphate income hasnot
alwaysbeen weiispent.Educationaland healthstandardshave fallenand large -

sums ofmoney haveben wastedon itemssuchas a nationalairline"(p.2).The
airline in fact consumed70per centof govemment phosphate revenue between
1974-75and 1987-88.Thestudyalsoshowsthat:

(a) from the trust funds available10Nauru at independence.their value in
termsof income savedin today'stermswouldbe some$83 million,which

by 1995wouldhaveaccumulatedto$136million;

(b)the capitalizedvalue of the future streamof profits fromthe concession
from 1968,assuming theycontinuedto1995. would in today'sdollarterms

amountto$945million;and

that.could havebeen madeby pla. .gthe same proport-ono- phosphate
revenue in trust fundsas occurredbefore independence with the savings

availableat independence. this fund would providea percapita incomeper
year of $16.600 - only slightly less than Australia'scurrent per capita

income.

Ik sludywu pmm bylhcCm, folnlmaliaial Econorn.hiscenlisahighlyrespeeicd.
indcpcndcnlm oleconaniconrulianh%xdinCuitena. ishwdd by DrAnhw Siaeckcl.
oneol A4ia'j lcadingcuinomists.Mmy ol iispmlessionnslWllhavchd expcncnccin
govmmenirn wcllaopriva1cenicip"lhu undchllrscvml mjor studierintheacomrnics
ol develapingcwnViinihcAsu/Pxiiiç mgisndiiscliaiisincludetheWarldBankmd
AmvalianNYiond Ccnm lm IkwlaprnentStudicr. 383. Indeed. even with some of the problems associated with the use of
revenue noted in the study, theT~st Funds managed by the Govemment of

Nauru still hold substantialassets.These are set outin the AnnualReport of the
Nauru Phosphate RoyaltiesTmst for 1988-89, tabledin the Naunian Parliament
(Annex27 to PreliminaryObjections).They include a largenumberof valuable.

sound property investments in Australia, the United States, Guam, the
Philippines andothercountries.

384. Hence. Naum could be a communityof persons having no necessityto
work -living on the substantial income from the phosphate resources.The

economic study strongly suggests that the Naunians were left with adequatc
resourcesat thetirneof independence.Suchresourceshave comefmm the Trust
Funds handed over at independence and the handing over of the totalinterest in

the phosphateindustryas a resultofthe Canberra Agreement.

Section VIII:Conclusion

385. If, as Nauruappears tocontend,a duty to rehabilitatearose from the fact
that miningwould destroy thehomelandof a people, thiscan onlybe becausein
some way the circumstances in which this mining tookplace prevented the

well-king of the people of Nauru fromking realised.Yet the factualmaterial
showsclearly:

(a) atthe timeof independence,theNaunianhomelandwas not destroyed;

@) the Nauruan people were lefitna situation wheretheireconomicand social

weU-king hadken secured;

(c) rehabilitation, in the sense of restoration of the area mined during the
Trusteeship,was notin 1967 practicable,althoughparticularproposais for
restoration anduseof the minedoutland may have been;and

(d) Nauru was leftby the Administering Authorityin 1967 withthe financial
resources to choose how it might in future restore and use the mined-out
area for particular purposes,but it has until nownot in fact taken any steps
actually to restore and usetheminedarea foranyalternative purposes.

386. For twenty-five years since independenceNauru has continued iobe a
viable island community. IIhas, in fact, throughits own decisions minedtwice
the area mined prior to independence. 387. It isdifiïcuinthesecircumstancesto seehow thetrusteeshipobligations

as set out in the Charter and the Trusteeship Agreement obliged the
AdministeringAuthorityto rehabilitate theisland.,

388. One has only to describethe situationthat in fact prevailed on Nauru at
the time of independence and subsequently to see that it is not a situation

remotely like that portrayedby Nauru. One could hypothetically suppose an
extreme situation where a whole island became uninhabitable through the
actions of an Administering Authority, for instance, through the useof the

island for an atmosphericnucleartestnecessitatingthe exclusionfor 100years
of any human habitation. Such a situation could clearly be accepted as
inconsistent withrusteeshipobligations.But the situation on Naum is clearly

not comparable inanyway.The miniig wasaccepted. indeedwelcomed,by the
Naunians. Australia rejects the Naunian attempt to equate the two situations
which itslegalargumentswouldappearto do.

389. Naum fails to show that there was any particular duty in relation to

rehabilitationseparatefromthe ovemdiig duty of the AdministeringAuthority
to promote the weU-king of Nauru asa whole so that the people were able to
exercise their right to choose independence. Forthe reasons outlined above,

Australia considers that Nauru hasshown no legal basis for any such duty to
rehabilitatein the Charter. theTmsteeshipAgreement (ortmsteeship objectives
to whichthoseinstnimentsrefer).

390. The significanceandvalue of the independencesettlement shouldnot be

underestimated. Under the tenns of the concession.,BPChad a right to recover
phosphate until the year2000. As a surveyat the tihe showed. it was common
practice in the case of mining operations fok sharing arrangements to be

negotiatedbetween operatingcompaniesand govemments.The survey showed
a wide variation. influencedby the local economic and politicalpolicies and
situation,in the percentageof net profit goingto govemment rangingfrom 35%

in the USA to 85% in Chile. Against this background a fifty per cent sharing
arrangement between the Partner Governments andNauru was seen as not
unreasonable(Amex 7to PreliminaryObjections).

391. While Nauru argued at the time that the concession was not ralidly

based. the reality was that ithad been acquiredas a commercial concemby the
PartnerGovemmentsin 1920,andtheexpectationwasthat they wouldcontinue
to receive the benefitsarising from it. There was nothing unusual about the

concessionto suggest its legalstatuswasnotweUfounded. 392. Australiadws not deny the'nght of Nauru to decide, as did many other

newly independentStates at this time, thatit shouldacquire total controlof the
phosphate operation subject to appropriate compensation. And the Partner
Govemments in the negotiations concededthisright.But thefact that ultimately

the phosphate rights were given up for nothing is of major significance in
considering whether the meanschosenby the PartnerGovemmentsdischarged
the trusteeship obligations. The full extent of the benefits in terms of a

significant income Streamfor Nauru which morethan adequately enabled any
rehabilitation program to be undertaken has ken set out in detail above
(paras.382to 384).If valuedas a going concern that wasacquiredcompulsorily
it suggests compensationof $90 miliion wouldhave been payable to the BPC.

Yet no such payment was made. Only the physicalplant and equipment was
paid for at avaluation thatenefitedNauru(seeparas.370 to373above).

393. The 1967Canberra Agreement.along with thetransferof the trustfunds,

provided Nauru with the meansto choose whether, when andhow rehabilitation
wouldbeeffected. Given theconsiderablefinancialprovisionmadefor Nauni, it
is apparentthat Nauru's onlycomplaintis that the PartnerGovemmentsdid not

specifically earmark part of the settlement as allocated to cover the cost of
rehabilitation. As the negotiationsshow. Australia on behalf of the Partner
Governments consistently maintained that it had given Nauru the means

whereby it could choosefor itself whether to rehabilitate.Naurualways wanted
more. But this does not establish a breach of any trusteeship obligation to
rehabilitate. It pointsimply to a dispute overthe generosityof the phosphate
settlement.But thatisnot thesubject ofthecunent dispute.

394. For al1the reasons set outin the above sections of thisChapter, Nauru
fails toestablishthat:

(i) there was any obligationunderthe trusteeship to rehabilitate; and

(ii) Australia,jointly with the two other States comprisingthe Administering

Authority, did not discharge anyof the duliesincumknt on it accordingto
the lawof trusteeship. CHAPTER 3

NOVEL ALLEGATIONS OF BREACH BASED UPON

INTERNATIONAL STANDARDSOR DUTIES ARlSING
INDEPENDENTLY FROM TRUSTEESHIP

Introduction

395. As well as breach of the Trusteeship Agreement andthe Charter, the

Naunian Memorial alleges breaches of general international law, including
breaches ofprinciples of self-determinationand permanentsovereignty,denial
ofjustice lotsensu,breachof dutiesof a predecessorStateand abuse of rights.
These allegationsarethe subjectof this Chapter.Nonfmds any support in the

contemporary historical record. Thelast three rely upon asserted doctrines
which are incapableof providingseparatecausesof actiointhis case.

396. Each supposedbreach of international lawaUegesconduct which, hadit

occurred, ought properly to have been broughtto the notice of the Trusteeship
Council, since it fell directlywithinthe scopeof the Council's supervision.But
theallegedconductwasno1raiseda1anystage.so thateither it did not occur.or

the United Nations,inparticularthe TrusteeshipCouncil. failedto dischargeits
own basic trusteeshipresponsibilities.

397. As part of the International Trusteeship Systemt.he administrationof the
Temtory of Nauru was governedby ChapterXII of the Charter as well by the

1947TrusteeshipAgreement.The relevant provisions werespecificallydirected
to the conduct of the Administering Authorityination to the Territory. Of
their nature, these provisions subjected the Administering Authority to

obligations which were at once more precise and more stringentthan those
under general international law. As the preceding Chapter shows, the three
Partner Governments.including Australia.ully dischargedtheir more rigorous

obligationsunder the Charterand theTrusteeshipAgreement.A fortior tien.
Australiaalsomet the requirementsof generalinternationallaw. In thisChapter,
Australia describes its position at general internationally because that

positionhas beenchauengedby Nauru. CHAPTER 3

NOVEL ALLEGATIONS OF BREACH BASED UPON

INTERNATIONAL STANDARDSOR DUTIES ARlSING
INDEPENDENTLY FROM TRUSTEESHIP

Introduction

395. As well as breach of the Trusteeship Agreement andthe Charter, the

contemporary historical record. Thelast three rely upon asserted doctrines
which are incapableof providingseparatecausesof actiointhis case.

396. Each supposedbreach of international lawaUegesconduct which, hadit

the United Nations,inparticularthe TrusteeshipCouncil. failedto dischargeits
own basic trusteeshipresponsibilities.

397. As part of the International Trusteeship Systemt.he administrationof the
Temtory of Nauru was governedby ChapterXII of the Charter as well by the

positionhas beenchauengedby Nauru. Section 1:There was full eompliance with the prineiples of

self-determination and permanent sovereignly over natural resources

398. Naum alleges that Australia is guilty.of "substantial breaches of the
principleof self-detemination",ecauseit says Australianpolicieswith respect

to the phosphate industry involved the supposed "disposal of the territorial
foundationof the unitof self-detemination accompaniedby a failure toprovide
an adequate sinking fund to cover the costs of rehabilitating the worked-out
phosphatelands" (NM, para.413).Naum also saysthat Australiais guilty of "a

particularlygraveseriesof breaches"of the principleof permanentsovereignty,
because Australian policies resulted in "a major resource being depleted on
grossly inequitable tenns" and "the physical reductionof the homeland of the

people of Naum" (NM, para.419). These are extraordinaryclaims. If tme, the
UnitedNations (as wellas the AdmimisteringAuthority) would have beenguilty
of most seriouswrongdoing.

A: THE UNITEDNATIONSWOULDNOT HAVE
PERMITI'EDABREACHOFTHESEPRINCIPLES

399. The tmsteeshipsystem wasestablishedunderthe authority of the United
Nations. The United Nationshad primary authority and responsibility for the

system and each Administering Authority remained subjectto the General
Assembly and the Tmsteeship Council throughout its tmsteeship (Charter,
Ans.75,76,81.85. 87, 88). (The position of the United Nations is enamined
furtherin PartHI,Chapter3.SectionIV.)

400. It is scarcelylikelythat the UnitedNationswouldhave closed itseyes to
the supposed breach of the principle of self-determination. First. one of the
"basic objectives"of the tmsteeship systemwas the "progressive development

[of each Territory] towards self-government or independence as may be
appropriate to the particularcircumstancesof each territoryandts peoples and
the freely expressed wishes of the peoples concemed" (Charter, Art.76(b)). In
the case of Naum, the Administering Authorityhad given an assurance that

Nauruans would be accorded "a progressively increasing share in the
administrativeandother servicesof theTerritory" andthat the Authoritywould
"take al1appropriate measureswith a view to the politicaladvancemeniof the

[Nauruans] in accordance with Article 76(b) of the Charter" (Tmsteeship
Agreement, Art.5(2)(c)).401. It is equally unlikely that the United Nations wouldhave permitted the

supposed violationsof the principle of permanent sovereignty. The economic
advancementof the tmst territorieswasalsoa basic objectiveof the tmsteeship
system together with respect for human rights and fundamental freedoms

(Charter. A1i.76(b) and (c)). Under the Nauru Tmsteeship Agreement. the
AdministeringAuthonty promised, amongstother thiigs, to "respect the rights
and safeguard the interests. both present and future, of the indigenous
inhabitants of the Territory" and topromote their economic development

(Art.5(2)(a) and (b)). The practice of the United Nations, particularly the
Tmsteeship Council, reflectedthe substantiveoperation of the principle which
had been adopted by theGeneral Assembly, by resolution 1803(XVII) on

14 December1962.

402. Had there been any breachof these principles,the Tmsteeship Council
would have identified and directed the attentof the internationalommunity
to it. But this did not occur. It will be recalled that although the Tmsteeship

Council made recommendationsto the Administering Authority from time to
time, the Council invariably expressed generalsatisfactionwith the conduct of
the Administering Authority throughout the Tmsteeship. Thus, the Council's

1961Report recorded:

"satisfaction [with]the progress madein the Territoryring the year
under review in various fields. through the efforts of both the
Administering Authority and theNauman people". (United Nations.

Report of TrusfeeshipCouncil,GeneralAssen~blyOflcial Records.
1611S1ession.Suppl.No.4(A/4818),PartII. Ch.lV,para.1)

403. In its last annual report before independence.in June 1967, the Council

noted th$:

"relations between the Administering Authority and the
representatives of theNauman people continue to be cordial; that
economic, social and educational conditions continue to be

satisfactory; and that commendable progress has been made in the
Territory". (United Nations,eportof TrusteeslripCouncil, General
Assembly Official Records. ZZndSession, Suppl. No.4 (A/6704),

PartII,para.310:set outin Annex28PreliminaryObjections)In the samereport.theCouncilsaid:

'nie representatives of the Nauman people'reiteratedtheir desire to

become independent by 31 January 1968 and specifically proposed
that the Island should become a republic within the British
Commonwealth.

The Council is gratified to note that the AdministeringAuthority has
expressed its sympathetic attitude in connexionwith the Naunians'
wishto realizetheir political ambitionby 31 January 1968."(para.332)

404. Underthe heading"Economic Advancement",the Council:

"recalling its belief thatevery effort wiUbe made to adopt a solution
tothe phosphate questionin conformitywiththe rightsand interestsof
the Naunian people. note[d] with satisfaction that an agreement was

reached in Canberra in 1967 between the Nauruans and the
Administering Authority, whereby the ownership. control and
management of the phosphate industry will be transfemd to the

Nauniansby 1July 1970.

The Council note[d] further the statement of the Administering
Authority that the financial arrangements agreed with respect to

phosphate took into considerational1future needs of the Naunian
people, including possible rehabilitation of land already worked."
(para.403)

405. The Trusteeship Council's deliberations with respect to Nauni are

discussedin moredetailin Part1,especiallyChapters 3and 4. The recordshows
that the Trusteeship Council kept a watchful eye on political and economic
conditionsin the Territoryght up toindependence,and thattherewasnever the

slightest indication thatthe Council considered thattralia,as representative
of the Administering Authority.hadviolated principlesof self-determinationor
permanentsovereignty.

406. Further.as shownin Part1,the UnitedNationswaskeptwell-informedof

developmentson Naum duringtheTnistecship period.The Tnisteeship Councilsought and received detailedinformation on theTerritory. The Administering
Authority provided annual reports on al1aspects of its administration. There
were also the regular Visiting Missions and, after 1961. there was direct

Naunian participation inthe workof theTnis~eeshipCouncil.See para.63: also
seeeg para.76 above.If Nauni'sclaimsweret~e, theTnisteeship Councilmus1
have closed itseyes to patentand veryseriouswrongdoingby the Administering

Authority,and theUnitedNations musthaveneglecteditsown very specialduty
- to supewise theTerritory'spolitical and economicdevelopmentin accordance
withthe Charter.

407. Had the island been "disposed of' or its major resource depleted on

"grossly inequitableternis"as Naunialleges(NM,paras.413 and419), the result
would have been evidentnot only Io al1Naunians,but to the Visiting Missions
of 1965 and earlier who were sent to examine and report onconditions in the
Territory. (For the reports of the Visiting Missions. seeexes 7-12. Vo1.4,

NM.) This aUegedstate of affairs wouldhave called for very serious discussion
by al1 relevant United Nations bodies, particularly before any decision to
terminate the Tnisteeship was made. But the record does not disclose such a
discussion.

408. Instead, the contemporaryrecord shows that the Naunian representative

encouragedthe UnitedNationsto terminatethe Tmsteeshipon the basis that the
emergent State would have a viable economic future, because of its newly
acquired ownership of the phosphate resource. It will be recalled that on

6 December 1967, Head Chief Hammer DeRoburt had assured the Fourth
Committeethat:

"During most of 1967, ...work had been under way to prepare the
neqessary political and administrative stnictiire. Economically,

Nauni's position was very strong because of its good fortune in
possessinglargedepositsof high-gradephosphate. ...Alreadysome of
the revenue was king allocated to development projects, so that
Nauni would have substantial alternative sources of work and of

income long before the phosphatehad been usedup. In addition. a
much largerproportionof its income wasking placed in a long-term
investmentfund.so that, whateverhappened,futuregenerationswould
beprovided for.In short. theNauruanswanted independence andwere

confidentthattheyhadthe resourceswith which tosustainit." (United
Nations, General AssemblyOficial Records. 22nd Session, Fourtlt Cornmittee,Doc.A/C.4/SR. 1739set out in Amex 30 to Preliminary
Objections.)

409. AttheTmsteeshipCouncil'sSpecialSessionon22 November1967,
Head Chief DeRoburtassuredtheCouncilthat:

"Australia had administered the island of Nauru for almost half a
century. Australia's tutelage of [the Nauruan] people. which it
exercisedalso on behalfof theothertwopartnerGovemmentsof New

Zealand and the United Kingdom, had been effective. Those
Govemments could be proud of their achieuements,and he wished to
thank them. on behalfof the people of Naum. for the many benefits

received.

During the past two decades, the Council had sent to Nauru six
visiting Missions which had been instrumental in encouraging and
fostering his country's progress towards independence. The

burdensome task borne by the Administering Authority for half a
century,andby the Council fora shonerbutno lesssignificantperiod,
wascoming to an end." (United Nations,TridsteeslrCounci Olfleial

Records, 13th Special Session.Dac TISR 1323. in Annex 29 to
PreliminaryObjections).

410. The result was that on 19 December 1967, the General Assembly

resolvedthat:

"in agreementwith the AdministeringAuthority,that the Tmsteeship
Agreement for the Territory of Nauru approved by the General
Assembly on 1 November 1947 shall cease Io be in force upon the

accessionof Nauru toindependenceon 31January 1968."(Resolution
2347(XXII),,reproducedin Amex 17.Vo1.4.NM.)

411. Nauru's allegations that Australia breached principles of
self-detemination or permanent sovereignty are utterly inconsistent with

Nauruan conduct around the time of Nauruan independence. No Naunian
alleged at that time that the islandhad becomeuninhabitable,or that Nauruans
had ken deprived of a major resource ongrossly inequitabletems. Although

Nauru did not waive its claim for rehabilitation(ICJ Reports 1992, p.250). its
representativemade it clear to the internationalcommunitythat Nauru saw the
question of rehabilitation asuite separate frorn the matters appropriate fordiscussion by the United Nations, ie, self-determination and its corollary,
permanent sovereignty.The HeadChief toldtheCouncilthat rehabilitation:

"was not an issue relevant to the termination of the Tnisteeship
Agreement,nor did the Nauruanswish tb make it a matter for United
Nations discussion." (United Nations, TrusteesliipCouncil Of/icial

~ecopds,1311S 1pecialSession,DocTISR 1323;setout in Amex 29 to
Prelininary Objections).

The Head Chief stated unequivocally that Naunians did not regard self-
determination and rehabilitation as related in any way. Given the Naunian

statementsmade in December 1967,it seems improbablethat ihere were, at the
very same the. breaches of the dimensionswhich Nauru nowalleges against
Australia.

412. As the Court said in its judgment of 26 lune 1992. the resolution of

19December 1967had "definitivelegaleffect" and theTnisteeship Agreement
was "terminated" on that date and "is no longer in force" (ICJ Reports 1992,
p.25, referringto theNortliern Canzeroonscase,ICJ Reports 1963. p.32). The

resolution made no reference to rehabilitation and contained absolutely no
indication that there had been any less than total compliance by the
Administering Auihoritywiththe pnnciplesof selfdetermination, or permanent

sovereigntyover naturalresources.

413. It wasfor this reasonthattheCourtheld, in theNorthern Cameroons case
(ICJ Reporrs1963,pp.32.37),that it wouldnot inquireinto the allegation made
by the Republic of Cameroons that the Administering Authorityhad failed to

comply with its obligations in respect of that Territory and, in particular, its
obligation under Article76(b) of the Charter to bring the people of Northern
Cameroons to self-government.If Nauru. in the preseiitcase, is to substantiate

its claim that the phosphate industrypolicy during the Tnisteeship resulted in
substantial breaches of the principles of self-determination and permanent
sovereignty, it necessarilyhallengesthe decision of the General Assembly in
December 1967 that it was appropriate, having regard to the particular

circumstances of Nauni. that the Naunians should exercise their right to
self-determination.absentanyconditionas tothe island'srehabilitation.

414. Nauru does in fact allegethat theAdministeringAuthonty breachedthese

pnnciples and, as the foregoingparagraphs show. this necessarily implies that
the UnitedNations failedtoo.That is, the UnitedNations failedto fulfil its own specialduty to the Territoryto ensurekit the Authontycompliedwith itsbasic

obligations. Given theacts referred to above (and in Part 1)and the particular
involvement of the United Nations in issues *of self-determination, it is
impossible to believe that the Organisationcquld have closed its eyes to such

breaches inthisway.

B: AUSTRALIA'SRECORD WlTH REGARDTO
SELF-DETERMINATION IS EXEMPLARY

415. As already noted, pucsuantto Article76@)of the Charter and therefom
under the Agreement, "self-governmentor independenceas may be appropriate

to the..territoryand the freely expressed wishesof thepeoplesconcemed" was
a basic objectiveof the Trusteeship.erthe 1947TmsteeshipAgreement.the
Administering Authority undertook to promote the political (as well as

economic) advancementof the Temtory accordingly.Within the contextof the
tmsteeship system. the TmsteeshipAgreementcontemplateda specific process
for Naunian self-determination.In confomity with thatAgreement and during
the Trusteeship.the Administering Authoritybmught the Nauruansto the stage

where they were freely able todetermine theirpolitical status. and having
so, to emergeas a Statewitha soundeconomicfuture.

416. As Part1has shown,undertheadministrdtionof thejoint Authority. there
were considerable social andpolitical advancementson Nauru betwéen1947

and 1968. Amongst other things, education became compulsory for Naunian
children from ages six to sixteen and there was ample assistance to enable
children to continue their studies. particularly in Australia. The political and

administrative system was altered overtime to ailow for progressively more
Naunian participation in govemment until complete independence in 1968.In
1951 the Naunian Council of Chiefs wds replaced by the Nauni Local
Govemment Council, an electivebody with considerableinfluence.Its powers

were enlarged in .1963, and in 1965 Naunians were granted even more
autonomy, the details of which are discussed in Pan 1. As well, Naunians
increasinglyassumedsenioradministrativeposts.

417. Clearly. Australia (on behalf of the joint Authority) fulfilled the

undertaking to give Nauruans an increasing share in the governme- of the
Territory. so that they might freely choose their political status. In preparing
Nauru for independence, Australia's conductwas exemplary. As Part 1 has
sbown. in agreeing to terminatethe Tmsteeship Agreement,the Administering

Authorityand the United Nationsactedtotally in accordancewith the wishes ofthe Naunian people. Independencewas, inevery sense. the resuit of "a free and

genuine expression of the wiU of the people concerned" (Western Sahara
advisory opinion, ICJ Reports 1975, p.32). As the United Nations noted,
31 January 1968 was the date which the*Nauruans themselves chose for

independenceand the AdmimisteringAuthorityrespectedtheir choice. See Part
1.As the Ausfialian Minister for Tenitories stated, Naunians sought and were
given "full and unqualifiedindependence"bara.70 above).

418. But il is said that the principle of self-determination was breached

because of the "disposal" of the unit of self-determination togetherwith the
"failureIo provide an adequatesinkingfund Iocover the costs of rehabilitating
the workedout phosphatelands".This. it is said.was compoundedby "a refusal
to pmvide relevanteconomicdata"to the Nauniansor the United Nations(NM.

para.413).

419. As thenext Chapter(Section1)shows, there isno basis infact for the last
allegation as to the provision of economic date. The allegation is entirely

inconsistent with the conductof the United Nations at the relevant time; and
cannot arise for consideration in this case which concerns only the matter of
rehabilitation.

420. Nor does the historical record support theNaunian claim that the unit of

self-determination wasdestroyed.DuringtheTnisteeshipperiod, what happened
was that the BPC, withthe knowledgeand consent of the Naunians and of the
United Nations. mined for phosphato en the island. But thearea actually worked

out by the BPC between 1947and 1967wasno more than one third of the total
area worked out between 1906and now. ~urther;the real value of the land in
question lay only in the phosphate minedfirstby the BPC and subsequently,by

Nauru. .Thalland, it shouldbe recalled,has never been used for agricultural or
residentialpurposesand has always had anerratic rainfall.For this reason,even
before mining took place. the phosphatelands would nothave ken capable of

supporting anything like the present population of Nauru. otherwise than
through phosphate exploitation. See eg, CSIRO report, 18January 1965,
Annex 20 to Preliminary Objectionsand para.144 above; Davey Committee

report, Annex 3. Vo1.3.NM,and para.149above.Mining anda less aesthetically
satisfying environment have been the price of Nauruan prosperity. This is a
price which theNauniansthemselves have accepted;for it shouldalso be bome
in mind that Nauni itself has, since independence, continued Io mine for

phosphate, and at an even greater rate, without commencing rehabilitation. Phosphate mining has not been treated by Nauru as anything other than an

appropriatemeans of advancingthe.Nauruaneconomy, to support its growing
population. This reflects the island'sparticular-characterist Sin.ce 1906,
Nauruan economic development has depended almost entirely on phosphate

mining. more especially in the Trusteeship penod before investments from
phosphaterevenue hadan opportunityto accumulate.

421. Finally, Nauru's own conduct since independence is altogether
inconsistentwithitsallegationthat Austraiianpoliciesinvolvedthe "disposal of

the territorial foundation of the unit of self-determination", or "the physical
reduction of thehomelandof the people of Nauru". For during thetwenty-five
yearssince independence,Nauruhascontinuedto mine, at afasterrate thanever

before(NM, para.207). Further,Naurudid not developor begin tocarry out any
rehabilitationprogram during that period.As a result. Nauru itself has already'
mined more than twice as much of its phosphate lands as did the former
Administering Authority in the Trusteeship period. Naunian claims that

Australia isguiltyof breachesof principlesof selfdetermination and permanent
sovereigntyare to be setasideasentirely withoutfoundation.

422. Nauru's complaint thatit was not given an adequate sinking fund for
rehatiilitationis alsojustified.The previousChaptershowsthat themeansby

which the Administering Authority chose to discharge its obligations (under
Article 76 of the Charterand Articles3.4 Gd 5 of the Trusteeship Agreement)
was to make more than sufficient financialprovisionto ensure the Nauruansa
secure future. so that theymiglit,if they so chose,undertakea properly planned

rehabilitation scheme. The reasons for this have already been discussed: see
PartII.Chapter 2.Noquestionnow arisesas to the sufficiencyof thosefunds to
achieve that result, foruruitselfconcedesthat ithas in fact adequate funds to

undertake the task. This is, indeed, not surprising, having regard to the
generosity of the 1967 Canberra Agreement and tothe funds transferred to
Nauru on independence.See Part II. Chapter 2, Section VII. This should have

assured to Nauru a prospemus future. Nauru's claim here as elsewhere in its
Memorial is that.regardlessof thegenerosityof thefinancialprovisionsmade in
1967, the Administering Authority oughtto have given it a fund specifically
designatedforrehabilitation.Butthis isfar removed from theassertedbreachof

the principleofself-determination.

423. There might have beena breach of the principle of self-determinationif
Australia had prevented or hindered the Nauruans from choosing to beindependent. But this wasnot the case.Theremight also have beena breach if
Australia had in fact deprivedthepeople of the island which was to be their
temtonal unit of self-determination.Theremight-thenhave ken no valid act of

self-determinationat au. But this was not the situaon Nauru. Nauru'sclaims
in this regard are without any foundation in fact. On the contrary, with the
termination of theTmsteeship in January 1968,there emergedan independent

State on disland which could notonlysupport its populationat the timebut. on
accountof itsphosphate resources, promised them a prosperouesconomicfuture
baras.376 to384 above).

C: AUSTRALIARESPECTEDTHE PRINCIPLEOF
PERMANENTSOVEREIGNTY ABSOLUTELY

424. The principle of permanent sovereignty requires that every State

recognize "the inalienableright of al1States freely to dispose of their natural
wealth and resources in accordance with their national interests" (General
Assembly resolution 1803(XVII),preambular para.5).Resolution 1803(XVII),

adopted by the Generdi Assemblyon 14December 1962,has been seen as the
crystallizationof this principle:sTexacovLibyanArabRepublic 53 ILR 389.
at pp.487, 491-2; Kuwait v AmericanlndependenrOil Co (Aminoil), (1982)

21 Internarional LegaMl aterialsp.976, at p.1021; Higgins [1982]Recueildes
Cours, Vol iii, p.293; Lachs [1980RecueildesCours, Vol.iv, p.57; Brownlie
LI9791 RecueildesCours, Vo1.i.p.261.The question whether internationallaw

on this subject altereduring the tmsteeship period need notbe answered, for
the factisthat Australia has acted completeinaccordance withthe demandsof
the principle. For thesame reason, thereis no need to consider whether the

principlein fact entitlesNauruto relyon Australia's alleged responsibias the
representativeof the formeradministeringpower, although that question is not
without doubt (cf Bedjaoui,"The Right to Development"in InternationalLuw:

Acliievemenrs and Prospects U,NESCO. Paris,1991,p.1190; Gess. "Permanent
Sovereignty overNatural Resources" (1964)13 International and Comparative
Law Quarrerly 398 at 415; Fischer. "La souveraineté.sur les resources

naturelles" AFDI. 1962. p.516 at 526;Elian [1976] RecueildesCortrs, Vo1.v.
p.48).

425. As Part 1.Chapter3 and Part2, Chapter 2 makeclear, arrangementswith

respectto royalties andltimately,theentireNaunianphosphate industry altered
radically between 1947 and 1968. This was in keeping with similar
developments throughout the world. Prior to 1950, long-term concessions pursuant to which a foreign concession holder acquirexclusive rightsto mine
in return for comparatively modest royalties and rental were typical of
arrangements governing the exploitationof naniml resources in many places.
The development of the principle of permanent sovereignty led to changes in

approaches to foreignminingconcessions,however,and, in the period between
1950and 1967,to increasesin the levelof royaltypaymentsand other forms of
return to pmducer States. (Seeattan. TheEvolutionof Oil Concessionsin the

Middle East and Nortli Africa, (New York,1967J,pp.34; Transnational
~orporations in World Developrnent:A Re-examination,ElC.lOL38.20 March
1978 (UN Sales No.78.U.A.S). pp.102-122, esp 102-3). As part of these

developments. there were increases in royalty payments throughout the
Tmsteeship, particularly after 1963. Even before 1963. royalties paid by the
BPC compared favourably to thosepaidby mine operatorsin Australia.A paper
preparedby the AustralianDepiment of Territoriesindicatesthat inJuly 1958,

the rate of royalty impostfor zirconwas216per ton; for coal, it was 9d per ton
for theirst twenty yearslease. 11-pertonfor the second,and 1B per ton for the
third twenty years; andfor phosphates. Il- per ton. Not surprisingly, the paper

recorded the view that the proposed payment of 216 per ton for Nauruan
phosphate was reasonable, having regardto the royaltyrates applicable in New
South Wales. (The paper appearsas Annex3 to thisCounter-Memonal.)It will

be recalled that the1962Visiting Missionhadnoted withsatisfactionthat,since
1947,the percentagebenefitto the Nauniansagainst the valueof phosphatesat
the point ofexportshadnsen fmmjust under 4% to 24%.'lherewereeven more

significant increases after 1963, as the reports of the Trusteeship Council
recorded. There was no indicationin these reports thatthe Council considered
that the Administering Authority was failing to insure that the BPC paid
royalties at a rate appropriate to the standards of the day (see paras.102

and 105). .

426. At the Naunians' request and in conformity with the Trusteeship
Council's recommendations,a substantialpart of these myalties was paid into

trust funds for theenefitof Naumansas a whole. Whenresettlementpmposals
failed in 1964, the Administering Authority ensured that an even larger
proportionwas paid intothe LongTerm Investment Fund,by way of saving for
Nauru's futureneeds. It willbe recalledthat as at 30 June 1967there w@over

$3 million standing to thecreditof the NauruLandowners'RoyaltyTmst Fund
and about $6.25 millionto thecreditof theLongTerm lnvestment Fund which,
together with other Trust Funds, amounted to almost $AI0 million. or

$A70 million in 1993 values (para351 above). At independence, these fundswere passedto Nauniancontroltobe appliedtoa rehabilitationprogram(or any
other project)as theNauruanssawfit.

427. In making the Phosphate Agreement of14 November 1967. the three
Partner Govemmentsrecognizedthe right of the new Naunian State to dispose
of its major resourceas it saw fit.Pursuantto thatagreement, theAdministering

Authonty (ie. Australia, the UnitedKigdom and NewZealand)agreed that the
BPC should giveup its interestin the Naunianphosphate industryon the terms
pmposed by the Naunians. It will be recaued that the Nauruans purchasedthe
BPC's Naunian assets at theirown request (Part1.Chapter 5,para.230). These

assets were valued at original price less depreciationat a rate consistent with
their economic life (1967 Agreement.Clause8(1), reproducedas a schedule to
Annex 9 to PreliminaryObjections).This was not a normal commercialbasis.

As alreadynoted,a commercial price would have yielded $A30to$A32 million,
ratherthan the $A21millionactuauypaid. Aftera three-yeartransitional period,
the BPCwasto transfer the managementof the phosphate installationson Nauru

to the Nauni Phosphate Corporation. a Naunian corporation, to manage
thereafter (Clauses 13 and 15). Thus, by the time Nauni emerged as an
independentStateon 31 January 1968, theformer Administering Authority had

aireadypassed ownership and controo lf the phosphate deposits tothe new State.
This was in fuUaccord with theprincipleof permanent sovereignty.

428. The 1967 Agreement was advanta'geousfor the Naunians; and the

arrangements made under it weremuch more favourablethan strictly required
by the then applicable law. See Part 2, Chapter2, Sections VI1and VII. The
basis of valuation for BPC's Naunian assets clearly favoured the Naunian

purchasers (Part II, para.371).Underthe Agreement,Nauni acquired the whole
industry- the capitalassets,the phosphate deposits andthe considerdble income
which phosphate salesgenerated. Further,the former Administering Authority

undertook to take the entire output of Naunian phosphate at a stated rate of
production and at a market-indexed price for at least the first three years
(Clauses 5(2) and 23).The three Govemmentstherebyassured the new State a
guaranteed market at a guaranteed price. (This arrangement was, of course,

subject to extension.)

429. For the threePartnerGovemments and the BPC. the Agreement involved
the relinquishment of valuahle legal interests. Until the pre-independence
negotiations. the BPC had held undisputed concessionary rights over the

Nauruan phosphate deposits which derived from the title of the three Govemments. They had purchased the interest of the Pacific Phosphate

Company in 1920.That Companyhad in tum acquiredtitle under a grant made
by the Imperia1German Government in 1905. The three Govemments had
transfemd the assets and undertakingof the Naunian phosphate operations to

the BPC under an indentureof 31 December 1920 and had vested title to the
phosphatedepositspursuant to the 1919Agreement.See Part 1.Chapter 1.The
BPChad not lostitsconcessionary rightswhenthe 1947TnisteeshipAgreement

came intoforce. Hadthe threeGovemmentsnot givenup their interests(heldby
BPC) priorto independence,Nauruwould haveben requiredto pay appropriate
compensationfor any compulsory acquisition.Thiswould have included atst
full compensation for the BPC's assets. valued at a somewhat higher

commercialratethan thehistoriccostbasis of the 1967agreement.There would,
moreover,have been no assuredmarket.

430. At the start of the 1967negotiations,the three Partner Govemmentshad
expected to make some form of pmfit-sharing arrangementwith the Nau.ans

(Part 1,paras.214 to 220). mis was in keeping wiîh the fact that the BPC had
concession rights over the phosphate to the year 2000. It was also consistent
withintemational practice as it then stood with respect to mining concessions

elsewherein the world. Aslreadynoted,thepracticeof grantingconcessionsto
foreign concems by mandatory powers and administering authorities was an
accepted feature of mandateand tmsteeship administration. Further, prior to

1950,concession-based royaltyandentalpaymentsweretypical formsof reiurn
received in pmducingcountries.The SaudiArabiaand Aramcoagreementof 30
December 1950 introduced the concept of equal profit-sharing between the

producer State and the concessionairein the context ofconcessions. Direct
pmfit-sharing gradually gainedwidercceptanceso that. by 1967.the concept
of mutual sharing reflected in a profit-sharing formula had become well
accepted às the appropriatebasis for the exploitationof natural resources. See

Steinerand Vagts.TransnationaLl egalProblems:MaterialsandTerr (1967),at
p.373;H Cattan,TheEvolutionofOil Concessionsi nitMiddleEastandNorrk
Africa,(19671, ppxi. xii3-4, 9-10; TransnationalCorporalions in World

Development: ARe-examination, E/C.10/38, 20 March 1978 (UN Sales
No.78.U.A.S).pp.102 -02-2,1e7.p

431. It was in keepingwiththese internationalstandardsthat the threePartner

Govemments soughtan equal sharing of the profits of the phosphate industry
with the Nauruans.Their approach wasalso consistentwith the conclusionsof
the 1966WorkingGroup (AM~X7 to PreliminaryObjections).As notedabove,the Working Groupidentified two different approaches -profit-sharingbetween
operatingcompaniesandgovemments and theretum of profits on shareholders'
funds (para.390).The availablematerialindicated thata 5050 sharing between

the Naunian Govemment and the commercial operator would have been
consistentwitharrangementselsewhereintheivorld(para.12of the Report). By
the end of the 1967negotiations. however, thehreeGovemmentshad agreedto

relinquishaii interestin the industry. including anyentitlementto a share of the
profits or managementfee. By so doing, theGovemments gave up much they
might reasonably have expected to retain. From independence, Naum thus

received the entire economic benefit of the phosphate industry. As the earlier
discussion of the 1967 negotiations shows, the three Govemments were
prepared to relinquish theirclaim to a proportion of the profits so as Io take
account of Naum's particular circumstances, including the fact that the

phosphatewas a wasting resource.SeePart 1,Chapter 5 and Part II. Chapter 2,
Section VII.

432. It should be borne in mind that, in 1967, direct exploitation by the

producing country was not usual and that further significant changes in
internationalapproachestoforeign investment inmineralexploitationtookplace
in the fifteen years or so following termination of the Tmsteeship. See
TransnationalCorporationsinWorldDevelopnienl: A Re-examination .eferred

to in para.430 above. The more radical nature of contractual revisions in the
1970s is illustratedby the revisionsmade tothe original Kuwait concessionof
1934, particularly in the 1960s and 1970s. whichculminated in the Kuwait

Acquisition Agreementof 1DeŒmber1975(reproducedin Peter Fischer(ed),A
CollectionofinternationaC l oncessionsand RelatedInstruntenlsC, onteniporary
Series 1975176,Vol.2. (1982).pp.133ff).These furtherchanges coincided with,
and reflected,refiements in the principleof permanentsoveieignty. They can.

howevei, have no bearing on the present case. See para.438 following and
Part II, Chapter 1.SectionIII.

433. In making the 1967 Agreement, the three Partner Govemments also

recognized that it was for the new Republic of Naum to decide whether it
wantedto embarkuponrehabilitationand if so, theparticularprogram it wished
Io pursue. It wilbe recalledthataslate as June 1966,the DaveyCommitteeof
Expertshad reported that "the very manypracticalconsiderationsinvolvednile

out such an undertaking [torehabilitatas impracticable".See Part 1,para.157.
The position of the Administering Authority was clearly understood by the
Tmsteeship Councilwhich reported that: 'nie basicpoinis inthe attitudeof the ParînerGovemmentswereihat

the decisions about what steps for treatment of these worked-out
mining lands shouldbe taken -whether they should be treated, what
treatment shouldbe undertaken. wheni! should be done and at what
use of resources -were ones that should properly be taken by the

Nauruans themselves and not by anybody else; and that the
responsibilityof the PartnerGovemmentswas tosee that the financial
arrangementswere such astoensurethatresourceswouldbe available

toenable the Naumans tomakeprovisionfor their fuhire in whatever
waythe presentleadersor theirsuccessorsmightdecide.

The Partner Governments thought that they had made sufficient
provision in the financial arrangements that had been agreed on.

Under these arrangements$US21 million wouldbecome available to
or for the benefitof the Naumanommunityin 1967-1968,amounting
on averageto about$US40,000per family,andalmost$US18million

a year from 1969-1970on ..The PartnerGovemments have agreed
that the Nauman people wouldreceive the benefit of the whole, ie,
100 per cent, of the net proceedsfrom selling the phosphate al fair
value. They did this, although theinformation assembledby a joint

working party of the Nauman representatives and the Pdrtner
Governments which assembled a great deal of information about
comparable mining practice elsewhere, showed that there was a
well-establishedbasisof sharingofnet benefits and thatinmanycases

the sharingwas 50150.The PartnerGovemmentsdid consciouslytake
into account the veryreal needs of the Naumanpeople toprovide for
their long-term futureecauseof the extractive natureof the induslry

and of thesmallsizeof theislaiid,in deciding thatit should notfollow
thèseprecedents of sharing." (United Nations,Report of Trusreeship
Council, General Assembly Oflcial Records, 22nd Session. Suppl.
No.4 (A/6704), Part II, paras.401-2; set out in Annex 28 to the

PreliminaryObjections)

434. The Council noted "with satisfaction" that amongst other things,
agreement hadken reached to transferownershipand controlof the phosphate
iiidustry to the Naumans (para.403). It did not indicate that the 1967

arrangements were anythinglessthansatisfactory.435. As noted in Chapter 2 (para.380).Australia's representative assuredthe

GeneralAssemblythatthe 1967agreementwould provideNauru with anannual
return of about $15 miilionand that the Nauruansmight expect to accumulatea
fund of about$400 million,if theycontinued tpput asidethe sameproportionof

their revenue as in previous years. The three Partner Governments clearly
believed that this wouldensurethe economicwellibeingof the populationonce
the phosphatedepositswere exhausted.

436. The Nauruans and theTrusteeship Councilconcurred with this account

(paras.195 to 202 above). It was. therefore. to beexpected that the General
Assemblywould agree to teminate the Trusteeshipfor Nauru fully, and indeed
pmperly. satisfied that the Charterand general internationallaw standards had
been complied with by the Administering Authority. Further, at no the has

Naurusoughtto impugntherepresentationsmadeby the Authorityto theUnited
Nationsconcerning theeffectofthe 1967Agreement.

437. Nauni's sovereigntyoveritsnaturairesourcesis "permanent" in the sense

that no action of the formerAdministering Authoritycould have deprived itof
its legal capacity to regulate exploitationof those resources. Australia would
have contravened the principle had it sought to bind Nauru to a long-term

arrangement with respect to the phosphate industry, or sought to alienate
Nauni's entitlement by claiming its own absolute right to the phosphate
deposits. Australia did not adopt either course. however. On the contrary,

Australia. together with the other two Governments, ensured that, on
independence. Nauru was able to exploit the resource in its own interest.
Australiadid not seek in any way to preventor hinder Nauru's operationof the
phosphate industry. nor to impair Nauru's enjoyment of unchallenged

sovereigntyoverthat resource.

438. ~hen the Trusteeship came to an end in January 1968, the full
ramifications of the principle of permanent sovereignty were still being

elaborated (Bedjaoui,[1970]RecueildesCours,Vol.ii,p.495; Brownlie, 119791
Recueil des Cours. Vo1.i. p.270; Hossain and Chowdhury, Permanent
SovereigntyoverNaturalResourcesin InternarionaL l aw (1984)p.Il). Over the

past decade or so, different legal arrangements havebeen formulated for the
development of the natural resources of developing countries to give fuller
expression to the principle of permanent sovereignty. But Nauru cannot

complain that such arrangementswere notappliedduting the Trusteeship,since
they were not available to the Administering Authority then. and the arrangementsmadeby the former Authoritymust beassessedagainstthe law in

force at the tirne(Islandof Palmas Case (1928)2 UNRIAA829; Guinea-Bissau
vSenego1(1989) 83ILR 1.atp.45;andPartII. Chapter1,Section HI).

439. As already noted, Nauru's claim that Australia's administration of the
phosphate industry involved breachesof the permanent sovereignty principle

finds no support in the contemporary historical record. On thecontrary, it is
clear that the Naunians derived considerable benefits from the phosphate
industryduringthe Trusteeshipperiod.nie Visiting Missionsof 1953, 1956and

1965had each commented onthis fact (para.349).The 1965 Visiting Mission
specifically noted that phosphate mining enabled the community to afford
excellent houses, schools and hospitals (1965 Visiting Mission Report. para.2,

Annex 12,Vo1.4,NM).

440. Further, Nauni's phosphate resources gave it a pet capita income at
independencewhich wasone of the highest in the world. It should still have a
very high per capita income(Annex26 to PreliminaryObjections. discussed in

para.382). Nauni's claim that the phosphate has been depleted on grossly
inequitable terms is entirely out of keeping with Nauru's very considerable
prosperitythmughoutthe tmsteeshipperiod and beyond.

Section II:There wasno hreach of any other

general principle of international law

441. Besides alleging breaches of international law specifically relating to
non-self-goveming tenitories, Nauru claimsthat Australia is guilty of breaches

of other more generalprinciples.These claims too are insupportable.Theyare
considered below.

A: DENIAL OF JUSTICE

442. Nauni alleges that Australia's supposed failure to make provision for
rehabilitation constitutesaenialofjustice (Application. para.46;NM, Pan III.

Chapter 4). According to Nauni. this conceptinvolves"ilie incidence of gross
and manifest error in the application of the relevant legal standards. often
associatedwith a policy of arbitrarinessordiscrimination" (NM,para.432)and,

Nauru alleges, this applies to "the policies, decision-making procedures.and
specific transactions, of the AustralianGovemment and the British Phosphate
Commission, in relation to the obligations of the legal regime constituted byArticle 76 of the United Nations Charter in conjunction with the Tmsteeship
Agreementfor theTerritoryof Nauni"(para.434).

443. Plainly, the expression "deniai of justice" does not cover every kind of

international delinquency. The expression'is ordinarily used to refer to
internationalwmngs committedby Statesin respectof the personor property of
a foreigneron itstemtory, andparticularlyto injuriescommittedby an organof

government in connexion with the administrationof justice. See Fitzmaurice,
"The Meaning of the term 'Denial of Justice"' (1932) 13 BYIL 93, at pp.95.
108. In its narrow sense, the expression relates to the treatment of aliens by

judicial organs; in its broadense. to the treatmentof aliens by the State. See
Sorensen (ed), Manualof Public Internationa law (1968) pp.557; Lissitzyn,
"The Meaning of the Term 'Deniai of Justice' in International Law" (1936)

30 AIIL 632.

444. By using the term "lato sensu", Nauni cannotgive it a meaning which it
does not bear in internationallaw; and even if the facts allegedby Nauru were
tnie, they would not attract the doctrine of denial of justice. At general

intemational law. the doctrineis concernedwith the responsibilityof a State in
relation to aliens and in particular.with the treatment of aliens by a State's
judicial organs. Its notconcernedwiththe nghts and obligationsof tnisteeship.

In relation tothese,the AdministeringAuthoritywas,of course.governedby the
Tmsteeship Agreement and the Charter. There can beno analogy between the
relationship of a State towards aliens on its territory and that of an
AdministeringAuthoritytowardsthe inhabitantsof a tnisteeship territor(NM,

para.436). For the latter was appointedby and at al1times subject to the United
Nations. There is no basis at al1for Nauni'scontentionthat the Charter and the
Tmsteeship Agreement providea separatecauseof action fordenialofjustice.

445. Furthermore, there is no factual basis for the Nauruan allegations
concerning the administrationof phosphate lands and royalty payments (NM,
paras.438-443). The subject of public finance and royalties during the

msteeship is dealt within detailinPart1.Chapter3. It sufficesto note here that
the BPC paid royalties toNauniansthroughout thetmsteeship period and there
weresubstantial incrementsover theyears. Forexample.it will be recalled that
the total royaltiespaid toaunians in 1966amountedto $A1.75 a ton, in 1967

to$A4.50per ton (para.93above).

446. The Tmsteeship Council'sannual reportsconcerningNaum reflected its
proper concem to ensure no1only that it had adequate informationon the size and destination of royalty payments, but also that royalties were paid to
Nauruans on an equitable basis. SePart 1,Chapter 3, Section II. The record

shows that the Administering Authority provided the Council with such
information,eitheron its owninitiativeor in rpponse to the Council'srequests.
Funhermore, the arrangements made by the Administering Authority for the
payment of ruyaltiesweremore than once commendedby the Council.See. for

example.the reportsoftheTnisteeshipCouncilin 1959,1960and 1965refemd
to in paragraphs100to 101and 105above.

447. If the Authority had been guilty of conduct amounting to a denial of

justice,t ought to havebeen consideredby the Trusteeship Council. as such
conduct would have fallen within the ambit of its supervisory function. But
neither the Council nor any otherrgan of the UnitedNations ever intimated
that the Administering Authority was guilty of a denial of justice in its

administrationof thephosphateindustry.

B: BREACH OF DUTIESOF A PREDECESSORSTATE

448. In an effort to findsomefurtherlegalbasis for its claim. Naum contends
that. at general international law. "a State which is responsible for the
administration oftetritory is underan obligationnot to bring about changes in

the condition of the territory which will cause irreparable harm to, or
substantiallyprejudice,the existingor contingentegal interestof another State
in respectof thaterritory"(NM.pak.458).

449. Nauru provides no evidenceof the widespreadacceptanceby nations of
the relevantprinciple.asrequiredof itby Aiticle 38 of the Statuteof the Court.
Nauru seeks to rely instead on obligations arising in very different situations
from that of tmsteeship and by virtue of specific treaties. mles made under

treaties,'or other consensual arrangements. It also cites Decree No.] of the
United Nations Council for Namibia (Annex 21, Vo1.4,NM). but this citation
merely emphasises Nauru's failure to identify any relevant practice. For the

differencesbetween the situationin Namibiaand Nauruare great:South Africa
continued in iUegalpossessionof the formertemtory in defiance of the United
Nations whilst the Administering Authorityon Nauni remained at al1times
observantof UnitedNations authority.

450. Nauni also reiers to the GermanSettlersin Poland case (PCU, Ser. B.
No.6 (1923)) and thecase of CertainGermanSettlers in Polish UpperSilesia
(PCIJ, Ser. A,No.7 (1926)). Neither provides any evidence for the supposedprinciple, however. in the former, the Permanent Court was asked to give an
advisory opinion conceming the nature of certain obligations contemplatedby

the Treaty of Versailles (PCIJ, Ser. B, No.6 (1923). p.7). The actions of the
Gem and Polish Govemmcntsfeu to becopsidered in this context; and the
particular provisionsof the Treaty govemedthe Court's conclusionsas to each

State's respectiverights and obligations.in the relevantpart of the latter case,
the Court was concemed to explain and maintain Germany's competenceto
disposeof iis propertypriorto eny intoforceof the VersaillesTreaty.It wasin

this contextthatthe Courtsaid:

"[Olnly a misuse of this right could endowan act of alienation with
the character of a breach of the Treaty; such misuse cannot be
presumed. and it rests with the party who states that there has been

suchmisuseto provehis statement."(PCIJ, SerA,No.7 (1926).p.30)

451. If this case has any relevance(which maybe doubted), it serves only to
show that the (undischarged)burdenof establishingsuch a case as Nauru seeks
to make rests at al1times with Nauru. Butneither of the cases to which Nauru

refersprovides any authoritative supportfor the supposed principle for which
Naurucontends.

452. Whateverthe principleswhich maygovem a predecessor State in relation
to its successor, they had no application in relation to an Administering

Authorityin a trusteeshipsituation.As Nauruitselfconcedes, the obligationsof
the AdrninisteringAuthonty on Nauru were at al1times govemed by the 1947
TrusteeshipAgreementandthe Charter (NM, para.464).

453. Furthermore,even if there weresome such principle as that alleged, the
facts would not attract its operationm. Nauru has clearly failed to prove its
allegatioris.Nauru does not contendthat miningper se was unlawful. or that it
infringed the principleof permanentsovereignty,or was camed on without the

consent of the Nauruans.Whilst it appearsto assertthat a breacharose fromthe
depradation of the natural resources on Nauru. it does not contend that
phosphateminingshould not have occurredand thatthe islandshouldhavebeen

left in aristine state. Such a claim would be inconsistent with Nauru's other
claim that it was thefailure to rehabilitateor adequatelyrecompensc that gave
riseto Australia'sresponsibility.

454. Asalready noted, the recordshowsthat Australia's administrationof the

phosphate operations was always subject to conscientious United Nations supervision (paras.399 to 414 above andPart 1,Chapters 3 and 4). Australia.
representing theAdministeringAuthority,did not harm or prejudice Naunian

interests. On the contrary, according to the Visiting Missions and the
Tmsteeship Council. Nauruans benefited a great deal from the phosphate
revenues throughout the Tnisteeship and, at independence, the Naunians
inherited the phosphate industry as a viable operation which assured them a

prospemusfuture .

C: ABUSEOFRIGHTSANDACïS OFMALADMINISTRATION

455.. Finally. Nauni claims that as a result of Australia's alleged acts of
maladministration. Australia is guilty of an abuse of rights. Nauni says "the
principle of abuse of rights wmprehendsthreepatterns of conduct- preferring

the interests of the administrationover those of Naunians; refusing "to report
essential data concerning the policies of the administration and their
implementation"; and failing to take account of the relevant international
standards in relation to the administration of the Territo(NM, para.449).

Nauni says that this conduct as a whole "revealed a wilful disregard of the
tnisteeshipregimeas a legalprocess" (NM,para.454).

456. The status and contentof the doctrineof abuse of rights is uncertain at
internationallawand therehas ken littleagreementamongst writersor arbitral

andjudicial tnbunals concerningit. It mabe regardedas the applicationof the
principleof good faithto the exerciseof rights. AsLauterpachthas recognised:

"There is no legal right, howeverwell estahlished.that could not, in
some circumstances, be refusedrecognitionon the gmund that it has

ken abused.The doctrineof abuseof rightsis thereforean instniment
which ...must be.wielded with studied restraint." (LauterpachThe
DevelopmenrofinternationaL l awbytheInternationalCourt. p.164.)

457. The fact is,however,that internationalresponsibilican arise only if the

supposed abuse amounts to an unlawful act which would. in this case,
necessarilyinvolvea breachof theTmsteeshipAgreement andthe Charter(NM,
para.444).Nauni, it seems.alsorecognizesthiswhenitailegesthat:

"In the Naunian context themie of law, the ideaof due pmcess, was
constituted by the international legal regime of tnisteeship, and

accountabilityto the UnitedNations."(NM, para.454)458. Nauni's meaning is far from clear, but it does apparently (comctly)
concede in thispassagethatthere canbe no separaterequirementof duepmcess

or the like, or anysponsibilityarisingfroman abuseof rights,unless therehas
first been a breach of tmsteeship obligations: But, as the preceding Chapter
dernonsirates,therehas teen no suchbreach.

459. Further, as the record shows. theclaim of abuse of rights has absolutely
no factual basis. The relationshiptetween the United Nations, particularlythe

Tmsteeship Council, and the Administering Authority has already teen
discussed insornedetail (Part1,Chapters3and 4; Pariil .hapter 2,Section V
and VI; and Part Il. Chapter3, Section 1). That relationship involved active

inquiry on the pari of United Nations bodies andCO-operativereporting by the
Administering Authority. TheTmsteeship Council,aided by Visiting Missions
and Naunian representations. sought conscientiously to ensure that the
Tmsteeship administration was conformable with the Charter. especially

Article76.

460. If Nauni's claims were tme, they ought to have been the subject of
anxious debate and censure by the Tmsteeship Council. On the contrary, the

Council was warm in its praise of the Administering Authority'sworIn light
of the contemporaryhistoncal record. it can scarcelybe contemplated that the
United Nations, through theTmsteeshipCouncil,failed to take any note of the
imaginedabuses. CHAPTER 4

NOVEL ALLEGATIONS OF BREACH OF TRUSTEESHIP
UNRELATED TO REHABILITATION

Introduction

461. The three precediig Chapters examine Naum's specific claim that, at
internationallaw, Australiawasunderan obligationto rehabilitatelandsmined
outduring the trusteeship period. The Nauruan Memorial also contains other
allegations, however, which are unrelated to the rehabilitation claim. In

particular, Nauru alleges that Australia.acting on behalf of the Administering
Authority:

. failed to make full and fair reports to the relevantorgans of the United
Nations on theeconomic affairsof Nauru,includingthe phosphateindustry

(NM. paras.284.315-6.320-1.339)

. failed to exercise governmentalauthority in a manner appropriate to the
obligationsof trusteeship(NM,para.364ff);

failed to promote the political advancement of the inhabitants and their

pmgressivedevelopment towardsseK-govemmentand independence(NM.
para.374ff);

failed to promote the economic, social, educational and cultural
advancementof the inhabitants(NM.para.389f0; and

failed to respect the land rights of the indigenous inhabitants (NM,

para.394ff).

These allegations are dealt with in this Chapter. As the following discussion
shows. they each lack factual support (Section1).In any event. the allegations
cannot pmperly arise for decisioninthese proceedings and theyare in conflict

withthe deliberationsand conclusionsof the TrusteeshipCouncilandthe United
Nations(Sections II andIII).

Section 1: There is no factual basis for any of these allegaiions

462. The facts do not supportanyof these fiveallegationsand eachallegation
is essentially fact-dependent. As the following account shows, Nauru fails Iomarshal any evidence in its support and relies insteadon vague generalisations
and gives few details.Thus,even if it were opento Naum toraise such matters

in these proceedings (whichAustralia denies), Nauru's claims in this regard
cannotsucceedbecauseof itsfailure topresentevidenceintheir support.

A:THEALLEGED FAILURETO REPORTFULLY
ANDFAlRLYHASNOBASISIN FACT

463. Naum aiiegesthat the failureto report andto rehabilitate "form partof a
pattern of conduct stemming from ...goals divorced from concem for the
purposesof the tnisteeshipsystem andinimicalto these purposes" and that"the

failure to rehabilitatefoms an entirely consistentelement in [this] pattern of
conduct" (NM,paras.314-5;alsoNM. Part IV, Chapter4). It furtheralleges that
Australia's conduct "was characterised by a carefully maintained reticence

which amounted to an absence of goodfaith (NM, para.319).

464. N~UN adduces no relevant evidence in support of this allegation.
Certainly, Naum refers to records of the BPC, recordingsome of the intemal
deliberations of the Commissioners, and relies on isolated and selective

passages, especiallyconceming eventsin 1946and 1953(NM. paras.355-363).
But whateverthe attitude of theBPC.it evidencesnothing aboutthe practice of
the Administering Authority, a different body with separate purposes and

responsibilities.However characterized, the approacof the BPCis immaterial.

465. The allegation that the Authority failed to report fully to the United
Nations is not borne out by the United Nations record andis inconsistent with
the detailed nature of the information in fact given by Australia to the

Trusteeship Council. Each annual report presented by the Administering
Authority to theCouncilset outthevolumeof phosphateexported,itsvalue, the
amountand distributionof royalties andthesumscontributedby the BPCto the

cost of the Nauman administration. These figures were subjected to annual
scmtiny by the TmsteeshipCouncil. Triennial Visiting Missions also carefully
inquiredinto thesematters. SeePac 1,Chapter3.

466. Naum seeks to make out a caseof wrongdoingon the basis that, from

time to time,the Tmsteeship Councilsought furtherfinancial information from
the AdministeringAuthority (NM, para.339ff).ButNaum fails to take account
of the actual responsesof the Administering Authority.As noted in Part 1.the

Administering Authority iiever failed to reply to the Council's
recommendations, eitherby way of explanationor the supply of the requested data. Further, the Council's particularconcems regarding royalty payments,
reflected in requests for additional information on the BPC in the years

1959-1961.weresubsequentlymet bythe introductionof aconsuliativeprocess
(between BPC and Nauruans) for the settlement of royalties and other like
payments. As a result. after 1963,the Trusteeship Council no longer sought
more detailed informationfrom the Adminitering Authority on the royalties

question.Seepara.l10 above.

467. Naum says Australia didnot provideinformationon the price paidby the
three Govemments for Nauman phosphate and prices obtainable in the world
market. But, as shown in Part1. information was given by the Administering
Authority to theisiting Missionin 1962whichshowedthat theprice paid for

Naunian phosphate did not differ significantlyfrom that paid elsewhere in the
world.This more thansatisfiedUnitedNationsconcems.

468. When negotiations concerning the reorganisation of the phosphate
industry began in 1965.the proposais madeby the three Govemments and the
agreementsreachedwiththe Naumanswere the subjectof careful reports to the

Tmsteeship Council and other relevant United Nations organs. Moreover. it
should be bome inmind that therewas directNaunian participationin the work
of the Trusteeship Council from 1961 until the end of the Tmsteeship. From
1961onwards, aNauman adviserwasappointedto thedelegationof the Special

Representativeof the Administering Authorityduringthe Trusteeship Council's
annuaiconsiderationof the Administering Authority's reportI.t was open to the
Naunian adviser to speak on Nauruan affairs, particularly on financial and
relatedmatters (para.63above).

469. It is true that Australia declinedto providetheBPC's interna1accounting
documents to the Trusteeship Council, because the BPC was a separate
commercial concem over which it had no independent control. It did not
disguisethis fact. as Naum seemsto allege,but made itsposition on this matter

very clear to the Tmsteeship Council. (See Trusteeship Council Oficial
Records, 18th Session, 714th Meeting.26 June 1956,p.112. quoted in Part 1.
para.116 ;see also NM, paras.544-545.) This is significant for it was plainly
open to the Trusteeship Councilto take issue withAustraliaon this point andit

did not do so. Althoughthe TrusteeshipCouncilwasclearlyverymuchaware of
the need fordequateinformation concerningNauruanfinanciaiarrangements.it
did not censuretheAdmimisteringAuthorityfor faiiiigto provide internai BPC
records, butregarded the addition&data supplied by thuth ho (conct^ningthe BPC's Nauman trading operations)as fulfilling its purposes. See Part 1,
paras.108to 119.

B: THEALLEGEDFAILURE TO EXERCISEGOVERNMENTAL

AUTHORITYHASNOBASIS iN FACT

470. This far-reaching allegatioinfact reduces to two limited contentions.
The firs- that Australia shouldhaveexerciseditsgovemmentalpowersso as to
provide for rehabiiitati-foms the subject of previous Chapters (CR91120,

p.83. CR91R2, p.45).This isno morethananotherwayof statingNaum'sclaim
that Australia's failure to rehabilitate constitutes a breachof international law
(cflCJ Reports 1992, p.282 (JudgeShahabuddeen)),a claim discussed earlier.
See para.32lff.

471. Secondly. Nauru challengesthe systemof public finance maintainedby
the AdministeringAuthority (NM, paras.284.365ff).mis was, Nauru alleges.
affectedby:

"the dominanceof the phosphateindustiyand itsoperationsin the life

of the island; the independence of the British Phosphate
Commissionersin relation to thedministrator;and the fact that the
operationsof the Commissionerswere notsubject to taxation."M.
para.365)

472. The phosphate operationswere undoubtedlycentral to Nauman life.The

revenue from phosphate mining gave the Naunians great benefits, including
excellent social servicesand public utilities (describedin Part 1).By the end of
thetmsteeship.schoolingwasfree andcompulsoryuntilagesixieenand medicül
treatmentat a well-equippedgeneralhospitalwasalso free of charge. Therehad

alsobeemsignificant improvementsin environmentalsanitation, immunisation
and nutrition.These public amenities were noted by successive Visiting
Missions(para.347above).Therewaslittledoubtthatphosphateminingbrought

to theNaumans:

"greater prosperityand better socialservicesthan are enjoyed by any
other communityof similarsize in the Pacificregion." (1956 Visiting
Mission Report,ara.18,Annex9, Vo1.4,NM).

473. Without the phosphaterevenue.it wouldhave ken impossibleto finance

and maintain on such a srnall isolated island the veryhigh standard of living
which the Naunians enjoyed. Australia, representing the Administering Authority, used ils govemmental authority to direct the phosphate revenue to
thisendand bringaboutthisresult.

474. The BPC also played an imporîantmle on the island,but was there only
to manage the phosphate operations(Part 1,Cltapter 1.Section III above). It is

true that the BPC was not taxed. Instead,it was required to pay for the entire
administrationof Nauru,includingsocialservices andpublicutilities. It did not
decide how the sums contributedby it in this way were to be spent. however.
This feu to the Administrator, the Nauru oc aGlovemment Council and its

successor.

475. After 1951.not only did the Nauruans pay notax at all. as would have
ken expected in any other country, but from the BPC they also received
royalties. surfacerights and other payments(see paras.81 to 84 above). Many

Naunians in receipt of direct BPC payments were not ohliged to work at all.
Othersfoundemploymentin the BPC'soperations.

476. Nauru alleges that Australia failed to exercise govemmental authority

appmpriately because the Administering Authoritypermitted mining without
rehabilitation.Butat the time rehahilitationwas thoughttobe either impossible
or impracticable,so that Naurueffectivelychallenges the fact thatmining was
pennitted at all. But it was onlyby phosphate mining that theNauniansenjoyed

the significant income that enabled them toenjoy the benefits of development
missing from other Pacific island territories. Nauru cannot have it both ways.
nie Authority was bound either to permit mining.making such provision as

appropriate for Nau'ru'sfuture. or to forhid it until such time as rehabilitation
became a realistic option. despite the absence of other Nauruan revenue.
Australia, for the AdministeringAuthority,chose the former, and at the same
time it established a Long Term Investment Fund to cover the community's

futureneeds (para.89above).

477. Indeed, by irsown conduct since independence, Nauru /ras tacitly
accepredthe legirimacyand economicnecessiryofr/zepre-independencemining

acriviries. This is so because. over the last quarter century, Nauni has itself
continued to mine in the same way and with. at least, the same intensity as the
BPC in the tnisteeship period. It has made no attempt since independence to

rehabilitateany minedland,whetherworkedout beforeor after independence. It
is scarcely conceivablerhatAusrruliashouldbe heldculpablefor the verysame
niiningaclivirieas rhosecarried on byNauru overIltepas1hventyfiveyears. C:THEALLEGEDFAILURETOPROMOTEPOLlTICAL

ADVANCEMENTHASNOBASIS IN FACT

478. Nauru asserts that "the experience of Nauru was essentially one ot
constitutional and politicalirnmobility"from 1919until 1966(NM,para.375).
AsPart 1shows,however. thisassertionhasno regardfor historical açcuracy.It
is very clear that there was significantly more Nauruan participation in
govemmentalmattersas Nauruprogressedtowards complete independencein

1968. After theNauru Local Govemment Council replaced the Council of
Chiefs in 1951.it exerciseda gooddeal of influence in Nauruanaffairs. The
NLGCacquiredfurtherpowersin 1963. In 1965,the LegislativeCouncil was
created witheven greater autonomyand, as alreadyseen, the Administering
Authority freely acceptedthe Nauruanchoiceof independenceon 31 January

1968.SeePartII.Chapter3,Section1. Inthiscontext,the wordsof the Nauruan
Head Chiefshortly beforeindependenceare relevant. Itwillbe recalledthathe
then said that "Australian tutel...had ken effective" and that the three
Governments"couldbe proudof theirachievementson Nauru" (quoted earlier
at para.197).Expressedon theeve of independence,hese sentimentsare quite

inconsistentwith theclaimnow madebyNauruthat Australiafailedtopromote
Nauruandevelopmenttowards self-governmeno tr independence.

D: THEALLEGEDFAILURETOPROMOTEECONOMIC.
SOCIAL,EDUCATIONALANDCULTURAL
ADVANCEMENTHASNOBASISINFACT

479. In the samevein,Nauruallegesthat "therewasa total failure topromote

the economic advancement of the inhabitants in relation to the resources
available"(NM, para.390).Naurumakesa similarallegationin relation to the
otherfohs ofadvancement(NM.para.392).

480. Enoughhas alreadybeensaid in thisCounter-Memorialas to the social.
educational and cultural advancementon Nauru. See Part 1,Chapter 2 and
Part II. Chapter 3, Section 1. Indeed. Nauru does not seek to rely on any

circumstancewhichmightprovidethe slightestbasis in fact for this assertion.
There can be no doubt that Australia left the Nauruans healthy and
well-educated.

481. Nor is thereany evidenceto supportNauru'sallegationsas to economic
matters. Naurualleges that royalty payments werewell below an equitable standard.despite the increasesduringthe tnisteeshipperiod. Royalty payments
were, however, frequently adjusted. (See eg, the adjustments made in 1947,

1950.1953,1957,1960,1964 and 1966followingconsultationswith Naunians,
describedin Part1.)It is truethatthebasisforcaiculatingmyalties changedover
time, panicularly as the principles of permanent sovereignty became more

defined. In the early 1950's. royalties were apparently fixed by the
Administering Authority having regard toNaunianneeds, notsimplythe expon
pnce of the phosphates. Butas the totalexpon tonnage increasedin the early

1960s from about 1.2m tons to 1.6mtons, so too the AdministeringAuthority
ensured that royalty payments by BPC also increased.There were marked
increasesin myalty payments, panicularlyafter 1963.This was in keeping with

the re-evaluation of foreign-owned mining concessions occurring
internationally. Even before this, however, Naunian royalty payments were
entirelyconsistent with theroyaltyrates paidby mine operatorsin Australia.See

PartII,Chapter 3 andAmex 3.

482. There can be little doubt thatthe intertemporalprinciple applies in this
circumstance, so that the question of royalty payments falls to be determined
against the law as it wasinterpretedat the time the paymentswere made. See

Part II, Chapter 1, Section III above.The contemporary recordshows that the
paymentsfully compliedwiththe standardsof the day.This is confirmedby the
results of the TmsteeshipCouncil's scrutiny throughout thTerusteeshipperiod.

After some expressions of concern in the mid 1950s.the Council went onto
express general satisfaction with royalty arrangementfor theremainderof the
Trusteeshipperiod.See Part 1,Chapter 3,SectionII.

483. In consideringthematterof royalties.it shouldalso be borne in mind that
the Naunians'financial benefit from the phosphateindustrywas not confined to
royalty paymentsmadedirectly to individual Nauruans.A substantial proportion
of the royalties were placed into investment funds for the benefit of the

communityas a whole. Hence,as at 30lune 1967.there wereabout $A3million
(in 1993values, $A21 millioii)standing IO the credit of theNauni Landowners
Royalty Tnist Fund and about $A6 million (in1993 values, $A42 million), to

the credit of the Nauni Long Term Investment Fund (para.89 above). This
representedaccumulationsof part onlyof the royalty paymentsmadeduring the
trusteeship.As alreadynoted, the LongTenn Fund was intendedto ensure that

the Nauruanshad sufficientfundsto providefor their needs when the supplyof
phosphateended and it is clearthatthis aim hasken substantiallyachieved.See
Part II, Chapter2, Sections VI1and VIII. esp paras.377 to 383. It should beborne inmind too that.after 1951, theNaunianspaid no taxes;that the cost of
the administration wasmet out offunds paid directly by the BPC; and that. at
independence, they acquired al1rights to the phosphate revenues under an

agreemententirelyfavourableto themselves.

484. There can be no doubt that at independenceand by virtue of the 1967
Agreement (pursuantto which Nauruans acquiredthe phosphate industry as a
going concern for a lessancommercialprice),Nauni could lookfonvard Ioan
economic future which was much better than their Pacific neighbours. It was

Australia (with the other twoPartner Governments) which had brought the
NaunianeconomyIothis high level.

E: THE ALLEGEDFALURE TO RESPECTLAND
RIGHTSHASNO BASIS IN FACï

485. Nauni alleges that the failure to respect land rights (in breach of
Article5(2)(a) of the Tnisteeship Agreement) was the product of the legal
regimewith respectto phosphate landsestablishedduringthe Tnisteeship(NM.
para.396).Naum challengesthe LandsOrdinances on thebasis that "the interest

of the individuallandownerwasplacedat thedisposalof the British Phosphate
Commissioners subjectto the paymentof "royalties" whichwere not the result
of a pmcess of genuinenegotiation..and ..were ..umlated to the real value
of theresourcesbeing disposedof' (NM.para.398).The Naunian Mernorialalso

contains another ailegation concerning the failure to return worked out lands
"without unduedelay"(NM, para.399).

486. Australiadeniesthatthereis any factuaibasisfor theseaiiegations.Nauni
itself gives no paiticulars of the supposedunduedelay. In its other "royalties"

aspect. theclaim repeats the attack already madeby Nauru in relation to the
allegedfailuretopromote economic advancementS . eeparas.479to 484 above.

487. Royalty payments werefixedon an equitablebasis. by referencenot only
to theexport price of the phosphates,but also to Nauruan needs. As already

noted. royalty payments werealsofrequentlyadjustedand in the period pnor Io
independence following direct consultationsbetween the BPC and Naunians.
The royalties were,ai Naunian request, paid no1only Io individual Naunian
landowners, but also into funds for the benefit of the whole community.

Moreover, the royalty rates to which the BPC was subject were entirely
consistentwith (and ratherhigherhan)the ratesof myalty impostpaid by mine
operatorsin Australia.SeePartU,Chapter3,para.425. 488. Moreover. the Lands Ordinances clearly provided compensation in
respect of leases granted to the BPC. A review of the Lands Ordinances

@araAOffabove)disclosesthat:

. each Ordinance was made following negotiation with the Naunian
landowners

payment was madeto individual landownersin the fom of a lump sumat

the time of the initial leaseof phosphate-bearing land.This was £20 per
acre in 1921.£40 peracre in 1927and $240 anacre in 1967:

royalties were paid to the individual landowners, as well as to funds

availablegenerallyfor the Nauniancommunity: and

in relation to non-phosphatebearing land used for BPC operations, a sum
was paid as annual rental to the relevantlandowner for lease over such
lands, togetherwith compensation for individual treesestroyed,depending

on speciesandsize.

489. Nauni alleges that the 1921and 1927 Land Ordinances resulted in an
"effective 'taking'of the Naunians'land" (NM,para.86).or were "effectivelya

fom of expropriation" (NM,para.98).At al1times, however, theAdministering
Authorityon Nauni acted in accordance with what was accepted intemationally
as the appropriate standard of the day. As shown in the previous Chapter

(paras.429 and 432), when the Tnisteeship commenced, it was accepted
intemationallythat mineralexploitation was appropriatelyeffected by thegrant
of long-tem mining concessions in return for royalties and rentals which.
judged by today'sstandards, appear comparatively modestT .he Authorityacted

in accordance with the developing principlesof permanent sovereignty and
changing.standardsby ensuringprogressivelyhigher levelsof royalties werein
fact paid to theNaunians (Part II, Chapter 3).Finally, of course, it passed the

entire industry to them andgave up its claim, basedon theinternational practice
of the time. to anyurthershareinthe industry's profits.

490. If Nauni was to prosper economically it was necessary to mine the
phosphate lands. In return for mining, the individual landowners and the

Naunian community were the recipients of direct financial benefits from the
mine operators. This was, as Article 5(2)(a) in fact stipulated, "in accordance
with [the Administering Authority's] established policy" at the time theTmsteeship Agreementwas made. It was that policy whichthe United Nations
had indicatedwas acceptableto it.

491. Under Article 5(2)(a) of the T~steeship Agreement, the Administering
Authority undertook to "respect the rights andsafeguard the interests..of the
indigenous inhabitantsof the Territory;and in particular ensure that no rights

over nativeland in favour of any personnot anindigenousinhabitant ..[were]
created or transferred except with the consent of the competent public
authority".Nauni doesnot show. however. thaA t ustraliaacted othenvisethan in
accordancewithestablishedpolicyin relationto the rightsof indigenouspeople,

nor that Australia permitted the creation or transfer othenvise than with the
consentof the competent public authorityE. venif therewere somemore gened
and as yet unidentifiedobligation (which Australiadenies).Naum cannot show
any factuai basis forits assertionthat Australia failedto respect Nauman land

rights.

Section II:The termination of the Trusteeship and the judgment
of the Court preclude the consideration ofallegations
unrelated to the rehabilitation claim

492. Thus fat, the factuai bases of these five Nauman allegations have been
considered, even though unrelated to Nauru's rehabilitation claim. In tmth,
however, the rehabilitation claim cannot support any judicial inquiry in these

proceediigs intoAustdia's administrationundertheTmsteeship. There aretwo
reasons for this: first, the Tmsteeship was unequivocally terminated by the
United Nations to its full satisfaction; and secondly. the allegations made
conceming Australia'sconductare entirely inconsistentwith theactions of the

Tmsteeship Council and other United Nations organs during the period of the
Tmsteeship. As a result. there can be no investigationas to whether Australia
together with the United Kingdomand New Zealand breached any obligations

other than the supposed obligation 10 rehabilitate (the existence of which
Australia denies).

493. The issuein this caseissolelywhetherAustraliahas a legal responsibility .
to rehabilitate the phosphate lands mined out during the Trusteeship
(Application, paras.445-9.NM,para.621;CR91118,pp.10-1; 17.21). A~cording

to the Court'sjudgment of 26 June 1992,what survived the termination of the
Tmsteeship Agreement was the Nauman rehabilitation claim and whatever
rightsthe Naumans mighthavein thisregard(ICJReports 1992.para.30).There

is,therefore,no place for other, unrelatedallegationsin thesepmceedings. 494. As the Courtalso observed in its judgrnent, resolution 2347(XXII) of
19 December 1967 -terminatingthe Tnisteeship -had "definitive legal effect"

(ICJ Reports 1992. para.23). In consequence, no question conceming the
AdrninisteringAuthority's compliancewith its obligations with respect to the
Temtory can anse, except the question of rehabilitation which survived only

because of the "particular circumstances of the case" (ICJ Reports 1992,
para.30). Nauru cannot now raise any question conceming the adequacy of
reports made by the Authority to the United Nations,or the fulfilment of its

obligationsof result to pmmote Nauman political and economic advancement.
and to respectaunianrightsand interests.

495. The only matter for resolution in these proceedings is the question of
rehabilitation. This isdeedconsistent with theentire history of the dispute.
Until the Nauruan Memorial, this wasthe only issue which had beenraised.

Rehabilitationas theonlymatteron which thethreePartnerGovemmentsand
Nauruhad notagreed prior toNauruanindependence(paras.1to 8 above) It was
the matter to which Head Chief DeRoburt referred when he addressed the

Trusteeship Council on 22 November 1967 (paras.196 to 198 above). In his
1983 letter the Naunian President had referred onlyto the rehabilitation of
worked out phosphate lands and it was this claim which Australh ad rejected
(Annexes 78 and 79, Vo1.4, NM). The rehabilitation issue led to the

establishment of the Commission of Inquiryin 1986, the Final Report of which,
in tum. led totheseproceedings(Annex80, nos.4and28. Vo1.4,NM).

496. These proceedings cannot, therefore,support a judicial inquiry into the
further allegationswhich Nauni makes. for the allegations are unrelated to the

question of rehabilitation.The claim which the Court is toecide is a specific
one - whether Australia is responsible forrehabilitatingphosphate landsworked
out during the Tnisteeship.

Section III:The conduct ofthe Unitcd Nations bodies during the

Trusteeship excludes the possibilityof anyother supposed wrongdoing

497. Unlike the rehabilitation claim, theimsdiscussedin tliisChapterwere
never made to the United Nations, notwiihstanding thatthey cover supposed

breaches during the Tnisteeshippenod and they feu directly within the area of
the Trusteeship Council's responsibility. They concern matters of such
seriousnessthat it is scarcely conceivablethat they would nothave been drawn
to the Council's attention, either by theauruans themselves or by Visiting

Missions.In making these auegations,Nauruagain fails Io take acwunt of theextensive involvement of the United Nations in the administration of the

Tmsteeship system. As already noted. this involvement provided for full
"securities forperformance"by the Administe~g Authorityof itsobligations.

498. From its active scmtinyof Naumanaffairs,there was ample opportunity
for the Tmsteeship Councilto assessthe adequacy andreliabilityof the reports

made by the Administering Authority to it. There was, however, never the
slightest indication that the Tmsteeship Council considered that the
AdministeringAuthorityhad failedto meet its obligationsof report.Given this

and the Council'sconscientiouspursuitof informationconceming the Nauman
phosphate industry.it isirtuaiiyinconceivablethatthe AdministeringAuthofity
breached any separate duty in relation to its accountability to the United

Nations. Moreover.the recordshowsthatAustralia gave carefulconsideraiionto
the Council's requests forinformation andeither supplied the data sought, or
explained why it could not do so. The outcome of the Council's scmtinywas
invariablysatisfactionwiththe AdministeringAuthority's conduct.

499. It is equally difficult to imagine that. despite the safeguards of the
Tmsteeship system.the Administering Authoritycould have been pennitted to
contravene its basic obligations to promotethe political. economic. socialand

educational advancement of the Nauman population and to exercise its
govemmental authority in a manner appropriate to its obligations under the
Tmsteeship Agreementand the Charter. After all, throughout the Tmsteeship,

the Tmsteesh'ipCouncil, assisteclby regularvisiting missions, inquired into the
governmentof the Temtory. includingthe regulationof the phosphate industry
and the distributionof phosphate revenue. (Part1,Chapter 3). The Tmsteeship

Council was well acquaintedwith the roleof the BPC and with the system of
public finance on Naum. It well knew that Naumans were no! (at least after
1951)directly taxed,but thattheBPCmet the costof the island'sadministration
(cfTmsteeship Council Report. 1958-9,p.160,quotedin Part1,para.83).

500. In this area, as in others. the relationshipbetween theCouncil and the
Administering Authority was a CO-operativeone. Thus, when the Tmsteeship
Council recommended change, particularly in the early 1950s. the

AdministeringAuthority acted accordingly. For example.the capitationtax was
abolished in 1951, in conformity with the Trusteeship Coùncil's
recommendations;and direct consultationsbetweenthe BPC and the Naumans
on the questions of royaltieswere institutedat the Council's insistance.On the

question of hnding through theBPC'scontributions,the Council accepted the AdministeringAuthority'sassurance that the continuance of thissystem was in
theNaumans'bat interests(Part1,paras.85-86).

501. The United Nations was weUaware tooof the cardinalimportanceof the
phosphate industry.VisitingMissionsregularlynotedthat the island'spmsperity
depended onphosphate revenue (Part1.para.345).The questionof royalties was

thereforescmtinisedwithparticular cm. Throughoutthe Tmsteeship.Australia.
on behalf of the Administering Authority,supplied informationwnceming the
quantum of royalties and their distribution.The Council'srequests for further

information were substantially met by the Authority, either through the
provision of additional dataor the introductionof a consultativerocess to set
royalty levels. When increases in royalty payments were made later in the

Tmsteeship, they were paid into the Nauman Long Term InvestmentFund. in
accordance withUnited Nations wishes. In relation to royalty payments.there
was not the slightest suggestionthat the Administering Authority was acting
otherthan incomplete accordance with its obligations.

502. Nohvithstandingthe seriousnessof Nauru's allegations, none can form
the subjectof judicialinquiryunlessNaum can show that the conductof which
itcornplainsis not only attributableto Australia,but that itconstitutesa breach
of an international obligation owed tot.This itcannotdo. Naum does not show

that Australia is guilty of any conduct which wouldconstitute a breach of ils
international obligations.

503. The fact is that throughout the Tmsteeship, the Tmsteeship Council
.
expressed its confidence in the Administering Authority and, in 1967. the
Councilconcluded that "commendable pmgresshas beenmade in theTerritory"
(United Nations. ReportofIlleTrusteesliipCouncil,General Assen~bl y ficial

Records..ZZndSession. Suppl. No.4 (A/6704), Part II, para.30. Annex 28 to
PreliminaryObjections).At thecloseof theTmsteeship,it was apparentthat the
United Nations was well satisfiedwiththe Administering Authority.The result
of its administration was aelleducated, healthy andprosperouscommunity.

504. The allegations which Naumnowmakesare clearly.inconsistent with the
contemporary historical record. It is. therefore, notsurprising that Naum has
been unable to substantiate the allegations considered in this Chapter by
reference to the facts. In particular, its to show that the relevantobligations

of result were not achieved. or that Australiaailed to account properly tothe
United Nations. The United Nations, to which it was uItimately responsible,
broughtthe TmsteeshipAgreement toan end on thebasis that the Authorityhadfully performed its obligationsunderthe TnisteeshipAgreement.Nauni cannot
invite the Court to second-guessthe General Assemblyon these matters, or to

fail to give considerable weight to its opinion. The only questions in these
proceedigs are herefore.whether Australiahasa dutyto rehabilitateand. if so,
Australia has violated that duty. According to Australia, the answer to both
questionsis,of course.no. PARTIII

THEREMEDIALPOSITION INTRODUCTION

505. If. contrary to the submissionsin Part II of this Counter-Memorial. the

Court were to fid Australia responsible for so,mebreach of an international
obligation relating to rehabilitation. thequestionwould arise whether Australia

was liable to make any reparation. 'Ihisis an ïssueseparatefmm the quantumof
any damage,a matter which would need tobe the subjectof a separatephase of

proceedings. But, as the Court has indicated (ICJReports 1992. p.262). the
extentof any responsibilityis a matterthat arisesat themeritsphase if the Court

fmds a breach of internationalresponsibilityby ~uStralia. It is for this reason
that Australia considers it necessary to deal with the remedial position in this

Counter-Memorial. It is, however. included only as a subsidiary rnatter and
Australia considers,forthe reasons givenin thepreceding Part, that nobreachof

internationalobligationbyAustralia canbeestablished.

506. Naum requests the Court to declare that by reason of Australia's
international responsibility, Austraiia is "bound to make restitution, or other

appropriate reparation Io Naum for the damage and prejudice suffered"
(Application, p.30-1, para.50; NM. para.621). Australia does not accept any

responsibility Io rehabilitate worked-out phosphatelands, but even if the Court
found against Australia on this point, restitution would clearly not be an

appropriate remedy (cf Forests of Central Rhodope(Merits) case. 3 UNRIAA.
p.1405; Tito v Waddell (No.2) [1977] 1 Ch.106, 328)IO.Other aspects of the

remedialpositionare examinedin this Pari. If Australia were found responsible.
Naum has disqualifieditself from the relief whichit seeks by reason of its own

conduct (Chapter 1). Additionally, Australia's liability cannotextend to the

Mandate period (Chapter 2. Section1).Nor can it extendbeyond that pmportion
of the supposed injury whichequity wouldhold Australialiable to kar. having

regard to the co-equal responsibilityof the United Kingdomand New Zealand
(Chapter 2, SectionsII andIII) andthe supervisoryresponsibilityof the United

Nations (Section IV). The question of Nauru's contributory negligence isalso
examined (SectionV).

'0in ik~hdopc Foresiwse.II~ibunaround~ia~u~gaiah;uuiiluwrullyconfisalcdromls
MongirigIoGracrutiamh ihcarbibamrdecidei rwarddamp. nihm Uwn rrrfifuiio in
hrrgrwr onIhcbashl il wouldbcinappmpialctacmpel BulgarhIoruUiedisputcd

forrsubcwwil wïsm Iiicly Uiallhcïmls wen inmee .WC a$lhcyhd bccnin 1918ad.
inanyevcn~onlysomcoflhcdisporsesedm hîdm& chs. ThcvalueoUiefms wù
calculalasallhdalofdispossrnion. ecUNRIAA .ipp.1432.1435.InTirovWaddcll
lNo.2)thCoun hcldUiataordefoLhercplanliofpuimly oflhemined-ot hosphalIcmds
on~lsknlwwWbcf~~and"~shccrw~of~imandm~y~andLhalan~fm
gcnml rcpluiiingwouldbc"whollydispmponiOnlhcmcagreandlong-dclayctdcncfiilhai
mightinthecndbcachievcdSa:Il97711Ch 106.alno327-7and328. CHAPTER 1

NAURUHAS DISQUALIFIED ITSELF FROM THE RELIEF IT SEEKS

507. In its decision on Australia'sPrelimiqaryObjections, the Court did not
decide "the possible consequencesof the conduct of Naum withrespect to the
merits of the case"(ICJ Reports 1992. p.255, para.38).Australia contends that
by reason of that conduct,Naurucannotnowreceive the relief whichit seeks.

508. At the 1323rdmeetingof theTrusteeshipCouncil on22 November 1967,
Chief HammerDeRoburtdeclaredîhat:

"The Naunian people fully accepted responsibilityin respect of land
mined subsequentlyto 1 July 1967. since under the new agreement

theywere receiving the net proceeds of tsale of phosphate.Prior to
that date, however,theyhad not received the net proceeds anit was
therefore their contention that the three Govemments should bear

responsibility for the rehabilitation of land mined prior to 1 July
1967..."(United Nations, TrusteeshipCouncil OJjïcialRecords, 13th
SpecialSession,TjSR.1323,reproducedin Annex29, NM)

By independence in January 1968, Nauru had thus clearly admitted

responsibility for the phosphate landsminedfter1July 1967.It has never since
alleged that the former Administering Authorityhas any responsibilityin that
regard.

509. The admissionis significantfor two reasons. First,Nauni concedes, as il
must. that it continues to carry on phosphate mining without post-mining
rehabilitationjust ashe Administering Authorityallegedly did prior to1 July
1967. Indeed, accordingto Nauni, it has mined twice the area in twenty-five

years as BPC minedin seventy-twoyean. According Io Naum, about one-third
of the 1700 hectares of phosphate landson Nauni was mined prior to 1 July
1967. Itsminingprogramhas coveredthe rest(NM,para.207).Secondly, onthe

matter of rehabilitationNauni assumes thatits responsibilityis the same as the
supposed duty ofthe Administering Authority,in this wayconceding that that
duty is no higherthan its own.

510. Despite the greater area mined, however, Naum has not at any timc

during the past twenty-five yearsbegun to rehabilitateany mined-out land.At
most. it has reviewed thematterand has.it says, kept money aside in the event
that someprogramshouldbecomefeasible.The Administering Authority didno less.Given this, it mightbe thoughtthat îhat Authorityhad, relativelyspeaking.

accomplishedrathermore than~a&u has in thepast twenty-fiveyears.

511. AsPart 1has shown, rehabilitation wasa matter for active consideration
by the AdministeringAuthority bothbeforeandafter the failureof negotiations
for resettlementin August 1964. Itill be reialled thain conformity with the

United Nations' own views. theAdministering Authority had until then
regarded resettlement rather than rehabilitation as the best option for the
Naunian population. In the few years between 1964 and independence in

January 1968,the AustralianGovemmentfirst sought andobtained the reportof
experts on the matter, the DaveyCommitteeReport (paras.155 to 165above).
This report was later commendedas "a particularly excellent and far sighted

study" by the 1987 Commissionof Inquiry (p.1132; see paras.11 to 13 above
andparas.514 to515below).TheCommissionaddedthat:

"Many ofthe obsewationsand recommendationsare as valid today as
they werein 1965."

512. Given the state of contemporary knowledge. it would have been

foohardy for the Australian Government (on behalf of the Administering
Authority) to have soughtto formulateand completea rehabilitation program
betweenthe end of 1966 - followingreceiptof the report-and independencein
January 1968. This was particularly so given the findings of the report

(paras.157 to 165 above). The only course then open to the Administering
Authority was to leave Nauni with funds sufficient for the task if it chose to
undertake it. This was in fact the course adopted by the Authority (Part 1,

Chapter 5 and Part II. Chapter2, Sections VI1and VIII), and Nauni concedes
bat today ithas suchfunds (para.7above).

513. On its own account. however.Nauni has notsince independenceapplied
these funds to carryingout rehabilitation.It saysthat it hasaccumulatedmoneys

in a public Tnist Fund specifically marked for rehabilitation. That Fund was
created before independence andhas been augmentedby the income generated
by the phosphateindustry whichwas transferredto Nauni by the three Partner
Govemmentsaspart of the pre-independencearrangements.

514. Although N~UN says that "from the time of independence" it has
undertakensome "preliminaryplanning",no detailsof thisappear.It saysthat it
has saved the topsoildisplacedduringmining,but in1968,as now. it was plain
that rehabilitation wouldinvolve much more than this. Indeed, it took Nauni

some twenty years to appoint another investigatory body - in this case, aCommission of Inquiry - to review the question of rehabilitation. That

Commissionpresented its reportto'theNauruanGovemment only recently, in
November 1988.

515. The Commissionobsewed:

"For rehabilitationon Nauru tobe costeffective and toensure that the

Republic of Nauniand the Nauruancommunityas a whole gain most
benefitinthe future development and usageof the rehabilitated land, it
is essential the rehabilitabedesigned, scheduled andcarriedout in

accordwith the requirementsof a MasterLand-Use Plan theobjective
of which is the development of the whole of the mined phosphate
landsof Nauru." (p.1141)

Sucha Planhas notken established.

Italso statedthat:

"Rehabilitation willbe a long-term process. Itwill probably extend
over aperiodof 20 yearsor more. Careful consideration mus te given
to decide what the land is tobe used for, which land uses have the

highest priority andon whichareasof Nauruthoseland usesshouldbe
developed."(p.1140)

516. Nauru nowclaimsto havebeguna pilot project designedby a member of

the Commission (Nauru's Written Statement on Preliminary Objections.
para.59).but this is toolittletw lateto show anyseriouscommitmentby Nauni
to rehabilitation now or during the intewening years. As the Commission

emphasized:

"The apparent lack of motivation among thegteat majority of the
Naunians for personal involvement and participationis seen. by the
Commission, as king the single most significant, likely impediment

to the development of the Republic of Nauru in general and the
successful rehabilitation of the mined-out lands in particular."
(p.1037)

517. In sum. sinceindependence,Nauruhas continuedto minejust as the BPC

did before it. Post-independencemining has notken accompaniedby, or made
conditional on, a practicable rehabilitation program. The Administering
Authority cannothave beenundera higher dutyin respectof rehabilitationthan

the beneficiary. Nor can the Authority have beenbound to observe a higher standard of conductthan thebeneficiary.Naumdoes not attempt to argueso. It
must follow either that Australiawas under no such duty as that alleged, or if
there was a duty to rehabilitate after phosphate mining. Naum too has been
guilty of its breach. But it scarcely seems reasonable to suppose that for

twenty-five years Naum has been acting uplawfully in respect of its own
lemtory.

518. Of course, if it were found that both Nauni and Australia had acted

contraty to internationallaw by failing to rehabilitate worked out phosphate
lands, Naum would k unable to press its claim kcause of the doctrine of
unclean hands. Naum itself concedesthat the doctrine covers "conduct on the

part of the claimant which is contraty to public international law" (Nauni's
writtenStatementon PreliminaryObjections,para.418).Butthe operationof the
doctrine cannot depend on an actual finding that the claimant acted illegally.
Nauni's hands are not the cleaner if it is guilty of the same (supposedly

wrongful) conduct as Australia. The doctrine of clean hands requires that a
claimant's ownconduct be consistent with itsclaim.This is a specificprinciple
forming part of the moregeneralprinciple of good faith which is applicable in

internationalas inother legal systems:see, for instance, A Miaja de la Muela,
"Le rôle de la condition des mains propres de la personne Msée.dans les
réclamations devant lestribunaux internationaux."Mélarrges Andrassy (1968)

pp.189-213. CHAPTER 2

AUSTRALIA ,IF RESPONSIBLE, CANNOT BE LIABLE ON THE

FACTSFOR THE WHOLEOF THE DAMACE CLAIMED

Section 1:No damages are recoverable in respect of the pre-1947 period

519. If Naum were notdisqualifiedfrom relief for thereasons set out in the
precedingChapter. it still would betentitledto compensationfor al1the loss

it claims, even if Australia were foundresponsible as Naum alleges. Naum
seeks to impose on Australiaesponsibilityfor damage to Naunian phosphate
lands caused by phosphate mining before,aswell as during the Tnisteeship
period (Application.p.30-1, para.50; NM, para.621). ButAustralia cannbe

foundliable in this casefor damagecaused prior to1947,for the claim madeby
Naum is that there has been a bmch of a duty (to rehabilitate) which arose
under the 1947TmsteeshipAgreement and the Charter, nout nder the pre-1947

Mandate (seeparas.240 to 242above).

520. It needs to be remembered that in the period prior to the Mandate
approximately 630,000 tons of phosphate were shipped (N Viviani, Nauru

(1970) 35; cf NM. para.289). In the period1922to 19418,254,990 tons were
shipped. ln the period 1947to 1966. 23,347,636tons were exported (Viviani,
op cit 186-7). Hence the pre-tmsteeship period mining represents roughly
25 percent of the total phosphate minedprior to independence. Australia

considersthatNauni has no possiblelegalclaimin relation to the period prior to
1947. Yet Naum fails completely to make a distinction between the two periods
and taks in general terms of all phosphate lands mined prior to 1 July 1967.

Miningin the pre-1947period cannotbe in the sameposition as that post-1947.
The Naunian claim is one for rehabilitationundertheT~steeship. On this basis
the surface area minedduring that period, and not the actual tonnages, are
relevant. Nauru alleges that one third of theisland was mined prior to

independence. Itdoes not say how much of that was minedprior to 1947, or
between 1947 aiid 1967. Yet that is critical information. Austrilia only has
informationon tonnages andhas beenunableitselfto identify the relevantareas

minedat the different times.

521. If theNauniaii claim is read as a claim for rehabilitation of land mined
during the Tnisteeship (as indeed it must).the deficiencies in Nauni's case
become plainer still. Nauni, forexample,assertsthat one-thirdof the phosphate

landshad ken minedby the BPCprior to independence (seeNM para.207;but compare NM, para.289: "one third of the surface of theisland"); but it is silent
on the relevant matter - the proportion of land mined during the Tmsteeship
period. Evidently. Naum has soughttodevelopa caseagainstAustralia basedon

highlyprejudicial generalities,butfew,ifany,relate totheclaim whichis in fact
beforethe Court.

522. This is not to say thattheTmsteeshipAgreement did,or was intendedto,
wipe the historical slate clean in Nauni. It came into force with Naunian

political. social and economic institutionsstill in place. Thus, the character of
the Nauman Tnisteeship must. to some extent at least, depend on the
circumstances in the Territory when theTmsteeship came into being. For this

reason,it is not said in this Counter-Memorial thata matter is irrelevant to an
assessment of the Nauman claim simply because it has its origins iii the

Mandate. For example, any consideration of the relationship between the
Tmsteeship Agreement andthe Naum Island Agreementof 1919must bear in
mind that the 1919Agreement was valid at internationallaw and binding upon

the parties toit in 1947when theTmsteeship Agreement wasapproved by the
United Nations General Assembly; and indeed itscontinued application was
confimed by Article 4 of the Tmsteeship Agreement (see Part II. Chapter 1.

Section IV). There was no suggestion chat the approval by the General
Assembly of theTmsteeshipAgreement bmught an end to the1919Agreement.
Naum fails tohave regard to this circumstancein propoundingthe view thatthe

1919Agreement was insomesenseinconsistentwiththe dischargeby Austrilia
of its trusteeship obligations. But the continued relevance of the 1919
Agreement'duringthe Tmsteeshipor the continuationof particular arrangements

in relation to th~ ph-sphatendustrythathad existedunderthe Mandatedoesnot
entitle Naum to claimdamagesarisingfrom allegedbreachesof the Tmsteeship
for actscarriedout in the periodpriorto the Tmsteeship.

523. The Mandate and the Tmsteeship gave rise to different rights and
obligations (cf Judgment of 26 lune 1992.ICJ Reports 1992. p.256. para.41).
After all, the United Nations granted theMandateto "His Britamic Majesty".

whilst the Tmsteeship Agreement appointed ajoint Administering Authority
constituted byAustrdlia. New Zealandand the UnitedKingdom.The conductof
the Mandatory Powers is simply not in issue in this case. Accordingly, the

questionof responsibilityfordamagepriorto 1947doesnot arise. Section II:Australia would not beliable forthe whole

of the damages claimed for the Trusteeship period

524. At the Preliminary Objectionsstage. ~ustralia argued that because its
liability, if any. was collective with the Unitedngdom and New Zealand,
Nauni'sclaimcouldonlybe broughtagainstail the States.no1Australiaalone.

But in its judgment on Australia's PreliminarObjections. the Court held that
the claim was not, for thisreason. "inadmissible ilimine litis"(ICJ Reports
1992,pp.258-9,para.48).At thesamethe. itspecificallyreservedfor the merits

the question whether, if found responsible, Australia would be liable for the
whole, or part only of thedamage (ICJ Reports 1992.p.262; also pp.286, 290
(JudgeShahabuddeen)).

525. There is, as the Court acknowledges, a clear distinction between
responsibilitystricto sensuand the consequencesof violation. Even if it were
held responsible, the consequencesforAustralia wouldnot be the same as if it

had acted alone, ratherthan, as was the case, in conjunction with the United
Kingdomand New ïealand underUnited Nationssupervision.ïhe facts cannot
be ignoredin thisfashion.Austraiia cannotbe required toeetthe totalityof the

damage. because it acted at al1times in conjunctionwith the United Kingdom
and NewZealand and responsibilityundertheTnisteeshipAgreementwasjoint,
or equal and collective.lternatively,Austraiiaacted not only for itself, but as

agent for the UnitedKingdomand New Zealandas well (cfICJ Reports 1992,
p.280 (Judge Shahabuddeen)). However characterized,if there has been any
failure.it wasa failurein whichailhreeStatesparticipated. Australia cannot.in

accordancewith accepted principlesof internationallaw,be requiredto meet the
alleged damagewhich is due to the other two States,and to the United Nations.
The legalbases for thiscontentionarediscussedbelow (PartIII,Chapter3).

A: Tfi~ UNITEDKINGDOMANDNEWZEALANDSHAREDEQUAL

RESPONSIBILITï WITHAUSTRALIAINFACT

526. It cannot be comct to say,as Naunihas done,that New Zealand and the
United Kingdom "never had actual legal or administrative responsibilityover

Nauru" (CR91/22, p.45; CR 91/20, p.76). For this is entirely inconsistentwith
the fact that the United Nations had charged the joint authority with legal
responsibility for the administrationof Nauru. under its supervision.7he three

States had such responsibility jointly. whetherthey chose to exercise it directly,
or forconvenience.to delegateits performanceto one amongst them. 527. Whatever Australia'sspecial,role, it could not alter thefundamentalsof
thelegal arrangementsrequiredby the Charter and the Tmsteeship Agreement

(cf lCJ Reports 1992, p.326 (Judge Ago)).Accordingto these, Australia at al1
times acted on behalf of the Administering Authority,Le., on behalf of the
United Kingdom, New Zealand anditself. It was thisarrangement which was

sanctioned by the United Nations (cf lCJ Reports 1992, p.340 (Judge
Schwebel)).

528. Aeai". it cannot be correct to sav. as Naum has done. that the United

Kingdom and NewZealand could not haveretractedthe authority delegatedby
them to Australia. Article of theTmsteeshipAgreement did not (indeed, could
not) deprive either State of this residual power.particularly in the event that
Australia failed tofulfil its obligations to them,includingits dutyto administer

theTemtory in accordancewith theTmsteeshipAgreement.If this were not so,
it would have been virtually impossible for the United Kingdom and New
Zealand to have discharged their tmsteeship undertakings in good faith.

Certainly, Article 4 sought to ensure that no one of the three States could
unilaterally alter the agreed arrangements. but thisonly emphasized the joint
characterof their responsibility.For. whateverthe arrangements between them,

so far as the United Nations was concerned the three States were equally
responsible in accordancewith their undertakings,and as joint members of the
Administering Authority.

529. Nor is it tme to saythat the UnitedKingdomand NewZealandcould not
have challenged Australia's administration (CR 91/20, p.75). The United
Kingdom and New Zealand each had a juridical interest in Australia's
performance (on their behalf)of the obligationsof tmsteeship;and either State

could have taken steps to remedy a failure in the Australian administration.
particularly if it involved a breach of the obligations which bound al1three.
Either State mighthave complained to Australiaif it had been dissatisfied with

the Australian administration;and had Australiadisregarded its complaints, it
might have indicated its concern to the United Nations to which it was
ultimately responsible.Sucha competencewas inherentin the establishmentof

the joint Administering Authorityundertheauthonty of the United Nations; and
itdid Botneed to bespecificallyexpressed. B:WHATEVER AUSTRALIA'S ROLEONNAURU.
AUSTRALIA ACTEDNOT ONLYFORITSELFBUT

FORTHE UNiTEDKINGDOMANDNEWZEALAND

530. That Australia acted in a representative capacity throughout the
Tmsteeship is confirmed by the Agreementto which Article 4 referred. The
1919-1923 Agreement bound each of the three States. It recorded their

arrangementsfor the appointmentof an Administrator.in thefirst instance by
Australia and thereafter "inuch manner as the three Govemments decide"
(Art.1). Australia continued to appoint Administrators onlybecause the three

Govemmentsso decided. Pursuantto Article3 of the supplementaryAgreement
of 1923, however, the other two States were entitled to require information
regarding the Territory's administration from the Administrator. thoughnot

appointedby hm. Subjectto the changeseffectedby the 1965Agreement, the
arrangements made under the 1919-1923 Agreement remained on foot until
shortlybeforeNauruanindependence(para.56above).

531. The fact is thatNaurufalselydiminishesthe rolesof the other two States

(CR 91/20. pp.80-1).There was a consistentpatternof consultation, discussion
and negotiation between the three Govemments in relation to al1significant
political, economicand social developmentson Nauru; and theractice of the

threeStatesconfirmsthatAustralia actedina representativecapacitythroughout
the Tmsteeship. Thus. Australia appointed an Administrator only after
consultationwiththe UnitedKingdomand NewZealand(Pan 1,para.61).There

were also tripartite consultationson other significantmatters. As paragraph 68
shows. each of the Govemments actively participated in the negotiation and
conclusion of the Agreement of 26November 1965 (which led to greater

political autonomy forNaum) andthe Agreementof 14November 1967(which
transferredownershipof the phosphate industryto Nauru).

532. AUthree Govemments were active in the development of proposals for
resettlement and committed themselvesjointly to facilitating this. As already

noted, it was the failure of the proposals for resettlement which led to
considerationof thequestionof rehabilitation.

533. The arrangements for Nauman independence,including the transfer of
ownership of the phosphate industry, were theesult of lengthy consuliations

amongstthe threeGovemments.Ateverystagefromresettlementto the ultimate
phosphate agreement thisled tosets ofjoint proposals.se formed the basis
of latcrnegotiationswithNaumanrepresentatives.The recordshowsthat in pre- independence discussionswith Nauni, Australia did notmake any proposal to
theNaunians which had notfirst been consideredand agreed by the other two
Govemments (see Australia's Preliminary Objections, paras.334-337). If
Australia acted as chief spokesman. itso acted only at thest of the United

Kingdomand NewZealand.

C: NOONE PARTNER GOVERNMENT COULDMAKEUNILATERAL
DECISIONSOF MAJORIMPORTANCETO THE TERRITORY

534. The joint involvement of the United Kingdom and New Zealand in

cardinaldecisionsis consistentwith theincapacityof anyoneof the three States
to perform the majorresponsibilitiesof the joint Authorityby itself. Each was
dependent on the other. For example, Australia could not have agreed to

Naunian independenceabsent the consentof the other two States.Their.consent
would have been required by the United Nations(cfICJ Reports 1992, p.280
(Judge Shahabuddeen)). This was, of course, clearly appreciated by the three

Govemments. A consensus was required amongst al1 three States. More
particularly, Australia could not have agreed to commit the Administering
Authority. or the BPC, to the cost of rehabilitating the land wdut by the

BPC without theconsent of the United Kingdomand NewZealand. The very
magnitude of any such program would have called for the agreement of the
other members of the joint Authority.In a practical sense. no rehabilitation
program could have ben carried out successfullywithout the CO-operationof

the BPC, its three Commissioners and hencof al1three Govemments.It is not,
therefore,surprising that in pre-independencediscussions, Naum sought the
assent of the three Govemments to undertake the task, or bear the cost of

rehabilitation (para.219).

535. Further, had Australia sought unilaterally to commit the BPC to a
rehabilitationprogram, it would have breachedArticle 13 of the 1919-1923

Agreemeiit, preventing any unilateral interference by any Govemment in the
management and control of the business of working the phosphate deposits.
Refening to thisprovisionin Titv Waddell(No2) Megany V-Cobserved:

"This article established the independenceof the British Phosphate

Commissioners as against any one or two of the ihree govemments,
though not. of course, againstl1three acting in concert." ([1977]
1Ch.106, at p.152)

536. Plainly. the purpose of the provision was to prevent the unilateral

interferenceby any of the threeGovemments in the business of the BPC- theworking, shipping and sellingof phosphates.Controlof the business was tobe

left to the Commissioners, who alone represented the three Govemments in
relation to this joint commercial venture. The provision was designed to
strengthen the BPC's independence and thereby enhance its position as a

commercialventure. Thus, it was intended topstrain Australia, justas much as
the United Kingdom and New Zealand. This was so. notwithstanding that in
relation to govemmental matters Australia administered theTemtory not only

for itself but also for the other two Govemments. In keeping with this. the
Administrator's powers were expressed to be "subject to the terms of this
Agreement" (1919 AgreementA , rt. 1).Hadthe parties intended theTmsteeship

Agreement to alter this arrangement, they would presumably have said so
expressly.Instead,theyapparentlyaffimed it.

537. Further, the arrangement was not inconsistent witthe Trusteeship. for
the function of the Administering Authority wasa public one which did not

involvethe interna1managementof a business operation.Article 13of the 1919
Agreementleft the Administering Authority free toegulate the governmental.
or public, aspects of the phosphate industry which were itsper concem. But

if there wasany failure in this regard, it was thefailure ofhree States. For
underArticle4 of theTmsteeshipAgreement andinpractice. Australiaacted,or
failed to act.on behalfof thejoint Authority.

D: THEPHOSPHATE INDUSTRYWAS

OWNEDBY ALL THREESTATES

538. In addition to the administrative regime established under the
Tmsteeship, the tripartite characterof the ownershipof the Nauruan phosphate

industry provides yet another strong reason why Australia should not be
required to meet more than a proportionate share of the damage. The 1919
Agreement established the BPC as a tripartite body with joint or collective
responsibility for mnning the Nauman phosphate business, theownership of

whichenuredto thethree Govemments.The Agreement vestedownershipof the
industry in three Commissioners.each of which wasappointed by one of the
three Govemments (Art.2).EachCommissionerheld office"during the pleasure

of the Govemment" which appointed him (Art.4). The three Govemments
agreed that title to the phosphate deposits,and to the undertaking generally
should vest in the Commissionersas their representatives (Art.6). Phosphate

deposits werenot tobe sold for thepurposesof the Commissioners,but "for the
purposeof the agricultural requirementsof each of the three Govemments "sa
far as those requirements extend" (Art.9). Phosphate was notto be supplied elsewhere without"the unanimousconsent" of the Commissioners (Art.10).

539. The Commissioners were CO-equal;and each had the same rights and
obligations. There was no question ofredominance.Further, Naum concedes

that through their representatives,the threeGovemmentshad equal authoritin
relation to the managementand control of the phosphate industry(CR 91/20.
p.81).This positionis confinnedby the agreementreachedwith theNauruansin

November 1967. pursuant to which the threeGovemments agreed to seIl the
assetsandundertakingof thephosphate industry toa Naunianenterprise.

540. Any failure,if failure therewas,to rehabilitate was thatof the BPC which

was the joint enterprise of the three Govemments. As a matter of equity,
responsibility for such a failure must thereforbe shared amongst the three
Statesat whose instance the three Commissioners acted. Moreover it,should be

noted that under the 1919 Agreement each State sought the same benefit -
phosphate for its national agriculture. It woulbe quite inequitable to hold
Australialiable byitselftobear theentireburdenof reparation.

541. Given this, Naum's contention (that BPC's tripartite character is not

relevant because the Commissioners were not parties to the Trusteeship
Agreement, CR 91/20. pp.81-3) misses the point. The fact is that the
Commissionerswere appointedby and acted for the threeStates concemed.The

Tmsteeship Agreement specifically mentioned and approved the continued
operation of the instmment to which they owed their existence and which
controlled their operations(Art.4).Through the BPC, thethree States together

enjoyed the real beneficialownership andenjoymentof the phosphate industry.
Given al1this and thatany failure to rehabilitate was ththe BPC. it would
be inequitableto hold Australia liable, morean two decades later. to bear the

totalityof theamage.

542. Nauru says that Australia should not havepennitted theBPC IO mine on
the basis that it didfCR 91/20.p.83). Butthe phosphate industry wassubject
to the provisions of the 1919 Agreement between the three Partner

Govemments. Australia could not unilaterallymake decisionsin relation to the
industry. The active involvement in the phosphate industry of the United
Kingdomand New Zealand (through their respective Commissioners)is clearly

relevant to any liability to pay compensation. If, as Naum says, Australia's
involvementthrough the BPCin the phosphate industry is relevant.then so too
must be the involvementof the UnitedKingdomand NewZealand. E:ANYLIABILITYUNDERTHETRUSTEESHIP
AGREEMENTISEQUALAND COLLECIlVE WiTH

THEUNITEDKINGDOMANDNEWZEALAND

543. The obligationsof the threeStatesunderthe 1947TmsteeshipAgreement
were joint; and hence theirliability for breach, if any, wobedequal and

collective. Thisflows from the terms of the Charter and the Tmsteeship
Agreement; and could not be altered by extrinsic facts (cf ICJ Reports 1992,
p.274 (JudgeShahabuddeen)).

544. Article 81 of the Charterprovidesthat an Administering Authorityfor a

trusteeship temtory "maybe one or more States,or the Organisationitself". In
conformity with this, Article2 of the Tmsteeship Agreement designated the
authoritywhich wasto exercisetheadministrationofaunias foUows:

"The Governments of Australia. New Zealand and the United

Kingdom (hereinafter called "the Administering Authority") are
hereby designated as thejoint authority which will exercise the
admiiistration of theTerritory."(Emphasisadded).

545. The establishment of a joint Administering Authorityfor Nauru meant

that there was a joint, or collective, responsibility forthe performance of the
obligations of the Administering Authorityder the Tmsteeship Agreement
(cfH Lauterpacht. Oppenheim'sInternational Law(London. 7th ed), Vol 1,

p.208; H Kelsen, The Law of the United Nations(London, 1951). pp.601-9;
Goodrich and Hambro. Cliarterof the United Nations(London, 1949).p.440;
Nicolas Veicopoulous,Trairedes territoires dependants(Paris, 1960).Vol.1,

p.144; Charles Rousseau, Droit internarionalpublic, Vol.11(1977). p.404).
Authority was conferred on the three States on the "basis of completegal
equality"(cfICJReports1992.p.326(JudgeAgo)).

546. Other provisions in the Trusteeship Agreement confirm that this

responsibility was equal and collective.s, it was thejoint Administering
Authoritywhich gaveeach of the undertakingsentionedin Articles3.5 and 6
of the Tmsteeship Agreement. including undertakings to administer the

Territory in accordancewith Article 76 of the Charter; to CO-operatewith the
Tmsteeship Council; and to promote "the economic. social, educational and
cultural advancement oftheinhabitants".These undertakings were necessarily
given jointly. as the Authority itself was joint. Thus, any breach of the

Trusteeship Agreement,includingtheseundertakings,would involveequal and collective liability for Australia.New Zealand and the United Kingdom. In

particular, if found responsible for breachof a duty to rehabilitate. Australia's
liabilityuIdbeequal andcollectivewiththeothertwo States.Australiacould
not.consistently with thisbe liable for more than one third of the damage.
Further. any such liability must be further rcduced to take account of the acts
and omissionsof the UnitedNations, andlsoof Naum.See Chapter 3below.

547. Neither Anicle 4 of the Tmsteeship Agreement nor the administrative
arrangementsmade under it point Ioa contraryconclusion.For pursuant to that
Anicle. the joint Administering Authorit-Australia. New Zealand and the
United Kingdom -accepted responsibility(jointly)for the "peace, order, good
govemment and defence" of the Territory. It was on this basis that the United

Nations approved theTmsteeshipAgreement; andit was for this statedrpose
that it was agreed by the three Govemments that Australia would exercise
legislative,administrativeandjurisdictional power intheTemtory "on behalf of
the Administering Authority andexceptandntil otherwiseagreed" by the th=

Govemments (An.4). It is, as Judge Shahabuddeennoted. "difficult, therefore.
toresist Australia's argument that, however extensivewas its administrative
authority over Naum. that authority fell to be regarded in law as having ken
exercisedby it on behalfof au three Govemments"(ICJReporrs 1992.p.378).

SectionU1: The internationalcorn mu annditauru regarded
the three Statessequally responsible for the territory

548. The international community of the day regarded the legal regime
establishedby the 1947TmsteeshipAgreement asreflectingpracticalas wellas
legal reality. At the time of the Tmsteeship, the international communityheld
each of the three States equally responsible for the Territory.Thus, when the
General Assembly or the Tmsteeship Council made recommendations

conceming Naum. both addressed themselves to the joint Administering
Authority, not Io Australia alone. For example, in two most important
resolutions - Trusteeship Council resolution 2149 (S-XIII) and General
Assembly resolution 2347 (XXII) -the Tmsteeship Council and the General
Assembly ~solved "in agreement with the Administering Authonty" that the

Nauman Tmsteeship Agreement should be brought Io an end. There was no
discriminationbetween the three constituentsof thatjoint Authority.

549. The Trusteeship Council - charged by the Charter and the General
Assembly .with particular responsibility for supervision of the Territory's
administration-clearlyregardedthethree Statesas responsible. Forexample,inits 1949Reportthe Councilwmte:

"The Council, recallingthat although in accordance with article 4 of
the Tmsteeship Agreementthe Govemmentof Australia is entrusted

with the administrationof theTmst Temtory, the Governments of the
United Kingdomand New ïealand are alio accountableto the United
Nations under the terms of the Tmsteeship Agreement, recommends

thattheseGovemmentstake suchstepsas may be appropnate to assist
the Govemment of Australiain canying out the recommendationsof
the Council." (United Nations, Report of the TrusteeslripCouncil,

GenerulAssemblyOficial Records,4thSession. Suppl.No.4 (AD33).
p.76.)

550. The 1956TmsteeshipCouncilReportalsorecognizedthat:

"Naum is unique also in having more than one State as the Joint
Administering Authority and in thespecial economic interest which

the three Govemmentshave in the Territory and which theyexercise
through the British Phosphate Commissioners designated by them."
(United Nations,ReportoftheTrusteeshipCouncil.GenerulAssembly
Oficiul Records,11thSession, Suppl.No.4(A/3170),p.323.)

551. At the internationallevel each of the three States held itself out as
responsible for Nauru. Each took an active part in United Nations discussions
conceming the Territory, particularly in the Fourth Committee and the

Tmsteeship Council (see eg Part 1.Chapter4). Indeed, New Zealand retained
Tmsteeship Councilmembership (until 1968)only onaccount of its part in the
joint AuthorityforNauru(Charter,Art.86(l)(a)).

552. Consistently with this, the Naunians themselves have also claimed that

the responsibilityto rchabilitatewassharedointlyby al1threeGovemments.On
26 November 1967,Head ChiefDeRoburtexplainedthat:

"[Ilt was...their contentionthat the threeGovemments should bear
responsibility for the rehabilitation of land mined prior to1 July

1987". (United Nations, Trusteeship Council Official Records.
13thSpecial Session, Doc.TJSR.1323;reproduced in Annex 29 to
Preliminary Objections; cf Head Chief's Speech in Trusteeslrip
CouncilOficial Records.33rdSession, Doc.TISR.1285,p.91, set out

in NM, para.186).553. The Naunian representatives adopted the same approach during the
1966-1967 discussions with the three Govemments on independence and

rehabilitation. Even moreecently, in its notes of 20 May 1989 to the United
Kingdomand New Zealand,Nauni maintainedthat both States "in the capacity
as one of the threeStates involvedin andyto the Mandate andTnisteeship

over Nauni. was also responsiblefor the bmches of those Agreements and of
general international law refemd to in that Note" (An80,Nos.29 and 30,
Vo1.4,NM). It wasnot until theseproceediigs that Nauni aUegedthat Australia

shouldbear responsibilityaloneandmeettheentireburdenof anycompensation
by itself. CHAPTER 3

THE LEGAL CONSEQUENCES OF SHARED RESPONSIBILITY

Section1:Equity would take account of the roles of the United Kingdom,
NewZealand and the United Nations in deciding Australia's liability

554. In deciding questions of reparation, the Court has of course a large

measure of discretion. The "jus aequum" always govems, however, in
determining liability for damages. Thus, any liability which Australia might
have incurredas a resultof the supposed failureto rehabilitate wouldnecessarily

reflectthe factthat theUnitedKingdomandNewZealand,as wellas the United
Nations, also contributed to the supposed injury. In these circumstances,
Ausüalia's liability. if any, wouldnot be greater than its pmportionate share of

the damage (cf G Schwaizenberger,International Law, Vol.1 (3rd ed. 1957)
p.669).

555. The Court has acknowledged theequitableand fact-dependent character
of decisions regardhg compensation. Inthe Corfu Cl~annelcase (ICJ Reports

1949. p.249) for example, the Court sought to make a fair and reasonable
compensation. having regard to al1the circumstances. International arbitral
tribunals have adopted much the same appmach. For example. in Kuwait v

Aminoil((1982)66 ILR519.at 581) the arbitral tribunalobserved:

"It is well known that any estimate in money terms of amounts
intended to express the value of anasset. of an undertaking, of a
contract. or ofemices rendered,must take equitable principles into

account."

This applieswithequalforceto anyestimateof the injuryallegedin this case.

556. The tribunal'sdecisionin TlreZofiro ((1925) 6UNIRAA 160)showsthe
operation of equitable principles in circumstancesuch as these where there

have been other participants besides the defendant State. The British-United
States Arbitral Tribunal held the United States liable for the looting and
destructionof the propertyof certainBritishationalsin Manila.This had been

caused by the Chinese crew mernbersof the Zaffiro, a US:public vessel. The
Tribunal found that they had beenallowed ashore without effective Control
(6 UNIRAA.at 164-5).Butbesidesthe Zaffiro'screw, itwas also shown that a

number of other persons had participated in the looting. As a result, theTribunal, confirming the equitable and evidentiary character of its award,

decidedthat:

"In view, however, of our finding that a considerable. though
unasceriainable, part of theamage is not chargeableta the Chinese
crew of the Zaffiro, we hold that intere'ston the claims should not be

allowed"(atp165).

557. Since the arbitrationwas conducted twenty-sevenyears after the damage
was caused.the interest wasa substantialproportionof the amount claimed. in

effect. the Tribunal did not require the United States to compensate for the
totalityof thedamagebecauseit wouldhavebeen inequitableto have requiredit
to do so.

558. Other arbitral decisionsin whichthe defendantState was held liable only

for a proporiionateshareof the loss.on accountof other contnbuting factors, or
because of other participantsincludeYuilleSlzortridgeand Co (Great Britain v
Portugal. 1861). Lapradelle and Politis, ii,78;Lacaze (France v Argentina.

1864).Lapradelle vPolitis. ii, 290;BritisliClaimsin SpanisliMorocco (1925)
2 UNRIAA 615; and theMartini case (Ilaly v Venezuela)(1930) 2 UNRIAA
975. In Britisli Claims in SpanishMorocco, Arbitrator Huber held Spain liable

for only 25% of the injury in someareas, and 50% in others, dependingon the
extent to which injury resulted from other causes. In the Martini case, the
Tribunal ordered Venezuela to payonlyone third of the damage. holding that

the resthad beencausedby war.

559. One notedauthorhas writtenthat:

"in the Venable Claim (1927). the Mexican UnitedStates General
Claims Commission relied primarily on the Lacaze case (1864).
between the Argentine and France for its finding that only the

immediate and direct results of an illegal act are be regarded as
losses for purposes of reparation (4 RIAA, p.219, at p.225).In this
Award, ..the propositionthat lossesshouldbe limitedto those which

are the 'immediate and direct consequence' of the illegal act is
justified on grounds of reasonableness and equity (2 La Pradelle-
Politis,p.290, atp.298). Similarly,in the Porîugo-GermonArbitration

(1928). the Tribunal based its conclusion that a tortfeasor is
responsible for intended damage irrespectiveof its direct or indirect
character entirely on gmundsof equity(2 RIAA, p.1011,at p.1031)."
(Schwarzenberger,p.669,fn.89.)Although it has not alwaysbeeneasy Io assess theexact proportion tobe borne
by the defendant State. no tribunalhas yet given up thtask on account of its
difficulty(cfMetzger'scase (Germany v Venezuela)(1903) 10UNRIAA 417.)

560. It would, therefore,be conhary to internationalpractice to disregard the
involvement of the United Kingdom and New ïealand, and of the United
Nations (discussedbelow)in deciding the questionof Australia'sliabilitinthis

case. It wouldbe quite inequitable tohold Australialiable for the totality of the
damage to which the UnitedKingdom.New ïealand and the United Nations
have clearly contributed. Practically speaking, it is, of course. virtually
impossible to link specific items of damage to the acts of one Govemment (or

Organisation) rather than another. However, bearing in mind the equal
responsibilityof the othertwo Statesfor themst Temtory and their respective
shares in the phosphate industry. Australia contends that it would not be

appropriate Io require Australiato bear more than a pmportionate share of the
supposed injury said to have arisenfrom miningduring the Trusteeship period;
and any such liabilityshouldbe furtherdiminishedto take accountof the roleof
the United Nations (andalsoof Nauni).SeeSectionsIVand V.

561. This approach is consistent with the preparatory work for the
InternationalLaw Commission'sdraftArticleson Stateresponsibilitywhichhas
referred to a need for proportionality between any breach and its legal

consequences (e.g., Special Rapporteur'sPreliminaryReports, [1980] YBILC,
Vol 2, Pt.1, p.127-8 (UN ~oc.N~~.4/330); [1981]YBILC, Vol 2, Pt.1. p.100
(UNDoc.NCN.41344) ).The possibilitythat the conduct of other States might
affect an award for damages has also ken mentioned in preparatory work

(eg, [1981] YBILC, Vol.11,Pt 1.UN Doc.A/CN.4/344,p.93, para.108, fn.69).
Whilst the Commission has not completed its deliberations on the subject, it
would apparently acknowledgethat a principle of equity and reasonableness

applies- (cf Draft Report of the ILC at its 42nd Session. 13 July 1990,
UN Doc.A/CN.4/L/450, pp.17, 29-31). The ILC's Drafting Committee has.
moreover, also proposed the inclusion of a specific provision requiring that
account be taken of the claimant's "negligence or..wilful act or omission"

(Article6.2 bis of draftArticles onStateresponsibility:lesand texts of articles
adopted by the Drafting Committee,at the ILC's 44th Session. 15July 1992
(UN Doc.NCN.4L.472)). Section II:There must be equitable apportionment
in the absence ofeffectiverights of contribution

562. Domestic systems acknowledge that situations involving collective

responsibility giverise to the priblem of apportioning liability. Each system
apparentiyseeks to resolve theproblemfairly.It ishighlyunlikelythat any legal
system would tolerate the possibility that a claimant might recover multiple

awardsin respect of the samedamagefrom differentdefendants,with the result
that the claimant received more than the damage actually suffered. It is
improbablethat internationallawwoulddifferin this respect.

563. The meansby whichliabiity isdistributedin situationsof thiskind varies

from legal system to legal system. A domestic system can offer little useful
guidance in thiscontext.Eachsuchsystemdealswiththe matteraccordingto its
own social. economic and legal history. As well there are many relevant

structuraiifferencesbetweendomesticand internationalsystems(cfNicaragwi
case.ICJ Reports 1984,pp.392.431).

564. For example. in the courts of commonlaw States. if an applicant brings
an action for damages in contract or tort against one CO-contractor or

CO-tortfeasor, the respondent may elect to join (compulsorily) the other
CO-contractorsor CO-tortfeasorsso as to recover contribution from them in
respect of any award of damages. A jus1 apportionpent can thus be made.
Common lawjudges have recognizedthat this righthas becomethe comllary of

the common law regime of joint and several liability, pursuant to which one
person alone can be requiredto meeta liabilitywhichhas also been incumd by
others. In those circumstances in which the common law regards a regime of

joint and several liability as appropriate, justice is completed by the ready
availability of an enforceable right of contribution. As Lord Templeman
observedin J H RaynerLtdvDepartmentofTrade [1990] 2 AC418, at p.480:

"An internationalor adomesticlawwhich imposedandenforcedjoint

and several liability on...sovereign states without imposing and
enforcing contributionbetweenthose states would be devoid of logic
andjustice."

565. International law cannot enforce contribution, because international

adjudication isfundamentallyconsensual.Were a regime of joint and several
liability to apply in a situation of collective State responsibility. a defendant
State would notbe able to exerci~~anenforceableright to contribution againstthose of its CO-wrongdoerswhich did notconsent to the Court's jurisdiction.

Joint and several liability at international law would cany with it the
consequence thatone State (here, Australia) couldwell be required to bear the
totality ofthedamagebmughtaboutby a nwnberof States.Sucha resultcannot
be regarded as conducive to the peaceful seulement of disputes by judicial or

other friendlymeans.

566. Nauni would defy the verylogicof internationallawand invite the Court
to adopta regime which works equitablyin domesticcommonlaw systems,but

would not do so at intemationallaw. InternationalLawcaiis for a different way
of dealing with theproblemof apponioning liability in a situationof collective
responsibility. Australia contends that if it has incurred any liability, then
principles of equitable apportionment are to be applied. These would take

account of the joint responsibility otfhe UnitedKingdomand New Zealand, as
well as the role of the United Nations.This solution is contemplaied by the
Court in itsjudgment of 26June 1992 (ICJ Reports1992. p.262, para.48;aIso

p.290 (JudgeShahabuddeen)).

Section III:Joint and several liability is not a
part of generalinternational law

567. It follows from the foregoing that Australia contends that joint and

severalliabilityis not a part of internationallaw. Nauni contends,however. that
where a numberof States concurrentlycause damage, or damage is caused by
one State acting onits ownand others'behalf. each Stateis not only separately

responsiblefor its own acts,but oneStatecan be required tocompensatefor the
totality of thedamage. notwithstanding the responsibility of the other States
(Nauni CR 91/20. pp.86-7; CR 91/22, p.46). According to Nauni. there is a

presumption in internationallaw of "passive solidarity"or "joint and several
liability:. This is the deviceused by Nauni to overcome the fact that two of the
three States responsiblearenot subjecttothe Court's jurisdiction.In conformity

with its already stated position, Australia denies that any such presumption
exists. Australiacontends that if such a legal regime can exist at international
law, it does so only by virtue of specific agreement. The 1947 Tmsteeship

Agreementshowsthat no suchagreementwasreachedinrelation toNauni.

568. Australia'scontentioninthis regardisentirely consistent withtheaititude
of States in concluding the 1972 Conventionoii International Liability for
Damage by Space Objects (961 UNTS187).7he Convention establishedjoint

and several liability as specialregimefor the unprecedeitted risks created by State activities in outer space (Art.V, discussed in Australia's Preliminary
Objections, pp.124-5, paras.299-302).But the recordof the debates leading to

the conclusionof the Convention clearlyshowsthat States consideredthat to be
a departure fmm customaryintemationallaw. The delegates were consciousof
breaking new gmund and of adopting an eqceptional regime as a practical

solution for a novel subject-hazardousactivities inouter space. nie debates
emphasize that States did not consider that a principle of joint and several
liability (or passive solidarity)was partof generalinternationallaw (Austraiia's
PreliminaryObjections.paras.300-302).

569. Nor do the decisions of this Court support Nauni's contention that.
notwithstandingthejoint involvementof the United Kingdomand New&land,
Australia is liable for the totality of the damage. Nauni relies on the Co@
Channel case (ICJ Reports 1949. p.9). but that case concerned only the

responsibilityof Albaniafor failure to wam of the possibility of mines. It was
not a case in which another State shared joint responsibility, nor was it
suggested that Albania acted, or failed to act. at the behest of another State.

Nauni camot make good itscontention inthis regardsimplyby showingthat, in
some cases. liability for the whole damage has attached to one State,
notwithstanding the possibleinvolvementof others. Further, in the Nicaragua
case, the Court specificallysaidthat althoughthe UnitedStates was responsible

for itsown unlawfulacts. it wasnot responsiblefor the acts of the contras (ICJ
Reports 1986, p.65) although the Court haddetermined that the United States
assistance to the contras had been "cnicial to the pursuit of their activities"

(iep.62).

570. Instead. the practice of this Courtand of international arbitraltribunals
emphasizes the equitable characterof decisionsconceming compensation. See
Section1above.It does not pmvideanyevidencefor a presumptionofjoint and

severdlliability, orpassivesolidarity.

571. Further, although the InternationalLaw Commission has not yet given
detailed consideration to the consequencesof collective responsibility, it has
indicated that it is disinclincd to accept the application of joint and several

liability (or passive solidarity).evenin relationto the injuriousconsequencesof
acts not pmhibited by international law - where solidary responsibility might
have been thought particularly appropriate (cf Report of the ILC on 42nd
Session, UN Doc.A/45/10. para.517).In relation to States which paiticipate in

the unlawful act of another, Article 27 of the ILC's draft Articles on State
responsibilitydoes no more than affirm the wellestablished principle that eachState is responsiblefor ilsown acts-and only thoçeacts. Butthe consequences
of that principle point away froa regimein whichone Statecan be held liable
for the totalityof damage(althoughalso causedby other States)to an equitable

apportionment of damages, having regard to the number of States involved
(cfQuigley, "Complicityin InternationalLaw:'(1986)LVII British Yearbook of
InternationalLnw77,at p.128).

572. There is little evidence that jurists considcr the principle of joint and

severalliabilitytobe part of generalinternationallaw (C1 Brownlie. Principles
ofPublicInternationalLaw (3rded 1983)p.456and (4thed 1990)p.456).ïhere
is, however. supportfor a principle whichpermitsa proportionatereduction of

damagesto iakeaccount of theroleofconcurrentwrong-doers:

"II n'y a pas placeen droit international pour une théoriedu grief
global qui permettrait d'écarterla ventilation du dommage en cas
d'intervention de plusieurs causes" (Brigitte Bollecker-Stern.

Le prgjudicedans laIhéorie dela responsabilit6internationale (1973)
p.292.)

Section IV: If Australia were to bearany liability at all,
it would be lessened by the failure of the United Nations

to exercise adequate supervisory authority

573. The failure, if failure therewas, toprovidefor rehabilitaiion wasas much
the failure of the United Nations.as of the Administering Authority;and the
resultingliability, ifany,of Australia wouldbe correspondinglyless.

574. ChaptersXII andXII1of theCharterdealt with the position ofthe United
Nations in relation to tnisteeshipterritories.erArticle 75. the primaryduty
of the United Nations was "to establish under iis authority an international

tnisteeshipsystern for the administration and supervisinf...territories" which
likeNauni came under the systemby agreement.The Charter gave the United
Nations primaryauthority and'responsibilityfor the tnisteeship system and for
ensuring that it met the "basic objectives"set out in Article 76. There was

nothing in Chapter XII of the Charter to indicate that.nce an Administering
Authority had been appointed in accordancewith Article81. the authority and
responsibility of the United Nationsended, or diminished. On the contrary,

under the Charterthe Administering Authority remained in each case subjectto
the General Assemblyand theTmsteeshipCouncil.See especially Articles75,
81, 85, 87, 88; cf Judgment of-26 June 1992, ICJ Reports 1992, p.304

(Judge Oda). 575. Charter Articles 85, 87 and 88 were intended toensure that the United
Nations. actingprincipally through the General Assembly andthe Tmsteeship

Council. wasable to discharge itsresponsibilitieson a well-informedbasis. The
General Assembly and, under its authority. the Tmsteeship Council were
empowered to entertain petitions from, and provide for periodic visits to tmst

territones; to considerreports from administeringauthoritiesand "tak...other
actions in conformity with theterms of the Tmsteeship Agreement" (An.87).
The Tmsteeship Council was required to submit a questionnaire to each

Administering Authorityand each Administering Authoritywas required to
make an annual report to the General Assembly on the basis of that
questionnaire(Art.88).

576. In the case of Nauru,the Administering Authoritymade detailedreports

to the United Nations annually. The reports dealt fully with the economic,
political and social situation in the Territory and were considered by the
Tmsteeship Councileach year.There werealsoVisiting Missions at threeyearly

intervals throughout the Tmsteeship.They too reported at first-hand on the
Naumansituation.Seeeg. Part 1,Chapter 2 above.

577. There was. moreover, direct Nauman participationin the work of the

Tmsteeship Council from 1961 until the end of the Tmsteeship. From 1961
onwards, a Nauman adviser was appointed to the delegation of the Special
Representative of the Administering AuthorityduringtheTmsteeshipCouncil's

annual considerationof the AdministeringAuthority'sreport.That adviser was
there toinformCouncilmembers (para.63above).

578. The Charter made it clearthat the administrativepowersconferredon the
joint Authorityunder the 1947 Tmsteeship Agreement were always inteiidedto

bc subject to the United Nations.In keeping with this, the United Nations was
kept fuUyinformed of developmentsin theTerritory.When the United Nations
teiminated the Tmsteeship in December 1967, it purported to discharge the

Administering Authority from its tmsteeship obligations on the basis of a
well-infomed confidence thatthe Authorityhadfulfilledils undertakings. It has
not been suggested until now that the United Nationis fact failed todischarge
itssupervisoiy functionand failedto ensurethat the Authority hadsafeguarded

the interestsof Naumans(CfICJRel>orls1992. p.305(JudgeOda)).

579. Butif, as Naum alleges, there wasa failure to make adequateprovision
for rehabilitation, that failurewas asmuch, if not more, attributable to the

United Nations under whose aegis the Administering Authority acted, as to theAuthorityitself. A fiiding in favourof Nauruwouldbe tantamountto a finding
that the UnitedNationsfailedto dischaigeadequatelyits own obligationsunder

the Charter.Worse stU. if Nauru'sclaims are upheld.the UnitedNationswould
have closed its eyes to very serious breaches of-international law. involving
self-determinationandprinciplesof jus cogens. It is virtualiy inconceivablethat

such breaches could have been permitted by the United Nations had it
supervised the Territory's administrationproperly. If, however.auni's claim
were upheld, then plainly the failure on the United Nations' partwould have

contributed in largepart to Nauru'ssupposed injury.As already foreshadowed,
Australia contends that equity would require thatthis tobe borne in mind in
deciding Australia's liability.Australiacould not, consistently with equitable

principles,be heldliablefor thatpmportionof the damagewhich in such a case
wouldrightlyrest with theUnited Nations.

Section V: Australia's liability, if any,
would be diminished by Nauru's conduct

580. If Nauru's conduct does not disqualify it from relief (Chapter 1 of this
Part). it does, at least, diminish Australia's liability,if any. for
non-rehabilitation.There are three reasons for this. First, it was the Nauruans
ihemselveswho gave pnority to resettlement,ratherthanrehabilitation.prior to

1965.And even after that date. in the contextof the discussionseading to the
Canbena Agreementin 1967,the Nauniansnoted that rehabilitationwas not an
issue that need concern the United~ations. and at no stage asked that specific

funds be set aside for rehabilitation. Nad they done so. and had the funds so
earmarkedbeenpatently insufficient,it wouldbavebeen possible for theUnited
Nations to have taken a more critical view of the adequacy of the Canberra

financial settlement. Secondly, if Australia has been guilty of failure to
rehabilitate,hen so too has Nauru. See Chapter 1 of this Part. According to
international practicediscussedbelow), this fact would alleviate any liability

Australia mightbear. Thirdly,Nauruhas not soughtto pursue its clairn withal1
duediligence.

581. The factsrelating to the prosecutionby Nauru of its claim are set out in
the Court's judgment of 26 June 1992 (ICI Reports 1992. pp.254-5,

paras.33-36). As the Court noted,Nauni was officially informedof Australia's
position on thesubjectof rehabilitation, at thetest, by letter da4eFebniary
1969. In that letter, the Australian Minister for External Affairs informed the

Naunian President that Australia, together with the United Kingdom and
NewZealand. denicdresponsibility for rehabilitationa"remain[ed]convincedphosphateindustryand responsibilityfor its managementon 1July 1967and. if
there has ken any wrongdoing on Australia's part, it was completed on that
date.

585. The practiceof this Court andof international arbitraltribunalsconfimis
that 1July 1967is the relevantdate for theasiessmentof Australia'sliability.if
any there be. See, for example, Corfu Channel (Compensation) case,ICJ

Reports 1949, p.249; RhodopeForests (Greece vBulgaria), 3 UNRlAA 1389
and US-GermanMued ClaimsCommissionof 1922, 7 UNRIAA13: and other
cases citedin Gray, JudicialRemediesinInternationalLow (Oxford, 1987).at
p.80. Thus. in theRhodopeForesis case. the value of theforest was calculated

as at the dateof dispossession.

586. This case is quitedifferentfromthe ClrorzowFacfory case (PCIJ,Ser 4.
No.13, p.46) in which the date of judgment was chosen as the date for
assessment. on the basis that the valueof the expropriated factorywould have

appreciated in the hands of the claimant during the intervening years. This
cannot be compared with the situation arising in the present case where
Australia's default,if any. was completedby1July 1967.

587. Finally, it goesalmostwithoutsaying that Naum cannotrecover the cos1

of doing the work of rehabilitation unless it can establish that this really
constitutes its loss. and that itll apply any compensation which mightbe
awardedin its favourto carryingouta practicablerehabilitationprogram.

588. As Chapter 1 of this Part hasshown,Naum itself has no1at any stage in
the past quartercentury begun such a program, even in respect of the lands
mined after 1July 1967.Norhas it, duringthe pasttwenty-five years, developed
a viable rehabilitationprogrdm. On the contrary, since independence it has

continued to mine much as the BPC did in earlier years, and even the 1987
Commission of lnquiry felt obliged to say that rehabilitation might well fail
because of a lack of real motivation on the part of the Naunians (para.516

above).In these circumstances, theremust be a degreeof doubt as to whethera
feasiblerehabilitationmgramreallycan be developed andif so, whetherNaum
would in fact apply any award which it might receive in this case to

irnplementingsuch a program.Nauru shouldbe required by the Court to show
that there in fact exists a viable plan for rehabilitation which.can be
implementedby Nauniwiththeexpertiseavailable toit.

589. Further.at least oneotherconclusionof the 1987Commissionof Inquiry

should alsobe borne in mind -that a rehabilitationprogram,if it was to workatall, wouldneed tocoveral1the mined-outlands.As the Commissionsaid:

"The land mined during the period 1906 to 1968 is physically
indistinguishable from the land minedubsequently.The practicalities

of rehabilitation.especiallywhenrehabilitation is designed to comply
with the requirementsof a plannedfut& land use, wouldprohibit a
specificportionof thetotal mined-out land.i.e.the land mined priorto
1968. king rehabilitated separately from the remaining mineland."

(p.1141)

It addedthat:

"unless the Naunian community and its Government have a full
commitment to achieve the objectives themselves,unless they are
prepared to undertakethe work themselves - irrespectiveof whdt the

work is - unless they are prepared to make the effort to train
themselves io acquire the skills, whethermanual or professional,that
will be needed to enable them to eventually operate. manage and

improve the various activities, industries and businesses, then the
project willailby default." (atpp.1165-6)

590. As proof of Nauru's serious intent and the practicability of any
rehabilitationrogram,Naurushould alsobe requiredby the Court toset asidea

sum which would enable it to rehabilitate the lands which it admits are its
responsibility-the lands minedout after 1July 1967.This must be a condition
of any award that mightbe madeinNauru's favour.

591. And reparation payableby Australia would be payable as and whenthe

actual costs of any particular rehabilitation project. completed. fell to be
met. These costs would haveto be limited to rehabilitation stricto sensu. ie
restorationof the land to its former state, and notthe costs of new development
projects.such as airfields or housing, undertakenon the site of the lands to be

rehabilitated.

592. The paymentby Australia would be also limitedto that proportionof the
cost whichthe Court determines to be attributableto Australia.bearing in mind
the responsibility ofauni, of the other two PartnerGovemments, and of the

United Nations. Section VI: Summation

593. Forthe reasons set outin Part Uof thisCounter-Memonal,Australiadoes

not accept responsibilityfor rehabilitatinglandsmied out pnor to1July 1967.
In any event, because Naum has failed to take any steps whatsoever towards
rehabilitating the landswhich it has minedout itself,Nauru is disqualifiedfrom

the relief it now seeks. And if not so disqualified, AustraliawouldiUnot be
liable to meet the whole of the damage. For the reasons set out earlier,
Australia's responsibilityfor the Tmsteeship wascoequal and collective with

the United Kingdom and New Zealand; and aUthree Govemments shared the
beneficial ownership of the phosphate industry. Accordingly, on the facts
referred to in Chapter2 of this Part. Australiacould not be liable for any more
than one third of the damage in respect of the land mined out during the

Trusteeship. But any such liability would be reduced on account of the
involvementof the United Nationsin the supposed breach.As explained. such
involvement is a necessary corollary of any finding of breach on Australia's

part. Fially, Australia's liability. if any, wouldbe further diminished on
account of Nauru's failure to pursue its claim against Australia with due
diligence, or tobeginitsown programof rehabilitationin respectof those lands

which ithas mineditself duringthepastquartercentury. SUBMISSIONS

1.The Govemmentof AustraiiarequeststheCourtto adjudge anddeclarethat:

on thebasis of the facts and law presentedin this Counter-Memorial.
Australia isnotnbreachof anyobligationrelatingto rehabilitationof
phosphatelandson Nauruworkedout priortoJuly 1967.

2. If the Court deciiies to acceptAustrdiia'sprimarysubrnissionand finds that
Australia is in breach of agal obligation,then the Government of Australia
requeststhe Courtto adjudgeanddeclarethat:

(a) Australia is not solely responsible for the damage, if any. to which such

breachmayhave contributed, norliableforthe wholeof thedamage;and

(b) any Australian liability arises only in relation to actual work done in
rehabilitationrictosensuandin theamountwhichreflectsAustralia'sdue

proportionof responsibility.

GAVANGRIFFITH
Agentof theGovemmentof Australia

HENRY BURMESTER
Co-Agentof theGovemmentof Australia

WARWICK WEEMAES
Co-Agentof theGovemmentof Australia

29 March 1993 Annexes

1. CentreforInternationElconomics, stimatingthe
1967valueofNauru'sp/rospluitmine....................................................
2. informatiopaperon possiblesaloftheBPC's
assets(üepartmentfTenitones)................................A.8........................

3. MinuteonroyaltyratesinNew SouthWales
(DepartmenotfTenitones)....................................A.......................... Keypoints
1
In 1967themahet value of the rlght Io mine Phosphate on Nauru was the amount that an
IndepBndent poity would have been prepored Io pay, ln 1967forthlsrlght.

. An indepenaont purcharor would hore been piepored to poy !ne dscountea (ta 1967)
I va Le 01tneexpocied f~t~ioprof 1ofth0 mone

Our Onol* indicotes that thisvalue ranges from S55mto S319m.Our preterred estimate as
valueof $mm. Thisirequivalent to S630mIn 1993dollon.

Background

In 1967,the rigl10 mine phosphate on Naum was a valuable asset. Sales
were alinost guaranteeù and the prccess of exhaction was relalively simple
and low cost. Before independence, the riglit to mine phosphate was
owned by the BPC,a right that was intended to remain until2000.

At independence, the right ta iiiine phosphate changed han-s from the

BPC to the Nauruans - at no cast. Had this exchange been a comn~ercial
traiiçaction, the UPCwould clearlhave sold the riglits. But at what price?
Wliat was the iilorket valueof the inine?

The niarket value of the mine is the aniount that some independent prty
-a venture capitalist for exain-lwould have bcen prepared to pay for
the riglit to mine in 1967.

The valut of the riglit to mine to any purclwser is the streain of net income
(that is, profits)iat the mine can eam. Alternatively, il is the return 10
capital that the initie could eam. Any poteiitial purchaser would have been
prepared to pay up to (but no more than) the preseiit (1967) value of the
discouiited steaiii of future profits frarii the i~iiningoperation, where the

discount rate isthe rquireù rate of rcturn.

In wliat follows, we tnke the point of view of an independent purcliaser
and set out the calculatio~ista estimate Iiow much such a purchaser would
have berii prepared to pay for the niine. ESIMATINGTHE1967VALUE OF NAURU'S PHOSPMTE MINE A3

Elernents ofthe calculaiion

Revenue

In 1967, Nauruan phosphate commanded $12 per ton. We assume that an

independent operator would also have received this price and that the real
pnce of phosphate remains the same throughout the life of the mine. In
reality, the real price of phosphaterose slightly in the mid to late 1970sbut

fell again in the 1980s.Thischange appears to have been related to the oil
price shocks in the early 1970s.It is unlikely that a purchaserin 1967could
have predicted these changes, and so a stable real price is a reasonable

assuniption.

By 1967,phosphate production was around 2 million tons per annum, and

in the>ègoliations around independence, the Nauruans agreed to supply
this amount each year. Clearly annual production o2 million was easily
achievable. We assume this same annual production throughout the life of

the mine.

nie lireoflhe mine

In 1967 it was considered that the remaining phosphate deposit was 60

million tons. With annual extraction of 2 million tons, the mine was
expected to last until 1997. We will assume therefore that mining
operations cease at theend of 1997.

In 1967 it cos! $3.74 to extract each ton of phosphate. We assuiiie that the

real cost of extraction remains thesame throughout the life of the mine.

This, combined with our assumption ofa constant real price of phosphate

of $12 a ton amounts to assuming a constant real profit margin of $8.26 a
ton. This means that Ourassuniptions regarding prices and costs are quite
robust as long as changes in real prices reflect changes in real costs and

vice vers..

Capital cosfs

Mining requires equipment, so sny purchaser of the mine must buy
appropriate equipment. The obvious starting point is the equipment ESTlMAnNTG HE1967 VALUEOF NAURU'S PHOSPHATM E INE ~4

already in use by the BPC, which the BI'C valued ai $30 million. Soine 75

percent of this was the value of (fixed) island installationwhile the
remainder comprised 'moveable'aisets.

In addition to the initial purchase of equipment, tlie mine operator must

pay annual replacement and maintenance expeiiditure. In 1967 the BPC
considerd exp~ld annual maintenance cosis ta be166 0M).

We assume that $30 million is paid for the equipment in 1967 and that

aniiual maintenance costs of $60 ûCare incurred. In addition, we assume
that of th- n~aintenancecosts, 75 percent are on island installations and
25 percent on moveable assets. With a depreciation rate of around5 per
cent. tliis means a rer~ie value of inoveableassets of Rm in 1997.

Discount rate

The funds a buyer isto speiid on the phosphate mine could be used to
purchase some other income earning asset. This means that for the

purcliase of the mine to be wortliwhile. it xnust earn at least the same rate
of return as tlie next best inconie generating asset. This means that the
streain of profits from thinine mus1 be diwountd at a rate reflecting

what could be earned elsewhere. If appropriate, tliis rate needs to be
adjustd for the riskiness of theasset.

Cencmlly, thediscount rate siiould also be adjusted for inflation. However,

in the analysis tliat follows we will cast everything in ternis of 1967dollùrs,
so a real rate of return is appropriate.

In 1967,ong tenii govemment bondscould earn a real interest rate oper

cent. As this represents the most certain return investinenb could earn, we
wiil assunie tliat the rate of return requird by the prospective purchasers
of the mine is5percent.

Risk

All investinents are risky. In the case of the phosphate mine, elenlents of
risk iiiclude:

. the amount of phosphate re~iiainiilg:

the amount tliat can be sold each year; and
the price at whicli il could be sold.

In 1967,tliere was a clear idea of the aiiiouiit of phospliatbelminedo
(60 n~illiontons). While the price was not certain, denland was assured and

Esonornisr A5
2SltMnNG THE 1967 VALUEOFNAURU'SPHOSPHATE MINE

profit margins were well known.

Another aspect of risk is country ns- the nsk that at any Limethe mine
could be nationalised with some of the returns from the investmenking

lost. However, the risk of niining on Naum was no greater than that of
mining elsewhere. Therefore it is not necessary to make any expliclt
adpistinent forisk

Toxoiionond royalties

Anyone purchasing the mine would most likely have to pay taxation and
royalties to the govemment contmlling Nauru. Taxation would have been

to cover the cos& of adininisteriiig the island aiid the royalties would have
been to pay a return to the Nauruan people. Wlut would the appropriate
royalty and taxation rates have been?

In 1967.45percent ofthe phosphate income was pid in royalties and 20

percent was paid in taxes (ie, to fund administrationIn uther countries
the expérience was quite dlfferent. In thUS taxation and royalty rates
were both 6 percent, while in Mahtea royalty rates were 2 percent and
tax rates were 26percent.

On the basis of Nauru's history we assume that any mine opemtor would
be required to pay 45 percent of revenue in royalties and taxes of 20 per
cent of net income. It is important to note, however that these rates are

extremely high by intemationalstandardsat the time.

Summory of ossumptions

Assun~ptions to establish the base case estimate are:

The real price of phosphate is$12per ton tliroughout the life of the
mine;

Annual production is $2 million tons - al1 of which is sold in the
year it isproduced- throughout the life of the mine.

Mining continues to the end of 1997and then ceases

The real cost of exlraction is S.74 per ton tliroughout the life of the
niine. This combined with the first assumption implies a -1profit
znnrginof $8.26per ton. ESTlMATlNTHE1967VALUEOFNAURU'SPHOSPHATE MINE
A6

. Capital equipmenl is purchased in1967 for530 million. Annual
maintenance costs ar560000 and the 'moveable' assels are sold for
$2m in 1997.

Tlie real discount ra5percent.

Royalties of 45 percent of niine revenue nius1bepaid each yeac
- Net mining tncome (aftercosts and royalties) is 20xpercent.

Thecalculation

Profits froin the niine in each year are qua1 10:

Revenue (2million tonsa$12per ton)
les5operaliiig cos& (2million to$3.7p4erton)

. less capital casts ($34millio1967and $60000 each year, wita
residual value $2m in1997)

lessroyalty paymenls

. lesstaxation

The 1967value of tliis streaiii of profits is qua1 to ilie sum of each yean
profits after the profits in each year have been disco1967dvalues
usiiig a discouni ra5epercent.

Resultst:he value ofthe mine

Perforiiiing tliis calculation gives a tii$90niillion.f

TIiat is, under lhese assuinptions, an independent operator would have
been prepared to pay up to $90 inillion for the mine.

Ifwe furtlier assume bidding for the mine was cornpetitive, then the
market value of the mine would have b$90million.

In1993 dollars, the value of the min$630 million. This is calculated
using the Austraiiaii CDP defia(aprice index publiçhed regularly by
the Australian Bureau of Statislics and also publislied in the International
Moiictary Fund's Iiileriialio,rolFinancial SInlislic)0i?fiate1967
values t1993 values. The CDP deflator indicales t1993 prices ar7
tinies Iiigher tha1967prices. ESnMAnNGTHE 1967VALUEOFNAURU'SPHOSPHATM EINE A7

Sensitiviiyanalysis

The threeassumptions with the large* effect on Ourestimates are:

thediscount rate;

. the royalty rate; and
thetax rate.

Table 1 presents eslimates of the value of the mine al various discount.
royalkyand tax rates.

Table 1:Value of mine, various royalty, tax and discountrates ($ml
Royiliy"IL.(<XI
Ta. "les(4.) S 10 20 45
DlwDvn1,.l2 pr ml

Tlie resulis indicate that:
An investor rquiring a lower rate of rcturn (2 percent) would have

been prepared 10 pay M Io 60 percent niore for the mine - ai any
give tax or royalty rate.

An investor expecting a higher rate of return (perhaps viewing the
inveslment as more risky) would have been prepared to pay around
30 percent iess for the min- al any given tax or royalty rate.

The lower the fax rate, the niore an investor would have been
prepared Io pay - halving the tax rate (rom 20 la 10percent means

an investor would have been prepared Io pay some 13 percent more.
The lower the royalty rale, the more an invnlor wouldiiave been

prepared Io pay - iowering the royalty rale from 45 to 20 percent
means that an investor would have been prepared to pay between M
and M) per cent inore. ANNEX 2

saokoo~

Oui pmpoul thit ra. mcdi by the Hsnrnan d.le.ptloui

ln the JQ 1966 dliouailons on the future 01 the Dhoenhat.

lnd~tq mi that the B.P.C.~ apltd -sot. at Nauni ahoald bs

aold to the Ilauan Oorernmant to be psi6 for mer a parlod of
ton ,- out 01 th. IWOW bonerlta bsaou svallnble to

the LTanmn noreniPunt Imn lta Dhsn OS proooads 01 the Nsphste

lnd~tq. ma @ar gmarnmonte ha net yet lndlosted to the

Neu-a&ru th& attltuda to thla pmpod. In the uehan<la of

dm betrean ~m.xxmmts di &we~~onta haro etated that thor

mal4 b. pnpsnd to intsrtdn thin 'pmposrl.,

2. zha pmrp0.i os thla ppu is mar.,lJ to pmddi the

&07.-ta rlth i- I~~~OU.M on th. DMsont 0ltUUtlia
th. mats at I-, go?mibls~ e ~ n t m ~ri.ig.4 Scu thau
.,.- ..
.'de, lWei~18 OZ sa^ d6Iil- .lipj+pllmta ?O plant and.
. .
5;tr.i-t 01 th. Wa -otlon,lq* B.P.0'- aommta.

Storia (mtsriala
and Spares) 1,931 908 na- iaomphi~ Buhti pn oxolndid.
(Bo* rrlw a~.gn.no).
.. m. bq* )F. .xt=oted rrom the B.P.C. -0.

Shaat am nt 30th J- lS66 and rr. 6.d rt ooet 1eii

d.pnol.tion.
. If th* Bh.0. van phma in a situation d ni.sot~atin(r

ilthin 1i100miu.3wnt& on ooommeralal buii it rnile

raad 130,000.000 to 132,000,WO as a minimm valui for

the ~a.tm ropn..nt.b abme, on the bnili oia taLemoi
g01i1g 0ono.m. mis 1. bp.0
&P"c
oosts iiny i.prsoi.tim%?;,oam1amma rirtdv

.irpo.a..a. to uriro at i O-.+ ~~11. à, w othir
....
-A+. Fh. ooimiroid .&+iji...... of a& -ait '1, las
n& iit~tlm UfooCd ~ho~~*woo~lm of mtmk
..,.:
prurit. bith w th. 'miner i~~~$+~j~thop&entid womu,
.... *:..,,. a'.
Zhlo muid not b..hoila In'thiiXd~ nltllatim. mlwi . .

5, ...... ...,,,x .. . ...
4. It iui bo imui frai th.:ib?n thars ua hroabl).
......... .. :, ...
&O b.s.;.hioh osriid pomdbl~ b.'~6~pt.d.%b.ri~~u ï&l$

tbnt iovld b. i.L.b far1s th.rai& 'm a oinuro1.l bail. dilch
muid b. em.ot.6 of in hoomlu.3 'montru toklas wmr a. i golx

oomern. ~hii ri- io giron abwi as a ruiso oi :)O-12 million.

Tt il thoYght thit Shi lmor limit tbnt oould bi sxpooted to ba

plia .ml4 be tb. rdu. 8bom br th. book. - 1.0.. th. hi*torloal oomt sui diprooiition ($15.8 mililon). I. .atiut.

Of the book Tela* OS th. *@**ta 1.10 p@ra' tim, dth nsoei-

npli6iuot#, mal6 Lw 18.5 mIgiou'ihireia tho biais of takamer

am rngob meam rdd ba soir $16 million.
5. Sma pnliminu7 dienuiloui Uiit n h.~. iïr.io h.d

dth th. Ilannune Indicate mit tby inild fial that the o~.mlal

bal8 na unda m.r<LIm. mql be1l.v. tbt th. mlutlm ~hmld

b4 m0il.t one ilno. thel av th.* th. ..a.ti. .part rrom the

original ooatribution br partuer gwMwnts (LitgZ.65 dlllon

for if- in WZO), estibllshed mit of phomphito prooe.da ma
th.*. lm al1 th* r.~e trp to the laet tio Or thr... the Newuan.

bsr. no.lre8 mu tokin parmut. for the pho.phot. and consumera

lm parti.= sonrnunts. n.nkt.- .. the owltal .ceditim>.
. ..
hin bw ohr6.4 te phoaphst.i:bm r.o.ir.4 th. phmphit. at

rqdm prioe..
6. lbat viliutiom tk$;pirbar gwe'inniets roiild

ippiopliita~~nka.i . OD n+.&jau tg ~w o9.i.t.ionii ür th.

trotio.;ia thirnegothtions M;gü tb. n& or

muill pot... or *oh th.?4;,+osil.r* a.&.. It

r(&t be'luairil ?O hi #ou.;;&~<+aabiit# poiltlon .+..altlonm
bit-- th# tro *Neri r!+i?pi6'ib~, [email protected]..~itimal#

for ..oh int.nibi.t. paitliqi:< ne. .ipP-at.

-..di ior se

7. , HU, @, th. &.unts th.% 1% w0ul.3 Lw

appropriate to de for th. ~iW.o.to pw ier th. i.e.ts rouid

davind 1s mbmt-tiil put 0 th. &.n.ril p&w. of .hioh the
sali. uriwimmt form part. Clearly, the 00Mltl~1~8 ~PC~O~D

wdd b. the aapaolty of the Rauruineto de the pw-nt end

thla -.OUM be r.l.ted to the alse or th. dlatrlhtlon rmn

pho.phite m0o1.0 thit th., w0~1d pt no4 upon th* ruluatioo thut
ras belng id0pt.d for tho aoaeta. It would depend In part on

mhetber th, ar2-3weme.t lnoluded lnterwt on the outatadlng baluno.. In .iy .-ornent it 1s likiu that the lnatdment
wuid he detemined ai an .POUDt per ton ai phoipheta dallrerod,

aine* the oop.oitl to p4~ .ml6 depend M th. rolui. iold. ~s

ili auipl* Of th8 imrt of wmnt per ton thit migbt b. inrelvsd

it y L* n0t.d thit if $1 par ton on . 2 mlliiro ton umud

aztput, it rarld naod .bat 8 IePra to ripy tho 1966 book -lui
of th* anmete (1101uùlllp phomphte rights iùloh u~ aeeumed to

be trauirerrad or artin(pilahod .ithout p-nt) dihout w ohnrgs

ror inIntest. If th. Ilaururnd ahare of pbo8ph.t. nre 15 par

ton wxohlina iddniitrmtion oonte (l..., up taudi th. isr.ed

uri-1, thy would itiïl bnw i4 p.r tm rft.r allp th. p-t,

*.m., $BK. i mu. aioh .O& .&au. aep-t..
8. a04 oomrai.l.,p+oip~.m ntild indio.te thnt

i.tu.it ahcau b. paia on tbo ~+tit.ndk bilinoi. ~n.oi~.d in
.:
th. yurohui pAoe of 'th. ....te. ,mtbir. h?in.r. thii shmU he

mo in thie p+ioa+ ou. .od::d.i.nd ~-Ioo.,:+.i: on th. ioturl
.w .~.-qt~th;t.,p*.,b*.ii'::d.t.~6 .t.*.n. ..t&t" ,
!.,:.
phi....nd &..,tt.:l; ....+ qi...&rb . ;.+ . . ._a.+.~-.ph....<.. ...
.>. '.
9. rh. ,W..&: ihioh .-;++i.dG+,a ... .,eidt (:~ith,.
i..*,.."
..d~wp*u; t*;*iqb ...*q~+*&z-it..i. rnt.nd.i..h.t .. thi
. .
uia .ta.. p&~o.':io. (i..:., th..jmm'.%+i uhti p.sa n& froa
.thin.~.c. te ,thi:a&). OT .b.thu it i. intenüea thi th

prip.rty pi.; .bon paid for.

&O- If it wen intw4.d tht thi proprrt, pias na th.

.Sre.p..Mm . .Wald probebu b. b.at dealt rlth b7 e.tibliihin6

1 Cu>t i.~r.~.ntin6th. amnt .gre.d r&. of th. iasota lhioh
"oula h. 1ipuidit.d mer thi igoed p.ficd or ,.mm it sin p.= ton

or phoighat. (hiied m 2 dlum tons output). ~i a oontro asainet

tbo dohit'for th. lmntalmsnts thon iould hm a oredit for the totd

ammi 0bSg.a in th. aooountn fcz depreolatim on aassta at Nauni.
A aharge for an, pwhaoo. or aaiata rould ha made agolnst the'

naunrnno( acoount. Cm the aocond saaumption, -eu th-; thepropart, muld pua rhui th# iaaotn won pld for, the b..t9tbM

mpww to lw to onüit to iwoiai wowmi the inaulaeut
-nt. k* 4. th*~.~iinm".rid onüit tu. ~OOOM~
...
dth .n -ad Pm* of&tu-#.,:(.& .ith *t. -t.n.t .hioh tM
, .
nua. wt,,.ll, mm). .Zh. t~.)Ot..,..osa th& b* 010U.4 b,

th. us. of tbmii iiad. to py for.tLu oipltrl uiitm it tlw and mf
th. puiod.

LI. & rppr0gri.t. isthod 'oip.ILnt b th. Eumua#

~aia b. 101.-tentim ofth. infiilunte art ofth. xuuiulii'
ibr* of prog.id. offh. Pb0.phiti' Ope-uoa. ANNEX3

DEPARTME ON F TTERRITORIES.

RC/~h:cc 55/984

lI3li' SOUTH ~;19I,ESPEY:.!<TIiEigTO? III>IZS - 39YRLTYRATE3

1 discussed the question of roynlty pnyments i:ith
MP. H.W. O'Connor, Accountant and Roynlty Officer of the Ileir
South Wales Department of b!ines, on the 19th June.

2. He said the policy of the New South Mines Demrtment
durinn the flrst 20 Yearrieriod of lease is to keeo the rov.~~v .
imposf for non-metallics to n minimum. The maximum rate for
several non-metallic minernls =cent in -?se of the rn-
valunble non-mctnllics such as asbestos. orecious Stones znd the
iike 1s 1/- per ton for first 20 years of the lease. If the
lease is renewed, rates are as orescîibed by the Govsrnor. Thele
8w
- h.3 is, generally spenkinc, n sharp increase in the impost.
3 u.
22, paragraph, Thare mtnkenvaloutleof the-munitlicclass fortiroyalty in2nd nutprevonus
<OLLU a rate of 1% for first 20 yenrs of lease.
4. , *
."., "
4. MI. O'Connor mentioned that al1 Broken Hill Proprietary
G2c. general arset-upject1s 4%o on first iU00,OOO baseof profits prrising 2% for
-ou each f200,OW thereafter with no ceiling.
gi2
QC" c
. O < 5. Beach sana minerals (rutile etc.) - the present rates are -
per ton rutile
2/6- ' ' Zircon
lq% " " !.ionozite

b -8
.I U O marketrutihas collapsed. is understood, vil1 shortly be reduced as the
m ..u-
i.'"03 With regard to coal, the royalty for the iirst 20 yenrs
..La V\ of leose is 9d. per ton, the second 20 yenrs #/- per ton and the
O Y- .
O-<-.". third 20 years l/j per ton.
Ea= .a7
U. Y\ 7. - Although no 011 has been discovered, the rote laid dovn
-- - - .. for petroleum and crude oil is 10S of sross value.
3~2,: o.
!Ji. O'Comlor feels thnt based on the :!et*South !lales
1,;ininp Act, the payment of 2/G proposed for ;i'nurii1s jujt and
cornenninto the royalty snid tliît Queensland !i?s anly recently
field and they hlvo 1ar;oly follo.,:o2 i;ei? South

9. httnched is a stntement shoring the royalty,r,?tos
Walesle and providedesserforvaundere Regulationnlli115A made underin HetheSo!?ininè

Act 1906/1952.

10. It vil1 be noted that, although no ~hosnhrt~ h-is heen
Ci:co';ereC ir. t!eï South '*'ales, n royalty raie of 1/- per ton la
applicable. DEPART1!EWT-
ROYALTYRATESADPLICABIiEhi LESSZR VALUb>=

Nii!I-IIE1'N.LICS.

RÏcrnnnui! II~AXIXINO ACT 1906/52.

WAL yd per ton

YIALE yd par ton
ALUI 1i p.= t0!1

NduliiA la. par ton
ALWSTUNE 1s. pei ton

ALUNITE 1s. per ton

BARYTES 9d per ton
BAUXITE 6d- Per ton

r< ay1 BRICK CLAY 3d par ton
Xf
CAWu CALCITE 6d par ton
u IL Y CilWT 6d per ton

4 t a- CLAY91*LB 3d pe* ton
LaUa.a
" .. DIATOhUCRlUS ?%il% le. pr tan
o 5:: IULWITE 66 por ton
w O
1.. pei ton
ae; mSPh
:O: PIRECLAI 9d' per ton
.. u &UORSPLB gd por ton
'Sc
82: NUEU'S EIB~ 1.. par ton
$8 g CRüIITE yd por ton
.a-
!S-8 CïPSIN 6d per ton
'"E
'#.b8 IR013 66 par ton
clvlo- IRO!!STUNE 6d per ton
Y1
LOsU"-21 IRUN ORE 6d per ton
c ,dm1- KAOLIN 9d per ton
g=
" U- in LATERITE 6d psr ton
-22 E
PC 3 P/ LmSTU1.IE 66 per ton
az2:: YACiIESITE la. psr ton

LIARULE 9d per ton
LlIIiEiU PIMENTS Yd psr ton

OXIDE OP IROll 6d pei ton

PUT 6d per tan
Yh'RLITE 6d pir ton

PHOSPHATES" la. per ton

PIPECLAY 9d per ton
POllT4D.YCLAY 9d por ton

PYF?PHILLITE la. per ton
SU SRmS ID. per ton

SEBPEXTWE 6d I>O'ton

SLLICA 64 per ton
SWSTONE 1s. per ton

Document Long Title

Counter-Memorial of the Government of Australia