Memorial of the Republic of Nauru

InternationalCoutfJustice

Certain PhosphateLand inNauru
(NauruvAustralia)

MemorialoftheRepublicofNauru
Volume 1

April1990ERRATUM

Memorial Volume 1,Page241,Line 1,
deletetheword,'Nauni',andsubstitute,'British'InternationalCouotfJustice
Certain PhosphateLand nNauru
(Nauruv Australia)

MernorialoftheRepublicofNauru

Volume 1

April1990 Tableof Contents

Notes on Sourcesand Legislation viii

Introduction 1

PART1 ANHISTORICAL ACCOUNTOFNAURU'SRELATIONS
WTH EXTERNAL POWERS

CHAPTER 1 FROM COLONIZATION TO THE
COMMENCEMENT OF THE MANDATE 5

Section 1. Introduction
Section2. The German Period
A. Nauni Placed withinthe Marshall IslandsProtectorate
B. Land and the German Administration
C. Jaluit Gesellschaftand the PacificPhosphate Company
D. German Mining Laws

E. Nauru duringWorld War1

CHAPTER 2 THE LEAGUE OF NATIONS MANDATE

Section 1. Mandate Negotiations
Section2. The Nauru IslandAgreement of 1919and the
Establishment of the BritishPhosphate
Comrnissioners
Section3. The Administration of Nauru and
theNauni IslandAgreement
A. The Administration of Nauru
B. The Position of the British Phosphate Comrnissioners
C. The Concerns of the United States and Australia's
Response: The BaileyOpinion
D. The Permanent Mandates Commission

CHAPTER 3 THE LANDSORDINANCES
Section 1. Land Rightsand MiningRightsunder the
1919Agreement (ii)

Section2. The Lands Ordinance 1921(Nau)

Section3. The Lands Ordinance 1927(Nau)
Section4. Impact of the Lands Ordinances

CHAPTER 4 FROM THE SECOND WORLD WAR
UNTILINDEPENDENCE
Section1. The Japanese Occupation

Section2. The Transition to Trusteeship
Section3. The United Nations VisitingMissions
Section4. The SystemofPublicFinance under Trusteeship
SectionS. Control of the Phosphate Industry
Section6. Political Developments
Section 7. .The Resettlement Issue
Section8. Independence and Rehabilitation
A. The Rehabilitation Issue
B. The Davey Comrnittee

C. The General Assembly'sViews onthe Rehabilitation Issue
D. Pre-Independence Discussionsof the Rehabilitation Issue

PARTIITHE SOCIALAND ECONOMIC GEOGRAPHY
OF NAURU

Section 1. Geomorphologyand Climate

Section2. Phosphate Mining
Section 3. SocialEffectsof Phosphate Mining
Section 4. Population Growth
Section S. Nauruan Identity
Section 6. The Economy

PARTIII THE BASESOFRESPONSIBILITY

CHAPTER 1 THE BREACHES OF INTERNATIONAL LAW
FOR WkIlCH AUSTRALIA ISRESPONSlBLE

Section 1. Introduction: theurpose of thisPut
Section2. Certain ReservationsCHAPTER 2 BRElACHESOF THE TRUSTEESHIP
AGREEMENT AND OF ARTiCLE 76 OF THE
UNITED NATIONS CHARTER

Section 1. Conlent of the Relevant Obligations
Section 2. The LegalNature ofthe Obligations
Section 3. The :Panicularsof the Breaches of the Trusteeship
Agreement and of Article76 of the United
Nations Charter
A. The StatiisQuo Since 1919
The Inheritance of thisStatus Quin 1947
B.
C. The Attitudes of the Australian Government in the
Trusteestup Period
D. The Performance of the Trusteeship Council
E. The Character of the Status Quo Inherited 1947
Inhibited Performance of the Relevant Obligations
F. The SpecificBreaches of the Obligationsof Trusteeship
1. The physicaldestruction ofa major part of
the :Islandof Nauru as a unit of self-
determination accompaniedby a failure to
dischargethe responsibilityfor rehabilitation
2. The failure to report fullyand fairlyon the
finailcialaspects of the production and
disposal of the phosphate deposits
G. The Systemof the Agreement of 1919

1. The Australian Interpretation of t1919
Agreement
2. The Motivationof the Australian
Govrrnment
3. Ausiralian Reporting Practice in the period
of theeague of Nations
4. Australian Reporting Practice in the period
of the United Nations
H. The Failuie to Exercise the Governmental Authority
Appropriate to the Obligations ofTrusteeship 1. The Failure to promote the PoliticalAdvancementof the
Inliabitantsand their ProgressiveDevelopmenttowards
Self-governmentor Independence
J. The Failure topromote the Economic,Social,Educational
and CulturalAdvancernentof the Inhabitants
K. The Failure to Respectthe Land Rightsofthe
IndigenousInhabitants

CHAPTER 3 BREACH OF INTERNATIONALSTANDARDS
APPLICABLEIN THE ADMINISTRATION
OF THE TRUSTEESHIP
Section1. Introduction

Section2. Breachofthe Pnnciple of Self-Determination
Section3. and Natural Wealth and Resourcest Sovereignty

Section4. The Statusof the RelevantPrinciplesasJus Cogens
Section5. the TrusteeshipAgreementAnnAlternative Approachand

CHAPTER 4 DENIALOFJUSTICE LAT0 SENSU

CHAPTER 5 ABUSEOF RIGHTSAND
Am OF MALADMINISTRATION

CHAPTER 6 BREACH OF THE DUTIES OF
A PREDECESSOR STATE

Section1. A General Principleof Responsibility
Section2. Applicationofthe Principle inthe Present Case
Section3. Conclusion

CHAPTER 7 THE UNLAWFULDISPOSALOF THE OVERSEAS
ASSETSOFTHE BRITISHPHOSPHATE
COMMISSIONERS

Section1. Background:The DisposalofAssetsin1987
Section2. The Nauruan Response
Section3. The Nauruan Claims

CHAPTER 8 THE FORMSOF LOSSCAUSEDTO NAURU
Section1. Introduction Section2. The VariousForas ofLoss
A. The CostsofRehabilitation ofthe Worked-Out
Phosphate Lands
B. Economiclosscausedbythe Failure ofthe Respondent
State to rnzikean EquitableReturn in Relation tothe
processofextractingphosphate
C. Lossof LaiidUse
D. Reparation in Respect of theymentfor B.P.C.Assets
PurchasedwithNaunian Funds
Section3. Conclusion

CHAPTER 1 INTRClDUCTïON

CHAPTER 2 THE REGIME OFTHE NAURU ISLAND
AGREEMENTS 1919AND 1923

CHAPTER 3 THE RELATIONSHIPBETWEEN
THE AUSTRALIANADMINISTRATIONAND
THE BRITISHPHOSPHATECOMMISSIONERS

Section1. 1ntrodui:tion
Section2. The NaiiruAct1965 (Cth)
Section3. ActualItelations between Australia and
the BritishPhosphateCommissioners
A. Disputesovr:rthe LandsOrdinances
B. Conclusion

CWR 4 THE BliITiSH PHOSPHATECOMMISSIONERS'
ACCOCNTSAND AUSTRALlANRETICENCE:
INFERElNCESTO BEDRAWN

Section1. The AustralianPositionon FinancialReporting
Section2. Criticisrrsofthe AustralianPosition
Section3. The Acci~untinSystemforNauni
Section4. Significaief the Failure to ReportCHAPTER 5 PROPOSALSFOR RESE'iTLEMENT AND
REHABILITATION: IMPLICATIONSOF
THE AUSTRALIANAPPROACH

Section 1. Introduction
Section2. Resettlement Proposals

Section3. Rehabilitation Proposals

CHAPTER 6 THE SIGNIFICANCE OF THE TRANSACTIONS
SURROUNDING INDEPENDENCE

Section 1. The Respondent's Position
Section2. Nauruan Insistence on the Rehabilitation Claim
in the NegotiationsLeading to Independence
Section3. The Rehabilitation Issue before the
United Nations,1967
Section4. Affirmation of the Claim after Independence
Section5. Conclusion

PARTV THEREMEDIALPOSITION

Section 1. The Relief Requested
Section2. Basisof Australian Responsibility

A. Presumption of Severalor Concurrent Responsibility
B. Application of the Presumption in the Present Case
C. The SpecificRole ofAustralia in the Administration
of Nauru and in Negotiating therrnsof
Nauruan Independence
D. Non-Existenceof Procedural Obstacles in the Present Case
Section3. Liberty ofNauru as to Choice of RemediesConclusion

Affirmation
Confirmation
Documents
Reservation

Submissions

Appendices 251

1. "StatementbyHammer DeRoburt, O.B.E., G.C.M.G.,M.P., 252
Head Chief,Nauru LocalGovernment Councii"
2. "Estimatesof theF.O.B. Cost of Nauru Phosphate, the
Commercial Price forNauru Phosphate and the
Lossof Earnings fromthe Underpricing of Nauru Phosphate"
by Mc.K.E.Walker 259
3. "AComparative Surveyof the LawofTrust and Trust-like
Institutions"byProfessor A.M.Honoré,Q.C., F.B.A. 353

List of Annexes 379 NOTE ON SOURCES

The foiiowingworks are cited frequently in thi Memorial, and copies of them have been
lodgedwiththe Registrar OCthe Court for convenient reference:

B. Macdonald,In Pumiifof fheSacredTnisf,New Zealand Institute of International
Affairs,OccasionalPaper No. 3,1988

Republic of Nauru, Commissionof Inquiry lnto the Rehab'itation of Worked-Out
Phosphate Lands of Nauru, Repm, 10vols.,1988

M. Wiams & B. Macdonald, The Phosphateers,Melbourne University Press,
Carlton, 1985

N. Viviani,Nauru.Phosphate andPoliticalProgress,Australian National University
Press, Canberra, 1970

NOTE ON LEGISLATION

In this Memorial the abbreviations "(Cth)" and "(Nau)" are used for legislation applying to
Nauru. The fust refers to legislationof the Parliament of the Commonwealth of Australia
enacted for Nauru under the territories power in the Australian Constitution (section122):
e.g., Nauru Act 1965 (Cth). The second refers to ordimances made by the Australian
Administrator and applyingto Nauru: e.g. Lands Ordiiance 1921(Nau). Laws made by the
Parliament of Nauru after independence are cited in the foiiowing form: Customs and

Adopted LawsAct 1971 (Nauru). INTRODUCTION

1. In a Note dated 20 May 1989(Annexes,vol.4,Annex 80)addressed to

the Australian Government, the Government of Nauru reported that it had
lodged an Application with the International Court of Justice in pursuit of its
claim for rehabilitation of the phosphate lands in Nauru mined out before
the independence of Nauru. In this Note the Applicant State stated that it
wished to record "that it has taken this step reluctantly and only after

repeated efforts and requests, dating back to Nauru's independence in 1968,
aimed at achievinga diplomaticsettlement of the claim".

2. The relevant correspondence appears in Annexes,vol.4, Annex 80 of
the present Memorial.

3. The Australian Note dated 31 May 1989in response to the Nauruan
Note dated 20 May 1989included the followingassertions:

'TheAustralian Governmentrecalls that the report of the Commissionof Inquiry
into the question of Rehabilitation is a complexand lengthydocument whichwas
not received in Australia until February 1989. The report raises many difficult
issuesof fact andawwhichrequire considerationby Ministersand Departments
of the Australian Government. Proper consideration of the report in the viewof

the Australian Government requires longeran the period that has elapsed.
Moreover,the Department's Note No. 167188dated 20 December 1988indicated
lhat the Government of Nauru had not completedils own consideration of the
report and intended to provide further advice on its position. The Australian
Government had not received anyhirther notificationin this regard prior to the
advice[rom the DeputyRegistrar of the International Court ofJustice that Nauru

had commenced proceedings againstAustraliaon19 May1989.
In the meantime the commencement and continuation of legal proceedigs
againstAustralid in the International Court of Justice can only make discussions
between Australia and Nauru of the matter more difficult.The Australian Governmentthereforr expressesthe hope that Nauruwüi reconsider the question
of proceedings in the International Court of Justice. If proceedings are to
continue,the Australian Govemment willhave no option but to take ailnecessary
steps to protect itsie~;alposition."

4. In a Note dated :19June 1989the Govemment of Nauru comrnented

as foilowson the viewseupressedin the previous Australian Note:

"The Department wishes to record that the legal position of the Republic of
Nauru with respect to the phosphate lands mined before Independence is a
longstandingone, whichwas restated in the Department's Note No. 16711988in
terms which were no! dependent on (though they were consistent with) the
conclusionsof the C(,mmissionof Inquiy. As the High Commission'sNote of

31st May, 1989 recded, the consistent reponse by the Commonwealth of
Australia to that demand has beenthat Australia was cleared of responsibiity by
the Nauru Phosphate Island Agreement of 1967, a view which Nauruan
representatives denicd at the time and which the Republic of Nauru has
consistentlydenied sioceIndependence. In these circumstaocesthere is clearly a
fundamental difference between the two Governments on an issue of principle,
the resolutionof whichis apt forjudicialsettlement.

The Department wishes to record its view, a riew which it understands to be
shared by theComm3nwealthof Australia, that judicial settlement of disputes is
an appropriate methi~dof resolution of disputes behveen friendly countries and
that the commencement of proceedimgsin a particular matter no! only has no
adverse implications forthe generai relations between the Statesconcemed, but

does not prejudice continued discussions between the parties with a viewto the
resolution of the disputeinquestion by other agreed means. The Department
wishesto reaffm its willingnessto discusswith the Commonwealth of Australia
the ways in which the Australian responsibility with respect to the lands in
questionmightbe cairied out.

On a point of detail, the Department notes that it provided acopyof the Report
of the Commission ol'Inquiryto the High Commissionon20thDecember, 1988."

5. In its Order datc:d 18 July 1989 the Court fixed time-limits for the
written procedure in this case. The Government of the Republic of Nauru

has the honour to preseiit this Mernorial in accordance with the Order of the
Court. PART 1

AN HISTORICAACCOUNTOF

NAURU'S RELATIONS ITHEXTERNALPOWERS PART1

CHAPTERl

FROM COLONIZATlONTOTHE COMMENCEMENTOF THE
MANDATE

Section 1. Introduction

6. The Island of Nauru constitutes the total land territory of the
Republic of Nauru. It is situated in the CentralPacific,just 42 kilometres
south of the Equator, and has a land area of 21square kilometres.

7. In the latter part of the nineteenth century it was populated by its
indigenous people in numbers somewhere between twelve and fourteen
hundred. Contact with the outside world to that time had been spasmodic--
islanders blown off course from neighbouring Banaba (otherwise known as
Ocean Island) and Kiribati (formerly the Gilbert Islands), the occasional

whaling ships seeking food and water, and the odd European beachcomber
and trader. Owing to its substantial forests and lush tropical growth, it was
known to European explorers as Pleasant Island, and was so marked on
contemporary charts.

8. From 1888,it came under German control and remained under the
control of external powers, Germany, Great Britain, Australia, NewZealand
(and briefly,from 1942-1945,Japan) until it achieved independence in 1968.
Phosphate rock was discovered on Nauni in 1900and thereafter the island
became increasinglyimportant as a principal supplier of phosphate rock to
Australia and New Zealand, both of whose soils were deficient in
phosphorous. In World War 1,Nauru was seized from Germany by the
Allied Powers and then by the Japanese in World War II, when i: was

relentlesslybombed bythe Alliesto prevent the production and export of the
phosphate rock to Japan. To the present time, it remains the principal
supplier of rockphosphate to both Australia andNewZealand.9. Nauru is a raiscd atoll composed of limestone with a mantle of
phosphate rock. On the topside plateau of Nauru, the sea of dolomitised

limestone pinnacles is srnothered for the most part, before mining, by a
mantle of phosphate rock up to 24 metres thick. The phosphate was
probably formed from avian guanodating back some 300,000years, but there
is evidence that the isla.ndhas been submerged twice below sea level. The
phosphate rock is formed only on the plateau about 60 metres above sea
level and is renowned for its purity and consistency. The impurities have

been removed by 1eac:hingor action of the sea when the island was
submerged. Most of the phosphate rock is granular, but hard precipitated
rock phosphate is alsofound.

Section 2. The German Periodl

-. F.4URU PlAcl:nW~IIXTHE m RSHALLISLANDPSROTECTORATE

10. Under the Anglo-German Declaration of 6 April 1886 (British and
ForeignState Papersvol. 77 p.42)', a line of demarcation was drawn in the
Central Pacific extending from the Solomon Islands in the south to a point
north and Westof the Marshall Islands. Territory to the Westof the line was
deemed to be within the German sphere of influence, territory to the east

within the British. The line brought the island of Nauru withinthe German
sphere of influence. A further Declaration signedon 10April 1896provided
that there was to be rrciprocal freedom of trade in the possessions and
protectorates in theare;i (Britishand ForeignState Papersvol.77 p.44). The
inclusion of Nauru within the German sphere was apparently deliberate
rather than fortuitous. 'me original demarcation line had been drawn to the
West of Nauru, placing the island within the British sphere of influence.

Germany insisted on a modification to bring Nauru under its control in view
of the activitvof Germail traders there, and Great Britain agreed. (Deutsche
Handels & ~lanta~en Gesellschaft der Südsee-Inseln zu ~imburg to Royal
Prussian Ambassador. 4 October 1887. German Central Archives. Nauru.
Gerrnan ~dministratiori Official ~ecords 1898-1916,Pacific ~anuscri~ti
Bureau, Australian National University,Canberra.)

' PanIofthis Memoriaiconstitutcsahistoricalaccounf.
Rcferenresare pnwidedforthc fartsstatedandihc assenions made,butonlyrcferencesof panirularsignificanîc
Io this Mernorialare matrhedby dcrumenisAnnexesOthcr documentsrefcrredIo will be made
amilabto the Covn andthe RespondeniStateuponrcqucst. 11. The Imperial German Government byproclamation placed the Island
of Nauru within the Protectorate of the Marshall Islands on 16 April 1888.'
However the actual occupation and control of Nauru by Imperial Germany
could be said to date £rom 1 October 1888,with the arriva1of the Impenal
German Cornmissioner from Jaluit in the Marshall Islands. In the usual

marner of German Colonial administration the large German trading
company, Jaluit Gesellschaft, played a major role in financing the
administration of the protectorate and as a result obtained a number of
economicprivileges. (See para. 14.)

12. In 1906,as part of a reorganisation of German colonial administration

in the Pacific,the Marshall IslandsProtectorate, includingNauru, wasplaced
under the administration of the German Colony of New Guinea with its
administrative centre at Rabaul.

13. The central feature of Nauru when the Germans arrived was the
settled ownership of land. Occupation was settled and land carefullydivided

into individually owned blocks. There was no ownerless land. This was no
new phenomenon. Nauruan socieiy before European contact had a
developed system of land tenure with strong principles of succession on
death, enforced by sanctions and chiefly authority. Under the German
administration, a Grundbucllwas compiled of some 1666 separate units of
land holdings. Traditional ownership was recognised by the German

administration, and dispute settlement by the German magistracy took full
account of local customary law. (Seeparas. 16,225-228.)

14. Trading companies, such as Jaluit Gesellschaft, were accorded an
important role under the German Schutzgebiete system. In return for

financingthe administration, the companywould obtain significanteconomic
privileges. In the case of the Jaluit Gesellschaft it was accorded
concessionary rights by the agreement of the Reich Chancellor in 1888
(Agreement between the Imperial German Government and Jaluit
Gesellschaft, 21 January 1888, referred to in Agreement between King
George V & Others and Pacific Phosphate Company Ltd,25 June 1920,First

Schedule, National Archives of Fiji, Pacific Phosphate Company, see
- -
' IGerma" colonlawthexpressionSrhuugrmcanin'apmiercedicmtosaspxfcrre10'mlony'.Annexes, vol. 4, Annexes 45). In accordance with those nghts Jaluit
Gesellschaft could take possessionof ownerlessland. It also had the right to
fish for pearl shell and to exploit guano deposits inthe Marshall Islands and

Nauru. In 1888, however, there was no great expectation of phosphate
operations on Nauru.

15. Sovereign power was exercised over territories with the status of
Scliutzgebieteby the Eniperor in the name of the German Reich. In practice,
the Sc/zutzgebietewere controlled by the Impenal Chancellor, who exercised
the powers of sovereigiitypossessed by the Emperor. His instructions were

carried out by the German Colonial Office through resident Impenal
officials.

16. So far as indigenous peoples were concerned, German law applied
onlywhen suchlawswere specificallymade applicable by Impenal ordinance
(Schutzgebietegesetz19C'OArticle 4, DeutsclzeKoloniul Gesetzgebung,vol. 1,
pp.23-28.) The principle was that the private and customaryland rights of
the indigenous people continued after occupation, unless there was an

Imperia1 ordinance to the contrary. Thus in the case of indigenous land
rights, existing rightsa~d titles were recognised onethe basis of customary
law. This was the case inNauru. The German administration was careful to
protect the rights of tlie indigenous population with respect to land. A
registry of land holdings was kept and any land held by a non-Nauruan was
also listed. In 1912ofihe non-Nauruan holdings,three properties belonged

to the Fiscus, two to an individual trader, three to the Pacific Islands
Company, four to the Roman Catholic Mission, and five to the Protestant
Mission; in total about fivehectares. Thiswasthe fullextent of non-Nauruan
land holding.

ç. JALUITGFSEI.LSCHAFAND THE PACIFTPROSP&MT COMPAiW

17. An English company, the Pacific Islands Company, first discovered
rock phosphate on 0ce;in Island (Banaba) and Nauru in 1900.(M. Williams
& B. Macdonald, Tlie Pl~ospltuteersM, elbourne University Press, Carlton,
1985,pp.30-40.)The Companypersuaded the British to annex Banaba, which

was on the British side of the 1886 demarcation line, and to give that
company exclusive mining rights. But with Nauru it was necessary for the
company to make overtures to Jaluit Gesellschaft, which it did. As a result,
in 1900Jaluit Gesellschaft assigned its rightsin respect of phosphates to the Pacific Islands Company (which in 1902 became the Pacific Phosphate
Company). In return for the assignment the Company was to pay Jaluit
Gesellschaft a royaltyper ton for phosphate mined.

18. The Concession of 1900was due to expire on 31 March 1906. In

November 1905, a new concessionwas granted to Jaluit Gesellschaft for a
period of 94 years, with effect from 1 April 1906. The 1905 Concession
provided as follows:

"The Jaluit Geseiischaft may, withthe consent of the Imperial Chancellor,
withoutprejudiceto its continuedresponsibiityfor the duties imposedon it by
thisconcession,transfer theexerciseof itsrightsto thirdparties."
(Containcd in Agreement between King George V & Oihers and Pacific
PhosphateCompanyLtd,25 Junelm, Fust Schedule,NationalArchivesof Fiji:
Pacific PhosphateCompany:see Annexes,vol.4,Annex43.)

19. On 22 January 1906, after approval had been obtained from the
Imperial Chancellor, Jaluit Gesellschaft assignedthe rights derived from the
1905 Concession to the Pacific Phosphate Company. (See Annexes, vol. 4,

Annex44.)

20. Under the agreement between Jaluit Gesellschaft and the Pacific
Phosphate Company,the Companywas to fulfilits duties in accordance with
the Concession. Jaluit Gesellschaft obtained significantshareholdings in the
Company,a seat on the Board of the Company and a capital payment on the
signingof the Agreement.

21. In an amending agreement of February 1906 (See Annexes, vol. 4,

Annex 44)Jaluit Gesellschaft was to be paid a royaltyof one shillingper ton
of phosphate shipped out of Nauni and Ocean Island. At the time of
concluding the main agreement, Jaluit Gesellschaft and the Imperial
German Government had learnt of, and understood the extent of, the
phosphate field. The Agreement represented a compromise between the
basic interest of Jaluit Gesellschaft in copra and trade and that of the Pacific
Phosphate Company in the exploitation of rock phosphate, the market for
which was going to be largely Australia and New Zealand. The Agreement

not only gave Jaluit Gesellschaft aninterest in the Company,but also in the
Con~pany'smine in Ocean Island (Banaba). At the same time, Jaluit
consolidated its monopoly in copra and trade throughout the Marshall
IslandsSchutzgebiete. Mining by the Pacific Phosphate Company was due tocommence on Nauru in.1907. On Ocean Island (Banaba) mininghad begun
as early as October 1901).

22. Meantime, the rnining laws of Germany had been undergoing some
change. In principle German lawseparated wealth-producingminerals from
the ownershipof land. .Athree-fold classificationof rights existed: ownership
of land, ownershipof ~inerals and the right to work the minerals. Basically
there was freedom to niine, but under the Prussian General Mining Lawof

1845, for example, this freedom was curtailed by a number of legal
requirements.

23. The original Agreement between Germany and Jaluit Gesellschaft
gave to the latter,interaliu, the right to exploit the existingguano deposits,
and was expressed to br "irrespectiveof the vested interests of others". At
that stage the mining of rock phosphate was not contemplated. Exploiting

guano deposits was not much more than a collecting operation.
Furthermore, guano wa!;not considered to be a mineral outside the disposa1
of the landowner,such as gold,silveror iron.

24. A major change occurred in 1907 with the promulgation of the
Imperial Mining 0rdina.nce for the African and South Sea Protectorates of
1906 (Deutscl~eKolonial Gesetzgebungv , ol. 10, pp.36-55). Phosphate was
then declared to be excliidedfrom the landowner'scontrol. In other words,it

became a free mineral. WhilstJaluit Gesellschaft attempted to escape some
of the more stringent provisionsof the 1906MiningOrdinance, a supplement
to the 1905Concession was added in 1907, whichmade clear the extent of
the application of the 1906Mining Ordinance to the 1905Concession. That
supplement (DeutsclteKolonialGesetzgebung,vol. 11, pp.121-123)stated as
follows:

"Theexclusiveright,ofthe JaluitCompanyaccordingto the concessionof 21st
November 1905 to exploit the existing Guano (Phosphate)deposits in the
protectorate of e arshallIslands, irrespectivevestedintzrestsof others,
shall be supplementedand confimed on request of theJaluitCompanywith
effect from 1st April 1906, afier the Imperial Bergverordnung[Mining

Regulations)of 27th February906,(R.G.p.363)for these protectorates came
into effecton1stApri11906.Inthisareaonlythesections1IIto 3d,2, 52-56,58, 60, 69-89, 91, 92 and 96 of the abovementMining Regulationsshaii be
appliedto theGuano (phosphaextraction.
The content of eoncessionremaiusothenviseunaffected."

25. Articles 69-89 of the Ordinance were thus made applicable to
phosphate extraction in Nauru. These Articles set out the obligation of the
miner to the landowners. In particular, Articl78 provided for compensation
for the reduced value to the surface use of the land arisingout of the mining

operations. This Article applied to any form of open cut or cast mining,asin
the case of the miningof rock phosphate at Nauru. Article 84 dealt with the
subject of unintended damage whichwas notpart of the operation itself. The
nature and extent of liability for such damage would be governed by the
general niles as to damages in private law under Article 249 of the Civil
Code (BügerlichesGesetzbuch[BGB]). In principle,the miner washeld liable
to restore the surface under the German doctrine of "Naturalresti~tion".
Such a responsibilitywas aimed at immediately and permanently restoring
the affected property to an equivalent previous economic state. Where

restoration was impossible then the miner was required to compensate the
landowner in money damages measured by the diminished value to the
landowner. In such cases, the obligor was the mine operator: where the
operator was a different person from the holder of the mining title, the
operator and not the title-holder wasthe obligor. Thus the PacificPhosphate
Company became the obligor through the assignment of the Concession in
January 1906. Similarlyunder German law the obligations thus assumed by
the Pacific Phosphate Company upon the assignrnent of the Concession

would have devolved upon the successor, the British Phosphate
Commissioners,in respect of al1the mined land.

26. The German period illustrates at least some solicitude for the
interests of Naunians, at least as far as concerned the law relating to the
rehabilitation of the mined land. Cale was to be exercised in choosingthe
areas for initial miningby the commercial operator, under the supe~sion of
localofficials. The German Imperial Commissionerat Jaluit insisted that for
every ton of phosphate mined by the Pacific Phosphate Company, the

indigenous landowner on whose land the miningtook place was to be paid 5
pfennigs. It is not clear what this payment was meant to represent. Roth
Jaluit Gesellschaft and the PacificPhosphate Company saw it as a once and
for al1payment. These companies evidentlyhad no interest in pursuing their
responsibilitiesnder the Mining Ordinance, and there was no indicationtliat any Nauruan owners were at al1aware of their rights under the Mining
Ordinance.

27. German law tre:ated the right of action for compensation under
Articles78 and 84 of thi: Mining Ordinance as something more than a purely
contractual matter between the miner and the landowner. The German
State had interfered wi.ththe rights of the landowner to allow the miner
access. The State therelore wasat pains to compensate the injured Party, the
landowner, for a sacrifice rendered by the landowner for the publicpurpose
of mining. The sacrifice imposed upon the landowner by the state as a

consequence of licensirig the mining activities consisted inthe landowner
being deprived of his right of enjoining interference with his property.
Articles 78 and 84 were:the quidpro quo for this deprivation. The German
CivilCode therefore placed significantobligationsupon the miner.

28. With the outbreak of World War 1,Nauru was seized and occupied by

a small force of Australian troops and placed under the control of a
Cornmissioner responsi1)leto the British High Commissionfor the Western
Pacific, situated in Suva, Fiji. The island remained under British
administrative control ihroughout the war and until June 1921, when the
Mandate Administratioi-iwas established. Phosphate mining by the Pacific
Phosphate Company, now British staffed, continued through this period. In
1915, the Gerrnan shari:s in the Company were placed in the hands of the
Public Trustee as enem:iproperty by the British Board of Trade. To ensure
the continued operation of the Company through the war, al1Gerrnan stock
was eventually sol<!at auction in Great Britain in July 1917 to a British

shipping firm.(N. Viviaiii,Nauru. PllosphuteundPoliticalProgress,Australian
National University Press,Canberra, 1970,p.41.) PART 1

CHAPTER 2

THE LEAGUE OF NATIONSMANDATE

Section 1. Mandate Negotiations

29. With the conclusion of World War 1 and the defeat of Imperia1
Germany and the Ottoman Empire, the distribution of the former coloniesof

these two powers wasat stake. The United States, in the person of President
Wilson,pressed for a systemof mandates administered through the proposed
League of Nations. On the other hand, particularly amongst the Dominions

of the British Empire, annexation was the most favoured course. In respect
of South West Africa,New Guinea and Nauru, and Samoa, annexation was
stronglyadvocated by South Africa,Australia and New Zealand. No greater
advocate of annexation was to be found than Prime Minister Hughes of

Australia. There was thus a strenuous confrontation between President
Wilson and Prime Minister Hughes at the Paris Peace Conference. (P.
Spartalis, DiplonlaticBatrles of Bilb Hughes, Hale & Iremonger, Sydney,

1983.)

30. In the viewof the United States,the mandatory principle embodied in
the term "the sacred trust of civilisation"was overriding,and the interests of

the indigenous peoples were accordingly to be treated as paramount. By
contrast, Australia fought hard for outright annexation of both New Guinea
and Nauru.' The argument for Australia with respect to New Guinea was

' Hughes view of the mistibidly erprcsrcd in h10the Govcrnor-General of Australia on 17January
1919:

100.But 1 hope we shall convince him.we rhall for he ir a man fim on nothing that really
mattcn.He regards the League of Kations as the Great Chaner of the World that is to be and sees
himrelf through the roreate Cloud ofdreamasaihe High Prieri in the Temple in which the
Srcaphagus or Ark containing ihc body or ashcr of this amazing gifr to Manbind ir to rest in majcrtic
seclusion for al1rime. Give him a League of Salion:us al1the rcrt. He shall have
his toy! Whal shape is [il])-oask. Sone how.He leart of all. ïbis is the literal tnith. He
docs not hou: hc is indeed incapable of reducing ihis idcal of his Io an?shapc or applling il ta the acrualbased on national secui,ity,and encompassed both the BismarckArchipelago
and the Solomon Islarids. On the other hand, with respect to Nauru the
argument was unasha:inedly econornic, as Hughes' memorandum to the

British Empire Delegation makes clear:

The Islands which, under Lord Milner's scheme it is proposed to hand over to

Australia, whilesszntial to our safety,WUinvolveus in very heavy expenditure
foradministrative and other purposes. Nauru, on the other hand,is an Island
containingveryvalriablephosphate deposits. At the outbreak of war it was taken
by Australian troops and has been since and stilisgarrisoned by our forces.
Certain persons kn4,wnas the Pacific Phosphate Co. Ltd. claim to hold a lease or
authority to work t'besedeposits but every attempt made by the Commonwealth

Government to obt;h productionof the company'stitle has been unsuccessfui.
The position therefore i--while Australia had thrown upon her the whole task
of wrestingthis island with others from Germany and has been saddled 4th the
whole cos! of garrijoning and administratingthem, the only means by which the

returns wouldexcecdthe expenditurewouldunder the proposed schemebe taken
away from her. This, 1 am sure, WU appeal to you as being, in aü the
circumstances, unf:iii, and 1 therefore venture to hope that the matter wiü be
reconsidered andNauru handed overto Australia."

(Lloyd George Pzpen, Beaverbrook Library, London, F/28/3/34, 13 March
1919.)

31. The clash over these former German colonies produced a
compromise within th,: overall framework of the Mandate system. Thiswas

the "C" class mandate: used for South West Africa, New Guinea, and Nauru
which maintained the basic principle of the mandate or sacred trust, but
allowed the mandator{ powers to administer the territories "under the law of

the mandatory state lis integral portions thereof'. The reasons for such a
form of administratioriin these former German colonieswas ascribed "tothe
sparseness of their pc'pulationor their small size, or their remoteness from

the centre of civilisat:lon,or their geographical contiguityto the mandatory
state" (Article 22 of the Covenant). The "C" class mandate did not contain
the "open door" obligation, viz. "to secure equal opportunities for trade and
commerce of al1 othw members of the League of Nations". This was a

source of some differencewiththe United States (see paras. 59-62).

cirrumstances of mankind.har 16Sccretansnd about100ncwspapcrmen - hisspecchcare
translarinIo al1langu-ginevcrmuntryofthewarld."

DiplomaricBariofBilpHt<gheHale8: IremongSydney19â1p.122.). M.S. 69612756,qvotcd in P. Spanalis,32. Under the Treaty of Peace with Germany signed at Versailles on 28
June 1919, Germany by Article 119 renounced in favour of the Principal
Allied and Associated Powers al1her rights over her overseas possessions.
But the Mandate for Nauru wasnot finallyconferred until17 December 1920
(Annexes,vol 4, Annex 27).It was awarded to "HisBritannic Majesty",and it

wasonly followingdifficultnegotiations withinthe BritishEmpire Delegation
that theform of administration wasfinallysettled.

33. The Australian Prime Minister, still seeking sole Australian control,
was initially confronted with strong opposition from the British Colonial
Secretary, Lord Milner, who proposed that Nauru shouldbe administered by
the High Commissionerfor the Western Pacificthrough the adjacent Gilbert

and Ellis Island Colony,which nowincluded Ocean Island (Banaba). Lord
Milner considered that the twophosphate islands shouldbe regarded as "one
economicproposition" (LloydGeorge Papers, Beaverbrook Library, London,
Lord Milner to LloydGeorge, F/28/11/14,22 April 1919). His proposal was
for a British administration with a joint Commissionof the three partners
(Great Britain, Australia, and New Zealand) to control the phosphate

mining, as the supplyof phosphate rock was so large that "there is plenty for
al1 three of us". He regarded the Australian requests for administrative
control as absurd.

34. On the other hand, the Australian Prime Minister, after prompting his
Cabinet in Australia, received the followingCabinet message with which to
influence the Britishgovement.

"Nauruü the one islandwhose receiptsexceed its expenditure. Its phosphate
deposit makes it of considerablevalue notnly asa purely commercial
proposition,butecause the futureproductivityof our continent absolutely
dependsonsucha fertiliser.
Withouta sure andreasonablycheapsupply of phosphaeur agriculturemust
languishand insteadof people-ingour vast unoccupiedinteriorpopuwiUion
continueto hugtheseaboard where thyU be a comparativeasypreyto any
predatorypower."

(Hughes to Mier, 3 May 1919, Lloyd George Papers,BeaverbrookLibrary,
London,F/28/3/34.)

35. This bald economic argument was fortified later by comparing the
vast agricultural needs for phosphate of Australia with those of New
Zealand. Under pressure from Australia, the United Kingdom sought somecompromise, for New Zealand was not happy to leave Australia in sole
control. (B.Macdonald, In Pursuitof the Sacred Tmt, New Zealand Institute
of International Affairs,OccasionalPaper No. 3,1988,p.12.) In June 1919,it
was decided that the inandate would be adrninistered jointly by Australia,

NewZealand and the United Kingdom,but that Australia shouldappoint the
firstAdministrator, whowould hold officefor fiveyears.

Section 2. The Nauni Island Agreementof 1919and the Establishment of
the British Phosphate Commissioners

36. The future of ;:he indigenous inhabitants of Nauru appeared to be,
and indeed was, far fiom the concerns of the participants in this battle for
access to the phosphate fields. The participants' real concern was
demonstrated with the signing of the Nauru Island Agreement between
Australia, New Zealand and the United Kingdom on 2 July 1919: see
Annexes, vol. 4, An~iex26. The Agreement was approved by Acts of
Parliament both in Aiistralia and the United Kingdom and by a Resolution
of both Houses of Parliament in New Zealand. (Australia: Nauru Island
Agreement Act No. 8 of 1919;Great Britain: Nauru IslandAgreement Act
1920, 10 & 11 Geo..V., Chap. 27; New Zealand, ParliamentcuyDebates
(House) vol. 185,p.821,(Council)vol. 185,p.962.)
37. When introduc:ingthe Nauru IslandAgreement Bill in the Australian

House of Representai:ives,the Australian Prime Minister made the following
observations:

"Withoutphosphates Australiacannot progress. We are a progressive nation,and
year by yearreqiiire a greater supply of this necessity. This agreement which
vestsin us,as one of the parties, 42 percent of the total output of the island,gives
us a most valuabc asset, no1one that endureth for a day,but an asset that wiii
last for a century or more. II WU give the agriculture of this country, at a
reasonable rate, the material whichis its verylife blood. We shall be able to sell
phosphates to the farmer at cost price; that is to say, the price at which the
Commission is able to get the phosphatic rock into the ship, transport it to the
port of dicharge, and there turn the rock into the form in whichit is immediately
available for us,: by the farmer. The agreement, therefore, is of immense
importancetothi:agricultural,and even the pastoral welfareofAustralia and wiii
be set-offagainstthe huge expenditurewhichwe incurred duringthe wu."

(Australia,Parlir;niery ebures(HoiiseofReprese~ttati)4 September 1919,
p. 12679.)This view was supported by P.E. Deane, Secretary to the Australian
Delegation at the Peace Conference,whowrote:

"If we take a consewative figure and value the total deposits at 400,000,000
pounds--Australia'sshare on the bais of allotment already agrisno less
than 168,000,000pound..Itis impossibl..to estimate the enormous value of
this island to Austr..It not only ensures to the farmer, freal1outside
interference and control,hisfdi requirements ofphos--but does so at cost
price."

(P.E .eane, "Australia'sRights: The Fight nt the Peace Table", Melbourne,
undated, p.15.)

38. There was a measure of unease about the haste involved in the
conclusionof the Agreement and the need for secrecy,at least on the part of
the United Kingdom. By secret despatch to the Governor-General of New
Zealand, Lord Liverpool, on 16 July 1919,the British Secretary of State for

the Colonies sent a copyof the proposed Agreement and added this remark:

"Confidentialfor the present, as it isundesirable thatits existenceshould become
knownpubliclybefore the wholequestion ofMandates has been fmallysettled."

39. The agreement anticipated the outcome, for it was concluded before
the Mandate was awarded and before a sale by the Pacific Phosphate
Company to the three governments had been effected, even though by
Article 6 title to the phosphate was purportedly vested in the British
Phosphate Commissioners.

40. When the Nauru Island Agreement Bill was debated in the British
Parliament, considerable criticism was levelled at the Agreement on a
nurnber of grounds. One was the failure to submit the Agreement to the
approval of the League of Nations. This was eloquently expressed by
Colonel Wedgewood:

"Everybodyknowsthat this is a test case and if the BritishEmpire came forward

and said that theywouldsubmit thisagreement, not merely as to the treatment of
natives but also as to the closingof the door to the League of Nations and take
their dccision,then their actionwoulddo more to establishthe League of Nations
than any<hingelse that they are likelyto haveit in their powerto do. It would not
only establish the British Government tothe rest of the Governments of the
world.H.ere we could take the first step and if wedid take the fust step in sacrificingowom materialinterestsfor therest of the worldother couutries
mightacton the:samelines."

(GreatBntaio,PvliantentaryDebates,Houseof Commons,vol.132,col.192.)

41. The criticism was also made that the Agreement violated the equal
opportunities provision (colloquialiytermed the open door) of Article 22 of
the Covenant. The Marquis of Crewe (Great Britain, Parliamentary
Debates, House of Lards, vol. 41,cols. 633, 634,635) and Lord Ernmott (id.,
col. 637) were particularly critical of the monopoly provisions. But even

more forthrightly, the former British Prime Minister, Asquith, made the
followingcomment:

"Iridegal inits.origin,unequinits operatiitisopposedinalirespectsto ali
oftheletterandthespiritof the Covenatf theLeagueofNation..."
(GreatBritain,l'arliamenlDebates,Houseof Comntons,vol. 130,p.1323.)

42. Lord Roberi. Cecil moved an amendment that the agreement be

confirmed "subject to the provisions of Article 22 of the Covenant of the
League of Nations". This amendment wascarried in the Standing Committee
and accepted in boh the Houseof Commons and the House of Lords: see
Nauru Island Agreement Act 1920 (U.K.) section l(1); Annexes, vo1.4,
Annex33.

43. The Agreement was to prove exceedinglydurable. Apart from one
amendment in 1922,(see para. Sl) t remained as the controlling instrument
for Nauru until the passing of the Nauru Act 1965(Cth) by the Australian
Parliament (see palas. 150-151).

44. The Nauru Island Agreement Act passed through the Australian

Parliament in Sept'zmber1919,some fifteen months earlier than the actual
conferring of the Mandate upon the British Empire on 17December 1920by
the Council of Lea.gueof Nations.' In fact, the Mandate administration of
Nauru did not conunence until mid-1921,when the Mandate entered into
force. Technically,Nauru had been in a state of belligerent occupancysince

1914, administerecl through the British High Commission of the Western
Pacific.

' As ihc cqurrJlcntBritiwasAnot pasvd until1920and as ratificationwas requircdby the thrcc
partiarncnist,he Australinopmlaimed uniil28 October 1920. 45. It was not the intention of the Mandatory Powers in Nauru to allow
the continued exploitation of the Nauru phosphate by a private British
company, the Pacific Phosphate Company Limited. At the same time the
PacificPhosphate Companywas aware that the cheap "at cost"pricingpolicy
proposed under the 1919Agreement for the entry of phosphate rock to the
markets of Australia and New Zealand would cut into the production and
profits from their other resource on Ocean Island. Accordinglythe Company
proposed to the Governments a complete sale of the relevant corporate
interests on both Nauni and Ocean Island.

46. The sale was effected by an Agreement which commenced on 1 July
1920 (see Annexes, vol.4, Annex 45). The Agreement was between King
George V represented in vanous capacities by the High Commissioner of
Australia, the High Commissionerof NewZealand, and the British Secretary
of State for the Colonies, and the Pacific Phosphate Company Limited. It
represented a sale of al1the rights, assets and liabilities of the Company
directly to the three Governments for a sum of3.5m. From 1July 1920,the
company continued to mine the phosphate on Ocean Island and Nauru but
did so on behalf of the threevemments.

47. Then by way of an Indenture, dated 31 December 1920,between the
Pacific Phosphate Company, King George V, represented by the same
parties as in the previous above described Agreement, and three named
individuals Dickinson, Collins and Ellis, who. were the Commissioners
appointed under the Nauni Island Agreement, the Company and the
governments conveyed to the then present Commissioners al1 the various
undertakings and assets on Ocean Island and Nauni. (See Annexes, vol. 4,
Annex 46.)

48. In 1922,the Laws Repeal and Adopting Ordinance 1922(Nau) was
enacted. By section 3(1) of that Ordinance, German laws applicable on

Nauru ceased to apply. The British Phosphate Commissioners, thereby,
escaped any obligations createdunder German law in regard to restoration
or compensation with respect to any future mined land. It is not clear from
the presently existingknowledgeof transactions relating to mined phosphate
land in the period 1906to 1922whether any acquired right subsisted to a
landowner by reason of the saving clause contained in section 3(2) of the
1922 Ordinance. Whatever the situation, there was no awareness by
Nauruan landowners of any rights they might or ~ight not have had arisingfrom the German 1a.w. For the text of the Ordinance see Annexes, vo14,
Annex35.

49. The purpose of the 1919Agreement was in simple term to provide

the method bywhichAustralia and New Zealand could obtain, with certainty
and over a long period, the cheapest possible phosphate for each country's
growing agricultural industry. The intent was gradually to came away the
core of an island to make the vast agricultural tracts of Australia and New
Zealand fertile --"to make the desert blossom like the rose". (Albert Ellis,
OceanIsland and Nauru, Angus & Robertson, Sydney, 1935,p.89.)

Section3. The Administration of Nauru and the Nauru Island Agreement

50. The Administration of the Island in accordance with Article 1 of the
1919Agreement wai;placed in the hands of an Administrator. Under Article
1,the first Administrator was to be appointed by Australia for a term of five

years; thereafter ihe three Governments were to decide on future
arrangements. In the event, as a result of an amendment to the Agreement
in 1923 and relatecl arrangements between the three Governments, Nauru
was administered ttiroughout the period of the Mandate and Trusteeship by
an Australian Adrriinistrator appointed by and exclusivelysubject to the
directions of the Australian Government.

51. Owing to th: unusual tripartite arrangement of the Mandate, there

was concern expresiiedin the initial stagesof the administration of Nauru as
ta the control that fcouldbe exercised overan Administrator. Did he act on
instructions of the Government appointing him, or, in some way, of al1three
governments, or of none of them? The matter was resolved by a
Supplementary Agreement concerning Nauru of 30 May 1923(see Annexes,
vol.4,Annex28),whichread in part as follows:

"ITIS HEREl3Y FURTHER AGREED between the three Governrnents as
f~~llows:-

1. Al1 Ordinanccs made by the Administrator shaU be subject to
confirmaiioncr disallowancein the name of His Majesty,whose pleasure in
rcspçct of sucli confirmationor disdiowance shall be signifiedby one of His Majesty's Principal Secretaries of State, or by the Governor-General of the
Commonwealth of Austraiia acting on the advice of the Federal Executive
Councilof the Commonwealth,or by the Governor-General of the Dominion of
New Zealand acting on the advice of the Executive Council of the Dominion,

according asthe Administrator shall have been appointed by His Majesty's
Government in London, or by the Government of the Commonwealth of
Austraiia, or by the Goverment of the Dominion of New Zealand, as the case
maybe.
2. The Administrator shaii conform to such instructiashe shaii from
time to time receive from the Contracting Goverment by which he has been

appointed.
3. Copies of aii Ordinances, proclamations and regulationsmade by the
Administrator shaii be forwarded by him to the Contractingverment by
which he has been appointed, for confurnation or disaiiowance,and to the two
other Contracting Governments for their information; and the Administrator
shaii supply through the Contracting Government by which he has been

appointed such other information regarding the administrationof the Island as
either of the other ContractingGovements shd require.
4. AU such reports as are required to be rendered to the Council of the
League of Nations in virtue of Articleof the aforesaid Treaîy of Peace or
othenvise shaii be transmitted by the Admimistrator through the Contracting
Goverment by which he has been appointed to Hi Majesty'sGoverment in
London for presentation to the Council on behalf of the British Empire as

Mandatory."

52. The effect of this supplementary agreement as to confirm that the
Administrator was suhject in his actions to the directions of the appointing
Goverment. In fact Australia was the confirming,instructingand reporting
Goverment in terms of the Supplementary Agreement of 1923throughout

the period of the Mandate and Trusteeship.

53. In fulfilment of his tasks, the Administrator wasgivengeneral powers
to make ordinances for the peace, order and good government of the Island
but, significantly, subjectto the terms of the Agreement. (Article 1). The

only specific responsibilities givento the Administrator in the Agreement
were the education of children, the maintenance of a police force and the
establishment of courts, civil and criminal. Al1 the expenses of this
operation, including the Administrator's salary, were to be paid from the

sales of phosphates or other revenue on the Island (Article 2). None of the
partner governmentswould he called upon to pay anything towardthe cost of
administering Nauru. In fact, the cost of purchasing the interests in PacificPhosphate Company Ltd at £3.5m was treated as a loan to the
Commissioners,which was repaid to the three Governments yearly hom the
receipts of phosphate. This was achieved through the establishment of a
sinking fund for the 1,edemptionof capital, with interest being paid on the

loan capital. (M. Wi:,liams& B. Macdonald, Ttie Plzosphateers,Melbourne,
Melbourne University Press,1985,pp.140-141.)

54. The Nauru Island Agreement of 1919, in making provision for the

mining of phosphatr, provided for the appointment by each partner
Government of one Cornmissioner: the three appointed were termed
collectivelytheBritish Phosphate Commissioners. Each Commissioner held
office during the pleasure of the Government by which he was appointed
(Articles3 & 4).

55. The Agreeme:nt purported to vest title to the phosphate in the
Commissioners (Arti(:le6).The Pacific Phosphate Company Limited was to
be compensated by the three governments, each contributing according to a
formula to be agreed upon (Article 7). In fact the formula was Great Britain
4296,Australia 4296,NewZealand 16%. That formulawas alsoto be used in
the case of future capital requirements, distribution of profit, and allotment

of mined phosphate.

56. The Commissioners worked and sold the phosphate, but had to
dispose of it inaccordance with the agricultural requirements of the three
Governments, thus setting up a monopoly linked to a tied market.
Furthermore the Commissioners were to supply phosphate at a price no
higher than that recyired to cover working expenses,interest on capital, a
sinking fund for re;iemption of capital and any other charges --in other
words,at cost price, includinginthose costs the costsof the administration of
the Island. There was no mention of royalties to the Nauruans, though they

might perhaps have fallen in the category of "any other charges". Any
production surplus 1.0the needs of the governments was to be sold by the
Commissioners"at the best price obtainable". These would be surplus funds
and wouldbe credited to the three Governments.' 57. Article 13provided:

'There shd be no interferenceby any of the three Govements with the
direction, management,orcontrolof the businessof workig, shipping,or selling

the phosphates,andeach of the three Governmebids itself not to do or to
permit any act thingcontraryto or inconsistentwiththe termsandpurposesof
thisAgreement."

It was soon apparent that the Administrator had a very limited function,

certainlyin relation to the mining industry. For example, in 1925,the first
Administrator acting in sympathywith the Naunians, moved to proclaim an
Ordinance limiting the depth of rnining. The Naumans were already
disturbed at the extent of destmction. It was the viewof the Administrator
that to limit the depth of mining to 20 feet would make the land easier to
reclaim. Pressure was immediately placed on the Governments by the

British Phosphate Commissioners in response to this interference by an
Administrator, and the Australian government took action notto confirm the
Ordinance. (See paras. 521-539for a more detailed discussionon the issue.)
This was an early lesson that the British Phosphate Commissioners would
brook no interference with mining and could count on the support of the
Australian Government, to whom alone the Administrator wasresponsible.

58. The Commissioners held the view, supported by the three
Governments and particularly Australia,that the miningenterprise was not a
matter for report either to the Permanent Mandates Commission or to the
Trusteeship Council. The accounts of the Cornmissioners were never
revealed, even though repeatedly sought by the Tnisteeship Council. (See
further paras. -543-559.) The Commissioners at first took the view that

matters relating to mining were not relevant to the mandate: later, when
pressed, theyresisted presenting full accounts on the basis that Ocean Island
was an inseparable part of the enterprise and that Naum accounts could not
be separated out. The advent of the Visiting Missionsin the trusteeship
period flushed out more information, but this was still limited both in
quantity and scope. Ç. 'JMECONCERNS OFTHi3UNITED STATE SMI AU~RALIA'S RESPONS TEH:BAILEY
smmm

59. The Nauru 1slafi.dAgreement 1919sat uneasily within the concept of
the Mandate. Before i:hemandate administration was even under way, the
United States, attempted to modify the system by its independent efforts.
The mandate system, whilst supported by the United States in principle, was
not accepted bythat country in respect of "C' classMandates. Moreover the
United States,althougkia Principal Allied and Associated Power in terrns of

the Treaty of Versailles,had not ratified that Treaty.

60. Following lengthy correspondence between Great Britain and the
United States ("Economic Rights in Mandated Territories" (Cmd. 1226,
1921)),the United States eventually put before Great Britain in 1923a Draft
Convention concerninf: the Territory formerly the German Protectorate of

South West Africa, the Island of Nauru and the former German island
possessionsin the Pacific Ocean South of the Equator other than the Island
of Nauru and former German Island of Samoa (Australian Archives, ACT,
CRS A989,Item 44/735/321/4; Annexes,vol.4, Annex67). Article 8 of The
Draft Convention provided:

"Concessionshaving the character of a general monopoly shall notbe granted.
This provisiondoe:;not affectthofthe mandatory to create monopolies of
a purely fiscal character in thest of the territory under mandine and
order to provide the territory with liscal resources whichseem best suited to the
localequirements or, in certain cases, to carry out the development of national
resources, either ,lirectly by the State or by a controlled agency, provided that

there shallult tterefrom no monopolyof the national resources forthe benefit
of the mandatory and its nationals,directly or indirectly, nor any preferential
advantage which shall be inconsistent with the economic, commercial and
industrialequalityliereinbeforeguaranteed."

61. This was an atkrnpt to givethe United States the benefit of the equal
treatnient article contained in the cl"B" mandates. The Draft Convention
and the submissions of the United States met with stiff resistance from the
partner Governments, and were strongly and successfullyopposed at the
Imperia1Conference in 1923.The Secretary of State made the position of the

United States clear when he wrote to the British Minister, Earl Curzon, on
20November 1920,in the followingterms: "1need hardly refer again to the fact that the Governrnent of the United States
has consistentlyurged that it is of the utmost impoitance to the future peace of
the world that alien territory, transfasa result of war with the Central
Powers, should be held'and administered in such a way as to assure equal'
treatment to the commerce and to the citizens of al1nations. Indeed, it was in
reliance upon an understanding to this effect, and expressly in contemplation
thereof, that the United States waspersuaded that the acquisitionunder mandate
of certain enemy territory by the victoriouspowers would be consistent with the
best intereits of the world.

The establishment of the mandate principle, a newrinciple in international
relations, and one in which the public opinion of the world is taking a special
interest, would seem toquire the fradest discussionfral lertinent points
of new. It would seem essential that suitable publiuty should be given to the
drafts of mandateswhichit isthe intention to submit to the Council,in order that
the fuiiest opportunity may be afîorded to consider their terms iIOtheation
obligations assumedby thï Mandatory Power andthe respective interestallf
Governmentswhichare or deem themselvesconcerned or affected."

(Correspondence, "Economicights in Mandated Territories"(Cmd. 12p.8.)

62. The United States was not successful in negotiating bilateral
arrangements with respect to the "C'class mandates, except in the case of
Yap which was a Japanese mandate. (Prime Minister's Department

Confidential Memo, 'Territory of NewGuinea --Treatment of Foreigners &
Foreign Interests", 31 March 1923, Australian Archives ACT, CRS A989,
Item 44/735/321/4.) Nevertheless, its attempt to secure most-favoured-
nation treatment and to prohibit monopolistic concessionsby the Mandatory
in "C classmandates was a continuingissue. When the issue of the transfer

of Naum to the tmsteeship system arose in the latter stages of the Second
World War, it was clear that a careful strategy would have to be adopted to
meet the expected opposition from the United States. It was in this context
that Sir Kenneth Bailey, the Secretary of the Commonwealth Attorney-

General's Department, in a secret minute in January 1944to the Australian
Attorney-General carefullyreviewed the contretemps with the United States
concerning the "C"classmandates (Pacific Conference Papers, January 1944,
U.S. Interest in "C Mandates, Australian Archives: ACT, CRS A989, Item
44/735/321/4; see Annexes, vo1.4,Annex 57). At the conclusion of the

minute he set out at the followingpropositions:

"a) As amatter of strict law, the dispositionof the former German colonies
required the unanimous assent of thc Five Principal Allied tuid
Associated Powers; b) Itisuncertain whether,in point of aliivepowers did assent in 1919
to the allocation to Australia and NewZeaiand of the Islands over which
theynowhold a Mandate;but that poiisnot of practicalsignif~cance;
C) The Unii:edStates has never givenits assent to the text of the Mandates
issuedby the Councilof the League;

d) The United States may probably be regarded as havingwaived for
practical purposes any claim that the Mandates issued have never had
anyvaiidoperation a, but

e) As amatter of practicai politics,and havingregard to the position of the
United States as one of the Principald and Associated Powers,any
claims ty the United States for an alteration of the Mandate or for
securingspeciairights for citizen5of the United States would have to be
disfusse3on their merits."

These propositions carefullyrnoved the debate awayfrom the legal point of
"unanimousassent"v~hichwasrequired in 1919,to the practical politics of the
day in 1944. The difficulties that confronted Australia in the change from
Mandate to Trusteerhip are outlined in paragraphs 110-116below.

63. At the first session of the Permanent Mandates Commission, the
Secretary to the CorLamission also made a general staternent on the mandates
question. Interalia, :M . appard said:

"The Mandatory Powers had assumed a responsibility simiiar to that of a
guardian with n:spect hisward. The interests of the natives were therefore of
primary importance andthe rightsoflihe members of the League must aiways
be respected.ltwas in order to complete the League of Nations by a work of

pacificationthaf these Colonies wereentrusted to certain Powers,subject to their
securing equal opportunities for the trade and commeraithe Members of
the League, andsubject, aiso to their being responsible to the League. Great
moderation was exercised in this regard; the Mandatory Powers were only
obligedto subuiitto the Council a singleannualreport on their administration."
(League of Nations, Permanent Mandates Commission, Minittes, 1st Session,
1921.)

64. At its. next session the Permanent Mandates Commission of the
League gave its i:.utial consideration to the Mandate for Nauru. The
Secretary of the Commission stated that the League of Nations could only recognise the British Empire as the tnie Mandatory in international law.
(League of Nations,Permanent Mandates Commission, Minutes,2nd Session,
1922,p.38.) This was reaffirmed by a member of the Permanent Mandates
Commission, M. Orts, who said the Commission couldonlyrecognise as such
the power designated in the Mandate -- namely His Britannic Majesty,

othenvise the British Empire. (id., p.46.) But Mr Ormsby-Gore, the British
representative on the Commission,took the view that for practical purposes
Australia was the Mandatory Power and regarded itself as such. He
reminded the Commission that there was no Government of 'The British
Empire" as such,and that it waspresumably forthe British Empire to choose
one of the constituent Governments to administer the Mandate. (id., p.46.)
The Chairman then raised the problem of rotation of Administrators

foreshadowed in Article 1 of the 1919Agreement. (id., p.47.) As has been
seen, throughout the period of the Mandate, Australia alone appointed the
Administrator and reported to the Permanent Mandates Commission.

65. At the same session of the Commission,serious doubts were raised as
to the way in which the 1919Agreement related to the Mandate. The very
nature of the British Phosphate Commissionerswasconsidered by M. Orts to
be a derogation from the principle of economic equality.(League of Nations,
Permanent Mandates Commission, Minutes,2nd Session, 1922,p.37.) The

1919Agreement, although known to the Secretary of the Commission, had
not been officiallycommunicated to the League of Nations. In considering
the situation of the indigenous inhabitants, the Commission sought
information as to what plans the Mandatory had for the indigenous
population upon the exhaustionof the phosphate deposits. (id., p.48.)

66. After considering the Australian report and hearing the
representative of Australia, SirJoseph Cook, the General Report for 1922of

the Mandates Commissionon "C"mandates made the followingobservations
to the Councilof the League:

"Thistiny island whichis hidden in the vast extent of the Pacfic, has only about
2,000inhabitants. Its sole w--and it isconsidera--consistsin vast and
rich deposits of phosphates. The Mandate for this island was conferred by the
PrincipalUiedand Associated Powersupon the BritishEmpire, whichdelegated
the workig of this minerai weaithto Australia, Great Britain and New Zeaiand.
These three Governments have devolvedupon Australia the responsibilityfor the
administration fora first period of Fiveyears. From information suppliedby the
Mandatory Power, the Commission finds ground for fear that the fundamentai
principle of the institution of Mandates may, as regards its application to this island, be prejud.icedin two ways. It fears on the one hand that the material
wealth of th% island and the small number of its inhabitants may induce the
mandatory Powersto subordinate the interests of the people to the exploitation
of the wealth. :lt is, thcrefore, not without deep concern that it considers the
questionwhether the well-beingand developmentof the inhabitants of thisisland,
which, in the w,~rdsof the Covenant 'form a sacredtrust of civilisation',the
accomplishment of which it is the Commission's dutyto safeguard, are not in

danger ofbeing i:ompromised.
It is moreover, concerned with the consideration of the question whether the
mandatory Powcr, by rese~ng the ownership and exclusiveexploitation of the
resources othi.territory to itself, bas brought its policyinto true hannony with
the requiremen~sof the Mandate which, in accordance with the Covenant, it
shouldexerciseon behalf of the whole Leagueof Nations."

(League of Nations, Permanent Mandates Commission,Minutes 2,d Session,
11thMeeting, 1922,p.55.)

67. In discussions on Australia's SecondReport, M. Rappard reminded
the Commission th2.taccording to the terms of the Covenant, the Mandate
was a system of tutelage and that tutelage implied a disinterested activity.
(League of Nations, Permanent Mandates Commission, Minute 3rd,Session,

1923, p.56.) Sir 1:rederick Lugard commented that if the principle of
disinterestedness w(:re abandoned, there would in reality exist a disguised
form of annexatioti. (id., p.56.) M. Orts believed that the principle of
disinterestedness w~uld jnvolve a condemnatjon of the system in force in
Nauru, and possibly of the exploitation of the phosphate in the Pacific
Islands. (id., p.57.) The Commission, after debate, adopted the following

declaration ofprinciple.

"Itwould be cantrary to the spirit of disinterestedneisthe characteristic
of the system3f mandates for a mandatory state to create, under cover of its
mandate, in tlie territory entrusted to it for administration, a Government
enterprise of an industrial or commercial character, the profits of which were
credited to the central budgetof the Mandatory State."
(League ofNations, Permanent Mandates Commission, Miriltres,3rd Session,

1923,p.59;AnIlexes,vol.4,Annex24.)

68. The Mandatory had set up a state monopoly,the cffect of which was
to prevent other Lx:agueof Nations members gaining accessto the phosphate
reserves, or, accessto the fruits of the production. The phosphate production
resulted in sales in Australia and NewZealand, with a little toGreat Britain, at markedly preferential rates in relation to the world market price. (League
of Nations, Permanent Mandates Commission,Minutes,22nd Session, 1932,

p.45; id., 23rd Session,1933,p.3.) This was not only stronglyobjected to by
the United States (see paras. 60-62) but also created a sharp diplomatic
exchangewith France, when Australia and NewZealand, through the British
Phosphate Commissioners, refused to import phosphate from the French
PacificIsland of Makatea in 1934.

69. With the increase in production at Nauni in the late 1920sand early
1930s the need for the British Phosphate Commissioners to buy
supplementary supplies of phosphate from La Compagnie Française des
Phosphates de L'Oceanie at Makatea, French Polynesia, for the Australian
and New Zealand markets, was at an end, particularly as that phosphate had
to be bought at the established world market price. This situation produced

a strong diplomatic reaction from the French Government. The diplomatic
note from the French Ambassador in London to the British Foreign Office
(Piiblic Records Office, London: Dominions Office1401258)is set out in
Annexes,vol.4,Annex75.

70. In that note, the French Government reiterated the United States

objection at the lack of an "open door". But it took the matter further,
criticisingthe manner of administering the Mandate on the basis that it was
contrary to the principle implicitin a mandate for the mandatory powers
directly to profit from it, particularly at the expense of the subjects and
intended beneficiariesof the Mandate:

"Ens'accordantun regime de faveurpour l'achatdes phosphatesnecessaàres
leur agriculture,Royaume-Uni,L'Auslralieet la Nouvelle-Zélantirent du

mandatun profitdirect,cc qui cst manifestementcontraireaux principesselon
lesquels doit d'exercerta gestion de la puissancemandataire.a là une
subventionindirecte dontbénéficienltes trois Gouvernemànla charge du
territoiresousmandat."
(Public Records Office,London:Dominions Office40/258;Anncxcs vol. 4,
Annex75.)

71. Between 1922 and 1939, with improved production techniques and
greater demand in both Australia and New Zealand, the annual export

tonnage of phosphate rock grew from 182,170tons in 1922to 932,100tons in
1939. The total exported for that period was more than 7 million tons. It
had become clear to the Permanent Mandates Commission that aconsiderable degree of destruction was being wrought on the Island. But this
waseven clearer to the indigenousNauruans whowere able to witnessduring
the Mandate period the extraordinarydamage being done to their land.

72. The Permanent Mandates Commission addressed the matter of

mining in the presence of the Australian accredited representative on a
number of occasions tluring the review of the Annual Report of Australia
between 1935and 19351.

73. In 1935, in aiiswer to a question in the Permanent Mandates
Commissionwhether the Phosphate Commissioners were obliged to return
lands in a state fit for agriculture, the Australianply was that there was
"apparently" no obligiition to put the lands in a cultivable state before
returning them to the native owners. (League of Nations, Permanent
Mandates Commission, Minutes, 29th Session,3 -18Jan. 1935,p.35.)

74. In 1936, M. Ra.ppardasked whether there was anydanger within the

foreseeable period that the phosphate deposits would be exhausted, so that
the inhabitants would be deprived of their means of subsistence. This was
believed to be a furdamental problem. The Australian representative
replied that land was generally classifiedeither as phosphate bearing or as
coconut land. When phosphate land had been worked out and returned to its
owners itwas classifieclas coconut land. It waspossible that in the future the
production of copra would become an industry of the island, but whether it
would be sufficientto jupport the population he was not in a position to say.
M. Rappard in response indicated that even on the most optimistic estimate
the population was urilikely to be able to live on the proceeds from copra

exports. (League of Nations, Permanent Mandates Commission, Minutes,
29th Session,27 May -12June 1936,p.33.)

75. In 1937,noting the substantial increase of the exports of phosphates,
the Commission agaiii drew attention to the question of the area which
would be available for native habitation or cultivationand expressed concern
about what would happen when the deposits were exhausted. On this
occasion, the Australian representative indicated that there was a fertile
section surrounding the island in which there was ample accommodation for
a much larger population than the present total of inhabitants, and that it was
hoped that this fertilf: section of some 1,200acres would in fact produce
more food bearing ti:ees and food. The Australian representative also

indicated that one should not fear the exhaustion of deposits, for the formerAdministrator had indicated on his calculations in 1928an estimated life for
phosphate deposits of 300 years. Nevertheless the Permanent Mandates
Commission again asked the Australian representative howsoon worked out

phosphate land would become fit for use as agricultural land. The Australian
representative said that he was unable to say with any certainty, but that
these areas were entirely uninhabited and very little used by the natives. He
added that the worked out fields would notin the ordinary course be able to
be put into a fit state from agriculture but that in the course of time there
would be some plant recolonisation. (League of Nations, Permanent
Mandates Commission, Minutes,31st Session, 31May - 15June 1937,pp. 50-

51.)

76. In 1938the Australian representative, on the basis of a recalculation
of phosphate land, said tliat estimates of reserves of phosphate were
probably pure speculation, but that the previouslystated figure of 300 years
should be reduced to 230 or 240 years. He also stated that some land had
been returned to the land owners but this was uninhabitable and not fit for

agriculture. The phosphate area waswaterless,uninhabited and little used by
Naunians. However in answeringa question on food crops inwhich he had
indicated that it was possible, particularly on the fertile land, for the growth
of local foods and fruit, he added that it was still an open question whether
worked out land could be made fit for cultivation. (League of Nations,
Permanent Mandates Commission, Minutes,34th Session, 8-23June 1938,pp.
19-20.)

77. In 1939, the new Australian representative before the Permanent
Mandates Commission, Mr. J.R. Halligan was asked questions about living
space, the duration of phosphate deposits, and the use of rnined-out land.

"Mlle.Dannevigaskedwhether there wassufficientroom left on the islandfor the
nativepopula~ion.
Mr. Hailigan pointed out that Nauru was an islandwitha circumferenceof some
twelvemiles. The outer rim wasformed bya coral reef which wasexposedat low
tide. Then came a beach and a strip of fertile lanuX)oto 800 yards wide

running up to a plateau in the centre of which the phosphates were deposited.
The natives lived on the fcrtile strip where they had sufficient accommodation
and were able to gow their crops of coconutsandanuspalm.
M. van Asbeckrecalled the question askedby the Chairman at the thirty-fourth
session as to whether worked-out landwas permanently unsuited for cultivation
of anykind. Wasanymore reccnt informationavailableon that point? Mr. I-Ialliganreferre(lto the photographs containedin the annual repor1926,
which showed that the removal of phosphate deposits left pinnacles of coral
exposedwhichwere ~obviouslu ynsuitahle for cultivation.

Count De Penha Garcia asked whether the Administration had made any
calculationof the probable duration of the phosphate deposits.

Mr. Halligan replied that severalrough estimates hadbeen made of the probable
lie of the phosphate fields. Muchwoulddepend on the depth of the deposits and
the rapidityof working. At the present rate of output, it could be caiculated that
the depositswouldprobahlylast up to eightyor eventoahundred years."

(League of Nations,Permanent Mandates Commission, Mininitt36th Session,8-
29June 1939,p.166,169,170.)

78. Clearly the Au:,tralian administration had not analysed with any

claritythe situation facingthe Naunians at the point of the exhaustion of the
phosphate fields, nor had the Administration shown any concern over the
state of the worked-out landupon its return to the landowner. The answers

to the Commission's q~ieriesdisplay inconsistency and little appreciation of
the growing problems for the Naunians of increasing population, lack of
domesticfoodstuffs,waier, and the diminution ofviableland area.

79. The last year of phosphate production before theJapanese occupation
was 1941. Thereafter there was no hrther mining until after the conclusion

of World War IL' Expcmro tf phosphate rockwasto be resumed in 1947.

I Followingthe outbreakof WarldWarII,thcrcwasno funhcrreponingwithrespecttothe Pcmancnt
Mandater Commissionaftcr the 26th Sess1939.The nen tinic thai Nauruwar mponed was to the
TrusteeshipCouncilin 19-18followlngtheconclusionof theTrusteeshipAgreementwasthusalmostheie
a decade withoui rupeMrianwhich includcdthe FapaneseoccNoamininglook place bewccn 1941and
1947. PART1

CHAPTER3

THE LANDSORDlNANCES

Section 1. LandRightsandMiningRightsunderthe 1919Agreement

80. Crucial to the requirements of the British Phosphate Commissioners
was access to the phosphate. The arrangements governing the Pacific
Phosphate Companyaccesswere outlined in paras. 45-48, 55. But now there
was established a state monopoly organisation owned by the Administration

under the 1919 Agreement. Already Article 6 of that Agreement had
purported to vest title to the phosphate deposits on the Island of Nauru:

"Thc tiile to the phosphate deposiis on the island of Nauru and to ail land,
buildings, plansand equipment on the island used in connexionwith the workig
of ihe deposits,shallbe vestedin ihc Commissioners."

Article 7 further provided that:

"Any right, tiileor interesi whichthe Pacilic Phosphate Companyor any person
rnayhavcin the said deposiis, land,buildings, plantand efuas such(so
right, iitle and inicresi isnriidealt withofPeace) shailbe converted
into a clairnfor conipensitiionai a fair valuation."

81. In fact, compensation in relation to rights to deposits and plant and
equipment was finally negotiated by the three governments with the Pacific
Phosphate Companyat a figureoff3.5 million.

52. The Nauru IslandAgreement paid no regard to questions relating to

Nauruan land ownershipor any customarylawexistent in Nauru with respect
to the extent of ownersliip. The Nauruan people do not figure in the
Agreement, and certainlywere not consulted before or after its conclusion.83. Article 6 might be read as an expropriatory provision of both
phosphate deposits and the land withinwhich these deposits are present. But
there was in eKistencean established individual land ownership systemin
relation to al1land areas of the island. This had been recognised by the
German Coloiual Government and been recorded by it in a register.
(Grundbuch h4arschall-inseln und *Nauru, Australian National Library,
Canberra.) It would, therefore, have been difficult,if not catastrophic,anor
incomingadministration to carryout an expropriation ofprivate land.

Section2. TheLands Ordinance1921 (Nau)

84. One of the first acts of the Administrator was to proclaim the Lands
Ordinance 1921 (Annexes, vol. 4, Annex 34). Under the Ordinance land
could not be leased or sold without the consent in writing of the
Administrator: if any such action were taken without consent of the
Administrator, it wouldbe absolutelyvoid and of no effect.

85. So far sisleasingwas concerned, land couldbe leased for such periods

as the Administrator approved. But the leasing regime had two arms, the
one relating to phosphate-bearing lands, and the other to non-phosphate
bearing lands. It wasa matter solelyfor the Administrator to determine what
lands were to 11eclassedasphosphate-bearing.

86. The use of the concept of the lease is unusual. Not only did the
Ordinance require the Administrator to consent to any lease of phosphate-
bearing lands; it also stipulated the terrns of any such lease. In practice,
there was no semblance of the right of an individualNauruan to bargain, and
from 1927(as a result of the Lands Ordinance 1927)the Commissioners had
the unlimited rightto "lease"phosphate-bearing land. Thus the terminology

of leasehold was used to bring about an effective "taking"of the Naunians'
land.

87. Phosptiate-bearinglands couldonlybe leased to the BritishPhosphate
Commissioners for a period terminating not later than 31st March 2000.
That date coincided with the termination of the original concessionof Jaluit
Gesellschaft. Inreturn for the "lease",the British Phosphate Commissioners
paid to the la~~downear lump sum ar rherate off20per acre and a royaltyon
al1phosphate shipped at the rate of threepence per ton. Twopence of this
royaltywasp;iid to the landowner, and one penny to the Administrator to be placed in the Nauru RoyaltyTrust Fund. All treesand shrubs on phosphate-
bearing land thus "leased" became the property of the British Phosphate
Commissioners, and could be disposed of as the British Phosphate
Commissionersdeemed fit.

88. By contrast, the lease of non-phosphate bearing land was subject to
the approval of the owner as well as the Administrator, and there was no
restriction on the persons to whom such land could be leased. The
conditionsof the lease were laid down. There wasto be an amual rental at a

rate of 25 shillings per acre. Trees and edible fruits were to remain the
property of the lessor, who in the daylight hours had the right to enter that
land and pick the fmits. The lessor was not able toremove trees without the
consent of the Administration. When removal was permitted, compensation
was to be awarded the lessor accordingto a schedule of particular species of
trees.

89. There was a marked difference between the two classes of land.
Approximately four-fifthsof land on Nauru was phosphate-bearing, and this
was now subject to a monopolistic legal regime for the purpose of mining.
This was to be cornpared with non-phosphate bearing land where the

Administration saw the wisdom of attempting to protect the important and
productive fmit bearing trees.

Section3. The Lands Ordinance 1927(Nau)

90. Upon the arriva1of a new Administrator in Nauru in 1927,one of his
first acts was to produce amendments to the Lands Ordinance 1921:Lands
Ordinance Amendment Ordinance 1927(Annexes, vol. 4, Annex 36). The

effect of these amendments was to tighten the hold of the British Phosphate
Commissioners, both as to phosphate-bearing lands and non-phosphate
bearing lands. Apart from the Administrator continuing to determine what
lands were to be classed as phosphate-bearing, the major powers ofdecision
were nowto be left to the British Phosphate Commissioners.

91. Under the amendments, the Commissioners had the right both to
lease any phosphate-bearing land, to mine the phosphate thereon to any
depth desired, and to use orexport such phosphate. This removed the need
for approval bythe Administrator under the 1921Ordinance. The reference

to depth overcame the attempt by the former Administrator to limit depth byan Ordinance in the previous year, which ordinance had been disallowed by
the Australian Government. Where the Commissionerseither wanted to use
or stockpile phosphate, this could be done without the need to pay royalty.
Royaltywas oillypaid for material which wasactuallyexported.

The British Phosphate Commissioners retained the right to remove
92.
trees on leased phosphate-bearing land, but nowobtained the right, with the
approval of the Administrator and landowner,which approval was not to be
unreasonably withheld, to remove any trees on any other phosphate-bearing
lands which the British Phosphate Commissioners required in connection
with their operations.

93. Additionally, the British Phosphate Cominissioners gaineda right of
wayover any -iinworked,partlyworked or worked-outphosphate bearing land

required by tlie Commissionersfor their operations, again with the approval
of the Adrninistrator and landowner, which approval was not to be
unreasonablywithheld.

94. In retbrn for the lease, the British Phosphate Commissionerswere to
pay pro rata forty pounds per acre as a liimp siim and a royalty intotal of
seven and one-half pence, of whicli four pence was to be paid to the
landowner, one and a half pence to the .Adniiiiistratortowards the Royalty
Trust Fund, 3nd the remaining two pence to a new Nauruan Landowners

Royalty TrusiFund. This latter fund was to I)e invested for twentyyears, at
the end of which time the interest accrued \vasto be paid Iialf-yearlyto the
land-owner or his or her successors in title, with [lie capital remaining
invested.

95. Sofar as non-phosphate benriiigIaiidswere concerned, these could, in
accordance with the régimecreated l~ythe 1917 Ordinance, onlybe leased to
the British Phosphate Comniissioiiers. The British Phosphate

Cornmissionc:rswere given the power to remove trees upon payment of
compensatioii,based on a schedule of pariiçiilar species. The rental for this
land wasfied at the rate of three pouiidsper :icreper arinulii.

96. There was another pro\,isioii irithe 0rdiii:ince tliat as soon as
practicable 8.11worked-oiit land iiot rcquired for or in coiinection with the
operations of the British Pliosph:ite Coniiiiissioners \vos to revert to the
landowners concerned. This wiis :iniaiter of soine contention for itwas left
to the British Phosphate Comniissioiicrsto deteriiiine the precise modalities of its application.here was some concern that land was not returned "as
soon as practicable". Any land so returned was neither cultivable nor

habitable and for al1 practical purposes useless. See Annexes, vol. 2,
Photographs 2-5.

Section4. Impactof the LandsOrdinances

97. Against the background of the 1919 Agreement, the two Lands
Ordinances were clear evidence both of the power and direction of the
BritishPhosphate Commissionersand the Governments behind them. There

was no bargaining power left to the Nauruans -- the more so when the
Administrators, by direction or othenvise, gave their support to the
development of the mining venture. It is true that Griffiths,as Adniinistrator
between 1921 and 1926, made some sort of stand, but he was quickly
defeated by an Australian Government which would not entertain
interference with the main purpose of administering Nauru, the mining of
phosphate. (See hrther paras. 521-539for a more detailed account of the
dispute over the Lands Ordinances.)

98. The 1919Agreement and the 1921and 1927Ordinances represented
the sheet anchor of Australian administration of the phosphate industry on

Nauru until the time of independence. Throughout the period of Australian
administration up to independence in 1968, the Ordinances remained in
force, except for some amendments to the rates of rental and royalty. (See
Annexes, vol. 4, Annex 38.) At no tirne did the "lease rental" bear any
equitable relationship to the damage done to the land, and in the case of
phosphate-bearing land al1that wasavailable wasa smalllump sum payment.
A "royalty"waspaid but it was not based on any relationship to the worth of
the phosphate extracted and was regarded by the Australian Government as
a gratuitous payment, if not as illegal. (See, e.g., GeneralAssembly ûfficial
Records,8th Session, Supplement No.4 (A/2427), p.199; Nauru Talks 1965,

p.19 (Annexes, vol. 3, Annex 2.) The "lease" was effectively a form of
expropriation: what was handed back to the landowner by the British
Phosphate Cornmissioners was, without rehabilitation, a worthless shell of
what had been conveyedbylease.

99. The Nauru IslandAgreement and the Lands Ordinances remained in
force even after the Nauru Act 1965(Cth). Section 26(c), (d), (e) of that Act
specifically excludedmatters relating to phosphate mining and its operationfrom the oversight of the Legislative Council: see par151 below. Similarly,
Articles 2 to 14.of the 1919 Agreement remained intact: the Nauni Island
Agreement 1919as such was not terminated until9 February 1987(see para.
470 below).

100. The effect of the legal regime which combined a single minded state
monopoly, and ever increasing demarid for phosphate meant the systematic

destruction of the Nauruan environment, a process which threatened to
engulf al1but the narrow coastal rim of the Island. When it was eventually
realised byAustralia that the so-called "fertile"coastal strip was not sufficient
to sustain a growing community whose previous total land area would
eventually be reduced by four-fifths, the strategy adopted was to seek to
remove the ccimmunity from their home, rather than to rehabilitate the
worked-out larid. This had also been the final outcome determined for the
neighbours of Nauru, on Ocean Island (Banaba), by a colonial government
not subject to the international duties imposed by a mandate or trust. (See

Tit .Wuùclell(No.2) []Y7713 All E.R. 129.) PARTI

CHAPTER4

FROMTHESECONDWORLDWARZMTILINDEPENDENCE

Section 1. TheJapanese Occupation

101. Even before Japan's eiitry into World WarIINauru had already been
the scene of an attack by an armed German vesse1on 27 December 1940,
which caused considerable damage to the loading plant. As a result the
Australian War Cabinet determined to erect fortifications on Nauru for the
protection of the phosphate trade (Minute & Agenda for 16January 1941,
AWM 52, A.I.F. and Militia Unit War Diaries, 1939-45,Item No. 567/2/1:

Defence of Nauru and Ocean Island.) That decision was communicated to
New Zealand and the United Kingdom. It was recognized, however, that
protection of the phosphate trade of both Nauru and Ocean Island (Banaba)
would be virtually impossibleonce Japan entered the war. (Prime Minister's
Cablegram 21.5.41,AWM 52, A.I.F.and Militia Unit War Diaries, 1939-45,
Item No. 567/2/1: Defence of Nauru and Ocean Island.) As a result,
Australia decided to evacuate most European personnel and carry out
demolition of the phosphate installations (Cablegram 9 August 1941,AWM
52, A.I.F. and Militia Unit Wariaries, 1939-45,Item No. 5671211:Defence
of Nauru and Ocean Island).

102. In December 1941,Japanese air attacks began and on 23 February

1942,the main evacuation of Europeans and Chinese took place. Only seven
IZuropeans remained, including the Administrator and Medical Officer.
Japan occupied Nauru with navalforces on 24 Aiigust 1942.

103. Itwas the intention of the Japanese to mine the phosphate and to ship
it to Japan for their owngricultural purposes. This was thwarted, however,
by demoiition of the cantilevers and much of the phosphate installations by
Australia in the period immediately before the Japanese occupation.
Whatever remained intact was subsequently destroyed by incessant Allied
bombing.104. The Jap:inese brought in a large number of foreign workers,
particularly Koreans, and in 1943 transported two thirds of the Nauru
population to tlie island of Tmk (31st/51st Battalion,MF, War Diaries,
History of Japariese Occupations of Nauru) in Micronesia, where they were
used in forced labour.

105. The pers~3naldiaries of Patrick Cook (31st/51st BattalioAIF, War
Diaries, Sept. 1'915,Appendix W) a Nauruan, reveal the extent of damage
wrought by the United States'bombing of the Island. Generally this was a
daily occurrenct?,its purpose to prevent the newly built airfield and the
phosphate works from operating. In the result, no phosphate was exported
from Nauru duringthe Japanese occupation.

106. At the end of the war in September 1945,Nauru was in a state of

chaos (3lst/jlst Battalion, MF, War Diaries, History of Japanese
Occupations of Nauru). Veryconsiderable darnage had been done to both
housingand rnii~inginstallationsbyallied bombing. The Nauruan population
of the island at that time constituted only 591 individuals. The Nauruans on
Truk were rep.uriated to Nauru on 31 January 1946 --a date which was
thereafter ofgreat importance to Nauruans, and which was to become the
day set for independence. Approximately one third of the total Nauruan
population had been lost during the war (Australian Archives, ACT, CRS
A518, Item Tt;00/1/2; and generally on the Japanese occupation see N.
Viviani, Naunr. Phosphate and PoliticalProgress, Australian National
University Press,Canberra, 1970,chapter 5).

Section2. TheTransitionto Trusteeship

107. Albert iEllis,the discoverer of phosphate on Nauru, stated that upon
the cessation of hostilities the wordhambles"was an appropriate term for
Nauru. (A. !Ellis,Mid Pacific Outposts, Brown & Stuart Limited, New
Zealand, 1946:p.64.) The industrial workshid been largelydemolished, and
little or nothirigwas most of the Nauruan villages.wing to the fall in the
numbers of Nauruans, the returning Australian administration did not have
as large a ta:ik as it may otherwise have had in providing housing and

employment. But the difficultiesconfronting the Nauruan communitywere
not made easi,:r by the acute population loss. Dr. Viviani(N. Viviani,Nauru.
Pliospl~ateand PoliticalProgress,pp.89, 182) sets out the demographic
situation. In 1948,the Nauruan population between 16and 60yearswas only 737 persons (405 male, 332 fernale). This had two significant results.
Although the percentage of Nauruan males above the age of 16employed in
Nauru was always about 9096,the requirements of the phosphate industry
were such that considerable numbersof foreign workers were required. The
numbers of migrant labourers equalled or nearly equalled the total number
of indigenous Nauruans. Phosphate rnining to the present day has required
the importation of considerable numbers of overseas workers. The other
ramification was the sad reduction in nurnbers of seniornians, people of
experience and leadership. It wasnot hard, therefore, for the Administration
to treat the communityin a ratheroffhand manner.

108. In fact, disenchantinent with Ridgway, the first Australian
administrator appointed after the War, was widespread amongst the
Nauruans. It arose fundamentally frorn the Administration's policy of
concentrating itsreconstmction efforts on works associated with the British
Phosphate Commissioners. The Nauruans felt neglected, particularly in
areas of housing and education. At this point, there was no secondary
education available on Nauru. At the same time, Ridgway put fonvard a
plan for distribution of royaltiesbyvirtue of a communitybased arrangement
which cut acrossthe customarysystemof individualland ownershipin Nauru.

(See the statement by Head Chief Hammer DeRoburt (Appendix 1 of this
Memorial, para. 6)where he asserts that Ridgway wasurged on in this by the
British Phosphate Commissioners.) The Nauruans regarded the supervision
and attitudes of Ridgwayas high handed, arrogant and contemptuous. The
Council of Chiefs complained first to a visiting Department of Territories
Officer,then wrote to the Australian Ministerfor Territories, E.J. Ward, and
finallysent a petition to the Trusteeship Council. All this produced avisit by
the Acting Minister for Territories, Cyril Chambers, who persuaded the
Chiefs to withdraw their petition. (Detudamo to Ward 1 October 1948,
Australian Archives, ACT, CRS A518 Items AV 118/12, AV 118/6(3).)

Ridgway'sterm wasnot renewed.

109. But controlling Nauruan dissentwasnot the main concern of the post-
war Administration. Amongst the Partner Governments, there was some
disagreement about the formulation of a Trusteeship Agreement. Provision
for such agreements was included in Chapters XII and XII1 of the United
Nations Charter. Nauru presented its share of problems, with the continuing
concern about the monopoly position of the British Phosphate
Commissioners under the Nauru IslandAgreement of 1919. For that reason,
there was a delay in submitting a draft Trusteeship Agreement to theGeneral Assemtply. Because of its delicacy, it was politic to await the
formation of the.Trusteeship Council with its "speciallyqualified persons",
and to negotiate with that body before confronting the General Assembly.
(Department of External AtYairs, Canberra to Dunk, Australian
Representative, London, Australian Archives, ACT, CRS A518, Item

023/2/2(1).)

110. At first, and consistentlywith its attitude in 1919,Australia sought to
eliminate the partners and assume total control of the Administration,
though withou affecting the position of the British Phosphate
Commissioners. New Zealand expressed fears at the consequences of this
move. (UK High Commission to Dominions Office, 22 November 1945,
Great Britain, I'ublic Records Office, London, Dominions Office 3511931,
WR213/8/1.), and sought support from the United Kingdom "if Australia

attempts to fora: the issue". (UK High Commission, Wellingtonto CRO, 11
July 1947,Grea.rBritain, PublicRecords Office, London, Dominions Office
3513829, U2976,/2.) Faced with these objectionsAustralia abandoned its bid
for a soletrustei:ship.

111. The issue of the continuance of the existingmining arrangements in
the lightof Article 76(d) of the United Nations Charter wasa matter of some
controversybehveen the three Governments. Article 76, besides stating the

object of proinoting the political, economic, social and educational
advancement of the inhabitants of trust territories, also embraced the "open
door" policy of the mandate system. In particular it required the
administration of trust territories to be carried out in a wayas "toensure
equal treatment in social, economicand commercialmatters for al1rnembers
of the United Nations and their nationals". The difficultywas expressed in
the followingterms in the initial briefingpaper on the issue:

"Althoughthe'equaltreatment'in economicandcommercialmattersreferredto
inthe Charter is subjectto thegeneralobligationto promotethe advancement of
theinhabiiants,it maybe diificultto maintainsucthattheexclusiveright
of exploitationanddistributionof phosphatein Naurucanbejustifiedsolelyon
thegrounclthat itisnecessaryintheinterestof the natives."

112. The Briiish Government was acutely aware of the problem, given its
varied colonial interests. The interests of Australia and New Zealand
focusedon the maintenance of the phosphate monopoly, whichassisted themto a much greater degree than the United Kingdom. A United Kingdom
minute put it succinctly:

"Itis clearthata draft thatdidnot payhomageto Arlicle76(d) of theCharter
would standlittle chance ofbeing approvedby the AssembIftherefore,it
becomesclearthatthe NauruanAgreementis irreconcilablewithArticle76(d),
thematterwillresolveitseüintoaclearquestionwhetherornotNaurushoube
placedunderTrustceship."
(Minute by Costly-White, 5November 1946, Great Britain, PublicRecords
Office,London,Dominions Office/1114,G158/61.)

113. Australia responded to the situation by suggesting that the Nauru
Island Agreement was covered by Article 80 of the United Nations Charter.
At the time there wasa disagreementbetween the partners as to whether this
constituted an adequate rationalisation. (Discussion between British and
Australian officiais,21 July 1947. For the British account see Great Britain,

Public Records Office,London, ColonialOffice53711462;for the Australian
account, Australian Archives,ACT, CRS A518 Item 103/2/2(1).) A curious
aspect of these discussionswas the solution put fonvard, though not acted
upon, to the effect that if the three Governments sold toal1buyers, including
themselves,at market price the increased cost to themselves couldbe met by
using the vastlyincreased profits of the British Phosphate Commissionersto
increase the subsidy to theirown farmers. This proposal makes clear what
was really happening, namely,that the existing costprice arrangement under

the 1919Agreement represented a subsidy to Australian and New Zealand
farmers, and a denial of considerable resourcesto the Nauruan community.

114. As the months went by without a draft Agreement being presented to
the Trusteeship Council,it was evident that both Australia and New Zealand
were intent on maintaining their position. In September 1947,the viewwas
taken hythe Ministers involvedthat it would bebetter to have notrusteeship
agreement at all, and presumably to operate in the South African mode of

maintaining the territory under mandate, rather than have the phosphate
arrangements jeopardised in any way. (Department of External Affairs,
Wellington to NZ Consul-General, UN, 16 September 1947, National
.4rchives,Wellington,EAl, 302/7/5(1B), quoted in B. Macdonald,In Pursuit
of rlie Sacred Trust. TrusteesliiparzdIndependence in Nauru, New Zealand
Institute of International Affairs, Occasional Paper No.3, Wellington, 1988,
p.27.)115. The matter of the Agreement eventually came before the Fourth
Committee of ihe General Assemblyin October 1947. In fact there was no
debate on the distribution of phosphate or the pricing arrangements. The
issuesrelating io the compatibilityof the Nauru Island Agreement 1919with
the Trusteeshi11Agreement were never directly addressed in the Fourth
Committee and the General Assembly: see Generul Assembly Officia1

Records, 2nd Session, 4th Committee, SIR, 35th Mtg, pp.25-28, 46th Mtg,
pp.98-104. The comment has been made that "it was good fortune, rather
than support fcirthe legciland moral principles involved,that provided a safe
passage".(Macdonald,op. cit., p.30).

116. The BritishGovernment was still not convincedthat al1waswell. The
Havana meetiilg on World Trade in 1948 resurrected the arguments, but
resulted in apolicybythe partners of "lettingsleepingdogslie". It wasfeared
that theTrustc:eshipCouncil,with its Visiting Missionsand Annual Reports,
would raise the controversial questions concerning the Nauru Island

Agreement. 'The British Government was willing to consider either the
abandonment or substantial amendment of the 1919Agreement in the event
of hostilecritii:ismsin the Trusteeship Council. Australia and New Zealand
would not agi:ee to such a course. (Cumrning-Bruce, CRO, to Hildyard,
Foreign Office, 1 June 1949, Public Records Office, London, Dominions
Office35/3830B,U2976113.)

Section3. The United Nations VisitingMissions

117. An aspect of the trusteeship systemthat proved most important to the
Nauruan community was the opportunity of speaking to persons other than
the Australiari Administrator or the island Manager of the BritishPhosphate
Commissionei:s -- an opportunity created by the institution of visiting
missions. Throughout the Mandate period there was no independent
supervision "crnthe ground", no manner by which the Nauruans could speak

to an indeperident "auditor". Itis true that a petition could be addressed to
the Permanent Mandates Commission, butthat was a distant and remedy:
the Nauruan:; craved an opportunity to address face to face someone
seemingly uninfluenced by the Administration or the British Phosphate
Commissioners. The first Visiting Missionwas therefore eagerly awaited.
The Nauruaris were concerned, in the immediate post-war period, with
questions re:.ating to employment, education, returns from phosphate,
political respi~nsibiliand also with the constant problem of the cumulative devastation of their land. It falls to very fewto witness their country being
diminished in usable size on a daily basis by the very people entrusted with
its protection.

118. In fact, there were six visiting missions to Nauru, in the years 1950,

1953,1956, 1959,1962and 1965.(For the Reports of the Visiting Missions
see Annexes,vol. 4, Annexes 7 - 12.) The introduction to the first Report of
1950remarked that:

"...unless further research should result in the establishment of new forms of
agriculture or of secondary industries,the Nauruans may have to consider in the
future the possibityaotransfer to some other island."

(Repon of the UN VisitingMissioii to Trust Temtoriesof the Pacifc on Nauru,
1950, TnisteeshipCoiincilOflcial Recorh, Eighth Session, Supp.3,oT/790,
P.*.)

119. The obvious politicaland administrative difficulties brought about by
the Nauru IslandAgreement 1919were quicklygrasped. In the words of the
Report:

"The British Phosphate Commissionersoccupyso commandinga position in the
economy of the island that theu administrative independence is Wtually
camplete, and the position of the Admioistratoin his relations 6th them
appeared to the missionto be a diicult one."

120. What is notable about the six Reports is the consistency of the
questions raised over the period covered. As the Nauruans gain experience
and become more politically articulate, greater urgency is expressed in the

questions and petitions. In general, the issues raised related to employment,
education, political control, control of the phosphate industry, and the
rehabilitation of mined land. Section4. The SystemofPublic Finance under Trusteeship

121. The first Visiting Mission Report in 1950 gives, however, a striking
illustration of the manner of financing the island by the Australian
Administration which really harks back to the prophetic words of W.M.

Hughes, declaring that here was a possessionwhich couldmore than pay for
itself. (See para.34 above.)

122. In the section dealing with Public Finance, the Mission liststhe scale

of royaltieson rach ton ofphosphate exported. It reads as follows:

M; paid mcount of the Admini-
6d. to meet the ordioaryexpensesof the Administration

6d. to repaythe rehabiitation advance'
Cd. to repay the advanceforNauruan housing

RovaItie.~~aid under the ameernent of 23 Mav 1947 beiween the British
w e Cornmissionersandthe Nauruan Councilof Chiefs
tid. to the orner of the land from whichthe particular ton of phosphate
wasexported

d to the Nauru Royalty Trust Fund to be used exclusivelyfor the
benefit of the Nauruans

d to be invested for the benefit of the landowners in the Nauruan
LandownersRoyaltyTrust Fund
:5d. to be invested for the benefit of the Nauruans in the Nauruan
CommunityLongTerm InvestmentFund

(Reponcftlte UiiitedNatio~tsWsitiiigMissionto TrustTemloriesiii the Pacificon
Naiinr, 1950, TnisteesliipCouncil Oficial Records, Eighth Session, Supp. No. 3
(T/790), p.3.)

' This refen to ihe advancepaid forgovernrnentalinfmsiructurerecwartdamage(sec pars. 107)
Ilhadnothiniodo wiihresiorationof rhemined-xt lands. 123. This schedule reveals a number of factorsbasic to the public financing
of Nauru. Although the Administration derived some revenue from import
duties, licence fees and a capitation tax,the amounts were minute. The cost

of administration of the island by Australia was to come from the "royalty"
paid to the Administration by the British Phosphate Commissioners out of
the phosphate tonnage exported. Additionally, post-war costs of
rehabilitation, direct war damage, roads, lighting, sewerage, construction of
government buildings and other works were financed by a loan of £200,000
from the British Phosphate Commissioners,which wasrecouped bya royalty

of 6d. per ton on phosphate exported. Similarly,the British Phosphate
Commissionersprovided a loan of f200.000 for Nauruan housing, destroyed
during the war, which again was paid back usingthe same method. In both
casesthe loanswere to be paid back to the BritishPhosphate Commissioners
over a period of fifteen years. In other words, with every ton of phosphate
exported, the Nauruan community was faced with a further piece of land
incapable of restoration economicallybut which waspayingfor al1the goods

and services of an Administration which had undertaken to preserve the
integrityof the community.

124. In relation to the royalties paid to Naunians, which amounted to
ls.4d. in 1950,it is important to differentiate between the various payments.
Sixpence was paid directly to the landowner concerned, and a further two
pence to a Landowners Royalty Trust Fund. Five pence was invested inthe

Nauruan Community Long Term Investment Fund, created in 1948, which
the Nauruan communitysaw and still sees as an accumulating fund to meet
the needs of government when the mining of phosphate ceases to provide
adequately for the economicneeds of the citizen5of Nauru. Thisis provided
in Article 62 of the Constitution of Nauru (Annexes, vo1.4,Annex 42) which
reads:

"(1.)There shallbe a LongTerm lnvestment Fund constitutedbythe moneysthat
immediately before the commencement of this Constitution constituteda [und
calied the Nauruan CommunityLong Term Investment Fund and by such other
moneysas are appropriated by lawfor payment into the fund or are paid into the
fund as pronded byclause(2.) of thisArticle.

(2.) Moneys constituting the Long Term lnvestrnent Fund may be invested as
prescribed by lawand income derived frommoneysso invested shallbe paid into
the fund.
(3.)Notwithstandingthe provisionsof Article 59, no moneys shd be withdrawn
from the Long Term Investment Fund (othenvise than for investment under clause(2.) of thisArticle)untilthe remvthephosphatedepositinNauru
hasby reasonof thedepletionof thosedeposits,ceasedto provideadequatelyfor
theeconomic needsof thetizensof Nauru."

Threepence was paid to the Nauru RoyaltyTrust Fund set up for the benefit
of Nauruans but whichwascontrolled by the Administration, and whichpaid
for Nauruan education. Rather less than 50% of the Royalties "paid to

Naunians"were paid direct to the landowner: inthe subsequent fifteen years
that figurewasreduced to about 20%. The remainder of the moneyspaid by
way of Royalty "to Naunians" were paid to funds invested and controlled by
the Australian Administration.

125. What is clear from these figures is that the returns from phosphate
mining formed i:hebasis of the public financialarrangements of Nauni. (See
also theStatemi:ntby Head Chief Hammer DeRoburt, Appendix 1,para 17.)
There was no fiinding, as occurred in other Trust Territories (e.g. New

Guinea), from the AdministeringAuthority itself.

126. Royalty payments again became the subject of major negotiations
between the Nauruan communityand the British Phosphate Cornmissioners
in 1959,and in 1964-1965. In particular major changes took place when at
last, in 1964,the Naunians were permitted to seek independent and expert
advice, and were thus enabled to bring considerable pressure to bear on the
Australian administration. (A table of royalty rates between 1920and 1966

appears in N. Viviani, Nuuni. Plzosp/~ateund Polifical Progress, Canberra,
1970,p.189.)

Section5. Control of the Phosphate Industry

127. Previou!;lythe British Phosphate Commissioners had negotiated on

royalties usinga certain limited conception of the "needs"of the Nauruans
But from the 1959 negotiations onwards the British Phosphate
Commissioners were faced with a different kind of argument from the
Nauruan negoi:iators--the "rightsnof the community. Not only was the
Naunian comniunityseeking to get an equitable return, what the community
described as "fair worth", from phosphate rather than a royalty built out of
the "costprice"formula. It was also looking towards the daywhen ultimately

it could contri31the extraction rate and sale of the phosphate in terms suitable to the communityrather than in terms of meeting the requirements
of Australian and NewZealand farmers.

128. In 1959, the Nauruan representatives told the British Phosphate
Commissioners that they wished to own the phosphate and mine it
themselves and for their own benefit. At the same time, the British

Phosphate Commissioners were increasing the annual production rate. By
1961, extensions on storage facilities had been completed and a second
cantilever for the loading ofphosphate was in operation.xport tonnages of
phosphate rock were increased at Nauru to well over 1.5million tons per
annum.

129. When, following a Trusteeship Council recommendation (Report of
the TncrteesliipCouncil, 1961-62, General Assembly Offcial Records, 17th
Session, Supp. No. 4 (A/5204), p.39) negotiations took place in November
1963, the British Phosphate Commissioners refused the Naunian Local
Government Councilthe opportunity to obtain independent economic advice
on the economics of the phosphate industry. Instead, a bargaining process
was begun where the British Phosphate Commissioners offered a 30%
increase in royalties and theNaunians countered with a 50% demand, the

equivalent of 4 shillings per ton. This was readily accepted by the
Commissioners, so readily indeed that the Nauruans decided to present a
new case to test howfar the Commissionerswere prepared to go in order to
maintain the existingsystem of control. Meantime, the Trusteeship Council
had recommended that the British Phosphate Commissioners accept the
presence of a professional adviser in later meetings with the Naunian
delegation. (Report of Ille TrusteeshipCouncil1963-1964, GeneralAssembly
Offcial Records,Nineteenth Session,Supp.No.4(A/5804) p.30.)

130. At this point, the Australian Department of Territories stepped in to
take over the negotiating round from the British Phosphate Commissioners.
The Department offered 7 shillingsa ton and the Naunians, now armed with

advice, sought fl per ton. Royaltywas being paid by the British Phosphate
Commissioners on Ocean Island (Banaba) at the rate of 25s.8d. After
further haggling the Naunians reduced their demand to 14s.8d which
represented, taking account of the administration costs on Nauru (estimated
at the rate of 11 shillings) the equivalent of the Banaban royalty. But,
significantly,the Naunians reserved their position that royalties should be
paid at the full difference between the costs of production at Nauru,
includingnormal profit, and theworld price for phosphate --in other words,the economic rerit. There was a ready reckoner on world pnce, namely, the
pnce of Makateri (French Polynesia) phosphate (see the Report by Mr. KE
Walker, Appendix 2.) The Nauruans believed that they shouldnot be called

upon to suhsidisc:Australian and NewZealand farm production, and lose for
themselvesthe economicrent as their usable land got lessand less.

131. The Australian Department of Territones rejected this whole
argument, which went to the very basis of the control exercisedby Australia
since 1919. It vfas now clear that future discussionswere not going to be
confined to royaityrates on the old formula of "needs".The talks,in 1965and
1967,conducted bythe Administering Authority andthe Naunian delegation,
now armed with.economic advisers,considered royalty increases, but were
strongly directed to the means of exercising control of the phosphate
industry. Eventiiallynew royaltyrateswere agreed for 1965at 13s.6dper ton
and for 1966,17i;.6dper ton. (Viviani, op.cit.,p.189.)

132. The phosphate talks between 1964 and 1967 saw the Nauruan

delegation, at first, being offered the Partner Governments a concession
by way of a 50% iinerest in the industry. (Nauru Talks 1966, 1st Session,
Annex 4, p.12:Luinexes,vol.3,Annex 4.) The Naunians, however,proposed
that the British Phosphate Commissioners should simplymine the phosphate
on behalf of the:Nauruans as managing agents,with the sale heing made at
the world price (loc. cit.). No agreement was reached and the matter was
adjourned to 1967.

133. The 1967 talks between the Partner Governments and the Nauru
Local Government Council were concerned largely with how control was to

be effected. With increasing production by the British Phosphate
Commissioners,the Naunians wanted control as soon as possible. On the
other hand, although facing pressure from the Tnisteeship Council, the
Administering Authoritywas concerned that any future control should not
affect the securityof supply.

134. At the commencement of the 1967 talks, the Nauru Local
Govenunent C(3uncilmade submissions(See Annexes,vol.3, Annex5) tothe
Joint Delegaticn of the Partner Governments, chairedby Mr WarwickSmith,
Secretary of i:he Australian Department of Territories. The Council

accepted the importance of phosphate to the Partner Governments and their
need for contiriuityof supplyand at an agreed price. But it also emphasised
the long term needs of the Naunian people. For that reason, the Councilsuggested that the Partner Governments' interests in the phosphate be
limited to the two matters, supplyand price, and that al1other matters should

be the exclusive concern of the Nauruan people The earlier offer to the
British Phosphate Commissioners of management with a management fee
waswithdrawn.

135. For their part, the Joint Delegation tried to forestall ultimate control
of the industry by submitting various proposals, al1 involvingmanagement
through the British Phosphate Commissioners. The proposals of the Joint
Delegation were based on British Phosphate Commissioners' control
together with a shared residual return between Nauru and the Partner

Governments, starting at 50150,then 75/25, and finally87.5/12.5in favour of
the Naunians.

136. At the conclusion of the 1967 talks, it was agreed that a Nauru
Phosphate Corporation would be established,and that the British Phosphate
Commissioners would be bought out by the Nauru Local Government
Council, the predecessor of the Nauru Government. The price to be paid
wasto be based on the depreciated value of the Nauru islandcapitalassets of
the British Phosphate Commissioners: it was subsequently agreed at

A$21,000,000. This was to be paid over a period of three years, with an
interest rate of6% operating on moneys unpaid after 1 July 1967. The
management was to remain in the hands of the British Phosphate
Commissioners for three years from 1 July 1967or until the final payment
was made by the Nauruan Government to the British Phosphate
Commissioners. These arrangements were contained in an Agreement
relating to the Nauru Island Phosphate Industry (see Annexes,vol.3, Annex

6). The Agreement was eventually concludedon 14November 1967,but by
paragraph 22 of the Agreement was deemed to have come into force on 1
July 1967.

137. So far as the Partner Governments were concerned, they achieved in
the Agreement continuity of supply and an agreed formula on price.
Paragraph 5 of the Agreement reads asfollows:

(1 Phosphatefrom the depositson the Islandof Naurushaübe supplied
exclusivelytoePartnerGovernments.

(2.) The phosphateshall be suppliedat the rate of two million tons per
annum or as near thereto as may be practicable,and the Partner
Governmentswillprovidean assuredmarketinsuchmmer astheymay designate, at the price ascertained from time to the in accordance with
thi:provisionsof thisagreement."

Paragraph 24 01:the Agreement made provision for a review of Part II, the
provisions dealii~gwith the supplyof phosphate. That reviewwascarried out,
after Nauruan independence, in 1969between representatives of the former
Partner Governments and a delegation îrom the Nauru Government. At the
conclusion of tlie review, an Agreed Minute was drafted, which was to be

read and construed as part of the Agreement relating to the Nauru
Phosphate Indrrstry 1967 (see Annexes, vol. 3, Annex 6). Inter aliai ,t
guaranteed to the Nauruans a market for phosphate to a certain tonnage in
the countries of the former Partner Governments. Although Nauru was no
longer restricted to supplyingthe former Partner Governments exclusively, it

had to assure tonnages and giveto these Governrnentspriority of supply.

138. Throughout these negotiations, the question of rehabilitation was
treated as a separate and distinct issue. A passage inthe course of the 1967
talks makes (hi:,position clear:

"26. The Secretary asked would the Nauruans press their argument despite
aiiyfmanciai arrangements made, that the Partner Governments had a
rc:sponsibilityon rehabilitation.

27. During the foliowingdiscussionit emerged that the Nauruans wouldstill
z.aintain their claim on the Partner Governments in respect of areas
uiinediathe past, evenif the Partner Governments did not press for the
withdrawalof thclaim,ina formalmanner such as in an agreement."
(NauruT;iks 1967,p. 51.)

The issue of rehabilitation remained unresolved, as was noted by the
Nauruans' leader, Hammer DeRoburt, on the eve of independence in his

speech to the Trusteeship Council. (See para. 192.)

Section6. Political Developments

139. There were fewif any changesof importance in the degree of political
control exercis,:dby the Nauruan communityduring the Mandate. But in its
first debate on Nauru, the Trusteeship Council indicatedsome disquiet at ihe
existing position and sought a greater degree of self-government. It even went so far as to suggest that the need for advancement of Naumans must
take precedence over the expansion of the phosphate industry (United

Nations, Report of the TmsteeshipCouncil1948-49, GeneralAssemblycy%cial
Records,Supplement No.4 (A/933) p.76).

140. In 1949, the Administering Authority reported that the Council of
Chiefs was constituted and acted in the same manner as it had since 1928.
Onlyone Naunian had a position of any importance in the Administration, as

Native Affairs Officer. The lack of political advancement moved the
Tmsteeship Councilto the followingcomments:

"(6) The Council,noting that although the inhabitants are prepared to take a
larger measure of participation in governmentan at present enjoyed,
political developmenthas so far been slow,and notingin particular that
aiikey positions in the admiistration are held by Europeans and that
the Nauruans have not been given the necessarytraining to occupysu&

positions and that the inhabitants have little or no voice in the
administrative or fmancial policies, recommends therefore that the
Administering Authority take legislative and other measures to afford
the inhabitants a larger degree of self-governmentthrough participation
in the legislative, executiveanddicial processes and organs of the
Territory, and that such measures include the reconstitution of the
Councilof Chiefs as a fuUyrepresentative body elected on a democratic
basis with progressively inueasing legislative, administrative and
budgetary powers, includiig powers in respect of the control oaii
royalty funds and negotiations, and recommends further that the
Administering Authority provide wider fadties for the training of

Nauruans in administrative positions as well as opportunities for
experienceinpublicoffice.
(7) The Council recommends that the Administering Authority enact an
organic law setting forth the fundamental rights and duties of the
inhabitants anddefiningthe nature and functionsof the variousorgans of
government including the principle of the separation of the judiciary

from the executive.
(Ttusteeslzip Coiincil Oflcial Records, Fijih Session, Examination of Annual
Reporis:Naiini,YearEnded30Jirne1948(T/381) pp.11-12.)

141. The Council of Chiefs itself was aware of the lack of advancement,

and exercised its right to petition the Tmsteeship Council. The matter was
reported in the 1948-1919Report of the Tmsteeship Council to the General
Assembly: "8. Pctitionsconcerning Nauru

The Council, at its fourth session, had before it a petition from the
N:iuruan Council of Chiefs stating that, despite the high degree of
literacywhich the population of Nauru had achievedin the last twenty-
fiireyears, the Native inhabitantsstill had no voice inthe formulation of
gc:neraladministrative policies or in the control of the finances of the

is'land. The petitioners requested that a representative of the United
Nations should be sent to Nauni to inquire fuUyinto the whole matter.
At the 12th meeting, the .Council decided to postpone further
considerationof this petition until the Cïthsession.
The written observations of the Australian Government on the petition

were received at a later date. Subsequently,a further communication
uas received from the Nauruan Council of Chiefs, withdrawing the
petitionas a result of assurances givento them by the Australian Acting
hlinister of External Territories during a visitto the Trust Territory."
(Repofi or the TrusteeshipCouncil covenngits Fourth and F$/I Sessions 1948

1949, Geiieral AssemblyOfficial Records, Fourth Session, Supp.No. 4 (A/933)
pp.93-94.:

142. The Australian Government had hastily dispatched the Acting
Minister for Tixritories to Nauru (see above para. 108), and the petition had
been withdrawn. In answeringobservations by members of the Trusteeship

Council, the representative of the Administering Authority gave the
followingexp1:ination:

"...the iniiigenous inhabitants had been praised as material for a mode1island

community. They were, however, a very much less standardied or developed
people tlian the Polynesians, andwith rare exceptions, they were hardly to be
compared with them in natural gifts. They were not uninteüigent people, and
they we1.ea happy people. But they were also a very indolent people, not
unexpectedly,because of their nearness to the equator. The representative also
stated that, although it wasthiity yearsnow sinceNauru Custbecame a matter of
international interest, of those thirty years only four of them had the benefit of
contact \rith the Trusteeship Council,and another four had been years ofwar and

complet^:physicaldevastation--years, too, of inhumane treatment by the enemy
of the iiidigenousinhabitants of Nauru. Twenty-fiveper cent of the Nauruans
hlid lost thcir lives. Tha25 pet cent were the flower and youth of the island.
Those whowere left were the old men, byNauruan standards, andgenerallytired old men, or, on the other hand, the very Young,stiUnot ripe for taking part in
councils. The fust task had been one of rehabiitation was not yet entirely
complete, but it wasbecoming possibleto givemore concentration to the goal of
development.*
(Reportof the TnrsleeshipCoirncil1949-1950,GeneralAssembly Oficial Recoràs,
Füth Session, Supp.No. 4 (A/1306) pp.140,141.)

Following the Visiting Mission in 1950,the Administering Authority
143.
informed the Trusteeship Councilthat, with the consent of the Nauruans, the
Council of Chiefs was to be reconstituted as an elected body with some
additional powers. As a result the Nauru Local Governent Council
Ordinance 1951 (Nau) was enacted. Apart from becoming an elected body

with a statutory base, the Council of Chiefs was not substantially changed.
Like the former Council of Chiefs, the new Council'stask was simply to
advise the Administrator on matters affecting the Naunian cornmunity. The
Administrator could act in opposition to the advice of the Council on any
matter.

144. Throughout the 1950s, the Trusteeship Council gently chided the
Administration about the lack of executive power inthe Local Government
Council and the failure to employ Nauruans in the higher echelons of the
Administration. For example in 1959 it made the following
recornmendation:

"TheCouncil, endorsingthe viewsexpressed bythe 1959VisitingMissionthat the
Administering Authority should notbe ioo reluctant to a certain amount of
risk in carrying out ils declared policy and the objectives of the Trusteeship
Agreement and that the lime is imminent when localmatters can, for the most
part, be entrust<O the Nauruans, welcomesthe statement of the Administering
Authority that careful consideratwiii be given to these views by it when
reviewingthe powers and functionsof the Nauru Local Government Councilin
local matters.

On the other hand, the Council trusts ihat the Local Government CouncilwiU
exerciseto the fullthe powers it already has and that the AdministeringAuthority
willfurther foster such an exercise.
The Council rccommends that the Administering Authority consider, in
accordance with Article 76b of the Charter, the adoption of further measures
necessaryto prornote the politicaladvancementof the Nauruans."

(Repoii of the TnrsteeshipCoirncil1958-1959,GeneralAssenlbly OfiicialRecords,
Fourteenth Session,Supp.NO.?(A/41Cû)p.157.)145. The decade ended, so far as advancement of Nauruans is concerned,
more or less zi it had begun. But the Nauruans were seeking additional
executive powe-rsand participation in proceedings concerningNauru at the

Trusteeship Cciuncil. The Trusteeship Council hoped that at its next
examination of conditions in Nauru, a Nauruan leader or leaders would be
included in the Australian delegation. (Report of the Tmteesllip Council
1959-1960,General AssernbbOfFcialRecords,Fifteenth Session, Supp. No.4
(A/4404) p.153.)

146. Similarlythe 1962Visiting Missionmade its viewclear that there was
too small a participation byNauruans in the legislativeand executivecontrol
of the Island. (VisitingMissionReport on Nauru 1962,Trusteeship Council
Officia1Records, Twenty-Ninth Session, Supp. No.2, p.10; Annexes, vo1.4,
Annex 11.) The Visiting Missionendorsed the concerm of the Nauruan

leaders as to the continued paternalism of the Administration. A
Memorandum submitted by the Nauru Local Governent Council to the
VisitingMissionin 1962stated:

The AdniinisteringAuthority,likea too fond parent, appears to be obsessedwith
a fear les!:we breab:our neck once his hands are off our shoulders as it were. So
we have Io wait tiUwe attain that human perfection in everything,before we are
givena clianceto fmd our own feet. We believethat risksare part and parce: of
human di:velopment.

Lookig 8:nviouslyaround and beyond us, we see other islands and peoples,some
just emerging from their old life wMe others are being prepared, with realistic
target dates fucedfor progressive advancement towardsindependence. We are
not even favouredwith tentative target dates. On the other hand, we are
loaded with intangible promiseswhichseem to accumulatestratum after stratum
as the yrars roU by. Promises, plans and projects which through their own
accumuliited weights have become static and in places stagnant for want of
motion.

It is our earnest hope that the Visiting Missionrsuade the Administering
Authority to be a bit more daring to take a risk with us,and if it is not prepared,
we will most reluctantly be persuaded to look around and request another
AdminisieringAuthority, who wdl be willingto take more risk with us, to guide
and lead.us 10 ow uiiimate goal through the usual and perhaps the on--way
trial-and-error method.

The argument against us that we have not yet made full use of the existing
extensiv,:power of the Council is not quite realistic. If the circumstances are
looked intoarefdiy, it wiUbe noticed that one's enthusiasm and initiativeare inevitablymufîied and blunted by too much, and most of the time unnecessary
restrictions, or,in other words,we are being too much and u~ecessarily hedged
in."
(United Nations, Viiting Mission, Report on Naum 1962, TnrrteeshipCouncil
Oficial Records, Twenty-Niith Session, Supp. No.2 (T/1603) Annex II p.24;

Annexes,vol.4, Annex11.)

147. At the Trusteeship Council, the Visiting Mission Report was
considered and the followingrecommendation wasadopted:

The Council bearing in mind the importance of assistingthe Nauruan people to
be self-governingin au thcir domestic affairs, endorses the view of the Viiting
Missionon this matter and recommends that an advisorycommitteeshouldbe set
up immediately to consider the whole matter of future legislativeand executive

authority and Io work out constitutional plans forfull Nauruan participation in
the legislativeand executiveadministration ofthe Territory.
The Council welcomesthe statement of the special representative that he does
not see any diagreement with the prinuple of fuUer participation by the
Nauruans in their own government as suggested by the Visiting Mission,
regardless of whatever developments the future may bring in relation to the

future home."
(Reportof the TnrsteeshipCoiincil 1961-62,GenemlAssembiy, Oficial Records,
Seventeenth Session,Supp.No.4(A/5201), p.37.)

148. This heralded some changes. The Administration amended the

Nauru Local Government Council Ordinance in 1963. The effect of the
amendment was to reduce the power of the Administrator to reject advice
from the Council or, in relation to the general powers of the Council, to
allowthe Council to act without requiring the approval of the Administrator.

Whilst it represented a certain movement in the right direction, thiswas not
demonstrably whatthe Trusteeship Council had hoped for. The Trusteeship
Council pressedthe matter, adoptingthe followingrecomrnendation:

"The Council notes that the NaurLocal Government CouncilOrdiiance was
amended by an Ordinance which came into operation on 4 October 1963 and
widened the powers of the Council. Recaiiiig its recommendarion adopted at

thethirtieth session and conclusions reachedby the United Nations Visiting
Mission 1962, the Council considers that before the next vital stage of
constitutionaldvanceis undertaken, there shouldbe a Eullconsultationwith the
elected leaders of the people and to that end an AdvisoryCommittee should be
set up as quickly as possible to consider the whole maiter of future legislative and executive authoriîyof Nauru. The Councilendorses once more the viewsof
the Viitini: Mission which suggested that the Advisory Committee might be
composed of allmembers of the present Nauru LocalGovernment Council
sitting witti the Administrator and a representative of the Department of
Territones, together with a legal oficer experienced in constitutional matters.
The Advisory Committee's task would be to work out and put fonvard for
consideratis>nconstitutional plans forfullNauruan participationin the legislative
and executive administration of Nauru. The Council hopes that the

Admiistering Authority wiUtake the necessary steps in this direction and will
makea report to the Trusteeship Councilat itsneMsession."
(Repon of Ille TmsteeshipCouncil 1963-64, GeneralAssernbly Oflicial Records,
19thSession,Supp.No.4(A/5804), p.27.)

149. The 1965 VisitingMission came to the conclusion that the Nauruan
leaders were now capable of conducting their own interna1 &airs and
recommended ihat a Legislative Councilbe set up in accordance with the

expressedwishesof the representatives of the Naunian people.

"The establishment of ihis LegislativeCouncilwouldbe a step in the direction of
self-deterniinarionwhichthe Nauruan people havethe nght to exercisefreely."
(Reporfof IlleTmsreesltipCouncil1964-1965,GeneralAssernbly,Oficial Records,
20thSession,Supp.No. 4 (A/6004), p.&, Annexes,vo1.4,AMeX12.)

150. The pre:;sure applied first through the Visiting Missionand then by

the Trusteeship Council, at the behest of the Nauruans, resulted in the first
major legislativ: change inNauru since 1919. For the first time,and onlytwo
years short clf independence, Nauru was provided with something
approaching a constitutional instrument, adopted after discussions with the
Nauru Local CiovernmentCouncil, and after agreement had been reached
between the three Governments. The legislation was the Nauru Act 1965

(Cth) (see Amiexes, vol. 4, Annex 39). Under Article 7 of the tripartite
Nauru Agreement of 1965,Article 1 of the 1919Agreement, and the 1923
SupplementaryAgreement ceased to have effect (see Annexes, vol.4, Annex
30).

151. The Nailru Act 1965(Cth) established a LegislativeCouncil consisting

of the Administrator, five official members appointed by the Governor-
General of A.ustralia and nine elected members. The Administrator
presided at meetings of the Council. The Legislative Councilhad the general
power to make Ordinances for the peace, order and good government of the Territory, subject to a withholdingand reservingpower in the Administrator.
But this general power was heavily circumscribed by exceptions -- defence,
foreign affairs, and, importantly in the context of Nauru, the phosphate

industry (including the operation, ownership and control of that industry,
phosphate royalties and the ownership and control of phosphate-beanng
land). The 1919Agreement, apart €romArticle 1,continued to operate and
was not subject, in any way, to the powers of the Council. This meant that,
apart from strivingforindependent political control,the Nauruan cornrnunity
had a separate and distinct goal in seeking participation in the phosphate
industry. The 1965Act, however,was a step in the political developments
whichculminated inthe Constitutional Conventionof 1967-68.The separate

control of the phosphate industry,on the other hand, developed froma series
of discussions of the mid-'6Os,some hard bargaining, and the eventual
purchase of certain physicalassets.(See aboveparas. 127-138.)

152. The remainder of the political development leadingto independence
can be reported shortly. The establishment of the Legislative Council
provided a vehicle for moving towards independence. At the resumed first
meeting of the Legislative Council,which had started to rneet in May 1966,

Councillor Hammer DeRoburt moved for the appointment of a Select
Cornmittee to inquire into and report upon the most suitable means bywhich
the people of Nauru could achieve complete independence by January 1968.
The motion waspassed. (Reportof the TncrteeshipCouncil1965-1966,General
Assembiy OfficialRecords,21stSession,Supp.No.4 (A/6304), p.36.)

153. The AdministeringAuthority also reported to the Trusteeship Council
at its 33rd Sessionthat discussionswere proceeding between a delegation of
the three Governments and a delegation representing the Nauruan people on

future arrangements for the phosphate industry, and on the separate subject
of the Report of the Davey Comrnittee on rehabilitation of the worked-out
lands (see belowparas. 178-184.)

154. At this stage,it was clear what the Nauruan people had decided. The
Report ofthe Trusteeship Council States:

"At its thirty-third session, Councillor Hammer DeRoburt, member of the
Australian delegation and electedHead Chiel of the Nauruan people,informed
the Trusteeship Council that there was a very strong and earnest desire on the
part of the Nauruan peoIOeremain the people of a distinctsmall nation, which
in a sense they were. No matter howsmd theywere and how unimportant they
may be to others, theywanted to be Creeto perpetuate their homogeneity andto preserve themselvesas a distinct people and nation. They wanted toshape their
owndestiny. They were firmlyconvincedthat these desires and aspirations could
be achieved only if they were granted sovereignindependence. They wanted to
achieveindcpendence by 31 January 1968. Any delayingof independence would
not be acceptable tohem. Their considered judgement was that it would be
better for tlie Nauruans to have independence sooner than later. The integration
or assimilationinto a biser country wouldmean the complete disiitegration and
extinctionof the Nauruans as a people."

(Repo~Iof the TnrsteesllipCoiincil1965-1966,GeneralAssemblyOjjicialRecords,
21stSessiori,Supp. N4(A/6304), p.36.)

155. This constituted nothing other than a deterrnined choice in favour of
independence. With the waning support of New Zealand for the Australian
position (B. Ma(:donald,In Pursuitof the Sacred Trust,New Zealand Institute
of International Affairs, Occasional Paper No. 3, 1988,p.55), the Nauruan
leadership was :ableto move directly to the target date for independence of
31 January 19681.But some idea of the sense of urgency can be got from the

fact that the acceptance by Australia of that target date was not amounced
until 15 October 1967, whichmeant that a special sessionof the Trusteeship
Council had .co be called in November 1967 to approve Nauruan
independence on that day -- a day which coincided with the important
amiversary of the return from Truk of the forcibly deported Nauruans in
World WarII (!;eepara. 106).

156. To make provision for the constitutional transfer, the Australian

Parliament passed the Nauru Independence Act 1967 (Cth) (see Annexes,
vol. 4,Annex 40), which wasassented to on 10November 1967. It repealed
the Nauru Act 1965 (Cth), and provided that, after Nauru Independence
Day, Australia was not to exercise any powers of legislation, administration
or jurisdiction in and for Nauru. The Act also authorised the Nauru
LegislativeCoiincilto establish a Constitutional Convention.

157. The Constitutional Convention met in January 1968 and drafted a
Constitution suitable for a change-over on 31 January 1968. The task of the
Convention wzisnot fully completed, but the deadline had to be met. The
process was described by Professor J.W. Davidson, Adviser to the
Constitutional Convention, in these terms:

"Austra1i:ihad not permitted a gradua1transfer of responsibilityin earlier years,
and as a consequenceof the hasty preparations for independence that had been unavoidablein the final months,a great deal still had to be done. The members
of the Councilof State had to gain experienczin the exerciseof executivepower
and, not least, to learn the procedures essential to effectivegovernment. The
LegislativeAssembly had to face a heavyload of work, amendmg and replacing
exisiinglaw. The administrativestructure of government had to be reorganized.
And, ultimately of over-ndig importance, plans had to be worked out for the
srnoothtransfer of the phosphate industryto Nauruan control."
(J.W.Davidson,"The Republic of Nauru",Journal ofPacificHistoy, vol.lll, 1968,
p.150.)

158. The Constitutional Convention met again between 25 April and 17
May 1968when a number of revisionswere made to the Constitution, one of

which was the inclusion of section 83(2), limiting the responsibility for
rehabilitation of the Government of Nauru to the area mined after 1 July
1967:

"(2) Nothing in this Constitution makes the Government of Nauru
responsible for the rehabilitation of land from which phosphate was
minedbefore theLirsidayof July,One thousand ninc hundred and sixty-
seven."

(See Annexes,vol.,Annex42.)

Section7. TheResettlementIssue

159. For a considerable time before independence, the Naunian
community had pressed the view that the mined land should be restored to
usability. On the other hand the view of the Australian Administration and
the British Phosphate Commissionerswas that this was an impractical and
une&nomic venture, and that the only solution was to resettle the

community elsewhere -- as was done with the Banabans of Ocean Island.
This hasbeen a major source of contention since 1945.

160. The Nauruan community has always had a strong attachment to its
nationhood, and to the preservation of the Nauruan identity. It was not
attracted to a resolution of the problem of destruction of the land which

woiildupset such an identity. Butif, as was repeatedly told to the Nauruans
by the Respondent State, the phosphate lands could not be rehabilitated,
there might beno alternative to a measure of resettlement.161. Each Vi:;itingMissionto Naurucommented on the issue: the Reports
of those Visitin: Missionsare set out inAmexes, vol.4, Annexes7 - 12

162. In partimlar a useful summary of the earlier consideration of this

issueis set out ïn the 1962VisitingMissionReport:

"56. The question of the future of the Nauruan communitywasconsidered by
tlie fust Viiting Missionto Nauru in 1950,although no local discussions
were held at that time concerning that problem. The 1950Missiondrew
attention to the situation in the neighbouring Ocean Island whose
phosphate deposits were to be exhausted -- and whose people had

nl-eadybeen resettled on Rabi Island in the Fiji grou--and expressed
the view that resettlement of the Nauruans on some other island or
territory might offer the only satisfactory long-term solutions unless
iesearch some possiblealternativeof liveliùoodfor the people.
57. 'Nhen the question was raised with the Nauru Local Government
Council by the 1953 Visiting Mission, estimates then were that the

]phosphatedeposits would be exhausted in about seventy years. The
'Vauruanswere already beginning to be concerned about their future,
and their spokesmen indicated that outside assistance would be
welcomed. The 1953Visiting Missionbelieved that the question of the
transfer of the Nauruans, either individudy or collectively,to another
placeor places should notbe put in abeyanceuntilthe termination of the
phosphate industry,but that a plan for gradual resettlement, whichmight

provide for the purchase of land at an early date, should be agreed as
soon as possible. The Mission considered that increasing attention
should be given to providingthe younger generation of Nauruans with
vocational trainingwhichwould fit [hem to obtain employment in other
areas of the Pacific.

58. At its tweüth session, the Trusteeship Councii recommended that the
AdministeringAuthority shouldformulate plans, in consultationwith the
Nauruan people, forresettlemenl and should also give consideration to
ways and means of li\felihoodfor those Nauruans who might wish to
rcmain in the Territory.

59. In 1955, the Administering Authority reported that extensive
investigationsas to the suitabiiityf certain islands adjacent to Papua
and New Guinea as a home for the Nauruan people had proved
unsuccessful,but the Administration of the Territory had been asked to
make every endeavour IO fmd new unpopulated areas where the
Nauruans could be settled without difficulty -- areas which wouldbe
suitable for agriculture, would enable the Nnuruans to engage in fïhing

pursuits and would permit easy access to avenues of employment.
Furthermore, the Trusteeship Council suggested that the Administering Authority might give further consideration to the possibiity or
rehabiitating the worked-outphosphate lands.

6û. In 1956, the estimated life of the phosphate deposits was reduced to
approximately forty years as a resuit of increased production by the
Company. The Admiite~g Authority stated that officers of the
Commonwealth Scientific and Industrial Research Organization had
carried out a soi1surveyof Nauru in 1954 and had expressed the view
that the rehabiitation of worked-out phosphate lands was impracticable.

A passageof its report read:
'It would be possibleto level this worked-out landwith the aid
of explosivesand heavy crushing equipment, and it wouid be

possible to import soii, e.g. as backloading from the mainiand,
but there is no certainty that the soii wouid stay on the surface
and not be washed down into the crushed coral. Even ifthe
plateau were to be resurfaced and maintained in this manner,
there wouidstillbe the question of an adequate water supplyto
supplement raidall. It is believed that any such scheme would

be fraught with so much uncertainty as to fmal success, and
would be so expensive, that it may be ruied out at once as a
practical proposition for the wide-scale utiiiuation of these
lands.'

61. The 19% Visiting Mission discussed the question of the Future of the
Nauruan people with the Nauru Local Government Cound, which
stated that there was a growing tendency among the people to favour
resettlementin Australia rather than on an island off NewGuinea. The

LocalGovernment Councilconsidered that the Admiite~g Authority
should eventuallymeet (a) the cost of the new homeland itself; (b) the
cost of erection of villages,administration centres and public institutions;
(c) the cos! of communication systems and other necessary and
reasonable faciiities. The Local Government Council was opposed to
individual,gradual or piecemeal resettlement. The1956Mission was of

the opinion that an advanced plan shouldbe agreed upon as early as
possibleand that it must havethe fuUestsupport and CO-operationof the
Nauruan people themselves. (It recommended the formation of a
standing joint consultative body consisting of representatives of the
Administration and the Nauruan people with possible assistance from

the British Phosphate Commissioners to provide continuous
consultations on the problem.) The Administering Authority, on the
other hand, pointed out that the basic diff~cultylay in the fact that a
physicalarea which would haveresources to sustain the present level of
livingof the Nauruans andat the same time wouldFulliltheir aspirations
was not available, and that it would no! be possible for Nauruans to

preserve their identityin Australia. The AdministeringAuthority further stated that whateverfundswouldbe needed for the possibleresettlement
of the Nauruans would be forthcoming as and when required, and that
all the necessary assistance, whetherit be special training or technical
as:;istance,wouldbe amplyprovided.

12. The Administering Authority reported that examination of the
pc.ssibities for resettlement in the Pacificarea had included islandsin
th: Fiji group, the Solomon Islands and the Australian metropolitan

area. The opinion of the 1959VisitingMissionwas that in the event that
island suitable in al1respects for the resettiement of the Nauruan
cc~mmunity could not be found, eamest consideration should be givento
settlement in the metropolitan countryof one of the three Administering
Authorities or in a possession of anyone of them where the standard of
Li~riwgascomparableto that enjoyedby the Nauruans.

63. On 12 October 1960 the Australian Government made proposais to
rf:setde the Nauruans in Australia by stages extending over thirty years
or more. The proposals were no! accepted by the Nauru Local

Ccovernment Council. The Nauru Local Government Council's
alternativeproposal in December 1960for resettlement of the Nauruans
ui a seU-governingisland off the coastof Australia was explainedby one
of its members, Mr Gadabu, at the twenty-seventh session of the
T'rusteeshipCouncil.

64. l'he Mission was informed that in February 1962 a delegation of the
Nauru Local Government Council hadpaid an inspection visit to two
i:ilandsoff the Australian coast,namelyFraser Island on the east coastof
Oueensland and Prince of Wdes Island in the Torres Straits. The

clelegationlater held talks with the Minister of State for Territories in
Canberra, foUowing which a statement was issued reiterating the
Iiauruan leaders' belief that their best hope for a future home lay in the
~levelopmentof some island adjacent to the Australian coast, although
iieither of the two islands aiready inspected by the Nauruan delegation
Iiadbeen foundsuitablefor that purpose.

(United :VationsVisitingMission to Trust Territories of Nauru and NewGuinea
1962,Rq,orl on Nairni, TntsteesttipCoiincilOficia Records, 29th Session, Supp.
No. 2 (T11603)pp.6,7.)

163. The Missionwenton to discussthe currentposition:

"65. The first conclusionto be drawn from this record of early discussions is
that the settlement of the Nauruan peoplein a new homeis unavoidable.
It is truc that some suggestionshavebeen made in the past that it might

be possibleto rehabilitate the land of the island for agricultural purposes
by bringingsoi1from elsewhere and covering thecoral. This suggestion has however, been rejected after investigation on the spoby the
Commonwealth ScientZc and Industriai Research Organization. And
indeed no one who has seen the wasteland of coral pinnaclescan bclieve
that cultivable land could be established over the top of it except at
prohibitiveexpense. Even a layman can see that, and it isto be noted
that the suggestion for rehabilitation of the land has never come from
anyone who has visited the island. It isalso beyond question that the
lslanders could not suMve on the meagre agriculturai produce of the
island.

On the grounds of fmancealone it willclearlybe impossible forthem to
remain in the island oncethe present sources of phosphate revenue are
no longer available(the cost of administrationinduding publicseMces is
nowapproximately $A500,000a year or abou$AlW per head per year).
66. It is true that a number of Nauruans maywtoremain in the island as
longas it continues to be habitable, but the starting point in a reviewof
this problem must be that Naurvdi be incapable of maintaining the
population when the phosphate is exhauste--and present estimates
indicate that thiswillcome in lessthan thirtyyears from now."

164. The last two paragraphs above are now outdated, in view of later

inquiries which establish the possibility of cost-effective rehabilitation (see
paras. 178-184, 199,205-210). But they certainly pointed to the urgency of
the problem, as the day was fast approaching when the Island would be
mined out.

165. Between the Report of the Visiting Mission in 1962and the next
Visiting Mission in 1965,the final act in the resettlement phase was played
out.

166. Australia had not always favoured resettlement. There was some
suggestion contained in a minute of the Secretary of the Department of

Territories that the General Manager of the British Phosphate
Commissionerswas pushing resettlement simplyto get the Nauruans out of
the way (C.R. Lambert 4/6/53, Australian Archives, ACT, CRS A518 Item
DR 118/6 Pt 1). The previous Secretary, J.R. Halligan, had suggestedthe
island of Laucala in the Fiji Islands. (The Banabans of Ocean Island had

already been relocated to one of the Fijian islands, Rabi.) Halligan felt it
was necessary to find a place withinAustralian jurisdiction, but he suggested
that "it would not be impossible for Fiji to be transferred to Australian
control within a not unduly lengthy period. If that were to happen it could
well be that Laucala would be under Australian jurisdiction before thecomplete transfei:of the Naunians from Nauni could be effected. (Halligan
17/11/52, Austra.lianArchives,ACT, CRSA518Item DR 11816Pt 1.)

167. Soon after writing this minute J.R. Halligan became the Australian
Commissioner of the British Phosphate Cornmissioners. The Australian
position at this time fluctuated betweengradua1assimilationof the Nauruans
in Australian Territories "after the European mariner", that is, by supported
individual emigration, to possible resettlement on islands off New Guinea.
(See Australian Archives, ACT, CRS A518 Item DR 11816Pt 1, Lambert
5/11/53, and vic:wsof the Minister, P. Hasluck attached; and W.R. Marsh,

Assistant Secretary (soon to become Director of Naunian Resettlement in
the Australian Department of Territories), Australian Archives, ACT, CRS
A518,Item DR 11816Pt 1;Annexes,vol.4, Annex62.)

168. When the 1960 assimilation proposal was not accepted, Australia
made an attempt to find suitable islands which would meet the criteria put
fonvard by the :Naunians (Trusteesl~ipCouncilûjjïcial Records,31st Session,
1964, "Opening Statement on the Trust Territory of Nauni by the Special
Representative, W.R. Marsh, Director of Naunian Resettlement",

T/SR.1225-1243,pp.56-59). After investigation,the Nauruans indicated that
Curtis or Frasei:islands shouldbe looked at. These were both islands close
to the Austra1i:mCoast,part of the Australian State of Queensland. The
Naunians were not seeking full sovereignindependence on Curtis Island but
sufficient control toenable them to preserve and maintain their separate
identity. The Naunians also offered Australia a treaty of friendship (see

statement of Hi:ad Chief,Hammer DeRoburt, Appendix 1below,para 21).

169. At the :meetingof the Tnisteeship Council inMay/June 1963, the
Australian Government, through its Special Representative, informed the
Council that:

"Ifan areawas chosenwhich wasnow Australianterritoryand whichcould be
made avdable, the basis of the administrative arrangesould be that,
subjecttc theresettledNauruansacceptingthe prideges andresponsibiitiesof
Australiaii citizenship, they should be enabled to manage their own local
administratiandto makedomesticlawsor regulationsapplicableto theirown
community."
(TnisleesiripCouiicilOfficialRe,3thSession,1963,T/SR.l2û3-1224,p.6.)170. On 12 December 1963, the Australian representative made the
following statement in the Fourth Cornmittee on the Report of the
TrusteeshipCouncil:

"Followingadvice from the Nauruan Resettlement Committee that subject to
satisfactorypolitical arrangements either Curtis Island or Fraser Island (on the
Queensland coast of Australia) wouldbe satisfactory places forthe resettlement
of the Nauruan people, the Australian Government deaded that Curtis Island
offered the better prospects for successhl resettlement and formulated ünes
alongwhichit wouldbe prepared to make Curtis Islandavailablefor the purpose.

These suggestionswere presentedby the Diector of Nauruan Resettlement, with
the aid of colour füm and photographs of Curtis Island, to the Nauru Local
Goveinment Council andthe people of Nauru during a Msitfrom the 17thAugust
to 12thSeptember, 1%3. During hisMsitthe Diector attended severaimeetings
of the Council and addressed several public meetings. which took the form of

open question sessions, and also made himself freely avaiiable for individual
inquiries.
The Naman Council has since informed the Australian Government thatit is

unable to accept the proposalson the grounds that theydo not meet the wisheof
the Nauruan people in respect of the form of governmeut they want to have if
resettled on Curtis Island; andthat the Counciwiilsubmit counter proposals for
considerationby the Australian Goverment.

The present position istherefore that, since the Trusteeship Council meetingin
May/June, 1963,the Australian Governmenthas satisfieditselfthat Curtis Island
wouldoffer prospectsof successfulresettlement; has put before the Nauruans the
lineson whichit wouldbe prepared to negotiate a resettlement agreement based
on Curtis Island; and is now awaiting counter proposals from the Nauru Local
Government Council.

The Australian goverment believesthat its latest proposals represent a genuine
and generous attempt to meet the wishes of the Nauruan people but it is
prepared IO give careful consideration to whateverfurther proposals the Nauru
Local Government Councilmay place before it. the Australian Governmentwül

not, however, be able to depart from its decision as already stated before the
Trusteeship Council 'that itcannot see its wayclear to transferring sovereigntyof
territory whichis at present partofAustralia'.
Thismatter to whichthe Trusteeship Councilrightlyattaches such importance is

therefore being very activelypressed ahead and my goverment willcontinue to
report in detaii to the United Nationson progressastdevelops."
(General Assembly Oficial Records, 18th Session, 4th Committee, 1513th

Meeting, 12December 1963,A/C.4/SR.1513, p.565,para.4.) due to natural over population and would-be sophistication of the younger
Nauruan generation. We feel thatGovernent propaganda aimed at shiftingthe
blame to naturai causes and evolution, is responsible for thisunfairemphasis but

have met with verylittle success. Although such factors may be regarded as
contributory, it is wrong to attribute the necessity of resettlement whoUyor
primarilyIO them. We submit again that the main need for resettlement aises
out of the physical destruction of the island and its attendant problems. Four-
fifths of our island is phosphate-bearing and therefore in the end thawiUuch
be destroyed.

We bitterly regret that in the recent discussions our delegation hasled to
achievewhat we had thoughtwouldbe acceptableto both our people and in their
mutuai interest. We feel that despite yoiir fullknowledgeof the relevant factors
in the situationyou havemade no effort to compromiseso that we could reach a
mutualiysatisfactoryagreement, but rather that your stand and your attitude on
this most important and vital matter to our people are based on Littleelse other
than sheer strength in bargaining.

We feel that we cannot secure a reasonably happy and satisfactoryfuture on your
terms for resettlement on Curtis Island and we haveecided on behalf of our
people that the idea should forthwith be abandoned. The properties of the
Queensland people on Curtis Island who have been so upset on our account

shouidnot be acquired.
Your representatives pointedout, and we had noted that thesame Ausvaiian
attitude wouidapply to aliits off-shore islands irrespectiveof their distances from
the mainland.

We are left therefore, with no option but to look to our own island for a
permanent future. We willremain on Nauru."

(Nauru Taks 1964,pp.4-5.)

174. Once settlernent on Curtis Island had been rejected, the Nauruans
stated very clearly that as their future lay in Nauru, rehabilitating the
quarried lands in fullhad become irnperative.(Nauru Talks 1964,p.5.)

Section 8. Independenceand Rehabilitation

A. THE REIIABILI'TATION ISSUE

175. When the rnatter of resettlernent/rehabilitation came up for

discussionbetween the Australian and Naunian delegations in Canberra in
May-June 1965, the Chairrnan (Mr. Warwick Smith) of the Australiandelegation registered the Government's disappointment at the decision of
the Naunians not to proceed with resettlement on Curtis Island, and stated
that it was hoped that the Nauruans would keep the issue alive, and not rely
solely on other :possibilities,such as a successfulrehabilitation of the island.

But the Australian delegation did propose that a committee be set up, to
include a civil engineer, an economist and a soi1expert, to investigate the
issue of rehabilitation. It was suggested that selection of the Committee
members be agreed upon withthe Naunians.

176. In relation to the problem of limited resources on Nauni, the
following exchangetook place between the Chairman and theHead Chief:

'The Chairman pointed out the diiculties comected with an increasing
population and the possibilityof limited resources on the Island to feed that
population. The question was whether the Nauruans saw agncuiture as an
avenue of employment or as a supplement to food, the buk of which would
presumabl:jstiiihaveto be imported.

The Head Chief replied that he couldnot ask his people to liveon onlyone filrh
of the islarid. Instead of four-ffi~hsof the island uselessthey wanted they wanted
al1the islaodusefui, or at least with trees. Theybelievedthat this wouid improve
rainfaii. Theycouid at least liveon the re-soiled land and usethe coastalstrip for
agriculture.ince the Governments were prepared to restore the area of Curtis
Islandafk:cted by mining for mineral sands why were they not prepared to
underde similarrespoosibiiitieson Nauru.

The Chairman said that it wasstandard practice to rehabilitate mineral sands but
not open (:utminiig or phosphate. He had mentioned these matters merely to
indicate tliat the Governments' view was that rehabiitation was ükely to be
impracticableand ineffectivein the long term. The Governments were however
quite willi:igto see the proposed investigation committee set up tolook into the
question to helIOget a common view, although this in no waycommitted them
to meetinf:anycosts forrehabitating the island."

(Record of Negotiations, 31st May-10th June, 2nd June p.m. 1965, p.6, 7;
Annexes,vol.3,Annex2.)

177. In evide:ncebefore the Commission of Inquiry into the worked-out
phosphate laniis of Nauni in 1987, Mr Marsh, the former Director of
Nauruan Resedernent, by now a retired public servant of the Australian

Department of Territories, gave his ownaccount of these events. He stated
that, once the plan for Curtis Island wasaccepted, Australia wasprepared to
finance completelythe setting up costs of the Nauruan community,involving
transfer of the Nauruans, housing, roads, deep-water port, industries.Secondly,resettlement was seen as the alternative to rehabilitation, so that

when resettlement could not be achieved then the issue of rehabilitation
revived. This was what led to the establishment of an investigative
committee, tlie Davey Cornmittee. One factor in thiswas the pressure being
exerted by the Trusteeship Council. Thirdly,so far as Mr Marsh was aware,
the Australian Government had not given much thought to what would
happen, once the Nauruans had accepted Curtis Island, in relation to Nauru
itself. The evidence of Mr Marsh, upon reflection, was that the Nauruans

could not have been deprived of their homeland, where there would still be
Nauruans living, even after resettlement. The Nauruans could still have
obtained self-determination in the Trust Territory, and presumably the
control of the phosphate industry. (See Commission of Inquiry into the
Rehabilitation of Worked-Out Phosphate Lands of Nauru, Transcript of
Proceedings, 8 July 1987,Marshpp.858-865:Annexes,vol.4,Annex 73.)

178. The Cornmittee comprised Mr G.I.Davey (Chairman), a consulting
engineer, Professor J.K. Lewis, Professor of Agricultural Economics,
University of New England, N.S.W., and Mr W.A. Van Beers, a Soils and

Land Classification Officerof the Food and Agricultural Organization. The
Comrnittee was appointed by the Australian Minister of Territories late in
1965, and was required to report by 30 June 1966. Its Report would be
tendered both to the Administering Authority and the newly-established
Nauru Legislative Council. For the text of the Report see Annexes, vol. 3,
Annex 3.

179. The Cornmitteewasrequired to examine:

whetherit wouldbe technicaiiyfeasibleto refillthe minedphosphate
"(i) areaswithsuitablesoi1and/or othermaterialsfromexternalsourcesor
to take other steps in order Io render themusable for habitation

purposesand/orcultivafion any kind;
(ü) effectiveandteasonablewaysof undertakinsuchrestoration,includig
possible sourcof materialsuitableforreîÏiling;
estimatedcosts of any practicablemethodsof achieviny restorinion
(iii) anyeffectivedegre..."The Committee wasalso instructed, assumingthat some form of "restoration"
was possible,to...

invcstigatethe water resources of Nauru;
"(i)
(ii) exriminefuUythe possibiity of growingin the areas to be restored, trees,
veg:etablesand other plants of a utilitarian kind, having regard both Io
what was done in this wayin the past and what might be most usehl to
the:Nauruan peopleinthe future."
(Reporron RehabilitationofhfinedPhosphaLands,1966 p.7.)

180. It was assumed by the Committee that an evaluation of possible
measures for rehabilitation of mined areas from an economic point of view
was expected. Further, the Committee understood its function to be
primarily the provision of information concerning technically feasible
methods of treating worked areas, the costs and benefits of alternative
treatments and the implicationsof such actions.

181. The Co:nmittee itself affirmed the close connection between the
issuesof rehabilitation and resettlement. It described the background to the
rehabilitation proposais as having arisen as a consequence of the refusal of
the Nauruans to resettle on Curtis Island. The Committee put it in thisway:

"Upon rejection of Curtis Island, the Nauru Local Government Council
consideretlit in the best interests of the Nauruans to remain in thcir own island.

The quesi:ionof rehabiiitation of worked-out phosphate lands was then raised,
bearingai it did on the capacityof the island to pronde a satisfactoryhome for
the Nauriians whosenumbers are increasing at a rate of more than four per cent
perannuin."
(ReportO,$Rehabilitatiotiofhfi~iedPliosplialeLands,,.9.)p

182. The Committee accepted that the concern of the Nauruans over the
mined-out lar!ds arose not so much because of loss of current useful

production but because of the loss of opportunities for future utilization of
these areas for habitation, agriculture or other purposes (id., p.10). With
rising population density, dependence on imported foodstuffs would be
greater and would reach an intolerable level unless something was done to
counter the problem. 183. The Committee was cautious in its appraisal, but it saw a future for
Nauru provided there was developed a co-ordinated land use plan based on

an overall policy covering the whole of the island's land resources. The
proposals of the Committee were limited but clear. It proposed a water
supply system, a new airport (thus releasing the land on which the existing
airport waslocated for residential purposes), the treatment of land to make it
suitable for public and residential purposes, approximating 500 acres,and the
vegetation of land extending to some 1120acres. It estimated an expenditure

of $31m to provide these facilities, and recommended such an expenditure.
It also recommended a land use plan to accommodate a population of
10,000.

184. The details of the Committee's proposals --which have to a large
degree been superseded by the comprehensive and more thoroughly

researched proposals of the Nauru Commissionof Inquiry --should not be
allowed to detract from its real significance. Thiswas, that rehabilitation, at
least on a modified scale,was a cost-feasiblepossibility. Information coming
from the British Phosphate Commissioners and the Administration had
always been designed to show that rehabilitation was either completely
impractical, or at least not in the usual course of mining.These assertions

and assumptions,never previouslyexaminedor questioned in anydetail. The
DaveyCommittee'sReport denied their validity.

ç. THEGENERAA LSSEMBLY 'IEWSONTHEREHARlLlTATT SNUE

185. Once it became clear that the Curtis Island resettlement proposa1was
not going ahead, both the Tnisteeship Council and the General Assembly

took up the issue of rehabilitation. The General Assembly in 1965
recornmended that the Administering Authority engagein a programme of
restoring the worked-out lands. Resolution 2111(XX) reads as follows:

"nieGeneralAssembly,

Havingexamined the chaptersof the reports of theTrusteeshipCouncil relating
to conditionstheTrustTerritoryof Nauru,
Takingnote of the reporton Nauru submittedby the United NationsVisiting
Missionto theTrustTerritoriesof NauruandNew Guinea,1965,
Having examined the chapters ofthe reports ofthe Special Committee on the
Situationwith regardto the lmplementationof the Declarationon the Grantingof Independence to Colonial Countries and Peoples relating to the Trust
Territory of Nauru,
ReafCumiiigthe provisions of the Charter of the United ~atio& and General

Assemblyresolution 1514(XV) of 14 Decemher 1960on the Declaration on the
Cranting of Independence to ColonialCountries and Peoples,
Noting th;it,in compliancewiththe request of the Trusteeship Councilat its thirty

rust sessi,>n,the Adrninistering Authority and representatives of the Nauruan
people, in June 1965at the Canberra conference, pursuedfurther the question of
a future home for the Nauruan people which would preserve their national
identity,

Noting hirther the conclusions of the Trusteeship Council at its thirty second
session to the effect that,as the Adrninistering Authorily was unable to satisfy
fdy the Nauruans' conditions that they shouid be able to resettle as an
independent people and have territorial sovereignty in their new place of
residence.,and as the offer of Australian citizenship was unacceptable to them,

the Nauruans decided notto proceed withthe proposal for resettlement on Curtis
Island andthe Australian Government has discontinued actionon thisproposal,
Endorsirg the conclusions and recommendations contained in the reports of the

SpecialCornmitteeconcerningthisTerritory,
Recallinl: the proposais made by the Nauruan representatives to the
Adminisiering Authority for the establishment of a Legislative Council by 31

January 1966and for the granting of independence on 31 January 1968after hvo
years of legislative experience together with experience through an Executive
Councilin the forms and procedure of democratic politicaladministration andin
the executiveprocesses,

Considering the decision of the Nauruan people to stay on the island of Nauni
and their request to the Administering Authorityto restore for habitation by the
Nauruaii people,the land workedoui by the Phosphate Commission,

(1) Reaffirms the inalienable right of the people of Nauru to self-
government and independence;

(2) Calls upon the Administering Authority to take immediate steps to
implement the proposal of the representatives of the Nauruan people
regardiig the establishment of a LegislativeCouncilby31January 1966,

(3) Requests the Administering Authority to Cu the earliest possible date,
but not Iater than 31January 1968, for the independence of the Nauruan
people,in accordancewiththeir wishes;

(4) Further requests that immediate steps be taken by the Administering
Authority towards restoring the island of Nauru for habitation by the
Nauruan people asa sovereignnation; (5) Calis upon the Administering Authority to report to the Trusteeship
Council at ils thirty third session on the implementation of the present
resolution."

186. At the 33rd session of the Tmsteeship Council, Mr Hammer
DeRoburt, Head Chiefof Naum, addressed the Tmsteeship Council:

"48.With regard to the question of a permanent home-land hesaid that after the

Australian Government and the Nauruan people had failed to reach an
agreement on resettlement, there had been no alternative left for the Nauruan
people butIOdecide to rernain on Nauru. If theycorneto do so, the island would
have to be completely rehabitated and the Nauruans submitted that the
responsibility forh rehabilitation rested with the Administering Authority. If
Nauru attained lndependeuce in January 1968, the Nauruans would have the
responsibility. Roughlyspeaking the apportionment of responsibiity would be as
f0Uows:

The Administering Authoritywould bear one third of the responsibilityfor the
rehabilitation, and the Nauruan peoplewould be responsible for the remaining
twothirds.
(Tnisleesliip Corrl ficial Records, 33rdSession,T/SR.1285, p.91.)

187. This has been the position of the Nauruan Government since

independence (see paras. 1,4, 193,615-618).

188. The 33rd Session of the Tmsteeship Council in 1966was informed of
the recent Report of the Davey Committee but was told that there had been
insufficient time for full consideration of the Report, either by the
Administering Authority or the Nauru Legislative Council. This meant that

the Committee Report would not be before the Tmsteeship Council until
June 1967,onlysixmonths before the date set for independence.

189. The position of the Nauruans in relation to the Davey Committee
Report was stated by the Head Chief, Hammer DeRoburt, at the 1966Talks

between the Nauru Local Government Council and a Joint Delegation of the
three Governments. (Nauru Talks 1966,Annex 11;Annexes,vol. 3, Annex4.)
As the statement revealed, the Committee's estimates of the cost of
restoration indicated that the Nauruans could have a sustainable future onNauru if certain rehabilitation rneasureswere carried out. For the Nauruans,
the Head Chiefstated:

"6. Oiir people have been seekingrestoration of the minedasaenght
to have returned to us adequate land for a permanent home. We were
ini:erestedin resettlement onlybecause it appeared to be an easier way
of solvingow problem, and the AdmioisteringAuthority encowaged this
by suggestingchatit wouldbe impossibleto liveon Nauru and, that even
if wecould,it wouldstillnotinour best interests so.do

7. To the Nauruans the most pleasing aspeof thiseport isthat the
Cornmitteehas wnfumed our viewthat ik practicablefor us to stay on
Nmru. We have lived on this island for centuries, and when no other
solution could be found we were sure that if the mined lands were
restored it wouldbe possible forus to remain on Nauru eventhough our
vi(:wswere not acceptedbythe Administration."

(Nauru Taks 1966,pp.58-59.)

190. The Head Chief accepted many of the ideas implicit in the Report,
while rejecting the view that full restoration or re-soiling could not be
achieved. (Nauru Talks 1966,pp. 62-77.)

191. The Joirit Delegation'sreply is set out in Annex 16 of the Report of
the 1966Talks. It rejected the preference of the Head Chief for cornplete
restoration, but left open the actual recommendations in the Report on the

basis that the three Governrnents had not had time to consider their
implications. But there were hints in the staternent that the partner
Governrnents were hopingto avoid any discussionof rehabilitation. As there
was no common view on the Report it was suggested as a fit subject for a
joint examination by the Nauru Local Governrnent Council and the three

Governments. Nor was there any detailed discussion of the Report at the
Trusteeship Councilin 1966.

192. By 1967..attention was focused on the conclusionof arrangements for
the transfer of'the phosphate industry and for the transition to political
independence. The issue of rehabilitation was not forgotten, but it was not

central to the process leading up to independence. This was made clear by
Head ChiefHa.mmerDeRoburt in the Trusteeship Councilon 22 November
1967:see belov~,paras. 609. 193. On the day of Naunian independence, 31 January 1968, Hammer
DeRoburt, as Chairman of the Council of State, publicly declared that the
partner Governments should meet one-third of the rehabilitation costs of the
worked-out phosphate lands (Melbourne "Herald, 1 February 1968; "West
Austruliun"2, Febmary 1968;Sydney"Sun"2 , Febniary 1968). See Annexes,
vol.4, Annex 69. This position, which remairisthat of the Applicant State,is
the basisfor the present Applicationbefore the Court. PART II

THE SOCIALAND ECONOMICGEOGRAPHYOF NAURU PARTII

THESOCIALAND ECONOMICGEOGRAPHYOF NAURU

Section1. ~eomor~hologyandClimate

194. Nauru is located 42 kilometres south of the equator at 166'56' E,
almost equidistant, some 4000 kilometres, between Sydney, Australia and
Honolulu in Hawaii. Within its region Nauru is isolated. The closest island
is Ocean Island (Banaba), which is approximately270 kilometres to the East.

(See Annexes,vol. 2, Map 1.)

195. The island of Nauru is small, being only 2200hectares or 22 square
kilometres in land area. It is more or less oval in shape, being about 6
kilometres north tosouth, and 5 kilometres east to West. (See Annexes, vol.
2, Map 3.) The outer limit of the territorial sea of Nauru is twelve miles
from the edge of the reef surrounding the island. Being an uplifted, coral
limestone island,the coastal reef extendsseawardsabout 100metres.

196. Situatedjust south of the Equator, Nauru is fortunate in that it bas no
historyof cyclonicweather pattern or tidal wave action. However,during the
wet season, extendingfrom November to April, winds tend to come from the

Westand to develop sea squalls which inhibit the loading of phosphate for
periods of time. Temperature throughout the year varies between a
minimum of 23°Cand a maximum of 3S°C,with little variation between the
dryand wet seasons.

197. Rainfall on Nauru is variable. Over a period of sixty years, the
average annual rainfall was 1,994 millimetres. However, the variation is
most marked. In 1930,rainfall was recorded at 4,590 millimetres whilst in
1950 it was only 280 millimetres. Most rain falls in the wet season from
November toApril. Nauru issusceptible to periodicdrought.198. The storage of fresh water is thus vital. Water supplies presently
come from imported water held in large storage tanks, or tank water

collected from ioofs. The 1987Nauru ~&ission of Inquiry, in the course
of its detailed investigation of the possibilities for rehabilitation of the
mined-out lands, quantified the extént and the quality of groundwater

sourceswhich can be tapped bywells:

"Groundwater

Oceanici:;landshavinga relativelyuniform geologyand permeable rocks, without
any rainfid, would have a water table and would correspond to sea level at ail
points subsurface on the island. However, with the addition of perwlating
meteoric waters derived €rom rainfall, a fresh\salt water relationship builds up
based on the difference in density of fresh water to salt water. The upper and
lower surfaces of the fresh water body (or lens) are eliipsoidal,the lower surface

extending;below sea level toa depth that is equal to the height of the upper
surface above sea level muitiplied by the ratio of the density of fresh to the
differenc: between the densities of fresh and salt water. For average sea water
and rain water the ratio is about ai.e40 units of fresh water belowsea levelto
every1 unit of head above. This lensis knownas the GhybenHertzberg Lens.

It has been knownfor manyyears that a water lensexistedbeneath Nauru. Test
drilling :and hydrological invesligations in 1%5-67 attempted to quantify the
ground \;raterbut the resultswere inconclusive.

Further investigationin 1987 by Dr. G. Jacobson of the Australian Bureau of
Mieral Resources resulted in a Report to the effect that there exists, beneath
Nauru, ;idiscontinuous fresh water lem averaging5 metres in depth. Beneath
this lens there existsa mixingzone of bra&sh water 60-70metres in depth. This

brackishwater, in turn, overlaysthe seawater below."
(Repub!ic of Nauru, Commission of lnquiry into the Rehabilitation of
Worked-Out Phosphate Landsof Nauru, Repo~?1 ,988,vol.5,pp.1013-1014?)

199. With rehabilitation of the worked-out lands, consideration would
need to be given to water storages or dams, supplemented by water run-off
from roads and airstrip. A desalination plant could be a supplementary

source of urater, particularly in times of dro~ght.~ Both the Davey
Cornmittee in 1966 and the 1988 Commission of Inquiry made

' The Commisicn of Inquiryconrirtcdof ProfersorC.G. Wecnmantry, Profersorof Law, Monash University
(Chairman),MI. ILII. Challen.a mnsuliing cngineer, and Mr. Gideon Dcgidoa, Manager.Naunian Language
LlurcauNaunianIiepartmcofIslandDevelopmeniandIndurtrSeethe NotonSaurces,abovep.vii.

.me GovernmentofNauru hasmcently takcn a deîiforrhe esrablishmcnradesalinationplaasa
rupplementarsourcof uatcr. recommendations for resolving the water problem (Territory of Nauru,
Reportby Cotnn~itteeAppointedto InvestigatethePossibilitiesof Rehabilitation
of Mined PhosphateLands, 1966,pp. 5, 30-32 (Annexes, vol. 3, Annex 3);
Commissionof Inquiry,Report,vol.5, p. 1388).

200. The land area of Nauru is made up of a coastal plain and a central
plateau stop acoral limestone escarprnent. The coastal plain varies in width
between 150and 300 metres. The coastal plateau ("topside") rangesbetween
30 and 70 metres above sea level. On topside, there is one major interna1
depression in the southwest of the plateau. This is called the Buada Lagoon

and is closeto sea level. (See Annexes,vol.2, Photograph 8.)

201. The reef is exposed at lowtide and drops awaysharplyon the seaward
edge. The depth of water immediately adjacent to the reef is approxirnately
three to four thousand metres, enabling extremely large vessels to moor
alongside the outer edge of the reef and be loaded with rock phosphate
through giant cantilevers. (Seennexes,vol.2, Photograph 10.)

202. The narrow fringing area or coastal plain contains soils of a weakly
developed character with lowwater-holding capacity. Howeverthere is sorne
organic matter accumulation over the limestone. The undisturbed topside
soilsare generally fertile. Levels of organic matter and the nitrogen content

are high enough to maintain non-intensive cropping. (R.J. Morrison,
"Comrnentson the Soilsof Nauru", 1987,unpublished paper prepared for the
Commissionof inquiry.)

203. The parent materials on Nauru varyfrom the fringingreef, which has
calcite dominant limestone, to the topside plateau where there is a
combination of dolomite and calcitic limestone together with phosphatic
material dominated by apatite (Morrison, loc. cit., p.8). Apart from Buada
Lagoon the topside plateau before mining presented a relief which was
generally flat to gently rolling. Geologically, the coastal fringe is much

younger than the topside plateau. The topside "overburden" or "black
phosphate" varies in depth from 15 to 38 cms. It has a rich phosphate
content but is deficient in nitrogen and potassium. This overburden was
previously mined and then blended within the rock phosphate sold by the
British Phosphate Commissioners.

204. The oriçirial vegetation of the topside plateau consisted of a
calopl~j~ilu('romano) and ficiis Fgrest.ümidst whicl?pnndanus groves wereplanted. The aiea surrounding the Buada lagoon has a wider cultivationwith
coconuts,breadfruit, pandanus, mango,soursopand lime.

205. Consideiable evidentiary material was presented on vegetation to the
Commissionof Inquiry into the Rehabilitation of the Worked-out Phosphate
Lands of Nauru. The part of the Report of the Commission of Inquiry
dealing with Nauru vegetation is contained in Annexes, vol. 4, Annex 71.
This matenai illustrates the availabilitybefore miningof a rich assortment of
vegetation, the uses of which were many and vanous amongst the Nauruan
community --food, medicine, building,implements, canoes, perfumes and
firewood.

Section2. Phosphate Mining

206. The history of phosphate mining on Nauru in this centuv reveals a
development from manual methods to a sophisticated and highly geared
industry. The three successivemethods of extraction --manual hand-raising,
overhead cablewayswith skips, and Ruston Bucyrusgrabs and trucks --the
drying and screening processes, and loading are ail described shortly in the
Report of the Commissionof Inquiry (see Annexes,vol. 4, Annex72.)

207. Nauru lias an area of 2200 hectares, 1700 hectares of which are
classified as phosphate lands. On the topside plateau only the area
irnmediately scirroundingthe Buada community has not been so classified.
Mining began on the western side of the island closest to the loading point
and, before July 1967, approximately one-third of the declared phosphate
area was min'rd out (see Annexes, vol. 2, Map 3). Before July 1967
approximately 41 million tonnes of rock phosphate were mined: since that
date almost tlie same amount has been mined by the Nauru Phosphate
Corporation.

208. As the operations of mining became more skilled and mechanical
methods took over from the manual, it became increasinglyapparent to the
Nauruan comrnunity that a very significant part of the island was quickly

becoming unusable.

209. The Commission of Inquiry Report descnbes the situation in Nauru
prior to miningin thisway: "The plateau was well covered with a mature forest of tomano, wild almond,
native hibiscus andother indigenoustrees with a somewhatsparse understorey of
shrubs and grasses. Ferns prospered in hollows. Coconut palms and pandanus
grew on the plateau -- generally where planted by the people. Coconut palms

thrived in the lower levels of the Buada Lagoon area as also did mango and
breadfruit trees. Noddy birds, terns and frigate bids utilised the trees for
nesting,roostingand food and werethere in considerable number.
The land was easily accessible and pleasant to walk over. The Nauruans, who

livedon the coastal plain, usedthe plateau asa source of manyof theu essential
supplies: timber for canoes; iimber, palm fronds and pandanus leaves for hut
building; timber to make tools, weapons and furniture; materiais for clothing;
fishinglines, etc. Nuts from the tomano trees were couected and crushed for oil
IOburn for light,almondnuls were collectedfor food.

Other berries, nuls etc. were collected for foodor medicine. The Nauruans prize
the noddy as a great delicacy and hunting parties sought them in the tomano
forests.

Of particular signiricancewere the pandanus groves. Pandanus were and stiUare
highlyesteemed as a source of food. The leaves were used for many purposes
includiig clothing,ground mats, and forroof thatching. Woven into waU sheets
they provided windand rain protection in iheir huts etc. Whenthe fruit was ripe

the Nauruans movedup onto the plateau in large parties and livedthere for long
periods, picking the fruit, extracting and cooking the edible jelly and preserving
food for the coming lean season. These pandanus expeditions involved many
people. They were essentiallyclan or communityundertakings. There was much
work to be done and many hands were needed. It was also a time of rejoicing
and the Nauruan community of today recaU such events of the pas1 with

nosialgia."
(Nauru Commissionof Inquiry, Repon, 1988,vo1.5,pp.1032-1033.)

210. But mining "changedthe face of the land":

"Phosphate mining has hada drastic effect on topography and vegetationof the
plateau. Prior to mining the land is stripped of vegetation, and topsoil and
contaminated phosphate are scraped off, thus exposingthe phosphate deposits.
Since most of the phosphate is found between the coral-limestonepinnacles, its

extraction results in a dramatic change in local reliefwhichvaries between 4 and
8 metres from the top of the pinnaclesto the pit bottoms. An average of about
three or four pinnaclescan be found to occur within each 100mZ. Because the
mining process isrelativelyinefficient,upto 20 per cent of the remains
alter extraction (Bailey1981),forming unconsolidated depositsin the pit bottoms

as weli as on the saddles and scree slopesbetween the pinnades. These deposits whichmayb':mined at a later date, and,to a lesser extent,the pinnaclessurfaces,
providethe mainsitesfor rewlonization and revegetation.
As phosphate extraction completelyremoves the original vegetation andsoi1and
exposes a niw substrate, the vegetation sequence that develops on the mined
areas may tie classified as a primary succession, aibeit one produced through
drastichumm intervention.

Despite the economic prosperity resulting from the exploitationof phosphate, by
the end of th centuryan estimatedfour-fAhs (or 17M)hectares) of the total land
area wiil h:we been transformed into a pitted wasteland of scattered coral
pinnacles which cm be best desnibed as a 'topographic jungle' or 'pit-and-
pinnacle'relief."
(Manner, Thaman & Hassall, "Plant Succession after Phosphate Mon
Nauru"AusfrolionGeographer, ol.16(1985)p. 187.)

211. At the cc~nclusion of mining any given area, there remains a sea of
coral limestone pinnacles, usuallywith a depth of four or five metres to the

pit bottom and with the pinnacles close together (see Annexes, vol.2,
Photograph 5).

212. Before the island was mined, Nauruan landowners were able to
identify their ovm areas of land through stone boundary markers. Various
trees were gram on this land, such as pandanus and coconut which were
much valued. laut once rnined, the areas become completely inaccessible

and, without c~irefulsurvey, almost unidentifiable (see Annexes, vol. 2,
Photograph 2). The most populous part of the island is along the narrow
coastal western fringe strip. Apart from pockets of forest, the main one
surrounding the Buada lagoon in the south-east, the island is -nearlymined
out (see Annexes, vo1.2,Photographs 1 & 8). The Buada area provides a
marked contrast to the rest of the topside plateau and provides some
indication of the plateau's appearance hefore mining (see Annexes, vol. 2,

Photographs 8 Ct 9).

213. After a -periodof time a weathering and regenerative process takes
place on earlier mined land. The pinnacles gradually become dark greywith
age, worn and more jagged. Natural regeneration at first occurs in the pit
bottoms with fm~~ and small bushes, and then later with vines and trees,
particularly flc8u. (See Manner, Thaman & Hassall,"Phosphate Mining:
Induced Vegetation Changes on Nauru Island, Ecology, vol. 65 (1984)

p. 1459.) Early mined-out areas witnessa substantial regeneration but owingto the pinnacle proliferation, such land is inaccessible and completely
unusable (see Annexes,vol.2,Photographs 4 and 5).

Section3. SocialEffectsOfPhosphateMining

214. The lifestyle of the Nauruan people has been affected by mining in a
number of ways. Basically,from being a homogeneousisland people existing
in a subsistence econornyand without rnuch external contact, the island has

become totally industrialised and completely dependent on imports for its
sustenance -- food, water and clothing -- and its development, building
materials, vehicles, and consumergoods.

215. In the pre-rnining period, the topside plateau provided a very
important part of the social life of the Nauruan. It was that area which
provided timber for the house, where it could take up to two months to

collect,cut and stack materials. At that time the Nauruan familywould go to
the plateau and live under temporary shelter, eating the fruits of the
pandanus and hunting the noddy birds whilst seeking the materials for the
coastal house.

216. The altivation and care of the pandanus is described by Camilla
Wedgwood, whocarried out her research on Nauru in 1935 at the invitation
of the then Australian administrator, Commander Garsia, R.A.N., and with

the authority of the Australian Minister for Territories.

'The cuitivation and care of the pandanus trees was primarily the word of the
women, though the men helped in the initial clearofgthe land and in the
planting. Thiswas done during the time of the westerlywindswhenthe raisfd
most plentifui. There are a considerable number of different varieties of
pandanus (of which each bas its own name) some with sweet fruit, some with
sou, which lend themselves to different treatment, and some which are more
valuable for their leaves (from which thatch, mats, petticoats andother objects
are made) than for their fruit. The pandanus flowersusuaUyduring January and
February and the fruit is ready for gathering about August or September.
Formerly, when thetirne for the pandanus harvest (ineded) had come, the people
used to leave their homeson the coasi andgo to dweUin more or less temporary
bush huts on theandanus lands in the interior. SometaUethe members of a
homestead helped in the gathering of the fruit, but the men generallyspent most
of their daysin fishimg,and onlyreturned iniand for the night. Commonlytwo or
three sisters with their children worked together, for picking the pandanus fruit
and turning it into edono entails heavylabour and requircs the CO-operationof a number of people throughout the two or three months of harvest. Young girls

unite IOcarry water from the home-wells tothe temporary settlements, forthere
is no water to be had in the bush-lands; groups of two or three youths or your
men work together pickingthe fruit, and if theisno old ovenwhichcan be used
for the cookig some men wüi dig a new one and coiiect from nearby coral
pimacles tynenecessary cooking Stones;the women do ali the work connected

withthe aci:uaicookingof the fruit and thesmall children are kept busycouecting
fuel. The process whereby the juice is extracted from the fruit alter the fus1
cooking is primarily the work of young men, and if anyone is known Io be
engügedin a big pandanus gathering, theywillcome from other homesteads and
even from other districtIO where the work is being done and hold a pandanus-

squeezing competition, either working individuallyor in groups. This was the
only stage in the harvest and making of edoiio which was al dl festai. My
informants impressed upon me that the people had to labour much too hard
during the harvest season to have anyleisure for dancing or singingor anyother
such relaxations. When al1the pandanus fruit had been gathered and turned into
preserve, tiowever,there was, in olden limes, a great harvest festivalat whichthe

people daricedand sang songs about tbe pandanus. Where this festivalwas held
my informant did not knowsince none had taken place during his lifetime,but it
seems probably that the dancers and singerswent round the island performing at
each place they came to, foruch tourhg parties seem to havebeen characteristic
of old Nawuan life."

(C.H. Welgwood, "Report on Research Work in Nauru Island,Central Pacific",
Oceatiia,vol.7 (1936)pp.8-9.)

216. Wedgwood rated the influences on cultural change in chronological order as the
coming of the mijsionaries and the discoveryand working of the phosphates. With some
perception, she noted theacute changethat hadtaken placeby 1935in these terms:

"...IObe teaithy, a culture must developgradually,and that anygreat change in
the cultru.d environment to which the society has to make a swift adaptation is
liable to weaken that society,or at the least puts a very great strain upon it. To
wipe away ail that is old and nativeatpeople, and to introduce or force upon
them an iiliencivilization,mayat first seem to be a successfulventure, but it does

not make for a stable or healthysociety andlaysup trouble for the future. This is
the danger in Nauru...he great need in Nauru IO-dayseems then to be a means
of linkinf:the past with the present; of restoring that personal dignity and self-
respectingmode of life for whichthe peoples of the Centrai and East Pacifichave
long been noted, while yet enabling the islanders to reap benefits from the

complex European civilizationwith which they havebeen brought in contact; to
develop a people who will take a pride in being Nauruans and not in being
imitaior: of Europeans."

(Wedgw~od,loc.cit., pp.361-2.) 218. In the present situation, Nauruan houses are western in style,and are
often imported in fabricated form from AustraliaA substantial proportion of
food is imported, and water is also imported in large tanker vessels. The
Nauruan culture, dances, chants, foodprocedures are al1but forgotten, in the
acceptance of Western ideals, religion and lifestyle (Wedgwood,loc. cit.,
p.33).Anyrehabilitation of the island involvingdevelopment would have to
take the presently changed nature of the lifestyle and the modern

requirements of the Nauruan conmunity into account.

219. In thisregard, current population pressure is an important factor. The
land surface of Nauru is finite, but without rehabilitation of mined-out areas,
the usable surface for whateverpurpose wouldbe reduced by80%.

Section 4. Population Growth

220. Before the Second World War, the indigenous population of Nauru
remained for the best part of a century remarkably static at between 1,300to
1,600. During the Second World War a large number of Nauruans were
deported by the Japanese occupation command to the Micronesian islandof
Truk. From an indigenouspopulation of 1,848in 1942,there wasa reduction
as a result of the War to 1,369in 1946.

221. Since 1946, there has been a remarkable rise in the indigenous
population. The censusstatisticsreveal the followingfigures:

Year Population

222. Demographic estimates since 1983 provided by the Nauruan

Department of Island Development and Industry would base the indigenous
population in 1990at 5,285. The estimate for the year 2000 is 8,200. The
rise in population was foreseen by the Australian Administration. In 1966,
the Davey Conmittee Report (see Annexes, vol. 3,Annex 3, p.18) based itsrecommendations on a projected population of 10,000 Nauruans by the turn
of the century.

Section 5. Naiiruan Identity

In the censusfigureof 4,964in 1983,only294Nauruans were included
223.
who were abroiid. The greater proportion of these were students studying in
Australia and New Zealand on Nauru Government scholarships. Veryfew
Nauruans ever leave Nauru permanently. There is no emigration such as

occurs in other Pacific Islandssuch as Western Samoa, Tonga or Niue.' The
sense of belongingis strong.

224. The smallness of the island and its population tends to prornote a
tight, homogeiieous community. But there are other factors which develop
strong Naum~tnidentity. The unique Nauruan language has produced a
closeness in comrnunityculture and knowledge,particularly of custom. The

Nauruan langiiageis the main source of communicationbetween Nauruans.

225. Land ii,central to the Nauruan identity:

"Nauruans enjoy the right of freehold title to their lands by Wtue of heredity.

The system of land holding is govemed by the custom and usages of the
Nauruaits. Practicailythe whole of the Island, wifhthe exceptionof small areas
giftedtrthe Misions or acquired by past administrationisownedby individuai
Nauruaiis.

Subject only to the custom and usages of the people and, more recently, laws
relating to disposition of title to land, each land owner acquires title by descent,
througt.wiiior intestacy,or by giftinfervivos. That the sale of land has not been
part of the Nauruan custom does not alter the fact that by custom landowners
enjoy the full rights of disposition of their landsThis right of diposition
includes,because of the absolute nature of ownership, everything upon aswellas

everythingin and belowthe surface of the land."
(B. Dowiyogo, "The Law of Land Holding Li Nauru" (unpublished paper
prepar,:d for and deposited with the Nauru Commission of Inquiry 1989);
Annex,ts,vol.4,Annex74.)

Mavernentfmm Parifir*lands io mcimpoliianterritoriesirconsiderable.cxceptforNauruans.Onlyoncguaner
of Niueans live in Niue, the rcrnainderan in New Zealand. Thirry-wo thovsanovcrwasa'hilrt
Wanl,0"Eanh'EinpiyQuaner?ïhcpParificIslandsin a PacifirCentuCeogr<~phicallouM.I.155, no.7
(1989)p213.)226. The Naunian conception of land ownership extended to trees, wells,

reefs and fishinggrounds.

"ALmostevery native on Nauru isthe owner of land or palms ..Just like every
small piece of land and eachpalm, so the reef that surrounds the islmd and the
sea washiig the shore,Uhave their owner. For example,no nativeisaUowedta
let down his fishing basket outside the reef without fust having obtained
permission by the owner of that particular part of the ...he 'sale' of land
happens rarely, but the exchangeof differentlots happensfrequently."

(Jung, Aiifreichnungenuber die Rechfsanschau-unged ner Eingeborenenvon
Naum; Schirizgebeifen X,Bd., Berlin, 1987,p. 67, quoted in Dowiyogo,op. ut.,
p. 16.)

Such arrangements were derived from custom which had pronounced legal

effectsin Nauruan society.

"Their notion of justice and law arose out of their thinkingand feeling. It led to
basiclawsof a publicor privatenature. They havebeen transmitted orally. They
were adjusted to the continuingdevelopment and foundtheir expressionin a code
of 'customary la$. These notions of law cover a wide spectrum: land, reef,
ocean, tree, animalouse, tools, family, nation etc. With the highly developed
people of Nauru these ideas have taken on a def~te legal character and many
were IObe found to be so weii applicable, that one bases decisionsin important

legal marters on this law. They are graduaüy being incorporated andadjusted to
OUIsense ofjustice andthe CivilCode."
(P. Hambruch, Nauru, L.Friederichsen& Co., Hamburg, 1914,p. 291.)

228. Land law was an intimate part of the legal web of custom, involving

various facets of society. Though Naunians today have become heavily
intluenced hy European mores, nevertheless the attitudes towards land and
familyare stronglydirected bycustom.

Section6. TheEconomy

229. In the earlier subsistence economy of Nauru, the great influence on

life was climate. Drought, a fairly common phenomenon, was the
determinant of the availability of water and coconut. The arriva1 of theEuropean introduced western diseases which at various times had a
deleteriouseffect on the population.

230. In the German period, the significancewas not as great. The area
mined was small (Annexes, vol. 2, Map 4: the area marked "E shows the
position as at 1!)13),and the amounts paid to the Naunians were miniscule.
Naunians, whilst subject at this stage to western influences and government,
nevertheless were still involvedina subsistence economy, combining fishing

with coconut arid pandanus (on the plateau), and using the plateau for the
dailyrequireme.ntsofwood, housingmaterial, canoes and implements.

231. With the introduction of overseas goods and foods,Naunians became
more and more dependent on returns from phosphate for everyday existence.
Government scwices, such as police, medical, educational, electrical
supplies, works, were paid for out of the returns of phosphate. With the
diminution of land supply,Nauruans became more dependent on phosphate
retums, as theslbsistence economyfaded out.

232. In the Report of the Administration of Nauru to the Council of the
League of Nations during the year 1928 (p. 37), there is a comparative
statement of revenue for the five years ended 31 December 1928. Of the

total revenue collected during these years, the royaltyon phosphate exports,
as it was then i:ermed,annually contributed between 35% and 45% of the
revenue. In th,: period 1924to 1928,a substantial contribution to revenue
came from import duty and a capitation tax. Import duties carrying a high
rate of duty were, tobacco, drapery, footwear, and motor vehicles and
accessories. The "royalty"payment was based inthose years on a rate of six
pence per ton of phosphate exported. Expenditure during these years was
very moderate. Where there was specific expenditure required for the
Nauruan Comniunity itwas largelyfunded from a further royaltypaid to the
Nauruan Royalty Trust Fund. That Fund paid for native education and a

number of miscellaneouspublic works forNauruans (Report,p.40).

233. A comparisonwith the years 1961-1962to 1963-1966reveals a rather
differentpicturi:. Revenue figureshave risen from a fewthousand pounds to
sums of over a. million dollars Australian. However, what was previously
described as the royalty on phosphates exported is now simplydescribed as
"payment by the British Phosphate Commissioners": thisrepresents 90-95%
of totalrevenue collected. Import duties have al1but disappeared. The only
other revenue provider of substance is the radio station and post office which in 1965-6provided some 7.5% of revenue. (Territory of Nauru, Report for

1965-6, 1966, p. 29.) This revenue met al1 the expenditure of the
Administration including capital works. (Report, pp.80, 81.) Capital works
for Nauruan housing, however, came from the proceeds of the Nauruan
RoyaltyTrust Fund. (Report,p. 83.)

234.
After 1968the dependence on the returns from phosphate is further
demonstrated by government revenue and expenditure figures. It is during
this period, after independence, that resources are built up through the
amounts paid annually to the Nauru Phosphate Royalties Trust for
investment.' Suchamounts are withdrawnas a percentage directlyfrom each
ton of rock phosphate exported. This revenue meets both the day to day

costs of government together with any developmental expenditure. The
Nauru Government's annual accounts reveal that since independence the
percentage of the revenue of the Government derived fromphosphate varies
between 55% and 70%. The only other major source of income within the
economy is also phosphate based. This is the amount paid to the individual
landowner in capital sumat the time his or her individualallotment is mined.

235. The Nauru Phosphate Royalties Trust set up by Ordinance in 1968,
one week before independence, is required by statute to administer two
major funds, the Nauruan CommunityLong Term Investment Fund, and the
Nauruan Land OwnersRoyaltyTrust Fund. The first fund is a Government
fund (see para. 124)to be accumulated and not paid out until "the economic
life of the phosphate deposits in Nauru is substantially ended (Nauru

Phosphate Royalties Trust Ordinance 1968, s.18(2); Annexes, vo1.4Annex
41). The purpose of the Fund is to establish a solid financial base for the
Government against the time when receipts from phosphate have ended.
The other fund, established by section 19of the Ordinance, has the object of
payinglandowner beneficiariesafter a certain date.

236. In the result the economy is built almost entirely on the proceeds of
the export of rock phosphate, placing Nauru very much at the mercy of the
vagaries of the overseas price of phosphate £romtime to time. Furthermore,
as the sales of phosphate subside due to the exhaustion of supplies, either
some other export commodity needs to be developed or a reduction in the

dependence on imports.
-~ --
1.IhcRchabilitationFundwas establishcdby the Nauruûmrnmcntisadministemdby the Nauru
Phosphate RoyaltiesTrust. Itspurpse irto accumulatefundsforthe rehabilitationoflandminedsince 1July1967.
nie FundhasaccumulatcdappmxiAS240m. PARTIII

CHAPTER 1

THE BREACHESOF INTERNATIONALLAWFORWHICH AUSTRALIA
IS RESPONSIBLE

Section 1. Introduction: the Purpose of this Part

237. The purpose of this Part of the Memorial is to elaborate upon the
principal bases of responsibility (or causes of action) upon which the
Applicant State relies. At the same time Nauru confirms its reservation of
the right to supplement or amend its Application, contained in paragraph50
of the Application.

238. Subject to this reservation, the pertinent heads of claim will be
examined in this Part in the followingorder:

Breaches of the Trusteeship Agreement and of Article 76 of the
(a) United Nations Charter (Chapter 2).

(b) Breach of international standards applicable in the administration of
the trusteeship: thats to say, the principle of the self-determination
of peoples and its corollary, the right of peoples and nations to
permanent sovereignty over their natural wealth and resources
(Chapter 3).

(c) Denial ofjustice latosensu(Chapter 4).

(d) Abuse of rightsand acts of maladministration (Chapter 5).

(e) Breach of the duties of a predecessor State (Chapter 6).

(f) Failure to make restitution of the overseas assets of the British
Phosphate Commissioners(Chapter 7).

The exposition of these bases of liabilitywill be followed (Chapt8)
239.
by a consideration of the forms of loss caused to Nauru as a result of thebreaches of int'xnational legal duties for which Australia is responsible. In
the circumstances of this case the Government of Nauru believes that the
specificationof the forms of loss willbe of particular assistance to the Court
in itsappreciation of the bases of liability.

Section 2. Certain Resemations

240. It is necessary to preface the substance of this Part of the Memonal
with certain rejervations of position.

241. The firijt such reservation relates to the validity of the Nauru Island
Agreement of 1919. The exposition of the bases of liability rests on the
assumption ttiat the Agreement remained valid throughout the relevant
period of timc:. However, the Applicant State reserves its position as to the
validity of that instrument and its right, if its fit, to present arguments in
the alternative.

242. The sc:cond reservation flows inevitably from the form which the
calendar of proceedings in this case so far has taken. The Respondent State

has not made any preliminary objections, whilst maintaining the right to do
sowithin the term allowed by the Ruies of Court. In these circumstancesthe
Applicant State will approach the case on the basis that issues of
admissibility have been resolved in its favour or, strictly speaking and in
procedural terms, have been completely left on one side. Consequently, the
Applicant Stsiteformallyreserves its position on al1questions of admissibility
and affirms that the Respondent State has the burden of proof in respect of
questions of ;idmissibilityif and when suchmatters are properly put in issue. PARTIII

CHAPTER2

BREACHESOFTHETRUSTEESHIPAGREEMENT ANDOFARTICLE
76 OF THEüNITED NATIONS CHARTER

Section1. Content of the RelevantObligations

243. The Trusteeship Agreement for the Territory of Nauru approved by
the General Assembly on 1st November 1947 (Annexes, vol. 4, A~ex 29),
together with Article 76 of the United Nations Charter, provides the
necessary background to the present case. The important obligations set

forth in these instruments form the primary causes of action on which the
Republic of Nauru relies.

244. The key provision of the Trusteeship Agreement, Article 3, provides
as follows:

'The Administering Authority undertakes to administer the Territory in
accordancewith provisionsof the Charter and in such a manner as to achieve in
the Territory the basic objectivesof the International Trusteeship System,which
are set forth inArticle 76of the Charter."

245. Article 76 of the United Nations Charter, which is independently
applicable, provides:

"The basic objectivesof the trusteeship system, in accordance with the Purposes
of the United Nations laid downin Article 1 of the present Charter, shailbe:

(a) to further international peace and security;
(b) to promote the political, economic, souaand educational
advancement of the inhabitants of the trust territories, and their
progressive development towards self-governmentor independence
as may be appropriate to the particular circumstances of each
territory and its peoples and the freely expressed wishes of the
people concerned, and may be provided by the terms of each
trusteeship agreement; (c) t6) encourage respect for human rights and for fundamental
f:.eedoms for al1without distinction as to race, se& language, or
r,:ligion,and to encourage recognitionof the interdependence of the

peoples of the world;and
(d) tt~ ensure equal treatment in social, economic and commercial
niatters for al1Members of the United Nationsand their nationals,

and also equal treatment for the latter in the administration of
j.~stice, without prejudice to the attainment of the foregoing
objectivesand subjectto the provisionsof Articl80."

246. The reinaining provisions of the Trusteeship Agreement which are

particularly relevant are as follows:

"Article4

The Adrainistering Authority will be responsible for the peace, order, good
governmi:ntand defeoceof the Territory, andfor this purpose,in pursuance of an

Agreement made by the Governments of AustraliilN,ewZealand and the United
Kingdom, the Government of Austraiia wu, on behalf of the Administering
Authorirr and exceptand until otherwise agreed by the Government of Austraiia,
New Zeiiland and the United Kingdom, continue to exercise full powers of
legislatioo,administration andjurisdictionin and overthe Territory.

Article 5

The Adroinistering Authority undertakes that in the discharge of its obligations
under Article 3 of thisAgreement:

1. It will CO-operatewith the Trusteeship Council in the dicharge of
the Council'sfunctionsunder Articles 87 and 88of the Charter;
2. It WU,in accordancewith itsestablished policy:

(a) take into consideration the customs and usages of the
inhabitants of Nauru and respect the rights and
safeguard the interests, both present and future, of the

indigenous inhabitants of the Territory; and in
particular ensure that no rights over native land in
favour of any person not an indigenous inhabitant of
Nauru may be created or transferred except with the
consent of the competent public authority;

(b) promote, as maybe appropriate to the circumstancesof
the Territory, the economic, social, educational and
cultural advancement of the inhabitants: (c) assure to the inhabitants of the Territory, as may be
appropriate to the particularcircumstances of the
Territory and its peoples, a progressively increasing
share inthe administrative and other services of the
Territory and takaiappropriate measures with a view
to the politicai advancement of the inhabitants in

accordancewithArtide 76bof the Charter;
(d) Guarantee to the inhabitants of the Territory, subject
only to the requirements of public order, freedom of
speech, of the press, of assembly and of petition,
freedom of consuence and worship and freedom of
religiousteaching.

Article 6

The Administering Authority further undertakes to apply in the Territory the
provisions of such international agreements +andsuch recommendations of the

specializedagencies referred to in Article 57of the Charter as are, in the opinion
of the Admitering Authority, suited to the needs and conditions of the
Territory and conducive to the achievement of the basic objectives of the
Trusteeship System."

247. These provisions are clearly standard-setting in character and involve
the application of the standards and obligations of general international law
to a particular territory.

Section 2. TheLegal Natureof the Obligations

248. There can be no basis for any inference that the obligations contained
both in Article 76 of the Charter and in the provisions of the Trusteeship
Agreement involvecommitmentswhichwere not taken seriously, inthe same
wayas the other solemn legal commitments of States. Like many provisions
in "minorities"treaties and instruments, bilateral or multilateral, concerning

human rights matters and social questions, they are standard-setting and
normative; and such a function supports the presumption that the provisions
involvelegal obligations.

249. Once the particular territory had become the subject of the legal
regime of trusteeship in accordance with the Charter, the relevant standardsapplied as standards of general international law. The application of the
system of trusteeship by the General Assembly certified that the particular
temtory was siibject to the obligations concerned: and the pnnciples of the
trusteeship system then applied as standards of general international law.
There are grc~undsfor the view that the application of the regime of
trusteeship toformer mandated territories like Nauru was automatic, in any
case, but the riature of the obligations as general norms followed from the
characterisation as a trusteeshipterritory and did not depend on anypremiss

that the trusteeship systern was compulsory, rather than voluntary, in
character.

250. There is no reason to doubt that the fundamental principles of the
trusteeship system formulated in Article 76 of the Charter and reflected in
the Trusteeship Agreement for the Territory of Nauru (and in al1other such
instruments) provide a basis for a legal claim on the part of a State with a
legal interest. Provided that a legal interest exists, the fact that the
trusteeship ter:minatedat the time of independence does not stand in the way
of the vindication of the principles of the trusteeship in respect of the period

when they were operative. Both during the currency of the Trusteeship
Agreement and since its termination the obligations of the Administenng
Authority could be the basis of a claim by any Member of the United
Nations, or by any state with an equivalent standingas a consequence of its
entitlement to become a party to the Statute of the Court, or othenvise.

251. In the circumstancesin which Nauru achieved independence, there is
in addition a special title to standing resulting from the principle of self-
determination, which is recognised as a principle of the United Nationi
Charter and fc~rrnsa part ofgeneral international law.

252. In this comection Nauru is not placed under any incapacity simply

because the operation of the trusteeship came to an end at independence.
The legal aspects of the performance of the duties of trusteeship remain
actionable at the behest of any State with a sufficient legal interest. Thiss
particularlySC,in that the independent State of Nauru now represented the
people which ,wasthe beneficiaryof the Trusteeship Agreement.

253. Withoiit prejudice to the foregoing, there are additional and
independent bases of the actionability of the obligations of the trusteeship
regime at the instance of the Applicant State. Inthe first place, the nature of
the trusteeship regime is such that the obligations which it generates rnustrank as obligations ergnomnes, a category recognised by the Court in its

judgment in the BarceIonaTractionCase (Second Phase),I.C.J. Reports,
1970,p.4 at p.32.

254. In fact the Permanent Court had long ago recognised that certain
types of standard-setting regime would have effects erga ornnes: see The
Wimbledon P.C.I.J., Ser. A. No. 1,pp.22, 28; and the viewsof Lord McNair,

The Law of Treaties,Oxford, Clarendon Press, 1961, pp.267-8. Secondly,
there can be little doubt that the principles of the trusteeship system also
have the status of principles of jus cogens, because they involve the
application of fundamental norms of human rights.

255. The relevant passages from the Judgment in the Baxelona Traction
case are as follows:

"33. When a State admits into its territory foreign investments or foreign
nationals, whether natural or juristic persons, it is bound to extend to them the
protection of the law and assumes obligations concerning thetreatment to be
afforded them. These obligations,however,are neither absolute nor unqualified.
In particulaan essential distinctionshould be drawn between the obligationsof
a State towards the internationalmunityas a whole, and those arising vis-à-
vis another State in the field of diplomatic protection. Byery nature the
former are the concern of al1States. In view of the importance of the rights

involved,ii States canbe held to havea legalinterest in their protection; theyare
obligations erga omnes.
34. Such obligationsderive, for example, in contemporary international law,
from the outlawing of acts of aggression, and of genocide, as also from the
principles and rules concerning the basic rights of the human person, including
protecdon from slavery and racial discrimination. Some of the correspondiig
rights of protection have entered into the body of general international law

(Resen,ationsto the Convention on thePrevenhonand Punishmentof the Crimeof
Ge~tocide,AdvisoryOpinion, I.C.J. Reports 1951,p.23); others are conferred by
international instruments of a universalor quasi-universalcharacter."
(1.C.J.Reports 1970,p.4at p.32.)

256. In the latter passage the Court explicitlyrecognises that the category

of obligations ergaomnes includes "the principles and rules concerning the
basic rightsof the human person"and byimplicationthat the implementation
of such basic rights is a major objectiveof the trusteeship systemaccording to
the provisionsofArticle 76of the United Nations Charter.257. The concept of obligations valid erga omnes is supported by
authoritative opinion: see, forexample, Judge Mosler (as he then was), The
InternationalSociety asa Legal Community, Alphen aan den Rijn, 1980,
pp.19-20, 134-6. Moreover, the concept is for most practical purposes

identical to th:it of juscogens, a concept which has received widespread
recognition from authoritative opinion. The evidence of such general
acceptance is by no means confined to the well-knownprovisions in Articles
53,64 and 71 of the Vienna Convention on the Lawof Treaties concluded in
1969.

258. Thus, as long ago as 1957,Sir Gerald Fitzmaurice, in his lectures at
the Hague Academy,referred to:

"...certainforms of illegaiactifannever be justified by or put beyond the
range oflegitimate complaint by the prior üiegal action of another State, even
when inteaded as a reply to such action. These are acts which are not merely
iiiegal, but malum in se, such as certain violations of human rights, certain
breaches of the laws ofwar, and other des in the nature of j--that is
ta Say oldigations of an absolute character, compliance with isinot
dependeni: on corresponding cornpliance by others, isrequisite iall
circumstaiices,unlessunder stress of literai vismajor."

(HagueRe'cuei, ol.92 (1957,II) p.120;and see also atpp.122,125.)

259. The extt:nsive acceptance given to the concept of jus cogens by the

most highlyqualified publicistsof the various nations is amply evidenced by
the following i.ources: Fitzmaurice,British Year Book of InternationalLaw,
vol. 35 (1959), pp.224-5 (also published in Fitzmaurice, The Law and
Procedureof the InternationalCourt of Justice,Cambridge, 1986,pp.626-7);
McNair, The Law of Treaties, Oxford, Clarendon Press, 1961, pp.213-15;
Waldock (SpecialRapporteur of the International LawCommission),Second
Report on the Law of Treaties, Yearbook of the International Law
Cornmirsion, 1'363,II, pp.52-3, paras. 1-6; Quadri, Hague Recueil, vol. 113
(1964, III), ~11.335-8;Jennings, Cambridge Essüys in International Law,

London, 1965,pp.73-4;Verdross, AmericanJournalof InternationalLaw, vol.
60 (1966), pp.fi5-63;Morelli,Rivistadi dirittointernazionale,vol. 51 (1968),
pp.108-17;Jud;;e Arnmoun,Separate Opinion in the BarcelonaTractioncase,
I.C.J. Reports. 1970,p.304; Ago, Hague Recueil, vol. 134 (1971, III), p.324
(note 37); Tuiikin, Tlieoryof InternationalLaw, London, 1974, pp.147-60;
Ago (Special Rapporteur of the International Lawcommission), Yearbookof
the InternationlzlLaw Commission, 1976,II (Part One), pp.31-32,paras. 98- 99;Jiménezde Aréchaga,HagueRecueil,vol. 159(1978,I), pp.62-8;Podesta

Costa & Ruda, DereclzoInternacionalPublico,5th ed., 1979,1,p.30; Nguyen
Quoc Dinh, Daillier & Pellet, Droit InternationalPublic, Paris, 1987,pp.107,
185-91;and the Counter-Memorial submitted by the United States in the
Jurisdiction Phase of the Case ConcerningMilitay and Paramilitay Activities
inand againstNicaragua,17August 1984,pp.126-7,para. 314.

260. The subject-matter of jus cow was summarised byJudge Ago in his

lectures at the Hague Academyin 1971 thus:

"If one examines careîuiiy the opinions expressed in the International Law
Commission and, more generally, in the writings of jurists, one becomes aware
that a certain unity of viewsexistswith regard to the determination of the rules
whichthe coosciousnessof the world regards asrules ofjus cogens. These
includethe fundamental rules concerningthe safeguardingof peace, in particular
those whichprohibit any recourse to the use or threat of force, fundamental rules
of a humanitarian nature (prohibition of genocide, slavery and racial
discrimination, protection of essential rights of the human person in time of
peace and of war), the rules prohibiting any infringement of the independence
and sovereignequalityof States, the rules whichensure to all the members of the
international community the enjoyment of certain common resources (the high
seas,outer space,etc.)."

(Hague Recueil, vol. 134 (1971, III),42, note 37; reproduced in English
translation, Yearbookof the Intentanonal Law Commission,11(Part One),
p.32,note 148.)

261. The legal character of the concept of trusteeship is confirmed by the
long recognised status of that concept as a "generalprinciple of law". For the
convenience of the Court the Government of Nauru has commissioned a
comparative surveyof the lawof trusts and trust-like institutionsprepared by
a leading expert in the field,ProfessorA.M. Honoré(Appendix 3).

262. In paragraph 3 of his study Professor Honoré states (by way of
summary) that "the picture that emerges is of the universal availability and
pervasive useofprotective institutions,bywhichpersons (trustees, guardians,
curators, administrators or the equivalent) hold an office which involves a
fiduciary duty to administer for purposes other than their own private
interest assets which are separate from their own private property".

Professor Honoréemphasisesthe wide diffusionof trust-like institutions and
especially guardianship and curatorship, in civil law systems (Appendix 3,
paras. 44-56).263. There can be no doubt that the principle of trusteeship established
during the United Nations Conference on International Organization, and
embodied in Artic.le76 of the Charter, was based on the broad concept of
trusteeship reflecting the general institutions of guardianship and

curatorship.

264. This conclv.desthe exposition of the views of the Applicant State on
the legal nature of the obligationsderiving from the regime of trusteeship.
The Court is respectfully reminded that, at the present stage of the
proceedings, and in the absence of preliminary objections, the Applicant
State formallyres<:rvesits positionrelating to al1issues ofadmissibility.

Section3. TheI'articularsof theBreachesof theTrusteeshipAgreement
andofArticle76of the UnitedNations Charter

8. THE STATUSOU0 SINCE 1919

265. The appreciation of the situation in the period between the beginning
of the trusteeship regime in 1947and the independence of Nauru requires an
understanding ofi the status quo depending upon the Nauru Island
Agreement of 19 19and the Mandate for Nauru of 1920. Once created, the
legal structure of the years 1919and 1920remained essentially inplace until

the time of independence, and this aspect of the situation was well-
recognised by t!~e United Nations Visiting Mission in the period of
trusteeship: see -the Visiting Mission Report, 1950, paras. 14-19; Visiting
MissionReport, 11956,aras. 24-25;Visiting MissionReport, 1962,paras. 96-
115(and, inparti'rular,paras. 101-2).

266. The deve!.opments in the early years of the Mandate have been
examined in Part 1: for present purposes it is necessary only to identify

certain key features of the legal regime emplaced in these years. The most
striking feature emerges from the text of the Nauru IslandAgreement itself.
The preamble iridicales its duality of purpose: "whereas it is necessary to
make provision ïor the exercise of the said Mandate and for the mining of
the phosphate deposits on the said Island. However, the practical
arrangements contained in the Agreement gave primacy to the second of
these purposes a.ndthus any tension in the duality of purposes was always

likelyto be resolved in favour of the exploitation of the phosphate deposits
with the minimuinof cost or delayor hindrance of anykind.267. It was in this context that Article 9 of the Agreement provided as
follows:

"The deposits shd be worked and sold under the direction, management, and
control of the Commissioners subjectto the terms of thisAgreement.

ItshaUbe the duty of the Commissioners to dispose of the phosphates for the
purpose of the agricultural requirements of the United Kingdom, Australia and
NewZealand, sofar as those requirements extend."

This provision made no reference to the purposes of the Mandate even as a
subsidiaryelement.

268. The key provision of the Agreement, the prelude to Article 9, is
Article 6,whichprovides as foiiows:

'The title to the phosphate deposits on the island of Nauru aallland,
buildings, plantand equipment on the island usednnexionwith the working
of the deposits,shd be vestedin the Commissioners."

This provision involvedthe expropriation of the phosphate deposits and the
assumption of extensive regulatorypowers affectingthe systemof land tenure
on Nauru.

269. This regime was focused upon the exploitation of the phosphate
deposits as an end in itself by the British Phosphate Commissioners as an

instrumentality of the three Governments. A significant constituent of the
regime was the limited role permitted in practice to the Administrator
appointed by Australia in relation to the powers, both forma1and actual, of
the British Phosphate Cornmissioners. The outcome was a regime the
predominant purpose of which was certainly not the promotion of the

material and moral well-being and the social progress of the inhabitants in
accordance withArticle 2 of the Mandate.

B. THE INHERlTANCE OFTHIS STATU3OU0 IN1947
-

270. The Tmsteeship Agreement for the Territory of Nauru was approved
by the General Assembly on 1 November 1947 and the Governments of
Australia, New Zealand and the United Kingdom were designated "theAdministering P,uthonty" (Article 2). Article 3 provided that "the
Administenng Authoritv undertakes to administer the Territory in
accordance 4th the proksions of the Charter and in such a manner ki to
achieve in theTerritory the basic objectivesof the International Trusteeship

system,whichare set forth in Article 76of the Charter".

271. Article 4 provided as follows:

"TheAdministe~g Authonty dl be responsiblefor the peace, order, good
governmentmd defenceof the Territorya,ndfor thispurpose,inpursuance ofan
agreementniadeby theGovernmentsof Australia,New Zeaiandand theUnited
Kingdom,the Governmentof Australiwill,on behalof the Admitering
Authonty and except and untii otheMise agreed by the Governmentsof
Australia,New Zeaiandand the United Kingdom,continue to exercfull
powers oflel$slation,administandjurisdictionin andovertheTerritory."

272. In fact the Trusteeship regime simply inhented the status quo
established by the Nauru Island Agreement of 1919 (and the subsequent
Agreement of (923). The Nauru Island Agreement was eventually

terminated by an Agreement concluded in Canberra on 9 February 1987.
(Annexes,vol. 4, Annex 31). The position of the Applicant State is that the
continuance in force of the Agreement of 1919and the concomitant legal
regime within Nauru in the period of trusteeship was anomalous. The
purposes of that Agreement and the accompanyingapparatus of exploitation
and Australia's persistent reticence as to the financial ramifications of the

Agreement were plainly incompatible withthe discharge of the duties arising
for the Respondent State from the Charter and the Trusteeship Agreement.

ç. THEATIiTUC'E OFTHE AUSIXALIA NOVERh'h4EhTINTHE TRUSEESHIP PERlOD

273. The attitudes of the Australian Government during the Trusteeship
are revealing, in particular,ecause these attitudes confirm the position of
the Respondent 13tatethat the central concerns of this bodywere the control
and exploitation of the phosphate deposits on terms not revealed to the
responsible organs of the United Nations. Further consideration will be

givento Australia'sconduct as evidence of violations of her legal obligations
in Part IV of the Memorial. For present purposes it is sufficient to point to
certain aspects of Australia's conduct inthe years immediately preceding
independence.274. Given the normal evidential presumptions of continu& and
consistency,the attitudes and viewsadopted byAustralian representatives in
the period 1965-1967maybe presumed to indicate the positions maintained
for the entire term of the Trusteeship.

275. During the negotiations between the Nauru Local Government
Council and Australian officiais in 1965, the Australian side adopted the
following positions on the central questions affecting the political and
economic developmentof Nauru and itspeople:

The goveming instrumentwasthe Nauru IslandAgreement of 1919;
(a)
The British Phosphate Commissionershad an exclusiveentitlement to
(b)
mine the phosphate deposits;

(c) The legal position inrespect of theworkingof the phosphate deposits
had not changedsince the beginning ofthe Mandate (see in particular
the Record of Negotiations,31st May -10tlzJune1965, Annex J, p. 12,
para. 26; and see the Record, meeting of 3rd June, 10.30a.m., passim;
Annexes,vol. 3,Annex 2).

276. The position had not changed in any material respect when the
Canberra talks on the Nauni phosphate industry look place in the period 14
June-1 July 1966(Record of Discussions) (Annexes,vol. 3, Annex 4). These
talks were held between a Nauruan Delegation and a Joint Delegation
representing the Administering Authority. There is no evidence that the

viewsof the Australian Government on the essentials of the legal regime had
changed at anystagebefore the time of independence.

277. The Annual Reports to the General Assemblyon the Administration
of the Territory of Nauru submitted by the Commonwealth of Australia in
the period of Trusteeship give no prominence to the Nauru Island
Agreement of 1919(see the Reportfrom 1stJuiy1947to 30thJune1948 ; and
the Report for 1965-1966. The Agreement is referred to briefly in the
"historical survey"but not in the section which describes the "status of the
Territory". The section on "Finance of the Territory" in theeportfor 1965-
1966(p.15)refers to the Agreement whileornittingto provide information on
the income generated bythe British Phosphate Cornmissioners(and see also

the Report...from 1stJuiy1947to 30thJune1948,p.25,para. 48).278. In accordance with Articles 87 and 88 of the United Nations Charter
the Tmsteeship Council duly exercised its supervisoryfunction in respect of

Nauru, and the Territory appears, for the first time, in the Repon of the
Council to the GeneralAssemblyin respectof the period 6 August 1948to 22
July1949(Gent?ralAssemblyQ9ïcialRecords,4th Sess.,Suppl.No. 4 (A/933),
1949). This lieport contains "Conclusions and recommendations" which
cannot be described as complacent (Part IIof the Report).

279. Howeve:r, this Report, like most of its successors, is relatively
unsuccessfulin penetrating the factual economic underpinnings of Nauruan
affairs. There were two factors at work here. First, a lot of patience is
required to penetrate the bland exterior of the legal regime governingthe
island. Seconclly,without the relevantinformation on the interna1operation

of the phosphate industry, it was impossible for the Tmsteeship Council
adequately to ineasure the progress of the people of Nauru in relation to the
standards prescnbed byArticle 76 of the United Nations Charter.

280. It is unfortunate that the Tmsteeship Council did not press harder for
the production ofthe essential information. The first request for information
on the operations of the British Phosphate Cornmissioners, including the
accounts, was .madeduring the Fifth Sessionof the Council (Report covering
its Fourtlianà Fifila Sessions,6 August 1948-22Juiy1949,GeneralAssembb
official Recorak,4th Sess., Suppl. No. 4 (A/933), p.77). A similar request
appears in a Report of the Council ten yearslater: Report...2August1958-6

August 1959, ~SeneralAssembly Official Records, 14th Sess., Suppl. No. 4
(A/4100), pp.160-1,para. 67. This position remained unchanged until Nauru
became independent, and Australia remained uncooperative.

281. Lookinl:at the Reports of the Tmsteeship Council in the light of the
facts now ava.ilable concerning the operations of the British Phosphate
Commissionerj, the findings of the Tmsteeship Council in its Reports are
flawed by serious errors of fact induced by the misrepresentations of the
Administenng Authority, of which the Commissioners were an
instmmentali~r. In these circumstances the Applicant State is entitled
respectfully to invite the Court to make an assessment of the legal

consequences of the behaviour of the Respondent State in the tmsteeshipperiod with the necessary rigour and in the light of the evidence now
available.

E. m R OFwp PERFORMANCE OF
m-8

282. The attitudes adopted by the Australian Government in the
trusteeship period,taken together with the performance of the Trusteeship
Council, confirm the continuing effectiveness and dominance of the legal
status quo of the Mandate period subsequent to the emplacement of the
regime of trusteeship in947.

283. In the submissionof the Government of Nauru the keeping inplace of
the status quo of 1919 and the mode in which this regime was applied in
practice by the Respondent State inhibited the Govenunent of Australia
from the performance of the obligations flowing from Article 76 of the
Charter and from the Trusteeship Agreement.

284. The extent of this inhibitioncan be demonstrated bya summaryof the
principal elements of the status quo inherited in7,as follows:

(a) The principal object of the Respondent State --to al1 intents and
purposes the exclusiveobject--was the exploitation of the phosphate
deposits inorder to meet the agricultural requirements of Australia,
NewZealand and the United Kingdom.

There was a persistent failure to make full and fair reports concerning
(b) the economic affairs of Nauru, and the modus operandi of

exploitation of what is virtually its only natural resource, to the
relevantorgans of the United Nations. Sincethe "quality"of progress
in the economic and social spheres, inerrns of the legal standards of
the trusteeship system, could only be assessed as a relation between
income available and results attained, the failure to account had a
major role in the failure of the Respondent State to perform its
trusteeship obligations.

(c) The result of the Nauru Island Agreement of 1919 and the Lands
Ordinance of 1921 (as amended) was a regime in whichthe systemof
individual land rightsof theaunian people was maintained oniy in form and was subject to the expropriation (without any or any
adequate compensation) of the rights to exploit the phosphate. The
legal regirneoverall,and the defacto position of the BritishPhosphate
Commissioners, led to a situation in which the entire island and its
resources were treated as being effectivelyat the disposition of the
Respondent State.

(d) There was a failure to provide equitable compensation for the

exploitaticlnof the phosphate deposits bywayof royalty or othenvise.
The so-ci:lled "royalties" paid over the years were not genuine
royalties hargained for on the basis of knowledge of the essential
facts, and were wholly out of line with the real market value of the
resources concerned: see further Appendk 2.

(e) As a consequence of the extensivedelegation of powers to the British
Phosphate Commissioners, there was a failure to exercise
governmerital authority in a mode appropriate to a legal regime of
trusteeship.

(f) There wax a substantial failure to provide funds for the normal
purposes of administration.

285. The section which follows will provide more detailed accounts of
these various defeults on the part of the Respondent State, preciselybecause
the situation continued after the installation of the regime of trusteeship.

286. It is intend'cdto present here the evidence of specific violationsof the
obligations of trusteeship on the part of the Respondent State. Given that
these specificvioliitionsin virtuallyeverycase flowfrornthe systeminherited
in 1947,the evidence of a pattern of continuing violations inthe post-1947
period has the double function of confirmingthe flawed nature of the status
quo inherited in :1947,and also of establishing the existence of continuing
violationsin the ycars between 1947and the time of independence.

287. The principal faults in the legal system installed in Nauru in 1919

certainly involvedbreaches of the obligations deriving £romthe Mandate. In
the present proceedings the Applicant State does not make any claim in respect of breaches of the Mandate as such but would emphasize the legal
and evidential significance of the events of the Mandate period for the
present proceedings.

288. The specific breaches of the obligations of trusteeship will now be

treated seriatim.

1.Theph.- r!an oftheIslandW~-de~e~lnat~o~ . .
-iiedla~re to dise* lheres~onuh111-1l .. .

289. Between 1919 and the time of independence the British Phosphate
Cornmissionershad by their operations removed the phosphate rock in an

area approximatelyone-third of the surfaceof the island (see Annexes,vol. 2,
Map 2). Only a small proportion of this area was mined out in the period
prior to the inauguration of the League Mandate. The physical and
environmental effects of the mining have been described in Part ii of the
Memorial, aswellas the exceptionalcircumstances prevailingon Nauru.

290. In legalterms the keyelements are:

(a) the existence on Nauru of an indigenous community living on the
islandas a unit of self-determination;

(b) the fact that the removal of phosphate rock, or the continued removal
of phosphate rock, must necessarilyhave had the effect of making the
island virtually uninhabitable (unless appropriate contingency
arrangements were made); and

the legal duty (arising fromthe existence of the trusteeship) in the
(c)
particular circumstances of Nauru to provide either rehabilitation as
such or the financialmeans to provide for rehabilitation.

291. The first element involves the position that in 1947 Nauru and its
population constituted a unit of self-determination for the purposes of the
United Nations Charter generally (see Article 1, para. 2), and for the
purposes of the trusteeship system (see Article 76). The fellowship of the
trusteeship systemand the principle of self-determination is recognised both

in the preamble and in the operative part of the General Assembly
Resolution 1514 (XV), which contains the Declaration on the Granting ofIndependence to Colonial Countries and Peoples and is widelyrecognised as
an aid tothe interpretation of the Charter.

292. In due couise, the General Assembly gave expressrecognition of the
application of the pnnciple of self-determination to the people of Nauru: see
Resolution 2111 (XX), adopted on 21 December 1965; Resolution 2226
(XXI), adopted on 20 December 1966;and Resolution 2347 (XXII), adopted
on 19December 1'367.

293. The second element depends upon the exceptional geographical and
economic circumsi.ancesof Nauru, which have heen descnbed in Part II of
the Memonal.

294. The third element involves the basic purposes of the trusteeship

system. That systi:mwould lack substance altogether if its principles were
not inimical to the physical destruction of the homeland of the people of a
trust territory. The Reports of the Trusteeship Council to the General
Assemblyhad froni the beginning of the trusteeship recognisedthe long-term
consequences of the rapid process of exploitation of the phosphate deposits:
see Report of the 1TurteeslzipCouncil coveringifs Fourth and Fifh Sessions,6
August 1948-22Julv 1949,GeneralAssembly mcial Records,4th Sess.,Suppl.
No. 4 (A/933), p.'74;Repo rt...Coveting its Fint Special Session, its Second
Special Session,and its Sixth and Seventh Sessions, 23July 1949-21July 1950,
GeneralAssembly ûjjïcial Records, 5th Sess., Suppl. No. 4 (A/1306), p.134;

Report... coveringifs TlzirdSpecial Sessionand ifs Eightand Ninth Sessions,
22 November 19511to 30 July 1951, GeneralAssembly ojjïcial Records, 6th
Sess., Suppl. No. 4 (A/1856), p.226; Report... coveringits Fourth Special
Sessionand ifs TenJ%andEleventh Sessions,18December 1951to 24July1952,
GeneralAssembly ûff7cialRecords, 7th Sess., Suppl. No. 4 (A/2150), p.259;
Report... Coveringthe PeriodRom 4 December 1952 to 21 July 1953, General
Assembly Official Records, 8th Sess., Suppl. No. 4 (A/2427), pp.112-13;
Report...covering the period Rom 22 July 1953 to 16 July 1954, General
Assembly Official liecords, 9th Sess.,Suppl. No. 4 (A/2680), p.265; Report...
covering the period from 17 July 1954 to 22 July 1955, General Assembly
OfficialRecords, 10th Sess., Suppl. No. 4 (A/2933), p.220;Report... covering

the period frorn 23 July 1955 to 14 August 1956, GeneralAssembly Ojjïcial
Records, 11th Ses, Suppl. No. 4 (A/3170), pp.323-5,333;Report ...covering
the penod from 13,' August 1956 to 12 July 1957, GeneralAssembly Ojjïcial
Records, 12th Sess., Suppl. No.4 (A/3595), pp.196,201; Report... coveringthe
work of its twenty-jfirstand twenty-secondsessions, GeneralAssembly Ojjïcial Records, 13th Sess., Suppl. No. 4 (A/3822), p.94; Report...2 August 1958-6
Augurt 1959, GeneralRrsembly Qfjïcial Records, 14th Sess., Suppl. No. 4
(A/4100), pp.154-55;Repo rt...7AuguFI1959-30June1960,GeneralAssembly
qjîcial Records, 15th Sess., Suppl. No. 4 (A/4404), p.149; Repo tt.1.July

1960-20Juiy1962,GeneralAssemblyOffcial Records,16th Sess.,Suppl.No. 4
(A/4818), p.60;Repo rt..20July1961-20Juiy1962,General Assemblyqjîcial
Records, 17th Sess.,Suppl. No. 4 (A/5204), pp.31-33;Repott... 20July1962-
26 June 1963, GeneralAssembiy Qfjïcial Records, 18th Sess., Suppl. No. 4
(A/5504), pp.22-23.

295. At a certain stage the question of the resettlement of the population
was seriouslyconsidered and eventuallyrejected by the Nauruans themselves
(see paras. 159-174):but suchresettlement, had it occurred, would have been

without prejudice to the situation of those who wished to remain on the
island. What was envisaged was not a scheme for forcible removal of the
population.

296. The only reasonable alternative to resettlement (as a free choice on
thepart of the population of Nauru) wasnecessarilythe rehabilitation of the
worked out phosphate lands. Prior to independence the duty of
rehabilitation could have been discharged either by putting the process in
hand or by providing the Nauruan inhabitants with the econornic means of

providing for eventual rehabilitation of worked out phosphate lands as a
consequence of their receivingan equitable share of the profits of phosphate
mining, or a combination of these. As shown in further detail in Part IV,
neither of these coursesof action wastaken.

297. The duty of rehabilitation has received ample recognition by the
United Nations General Assembly. Resolution 2111 (XX) of 1965"further
requests that immediate steps be taken by the Administering Authority
towards restoring the island of Nauru for habitation by the Nauruan people

as a sovereign nation" (paragraph 4). Resolution 2226 (XXI) of 1966
"recommends further that the Administering Authority should transfer
control over the operation of the phosphate industry to the Nauruan people
and take immediate steps, irrespective of the cost involved,towardsrestoring
the island of Nauni for habitation by the Nauruan people as a sovereign
nation" (paragraph 3).

298. By the time of independence no rehabilitation had been undertaken.
The historyof the Nauruan claimfor the costs of rehabilitation is set forth in Part IV of the Memonal, and for present purposes it is only necessaq to
indicate the anatyticalroot of the claim. The root of the claim consistsin the
deliberate and persistentpolicyon thepart of the AdministeringAuthority of
not payinggenuine royaltiesat an equitable level,with the consequence that,

at the time of independence, Nauru as a community was deprived of the
means of underi:akingan effectiveprogramme of rehabilitation with respect
to lands the mining of which had been carried on other than for the benefit
of the people of the Territory, who were the legal beneficiaries of the
Trusteeship Agreement.

299. The resultingsituationhas two distinctbut related elements:

(a) The failuireto pay an equitable share of the phosphate profits to the
Naunian landowners involved a serious breach of the obligations of
trusteeship in itself(and see paragraphs314-319 below);

In viewof'the failure on the part of the Respondent State to carry out
(b)
rehabilitation prior to independence, the duty to rehabilitate is
transformed into a demand for pecuniary reparation, as the
compensating form of reparation for various breaches of the
obligationsof trusteeship.

300. The category of breaches of the obligations of trusteeship presently
under examination includes two other types of conduct, namely, the
acceleration of niiningprior to independence, and the failure to provide an
alternative to practical rehabilitation.

301. The accelrration of phosphate mining on Nauru in the period after
1955 is an episode of considerable evidential significance. Notonlywas this

conduct a breach of the obligations of trusteeship, but the episode reveals
with great clarity the motivations and priorities of the Respondent State.
These motivatiorisand priorities centred exclusivelyon the production and
supply of very clieap phosphate and not on the interests of the people of
Nauru.

302. The motivation for the acceleration of production in 1955 is clear
. enough from the available documentation. Thus a Confidential Paper dated
12 October 1955submitted to the Australian Cabinet by Paul Hasluck, the
Minister for Territories (Annexes, vo1.4 ,Annex 63),explained the reasons
for the need to accelerate phosphate mining.303. The most relevantparts of the document are as follows:

"AUSTRAUAN PHOSPHATE SUPPLIES.

1. The vital position of phosphate supplies to the Australian economy was
the subject of Cabiiet SubmissionNo. 371 of 27th May 1935. Cabiiet
DecisionNo. 519of 20thJuly 1955directed that discussionsbe held with
the New Zealand Government, regarding Nauru and Ocean island
supplies, with particular regard to the United Kingdom requirements
under Article 14of the Nauru Island Agreement.

2. Sincethat decision-
the Christmas Island Phosphate Commission (Australiaand
(a)
New Zealand) has asked for authorityto borrow money to
increasethe output of Chriitmas Island;
(b) the British Phosphate Commissioners (Australia, New
Zealand and United Kingdom) have reported plans to

increase the output of Nauru;
(c) informal discussions have taken place between Australian
and NewZealand ofticials.

....

4. NAURU AND OCEAN ISLAND
The outputs are -

Nauru 1,?.00, t0n0s0
Ocean Island 310,000tons

1,510,000tons
At those rates the lie of the deposits would be-- Nauru 55 years,
Ocean Island 30 years. ~he British Phosphate Commissionerswish

to increase the output of Nauru to 1,600,000tons per annum. They
would be able to provide the finance for expansion (estimated to
cost f1.25 m) from their internai resources and existing bank
overdraft bits. Such expansionwould, however,reduce the life of
Nauru to 40 years therefore the Commissioners have sought the
viewsof the three partner Governme+nts. (Ocean Island is worked

with Nauru and, for reasons of economic workùig, the
Commissioners do not propose to increase the output of that
Island).
5. The proposal is favoured, notwithstandingthe reduction in the life of the

deposits forthefollowingreasons:
(a) The present cantilever and equipment wilisoon be in need
of a thorough overhaul andin preference to shutting dom production for six to nine months while the overhaul takes
place, the Commissioners propose to erect a second

cantileverand equipment which,in addition to providingfor
continuiîyof operations during the overhaul,wiiiultimately
relieve the present strain on theexistingequipment. The
increased production is desired so that the increased
capitalisationwiii not raise the costof production per ton.

@) The Island isvulnerable, both strategicallyand in respect of
possible increasing pressure from the United Nations to
giveother nations a share of the depositsin the future.

(c) The present is a particularlybad time to face a sharpise in
the imported cost of phosphatic rock if it should be deuded
not to accept the increase in production and the shortening
of the iifeof the deposits.

12. RECOMMENDATION

It isrewmmended that Cabinet approve:
,..

(b) That no objection be raised to the British Phosphate
Commissioners' plans for increasing phosphateoutput from
Nauru to 1,600,000tons.

(c) That the United Kingdom be approached with a viewto the
holdingof formaldiscussionsin December 1955,in London,
between representatives of the Australian, New Zealand
and United Kingdom Governments, and the British
Phosphate Commissioners,regarding the partner countries
future requirements of Nauru and Ocean Island phosphates.

(d) That the New Zealand Government be invitedto share with
the Australian Governmentthe costsof investigationsbythe
Department of National Development(as at Anneme 'D')

to determine the existence or othenvise of phosphate
deposits in Australia, New Zealand and their Territories,
and in British Pacific Territories, the amount to be voted
each year to be determined by agreement between the two
Governments.

(e) That the Ministersfor Commerce and Agriculture, National
Development and Temtories, constitute a committee to
deal with questions arising in the course of discussions with the United Kingdom Goverment and the New Zealand
Govemment, on the matters referred to in (c) and (d)."

304. The document makes no single reference t6 the obligations of the
Adrninistering Authonty in accordance with the trusteeship system. The
same is true of the Confidential Notewhichwasprepared on the basis of the
Confidential Paper presented to the Cabinet by Mr Hasluck (Annexes, vo1.4,
Annex 63).

305. In face of the acceleration of production the United Nations Visiting
Mission,reporting in 1956,expressed concern. Inthe wordsof the Report:

"Sincethe f&h sessionin 1949the Trusteeship Council bas ken concerned with
the future of the Naunian community after the phosphate deposits have been
exbausted. Owingto the requirement of the primary industry in Australia and
NewZealand, phosphate productionin Nauru has been accelerated1955. It
isnow estimated thal at the present rate of exploitation the phosphate deposits
willcorneto an end in af*utyears."
(United Nations Visiting Missionto Trust Territories in the Paciiïc,1956,Repori
onNauru T,/1256,12 June 195para .8.)

In face of the information that production had been accelerated, the
306.
response of the Trusteeship Council, in successivereports, appears to have
been to focus upon the idea of the resettlement of the population and upon
Australian undertakings in this connection. The resettlement option (see
paras. 159-174),in so far as it remained a practical possibility,reflected the
fact that the removal of the phosphate at a greater rate resulted in a
dramatically shortened life of the resource. The resettlement option also

highlighted the fact that the removal of the phosphate rock had substantial
and direct ramifications forthe population of Nauru.

307. A further contributing element in the breaches of obligations in the
form of the destruction of the island of Nauru, and the failure to discharge
the responsibility for rehabilitation, was the failure on the part of the

Respondent State to provide an alternative to rehabilitation.

308. In 1948 the Nauruan Community Long Term Investment Trust was
established (see the Report ... on theAdministrution of the Tem'toiyof Nauru
fiom 1st July 1948, to 30tI1June, 1949, para. 39). This is described as "a
communityfund, to which wasallotted 2d from the total "royalty"payable oneach ton "forinvestment until the year 2000. At 30th June 1949the balance
in the fund was f6,530.

309. As early as 1953 the relevant United Nations Visiting Mission
referred to the eventual need for resettlement and continued:

"The Missionis therefore of the opinion that consideration should be givenat an
early date to the establishmentof atal fund to be used for the resettlement of
individualsor groups of the Nauruan Community in accordance with the plan of
graduai resettlement which has already heen suggested. The Mission feels that
theexistingNauruan Long-term Investment Fund may not be suffiuent to meet
the requirements of such a plan"

(United NationsVisitingMission to Trust Terntories in the Pacific,Repo>t
onNaunr, para.48.)

310. These doubts were apparently shared by the Tmsteeship Council.

The Counciladopted the followingrecornrnendation:

The Council expressesthe hope that fuUdetailsof the new fmanciaiarrangement
between the AdministeringAuthority and the British Phosphate Commissioners
will be furnishedinthe nextannual report."

(Reportof tlieTntsteesliipCoitncilcoveringtheperiodf4December1952to 21
Jiil1953,GeneralAssemblyOficial Records, 8th sess., Suppl. No. 4 (A/2427),
p.119.)

311. The response of the Administering Authority appeared in the Annual
Report for 1953. The reference to the Nauruan Comrnunity Long Term
lnvestment Fund is as follows:

"Thisfund was created in 1947by the payment of an additional royaltyof 2d per
ton which is to be invested on behalf of the Nauruan Communityuntil the year
2000. The rate of this royaltywas increased to 5d per ton from the 1st July 1950.
The amount standingto the credit of this fund at 30thJune 1953wasf80,96Ll."
(Report, p.16.)

312. The scale of this "communityfund" was extremely modest inrelation
to the long-term consequences of the removal of phosphate rock and the
substantial inequities of the financial arrangements. The fund was expected
to contain three million pounds by the year 2000 (see the Report of theTmteeslzip Councilcoveringits Fourt/z and Fifh Sessions 6 August 1948-22
July1949,GeneralAssernblyQfJcialRecords,4th Sess.,Suppl.No. 4 (A/933),
p.74). In fact the British Phosphate Commissionerswere reported in 1953to
be conferring upon Aiistralia alone a benefit of four to five million pounds
per annum (Notes of Meeting of Board of Commissioners with
Representatives of Commonwealth Bank, 21 August 1953: Annexes, vo1.4,

Annex 61, p.6).

313. As a question of economics, the Long-term Investment Fund was
inadequate for the purposes of any meaningfulprogramme of rehabilitation
or resettlement: see the expert opinion of Mr.Walker (Appendix 2).

2. îhe faietoreoortfiiafai r onthe.fina-f thD

314. The failure to provide either for the actual implementation of a
rehabilitation programme or for the provision of the costs of such a
programme on the part of the Respondent State and the British Phosphate
Cornmissioners, is comected with the failure to report to the United Nations
in twoways. In the firstplace, the failure to rehabilitate providesindirect but
highly cogent evidenceof the general attitude of the Respondent State and
the general tendency to ignore the essence of the obligations attaching to
trusteeship. In this aspect the failure to rehabilitate marches alongside the

failure to report fully and fairly on the financial aspects of the phosphate
operations. These failures form part of a pattern of conduct stemming from
the existence of certain goals divorced£romconcern for the purposes of the
trusteeshipsystemand inimicalto these purposes.

315. Secondly,the failure to report fullyand fairly is an important part of
the elements of causation in the case. An Administenng Authority which
intends to behave in accordance with ordinary standards of fairness and good
practice simplydoes not start out bycarefullyavoidinganyproper accounting
to the authorities towhom the relevant duties are owed, and then pursuing

this course of conduct for most of fiftyyears. In other words the failure to
rehabilitate or othenvise to provide for the cost of rehabilitation forms an
entirely consistent element in the pattern of conduct. In the panoply of
prerogatives assumed by the Administering Authority in relation to the
phosphate deposits, the failure even to consider taking up the responsibility
of rehabilitationould be no more than an ancillaryelement.316. In any case the failure to provide full and fair reports constitutes a
specific violation of the obligations of trusteeship. Article 3 of the
Trusteeship Agreement declares the responsibility of the Administering
Authority "to administer the Temtory in accordance with the provisions of
the Charter and in such a manner as to achieve in the Territory the basic
objectives of the International Trusteeship System, which are set forth in

Article 76 of the Charter".

317. The implementation of those basic objectives mustdepend upon a full
and open disclosure of relevant facts. The failure to make such disclosure
necessarily constitutes a substantial violation of the provisions of Art76le
of the Charter as incorporated alsin the TrusteeshipAgreement.

318. It goes without saying that international obligations must be carried
out in accordance with the principle of good faith. This principle generally
recognised as a general principle of law: see Bin Cheng, Tite General
Principlesof Law, Stevens, London, 1953,pp.106-60. The principle is also
expresslydeclared to be one of the "Principles"binding the United Nations
and its Members (Article 2(2) of the United NationsCharter) and formspart

of the Declaration on Principles of International Law Conceming Friendly
Relations and Co-operation Among States in Accordance withthe Charter of
the United Nations adopted, without vote, by the General Assembly on 24
October 1970 (Resolution 2625 (XXV), Annex). The operation of the
principle of good faith in the interpretation of treaties has always been
recognised (see, for example, A.D. McNair, Law of Treaties,Oxford,
Clarendon Press, 1961, pp.465,549) and there is no reason to doubt that the
principle applies to obligations having a provenance in instruments other
than treaties.

319. It is sometimes pointed out that the principle of good faith has a
penumbra of vagueness. That may be so but the core of the principle has

clear definition and, as the Court will see from the evidence (sumrnarised
below), the conduct of the Respondent State was ci~aracterisedby a carefully
maintained reticence whichamounted to an absence ofgood faith. . ..
3.Thee&11ce ofAusmlia's relicenrr11farlrr.r.reoorifothe
financialarra'IpemenconcemiqglhemrnrneagU&$&fohosoh&

320. It is now necessary to expound the vanous elements of the evidence
which compose the picture of deliberate and persistent refusal on the part of
the Respondent State to report fullyand fairlyon the financial aspects of the
production and disposa1 of the phosphate deposits. In approaching the
matenal the Court is respectfullyrequested to bear in mind that the pattern
of conduct commences in the early years when the Nauru Island Agreement

of 1919 was implemented: and this pattern remained in al1 essentials
unchanged after the transition from the mandate to the regime of
trusteeship.

321. As a preliminary matter it is important to recall the actual subject of
the reticence on the part of the Respondent State. The secrecyrelated to the
financial terrns on which phosphate was mined in Nauru. The precise
mechanism and the systemof accounting are analysed in Appendix2 to this

Memorial. The essence of the matter can be expressedas follows:

(a) There was an absence of appropriate accounting to the relevant
international organs concerning the exploitation of phosphate on
Nauru: in brief,the accounts (in so far as theywere made public) were
extremely bland and melded the accounts for the three phosphate
islandsof Nauru, Christmas Islandand Ocean Island.

The proportion of the income from phosphate disposed of at artificial
(b)
prices which was provided to the Nauruans was grosslyinadequate in
the context of the regime of trusteeship. Further details of the net
loss of earnings resulting from the under-pricing of Nauruan
Phosphate are provided in Appendix 2.

(c) The inequities of the system revealed by the figures set forth in the
previous paragraph were in fact more marked when it is appreciated
that the "prices" fixedwere unrelated to the prices obtainable in the

free market for similar high quality phosphate: thus the "pricing"
systemwas as self-se~ng, inequitable, and unrelated to the purposes
of the trusteeship system, as was the system of the disposa1 of
phosphate as a whole. The question of the real value of Nauruan phosphate in the trusteeship period is analysed by Mr. Walker in
Appendix2.

322. The evidencewillnowbe set forth. When it is analysed it willbe seen
to fall into a verysimplepattern:

The extensive control of the resource granted by the Nauru Island
(a) Agreement of 1919and entrenched bythe Lands Ordinance of 1921.

(b) The policies and attitudes of the British Phosphate Commissionersin
the application of the provisions of the Agreement of 1919 until the
time of independence.

(c) The policies and attitudes of the Respondent State, in particular, in
the application of the provisionsof the Agreement of1919,combined
withthe failure to report fullyand fairlyto the Tnisteeship Council.

323. The system of the Nauru Island Agreement of 1919 was essentially
expropriatory and created an econornicautocracy operated in the interest of
the Governments of Australia,, New Zealand and the United Kingdom.
Article 6 of the Agreement provided that: "The title to the phosphate
deposits on the Island of Nauru...shall be vested in the Commissioners".
Article 9 provided that it was "the duty of the Commissioners to dispose of
the phosphates for the purpose of the agricultural requirements of the

United Kingdom,Australia and New Zealand, so far as those requirements
extend. Article 10 created a further autocratic dimension: it provided that
phosphates could not be supplied to any other country "except with the
unanimous consentof the three Commissioners".

324. The background to this Agreement has been explained in paragraphs
265-269. The historical record is clear. The Agreement of 1919wasmade on
the understanding that Nauru was to be a mandated territory, and the
preamble to the Agreement makes this explicit. No doubt the powers of
government and control assumed in the tripartite agreement were to be

applied compatiblywith the purpose of the League of Nations mandate. And
yet the form and structure of the arrangements placed a very large measure
of governmental discretion and political control in the hands of theAustralian Governrnent and its agents, the British Phosphate Commissioners
and the Administrator.

325. The system created by the provisions of the Agreement of 1919 was
reinforced by an extraordinarily artificialinterpretation of the provisions by

the Respondent State. The essence of this interpretation was that title to the
phosphate was vested inthe Commissioners and that therefore al1questions
relating to phosphate and, inpanicular, royaltieswere entirely divorced from
the duties of the Administering Authority, first under the Mandate and
subsequently under the Trusteeship Agreement.

326. This particular legal interpretation appears in a paper obtained from
the Australian archives (Annexes, vo1.4,Annex 65). The paper is undated
but refers to the period of trusteeship. The me'morandum includesthe

followingpassage (para. 8):

"A TrusteeshipAgreement for Nauruwas approvedby the Second General
Assemblyof the United Nationson 1 November194(Halpage364). The only
provisionwhich could relateindirectlyto royalties is the obligation of the
administeringauthorityuilderart5cthat in the diichargingof its obligations
thatit wiUensurethatno rightsover nativelandin favourof anypersonnot an
indigenousinhabitantof Naurumaybe createdor transferredexcept with the
consentof the'competentpublicthority':(emphasisadded.)

327. In essence the Australian view wasthat the Agreement of 1919 had

the consequence that the Commissioners and the Governments were
accorded plenary powers in respect of the phosphate deposits. That this view
had a longpedigree, reaching back at least as far as 1936,is clearly evidenced
by the bundle of documents obtained from the Australian Archives and
contained in Annexes, vol. 4, Annex 64). In accordance with this legal
opinion the validity of the payment of royalties, whether to the
administration or to the land owners,wasplaced inquestion.

328. The sequence of documents speaks for itself. Opinion No. 111
prepared by the Solicitor General in 1936(Annexes,vo1.4,Annex 55), which
is summarised in the document ectitled "Opinions Already Expressed"
(Annexes, vo1.4,Annex64),drewthe followingconclusions:(a) The Cornmissionersare not liable by agreement to pay royalty to the
Administration.

(b) The 1919agreement does not provide for payment of royalty,and the
Adrninistrator cannot make an Ordinance imposing royalty as his
powers are "subjectto the [1919]agreement".

(c) Ifthe Administration had power to impose a royalty,the result might
be that the Administration would accumulate largereserves of money
to the prejudice of the rights of the Govements under the 1919
agreement. This is not the intention of the agreement and the
Commissionersare not, and cannot be made, liable to pay royalty.

(Opinion No. 111of 1936;file 361438.)

329. The issue of the validlty of the payment of royalties had remained a
live issue within Australian official circles for many years. Butin 1965 it
ernerged into the light and did so at a cntical juncture for the Naiman
community. Thus it appears in a paper submitted bythe Australian Solicitor-
General in response to a submission by the Nauru Local Government
Council Delegation on the question of the ownership of the phosphate. The
Solicitor-General's paper is dated 7 June 1965. Its context was the
negotiations in 1965 between the Nauruan representatives and Australian
officialsrepresenting the AdministeringAuthority. Thus the paper appears
as "Annex J" in the Record of Negotiations prepared in Canberra (Annexes,

vol. 3,Annex2).

330. The Solicitor-General made clear his opinion that the powers of the
Administering Authority "in respect of the working of the phosphate
deposits" by virtue of the Agreement of 1919were not constrained in any
way, and that the position remained the same in relation to the Trusteeship
Agreement (paras.25-27).

331. The attitude of the Australian delegations engaged in negotiations
with the Nauruans in the pre-independence period reflected the position
adopted by the Solicitor-General in 1965. The followingdocument confirms
this view: see the Record of Negotiations 31st May-10thJune, 1965,Annex
K. (Annexes,vol. 3,Annex 3). 2. TheMotr atronoftheAustralianGovernment

332. The motivation of the Australian Governent from the outset of the

Mandate and until independence has been the getting and keeping, for as
long as politically possible,.of cheap supplies of phosphate. This dominant
motivation was prefigured in the politics of the Paris Peace Conference of
1919and the design of a compromise which resulted in Nauru becorning a
"Class C Mandate. As the record shows,Mr Hughes had made strenuous
efforts to obtain Nauruan phosphate for Australia preferablybythe taking of
Nauru as a colony(see paras. 29-39).

333. The Australian interest in cheap phosphate was the predorninant
purpose in controlling Nauru and this motivation was both powerful and
persistent. The Cabinet papers of 1955show the characteristic attitude of
the Australian Government during the tmsteeship period. The relevant
Confidential Paper dated 12 October 1955and attached "Notes on Cabinet
submissionNo. 588:Australian Phosphate Supplies"(Annexes,vol. 4, Amex
63) provide authentic evidence of the Australian attitude. In these "Notes"

the Recommendation of the Minister for Territories is supported vdthout any
reference to the interests of the people of Nauru, and the final paragraph
includes these words:

"A continuing and increasing supply of phoisvital to our economy and
thereisan urgent need for obtainipg additionai supplies of phosphate at the
lowestpossibleprice."

3.A usra'lranReoortin~PracticeintheperiodoftheLeame ofNations

334. It was natural that the pattern of a lack of frankness in reporting on
financial matters should be manifest in the reports to the League of Nations
presented by the Administrator. Thus, for example, the Report on the
Administration of Nauru during the Year 1922simplysets aside the affairs of
the BritishPhosphate Commissioners(p.6of the Report) thus:

"Thefunctionsof the Commissioners,so far as Nauru is concerned,are Limitedto
the businessmected 6th the phosphate deposits. The Administrator alone is
charged with the responsibiity pertaining to the government, moral and social
welfare, labour conditions, eaU.on the Islan--the British Phosphate Commissionersbeing ireared,from a Govenunent point of view, as ia ir were
privatecompany."

335. This statement also appears in the Reports for the years 1923(p.6),
1924(p.6), 1925(p.6), 1926(p.6). The statement appears, with certain small
variations, in the Report of 1927(p.6). In the Report for 1928the statement
has disappeared.

336. The statement appearing in the Reports prior to that for 1928 is
markedly opaque. The Commissionerswere not a private company. Their
relationship to the governments is explored in more detail in paragraphs 516-

541 below. The Commissionerswere the generator of massiveincomewhich
was neither treated as public revenue nor taxed as the profits of a trading
company would be. In these circumstances the separation of the
responsibilities of the Administrator from the functions of the
Commissioners,as indicated in these Reports, ishighlyartificial.

337. The effect of that separation was to present the phosphate mining
operation as something to which the basic mandate and trusteeship
obligation did not apply,or as to which that obligation has no purchase, and
the Australian Government (as can be seen from the incident of the

disallowance of the 1925 Lands Ordinance (see paras. 521-539)) acted
throughout as if thiswere the case.

338. In the later Reports the reference to the role of the British Phosphate
Cornmissionersis more or less restricted to the appearance of an appendiw
containing the "Report and Accounts of the British Phosphate
Cornmissioners"for the givenyear. These brief documents reveal very little
of the important facts: their eccentricities are analysed by Mr. Walker in
Appendix 2of this Memorial.

4.Aitstralian re-ootti~cti 'cein tl~eoeriodo,'the UniteN&

339. Throughout the period of the tmsteeship in Naum the Australian
representative took the lead in refusing to disclose the financial aspects of
the phosphate industry operating in Nauru. It became a custom for the
Trusteeship Council to include in its reports to the General Assembly a

specificrequest for theproductioiiof fullinformation, includingthe accounts.Thus in the Report of the TrusteeshipCouncil covenngits Fourth and Fvth
Sessions (6August1948-22July1949) (GeneralAssembb ojjïcial Records,4th
Sess., Suppl. No. 4 (A/933) p.77), the Council "requeststhe Adrninistering
Authonty to furnish in the next annual report full information on al1
operations of the British Phosphate Commissioners, includingthe financial

accounts in order to enable the Council to studyal1aspects of the question of
the phosphate industry".

340. An identical request appears in the Reportof the TrusteesliipCouncil
coveringits FirstSpecialSession,its Second SpecialSession,and ifsSixthand

Seventh Sessions, 23 July 1949 - 21 July1950, GeneralAssembly ojjïcial
Records,5th Sess.,Suppl.No. 4,(A/1306), p.134.

341. At its eighth session,the Counciladopted the followingconclusion:

'The Counci..eiterates that it remains handicapped inits appraisal of economic
conditionsecause ofthe absenceofinformationwhich would show,Liparticular,
the separate Financiaioperations of the British Phosphate Commissioners in
respect of Nauru, and the actual pricesreceivedfor phosphate as compared with
worldmarket prices."

(Reponof theTrusteeshipCozlncilcoveringits ThirdSpecial Session lsEiglith
andNintltSessions,22 November1950to 30July1951,Generalhsembly Official
Records, 6th Sess.,Suppl.No.4 (A/1856)), p.277.)

342. In the Report for the followingperiod the issue is dealt with in the
followingpassages:

"At its Flih session, the Council had requested the Admistering Authority to
furnish in the next annual report fuiiinformatialioperations of the British
Phosphate Commissioners,includingthe fuiancialaccounts.

At its seventh session,the Council had cxprcssed thethat the restoration to
fuii production of the phosphate industry had been ofneral benefit to the
Territory, but had noted that the Councilined handicapped in its appraisal
of economic conditionsbecause of the absence of informationwhich wouldshow,
in particular, the separate financiai operations of the British Phosphate
Commissionersin respect of Nauru, and the actual pricesreceivedfor phosphate
as comparedwith worldmarket prices.

Endeavouring to learn the costs of phosphates landed in Australia and New
Zealand from various sources, the Visiting Mission wastold by the general
manager of the industry that it wasunlikelythe Commissionerscould supplythe
informationrequested. At its eighth session,the Council had reiterated that it remained handicapped in
its appraisal of ewnomic conditionsbecause of the absence of information which
would show, in particular, the separate fmancial operations of the British
phosphate Commissionersin respect of Nauru, and the actual prices receivedfor
the phosphateas compared with worldmarket prices.

The annual report for 1950-51,like the previous one, wntained total export
figures for tonnage and value of phosphate, aswellasthe latest accounts of the
BritishPhosphate Commissioners for Nauru andOcean Island."

(Report of the TrusteeshipCouncil covering the Fourth Special Session and ifs
Tent11and Elevenlh Sessions, 18 December 1951 10 24 July 1952. , General
Assembly OfficialRecords,7th Sess.,Suppl.No. 4 (A/2150), p.260.)

343. At its twelfth session, the Council adopted the following
recommendation:

"The Council, recalling its recommendations made at previous sessions to the
effect that the AdministeringAuthority should make availableto it the separate

fuiancialoperations of the British Phosphate Commissionersin respect to Nauru
and the actual prices received for the phosphate inomparison with would
market prices, urges the Administering Authority to make every effort, in
agreement with the British Commissioners,toovidethis informationin ils next
annual report".
(RepoHof the TnrsteesliipCoitncilcovenngtt~eperiodfr4mDecember1952to 21

July 1953, GeneralAsseinbly Oficial Records, 8th Sess., Suppl.4(A/2427),
p.117.)

344. The Council discussedthe same question at its fourteenth session and
adopted a substantially similar recommendation. (Reportof the T~eeslaip
Council coveringthe period from 22 July 1953 to 16 July 1954, General
Assernblyû#?cialRecords,9th Sess.,Suppl.No. 4 (A/2680), p.271.)

345. At its sixteenth session, the ~oukcil adopted the following
recommendation:

"The Council recalls its previous recommendations to the effect that the
Administering Authority should makeavailableto il separate fuiancial accounts
in respect of the operations of the British Phosphate Commissionersin Nauru.

Thc Council takes note of the replies to these recommendations given by the
Administering Authority indicatingtheificulty it perceives in complyiagwith
them, and expresses the desirc thatthe Administering Authority in its next and subsequent reports willprovide the Councilwith the fullest information feasible
on the phosphate operation in the Island".

(Reportof the Trusteeship Councic loveringthe periodfrom 17July1954to 22 July
1955, General Assentbly Oficial Recoràs, 10th Sess., Suppl. No. 4 (A/2933),
p.225.)

346. The Report of the Council for the next period includes the fuilowing

passages:

"As indicated above,the Trusteeship Council has made severalrecommendations
to the effect that the Administering Authority should make available to it
separate financialaccounts in respect of the operations of the British Phosphate
Commissionersin Nauni. At its sixteenthsession it had taken note of the replies
given by the Admitering Authority to these recommendations indicating the
diificultieswhichthe latter perceivedin complyingwith them, and had expressed

the desire that the Administering Authorityin its neM and subsequent reports
wouldprovide the Councilwith the fuilest information feasibleon the phosphate
operation in the Island.

The information pronded in thc annud report for 1954-1955was on the same
iines as previously. The Viiting Missionstated that it was unable to obtain any
information either on the separate operations of the British Phosphate
Commissioners in respect of Nauru or on the actual prices received for the
phosphate in comparison with prices received for the phosphate in comparison
with prices in other parts of the world. No information was availableon the total

earnings from the operations on Nauru. The special representative of the
Administering Authority informed the Council at its eighteenth session that
information complyingwith Article 5 of the Trusteeship Agreement had been
suppiied in the annual reports to. the Council; however the British Phosphate
Commissionersoperated not only in Nauru but in otber islands not the concern
of the Trusteeship Councü. It would be impracticable to present completely

separate information relating to Nauru phosphates alone. The Administering
Authority feltstrongly that the Council did not need such information and the
diclosure of confidentid accounts of the Commissioners in order to perform its
task effectively. The information could not disdose any profits--there were no
profits."

(Report of the TrusteeshipCouricilcoverittgthe period from 23 Jirly 1955 to 14
Aligust 1956, General Assenibly Oflicial Records, 11th Sess., Suppl. No. 4
(A/3170), p.335.)347. That session, the Council adopted the following conclusion and
recommendatiun:

"The Councii recails its recommendation of the sixteenth session in which it

expressed its desire that the Admitering Authority, in ifs next and subsequent
reports, would provide the Councii with the fuilest information feasible on the
phosphate operation in Nauru.
The Council takes note of the information submitted in this connexion by the

Administering Authority, and expressesthe hope that the latter wilihimish the
fullestpossibleinformationin thisregard."
(Report of the Trusteeship Council coveringthe period (rom 23 July 1955to 14

August 1956, General Assembly Oflicial Records, 11th Sess., Suppl. No. 4
(A/3170), p.335).

348. The nextReport of the Trusteeship CouncilStates:

"84. At its eighteenth session, the Council had noted the information
submitted concerningthe phosphate operation in Nauru, and expressedthe hope

that the Administe~g Authority would furnish the fullest possible information
concerning it. In the Report for 1956 the Administering Authority notedthe
desire of the Council concerning information on the phosphate operation in
Nauru.

"85. At its twentieth session, the Council adopted the following
recommendations:

'The Councii,noting that proposals made by Nauru Local Government
Council to increase the royalty rates on phosphate are now being
considered, noting further that the AdministeringAuthority is currently
submitting information on the operations of the British Phosphate
Commissioners, consideringon the other hand that fuii information on
the operations of the British Phosphate Commissionersas specifically
related to theisland of Nauru wouldbe ofgreat assistanceto the Council

for its assessment of the question, recommends that the Admistering
Authority submitsuchinformationto the West extent feasible.
The Councii, noting the statement of the Admistering Authority that

the British Phosphate Commissioners exertno influence on the budget
of the Territory, but nevertheless concernedlest the present system of
direct payments by the Commissioners to cover the expenses of the
Territorial Administration might lead to the exercise of such idluence, suggests that the Administering Authority review the present
arrangements witha viewto removinganysuchpossibilitfy'."

(Reportof the TnrsteeshipCouncilcovenngthepenod from 15Augusr 1956 io 12
July 1957G,eneralAssembiyOficial Recordr, 12th Sess.,Suppl. No. 4 (A/3595),
p.un.)

349. In the Report of the Council covering its twenty-first and twenty-
second sessions the issue of information is not stressed: see the Report,

GenerulAssembb QfJciulRecords, 13th Sess., Suppl. No. 4 (A/3822), pp.98-
99, paras. 60-62). However, the absence of full and frank information on
financial matters continued: see the Report of the TrusteeshipCouncil, 2
August1958 -6 Aupst 1959,GenerulAssembb QfJcialRecords, 14th Sess.,
Suppl. No.4 (A/4100), pp.160-1,para. 67.)

350. At its twenty-sixth session the Council adopted the following
"conclusionsand recommendations":

"The Council commends the Administering Authority for the increase in the
royaltyrate paid directtond-owners.

The Councilnotes the statement of the Administering Authoritythat the general
review of royalty rates begun last year has reached the stage where the
submissions of the British Phosphate Commissioners and of the Nauru Local
Government Councii are riow being examined. The Council requests the
Administering Authoritytournishit with appropriate information regarding the
views submitted by the two parties in order that it may reach a better
understandimgof thematter. The Council reiterates the viewthat any increases
resuiting from this review shouid be applied to the Nauruan Community Long-
Term Investment Fund.

The Councii believing that the information provided to it concerning the
operations of the British Phosphate Commissionersin Naurues not enable it
to express a considered opinionon the equitableness of the royalty rates being
paid, reiterates its recommendation on this subject adopted at its twenty-fourth
session that the Administering Authority pronde it with more comprehensive
information."

(Report oft11eTnisieeship Council, 7 Augitsl 195- 30 lune 1960, General
Asse~ibiyOfiicialRecords,15thSess.,Suppl.No.4 (A/44û4), p.155,para. 74.)

351. The relevant passages inthe Report of the Council on the work of its
twenty-seventh session reveala growingimpatience with the attitude of the
Australian government:"97. The Council at its twenty-sixthsession commended the Admitering
Authority for the increase in the royalty rate paid direct to landowners. Italso
noted that the general reviewof royaltyrates begun in 1959had reached the stage
where the submissionsof the British Phosphate Commissionersand of the Nauru
Local Government Council were not being examined.The councilrequested the

Administering Authorityto furnish it with appropriate information regarding the
views submitted by the two parties, and reiterated its view that any increases
resulting from this reviewshould be applied mainlyto the Nauruan Community
Long-Term Investment Fund. The Admitering Authority reported to the
Councilthat the negotiations on royaltyrates had been concluded,with the result

that the total royalty rate had been increased with effect from 1 Juiy 1960£rom
2s.lld. per ton to 3s.7d. per ton. In addition to the above rates, surface
payments for landabovethe eightyfeet contour line had been increased from f60
to flm per acre. Ir had also been agreed that a four-year period for the new
rates be appiied in order to give successive LocalGoverurnent councils the

opportunityof reviewingroyaltyrates.
"98. At the same session, the Council,believingthat the information provided
to itconcerningthe operations of the British Phosphate Commissionersin Nauru
did not enable it to express a considered opinionon the equitableuess of t'ie

royalty rates being paid, reiterated its recommendations adopted at its twenty-
fourth session that the Administering Authority provide it with more
comprehensive information. In the report under review the Administering
Authority reiterated its previous observation that idormation on the operations
of the British Phosphate Commissionerswouid be induded in the annual report

to the fullestextent possible.
"99. At its twenty-seventh session, the Council adopted the foiiowing
conclusionsand recommendations:

The Council, recallingifs preisiousrecommendations that the Adntirtistering
Authorify provide il ~1111 niore contprehertsiveinformatio~tconcenting the
operationsof tlteBritishPhosphateCommissioners,notes wifhregretthatsuch

informationas is confainedin the annual reportfor 1959-60.parficulor&thut
on the financial operationsof the British Phosphate Commissioners,is no1
sirfficietttlycontprehensiveto enable the Council to determine wherherthe
Nauman people receivea fair and equirableshore of the benefitsfrom tlte
phosphate indusny. The Coirncilrequestsonce again that tlteAdministering

Aurlioriiymake evey possible effon to includefullet information in ifsfunrre
annual repons, especial&regardingthe cos1of extractionof phosphates and
pricesobtainablein thetvorldmarkets.

nte Cortncilnotes withsatisfactionthe increasein the totalroyallyrate wltich
came in10efiecton 1luly 1960and hopes that negotiafionswill be conducfed iviilia view 10 iricreasirigroyalries pn~abl10 /lie Narrnrari CoirirriiriiilyLorig-

Tcnri Irrveslr~icilirrtd."
(Reporf of llle Tnrsleeship CoirrrcilI Jirly 1960- 19Jirly 1961,Gerieral Asserribly

Oficial Records, 16th Sess., Suppl. No. 4 (A/4818), p.70.)

352. The Report of tlie Triisteesliip Couricil for the period 20 July 1961to
20 July 1962 is of particular significance for present purposes. At last some

figures had been supplied (coinparative costs of superpliosphate fertilizer Io
consumers in various countries) and tliis moved the Council to a fairly strong
indication of tlie responsibilities of the Adniinistering Autliorily. The
B
relevaiit passages froni the Report are as lollows:

"59. The Council has repcatedly rccommcnded that the Administering

Authority provide il with more comprchcnsive information conccrning the
operations of the British Phosphate Commissioners. At ils twenty-scvcnlli
session, it noted with rcgret tliat siicli information as was contained in the annual
report for 1959-1960, particularly tliat on the financial operations of the Drilisli
Phosphate Comniissioncrs, was not sufficicntly compreliensive Io eiiablc il Io

determinc whether the Nauriian people rcceived a fair and cqiiitable slinre of the
benefiis ot the phosphate iiidustry. lt rcqucsicd once again that lhe
Adinùiistcring Aulhorily make every possible clfort Io include fuller information

in its annual reports, especially regaidiiig thc cos1of extraction of phosphates and
price obtainable in the world markets.
60. The 1962 Visiting Mission rcported ihat !lie following figures had bcen

supplied by the Admiriislering Aiitliority at the rcqiicst of the Mission. Thcy
show the cosls of tlic siiperpliospliate fertilizer Io consumers in various countrics
in cornparison with those in Australia:

Ncw Soiitli \Vales L12. 9. O pcr toi1 xt ~ioiiilof rlclivcry (on
(Australia) railac works) :
Dciirtrark L15.12. 4 pcr loti
Irclaiirl 115.19. 1 per toi1 ex woiks

Fiiilniiil 112.10. O Der lori ex worl<s niid/or
<lclircry point
Fraiicc 113. 8. 6 @Crloi1 cx coastal works

Geriiiaiiy 116.13. 7 pcr loii
lsracl 112.10.O pcr loti ex works
Japaii 118. 1. 2 pcr tori ex iiclrcsl rail poiiit

Ncw Zealaiid 111. 9.11 pcr toi1
Swedcii 114.18.10pcr loii cx works
Soutli .%frics
117. 5. 1 pcr toi1 ex coastal fxctorics
Uiiitcd I<itig<loiti 120.10.O pcr loi1 cx railtvay slatioiis
(subsidy of 19.1.3 pcr loti is rlcrliicrililc
frolli tiiis pricc Io arrive al tlic pricc
Uiiitcd States paid by tlic fariiicrs, i.c., L12.8.9)
of Aiiicrica
110. 5. O pcr toi161. Tlie Mission st;itcd tlial iii 1947 tlic total contribiition niadc by tlic
British Pliospliatc Coinniissioiicrs to Nauruans aiid 10 the cost ol administration
was as lollows:

.. .
Pcr fan Toid
263.507 527,014 Is.ld. f14.274 6,588 3.95

62. In 1961, iindcr a ncw agreeincnt concludcd bctwecn ilic Adminisicring

Aulliorily, tlic Coiiiniissioncrs and tlic Nauruans concerned, the rates wcre as
follows:

63. Thus, since Ilic Trustcesliip Agrcemcnt was coiicluded, the percentage
bcnclit io the Nniiruans ngainst tl~cvalue or pliosphatc ni tlie point of export had
increased [rom jiist 4 pcr cent Io 24 pcr cent. Tlic Mission considcred that those
benefits wcre substantial, aiid il siipplics ol phospliate haclbec11inexiiaustible il

would Iinvebeen reasonable tu allow Ilic qiicstioiis of royalty and administration
costs ta be dealt witlr in ihc future as in the pas! by agreenient betwecn the
Adminislering Auihority, Ilic British Phospliatc Coniiiiissioncrs and the elected
represeotativcs of the ~ieolileof Nauru.

64. Since, howevcr, tlic lifc of tlic pliospliaie olicratioii was limitctl to some
thirty years aiid since thcre \vas no lorcsecnl>lc rcplacenicnt of tlie pliosphatc

incarne, the Mission was of the opiiiioii tlint tlic stroiigcst obligntion rested with
the Governmcnis of tlic coiiiitrics which h:id bcncfitcd froni low-price, higb-
quality pliospliate over tlic iiiany ycars of tlic operation of the Comn~issioncrsto
providc the mosi geiicrous assislaiicc lowsrds tlic cosfs of whatcver scttlerncrif
scheme was approvcd for tlic fiitiire honic ol the people ol Naurii. The schcme of resettlement already proposed by the Australian Government would
necessitate expenditure of many million poundsThe Mission trusted that

whatever additionalcostose from the approvalof the speciiïcscheme of a kind
proposed by the Mission should also be generously met by the Governments
concerned.
65. At its twenty-ninth session, the Council adopted the fouowing
canclusionsand rewmmendations:

The Council notes withappreciation the information supplied by the
Administering Authority to the Visiting Mission regardiig the costs of
the superphosphate fertilizers to consumers in various countries in
comparison with those in Australia. It shares the new of the Viting
Mission that the strongest obligationrests with the Governments of the
countries whichhave benefited from low-price, hi&-quality phosphate
over the many years of theeration of the Commissionersto provide
the most generous assistance towards the costs of whatever settlement
scheme is approved for thefuture home of the people of Nauru. In this
connexion, it takes note with satisfaction of the declaration of the
Admitering Authority that mple provisionof means for developinga

future home is not anwilnot be astumblingblock towards a solution
and that the Administering Authoritywill be mindfui of its obligationIo
providesuchassistance.
-Notingfrom the report of the VisitingMission that the rate of royalty
derivedby the Nauruan people from the phosphates been increasing
over the years, the Counùl takes 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 negotiation between the Nauruans, the British Phosphate
Commissioners and the Government of the Territory. The Council is
confident that as a result of those negotiations, fair and adequate
benefits forthe Nauruanswill be arrived at."
(Repoa of Ihe TmsfeeshipCouricil20Juiy 1-620Juiy 1962GenerolAsssembiy
OffiçialRecords,17thSess.,Suppl.No.4 (A/52û4,pp. 40-41.)

353. In the subsequent Reports of the Council the question of the

provision of information disappears: see Reportof the Trusteesl~ip Council20
Juiy 1962 - 26 June 1963, GeneralAssenlbiyQ@cialRecords,18thSess.,Suppl.
No. 4 (A/S504), pp.27-8,paras. 216-19;Report.. 27June 1963-29 June 1964,
General AssembiyWcial Records,19th Sess.,Suppl.NO.4 (A/5804), pp.29-
30, paras. 242-9;Report... 30 June 1964 - 30 June 1965, GeneralAssembiy

OfficialRecords,20th Sess., Suppl. No. 4 (A/6004), pp.47-50,paras. 402-31;
Repo tt.. 1.Juiy 1965 - 26 Jxiy 1966, GeneralAssembly OfficialRecords,21stSess.,Suppl. No. 4 (A/6304), pp.41-44,paras. 375-408; Report...27Juiy1966
- 30 June 1967,GeneralAssembiy Qtïcial Records, 22nd Sess., Suppl. No. 4
(A/6704), 45-49, paras. 364-403. On 31 January 1968 Nauni became
independent.

354. The reasons for the lack of reference to the refusal of the
Administering Authority, as such, and the Australian Government in

particular, to produce information about the financial aspects of the
phosphate operations, are not far to seek and stand out in the text of the
Reports referred to above. By 1962the issue of resettlement had become a
major feature of the agenda and the Australian Government had given a
series of undertakings in respect of the costs of such resettlement. Secondly,
the British Phosphate Commissioners had agreed to regular meetings with

Naunian representatives (the first to take place in July 1963). Thirdly, by
1965 the negotiations between the Nauruan representatives and the
Administering Authority were beginning to be seen as a forum which
provided a parallel mechanism, in political terms, to the Trusteeship Council
and the General Assemblyof the United Nations.

355. The unwillingnesson the part of those responsible for the phosphate
industry in Nauni to provide information on the mode of exploitation of the

island'sresources is nowhere more apparent than in the interna1Records of
the transactions of the BritishPhosphate Cornmissioners. The attitude of the
Commissioners was that it was not the business of the United Nations to
know about the relevant accounts. Thus in a minute of the Commissioners
prepared probably in 1946or 1947the followingappears:

"MI. Haiiigan expressed the view that the Trusteeship Council's request for
separate accounts for Nauru would probably be endorsed by the General
Assembly,and queried whether the partner Governmentswould comply.

AU Commissioners opposedanysuggestionthat they should be supplied and held
the viewthat U.N.O.is not entitled to such information,but only to information
concerningroyaltypaymentsto Nauruans.
In reply to a question as to the effect on the Nauru Agreement of the placing of
the Island under the International Trusteeship system,Mr. Halligansaid that the
chapter of the United Nations Charter dealing with Trusteeship territories
contains an article (Article76(d)) which wouldgive al1members of the United
Nations equal right of access to Nauru phosphate wereit not that Article 80 of
the chapter excepts then existing international agreements, of which the Nauru
Agreement was one, as overridmg any of the provisions of the Trusteeship
Chartcr. Any change of the Nauru Agreement might constitute a new agreement whichwould no longer override the provisf Article 76(d) of the United
NationsCharter."

(MinuteNo.683;Annexes,vo1.4,Anne58.)

356. The construction of the Nauru Agreement adopted implicitly in this
exchange within the Commission is baseless but the episode confirms the
resolution of the Commission not to provide the information which the
Trusteeship Councilwas seeking.

357. In a subsequent Minute under the heading "B.P.C. Accounts", the
Commissioners "agreed that pressure for further financial information
regarding the operation of the Commissionersat Nauru should be resisted".
(Minute No. 823;Annexes,vo1.4,Annex 58.)

358. The attitude of the Commissioners and the general character of the
financial dealings concerning the phosphate industry is confirmed by an

episode of 1953,whichis reported fullyin a document available in the Public
Records Office in London. The document takes the form of "Notes of
meeting of Board of Cornmissionerswith representatives of Commonwealth
Bank, at Phosphate House, Melbourne, Fnday, 21st August 1953". The
document is a contemporaneous record: it bears the sub-title "Notestaken by
Mr. Enting" and is dated "Me!bourne,25th August 1953". Mr. G.R. Enting
wasthe secretary to the General Manager of the Commissioners, Mr.Harold
Gaze and is recorded as such in the preambular list of persons present. The

document is set out in the Annexes,vo1.4,Annex61.

359. The purpose of the meeting was to provide the representatives of the
Commonwealth Bank with an opportunity to express their misgivingsabout
the progressivegrowthof the overdraft lirnitsand to seek confirmation of the
ultimate responsibility of the so-called "partner Governrnents" in respect of
the debt. The Board of Commissioners were represented by the New
Zealand Commissioner,the Australian Commissioner,the General Manager
(Mr. Gaze), the Deputy-General Manager, and the Secretary to the General

Manager (the author of the Notes of the meeting).

360. ln response to certain doubts expressed by the representatives of the
Commonwealth Bank as to the long-term financial position of the British
Phosphate Commissioners, Mr.Gaze made the followingremarks: "1donotthinktherisanypossibity of a loss.aslossiconcernedweare
selling phosphatefor not much more than a quarterof what itùeould
elsewhere,and the actualbenefitto Australiaat the if4,000,0 to0
f5,000,0 pr0annum.Thisnotknowntoanyonenoton theinside."
(Notesof meeting,p.6(emphasis added).)

361. Mr. Gaze, as General Manager from 1920until 1954,spoke with very

considerable authority, and his statement provoked no contradiction or
reservation from the two Commissioners present. His knowledge of the
affairsof the phosphatendustiy wassecond to none, and his role is recorded
in detail by M. Williams andB. Macdonald, The Phosphateers,Melbourne
University Press,Melbourne, 1985(see, in particular, pp.407-25).

362. This impressive repertoire of evidence establishes that the failure to
report on the financial aspects of the production of phosphate on Nauru was
the result of a deliberate and consistently maintained policy on the part of
the Australian Government and the British Phosphate Commissioners. The
evidence indicates that the Australian Governrnent and its partners from
time to time held the view that the Nauru Island Agreement of 1919

provided a justification for treating the phosphate industry as lying outside
the jurisdiction of the League of Nations and, subsequently, of the
Trusteeship Councilof the United Nations.

363. Against this background it can be remarked that, if this reliance upon
the Nauru Island Agreement of 1919were indeed justified, there would be

no objection to givingpublicityto the financial circumstancesof the industry.
If the pattern of conduct werewfuland above reproach, whysuch secrecy?
If the mode of operation of the industry were above reproach, why the
persistent refusal to respond to repeated requests for information by the
Trusteeship Council?

-. THEFAILUR TOEEXERCISET GHOVE~ME~AL AUTHON'I T PPROPMTE TO THE
0RI.lGATIOOF TRUSTE ES HI^

364. From the very first days of the trusteeship the Trusteeship Council
and the Visiting Missions expressed disquiet in respect of the system of
public finance in Nauru: see theportof the TrusteeshiCouncilcoveringitsFourtl~and Fifh Sessions 6 August 1948 - 22 July 1949, GeneralRFsernbly

OfficialRecords,4th Sess.,Suppl.No.4 (A/933), p.77.

365. The principal eccentricities of the system of public finance were
threefold: the dominance of the phosphate industryand its operations in the
life of the island; the independence of the British Phosphate Commissioners
in relation to the Administrator; and the fact that the operations of the
Commissioners were not subject to taxation. In combination these three

factorsproduced a systemof economicautocracywhichgavea low priority to
the interests of the people of Naum. Moreover, the systemwas based on the
assumption that thé Cbmmissioners had veryconsiderable autonomy and
~reroeatives. In the submission of the Applicant State the system of
gove&ent on the island, with particular rêférenceto the availability of
revenues for normal public expenditure, involved a failure to exercise the

degree and form of governmental authority in Naum appropriate to the
fulfilmentof the obligationsof tmsteeship.

366. The principal elements in this failure were as follows. In the first
place, the island and its resourceswere seen as a miningsite and a source of
revenue for essentially external -- particularly in the context of the
tmsteeship system --agencies,in particular, the Respondent State which was
responsible jointly and severallyfor protecting the interests of the inhabitants

as defined in Article 76of the United NationsCharter.

367. Article 3 of the Trusteeship Agreement providesin clear terms that:

"The Administering Authority undertakesto administer the territory in
accordancewiththe provisions of teharterandin sucha manneras to achieve
in the Territorythe basic objectivesof the Internatiol rusteeship System,
whichareset forthinArticle76of the Charter."

Moreover, Article 5 of the Agreement providesthat:

"TheAdministeringAuthority undertaketshatinthe discharge oils obligations
underArticle3 of thisAgreemen...
2. Iwill

(b) Promote, as may be appropriatein the circumstances of the
Territory, the economic, social, educational and cultural
advancement of the inhabitants:368. The system of public finance was congruent with the basic idea that
the exploitation of the phosphate was the dominant theme both in
government and in socialaffairson the island. The onlysource of revenue to
cover the normal cost of administration at the outset of trusteeship was the
royalty ofsixpenceon each ton of phosphate exported. In addition a royalty
of threepence per ton of phosphate extracted paid to the Nauru Royalty
Trust Fund was in practice treated as a budget to cover the expenses of
Nauruan education and other social services: see generally the United

Nations Visiting Missionto Trust Territories in thePacific,Report on Nauru
(1950), TrusteeshipCouncil OfficialRecords,8th Sess., Suppl. No. 3 (T/898),
pp.5-6,paras. 35-41.

369. It is a striking fact that the Australian Government was of the opinion
that the validity of the royalty paid to the Administrator by the British
Phosphate Commissioners was open to question: see the letter from the
Prime Minister's office (dated 10 May 1939) to the Secretary of State for
Dominion Affairs (Annexes,vo1.4,Annex 56); advice of the Crown Solicitor
(dated 23 April 1956) in response to a request from the Department of
Territories (Annexes, vo1.4,Annex 64). Thus the system as conceived made
no provision for the collection of revenue. The reason for this was, quite

simply,the inference from Article 6 of the Agreement of 1919to the effect
that title in the phosphate deposits was vested in an organ of the
Government, the British Phosphate Commissioners, and Governments do
not tax themselves.

370. As the Trusteeship Council constantly pointed out, there was a
persistent failure torovide a normal systemofpublic finance to cover public
expenditures: see theReportof the Tmteeship CouncilcoveringitsFourth and
Fifh Sessions 6August 1948 -22 Juiy1949,GeneralAssembiy OfficialRecords,
4th Sess., Suppl. No. 4 (A/933), p.77; Report... covering its Fint Special

Session, its Second Special Session,nd itsSixtlzand SeventIl Sessions23 Juiy
1949 - 21July 1950,GeneralAssembly OfficialRecords,5th Sess.,Suppl. No. 4
(A/1306), pp.134-5;Report... coveringifs Third Special Sessionand itsEiglzth
and Nint11Sessions 22 Novernber 1950 to 30 July 1951, General Assembly
OfficialRecords,6th Sess.,Suppl.No. 4 (A/1856), p.228;Report... Coveringifs
Fourth SpecialSessionand its Tenth and EleventltSessions,18December 1951
to 24 July 1952, GeneralAssembly Official Records, 7th Sess., Suppl. No. 4
(A/2150), p.261;Report...coveringtheperiodfrom 4 December1952to 21Juiy
1953, GenerulAssembly Official Records, 8th Sess., Suppl. No. 4 (A/2427),
pp.118-19; Report...covering rlle period from 22 Juiy 1953 ro 16 July 1954, General AssemblyOficial Records, 9th Sess.,Suppl. No. 4 (A/2680, pp.271-
2; Report... coveringthe periodfrom 17 Juiy 1954 to 22 Juiy 1955, General
Assembiy Offial Records,10thSess.,Suppl. No. 4 (A/2933), p. 225;Report...
covering the periodjiom 23 Juiy 1955 to 14 August 1956, General Assembly
Oficial Records, 11th Sess., Suppl. No. 4 (A/3170), pp.332-4; Report...
coveringtheperiod jion~ 15 August 1956 to 12 July 1957, General Assembly
Oficial Records, 12th Sess., Suppl. No. 4 (A/3595), pp.201-2; Report...
covering theworkof ifs twenty-firstand twenty-secondsessions,vol. 1,General
Assembly Oficial Records, 13th Sess., Suppl. No. 4 (A/3822), pp.98-9;
Report..2 Augwt 1958 -6 Augurt 1959, General Assembly OficialRecords,

14thSess.,Suppl.No. 4 (A/4100), pp.160-1;Report ...7August 1959 - 30June
1960, General Assembly OficialRecords, 15th Sess.,Suppl. No. 4 (A/4404),
pp.154-5; Repori...1 July 1960 - 19 July 1961, General Assembly Oficial
Records, 16th Sess.,Suppl.No. 4 (A/4818), pp.69-70;Repo rt.20 Juiy1961 -
20 Juiy 1962, General Assembly Oficial Records, 17th Sess., Suppl. No. 4
(A/5204), pp.39-41.

371. The particular preoccupations of the Trusteeship Council were the
inadequacy of the benefits derived by the Nauruans from the phosphate
industryeither directly (royalties)or indirectly (the systemofpublic finance);
the inadequacy, in terms of foreseeable long-term needs, of the Nauruan
CommunityLong-Term LnvestmentFund and the Nauru RoyaltyTrust Fund
(see theReport... 23 Juiy1955 to 14 Ai~gust1956, p.334 (Recommendations
and Conclusions)); and concern that the system of direct payments by the
Cornmissionersto cover territorial administration expenses might infiuence
I the budget of the Territory (see theport..15Augwt 1956to 12Juiy1957,p.
202:Recornmendations (para. 85)):

372. By 1962 the issue of public finance had become essentially that of
rates of the royaltypayments and the progress of negotiations on this subject.
At this period, and until the time of independence, the overriding concern
was the inequitable nature of the financial arrangements. It was also more
readily appreciated by this time that there was no sound reason for
segregating the issue of social and econornic advancement (and long-term
needs) and the question of "publicfinance".

373. The fact is that up to the time of independence the policy of the
Commissioners remained the same: to sel1the phosphate "at cost", and to
avoid acceptance of a system of taration. Moreover, the view of the
Australian Department of Territories was that it was extremely doubtfulwhether the Commissioners had any legal obligation to pay more than the
costs of the administration of the Territory (see themiring MissionReport,
1953, para. 46; Annexes, vol. 4, Annex 8). Overall, the system of public
finance, such as it was, was not based upon the long-term needs of the
Naunians. The exceptions to this --the Nauruan Community Long-Term
Investment Fund and the Nauru Royalty Trust Fund -- were small in scale
and of marginal significanceeconomically.

374. Article 76 of the United Nations Charter provides that one of the
"basic objectives of the trusteeship system ...shall be ...to promote the
political..advancement of the inhabitants of the trust territories, and their
progressive development towards self-governmentor independence ...This
obligation was incorporated into the provisions of the Trusteeship
Agreement for the Territory of Nauru both generally (byvirtue of Article 3)
and specifically(byvirtue ofArticle 5(2)(c)).

375. The experience of Nauru was essentially one of constitutional and

political immobilityfrom the inception of the Mandate in 1919and persisting
through the trusteeship until 1966.In the submission of the Government of
Nauru, the failure of the Administering Authority,and, in particular, of the
Australian Government, to make provision for the long-term needs of the
people of Nauru bears a closerelation to the lackofpolitical development.

376. This relation had two aspects. First, the absence of political
advancement was a natural concomitant and result of the narrow economic
motivation of the Administering Authority and of policies based upon an
obviously self-sewing interpretation of the provisions of the Agreement of
1919. Secondly, the Nauruan community was significantlythe less able to
express itswishes and to seek to impose constraints upon the policies of the
kespondent State.

377. There is thus an intimate connection between the Iack of political

advancement and the extreme slowness of the Respondent State to face upto
the long-term consequencesof the phosphate miningand the responsibilities
which these conscquences generated within the trusteeship system. This
connection deserves to be stressed. However,giventhat the Applicant Stateis concerned pnmarily with the consequences of the phosphate mining and

the question of rehabilitation, itwill not be necessary to do more than to
indicate the essential elements in the pattern of conduct constituting a failure
to promote the political advancement of the inhabitants of the Trust
Territory and their progressive development toward self-government or
independence.

378. As a preliminary to an examination of the facts, certain highly
relevant background factors must be indicated. First, the level of literacy in
the population of Nauru (as a result of the influence of mission schools)was
high during the material period. Secondly, the island has no history of
political instability,or foreign subversionofnoritygroups. Thirdly, inview

of the radical significance, for the future of Nauru as a homeland, of the
substantial programme of phosphate mining, the duty of the Respondent
State to bnng the population into the political and economic picture would,
according to any ordinary standards of law and morals, be more, rather than
less,onerous.

379. Indeed, in this context it can be appreciated that the option of
resettlement wasplaced before the Nauruan communityat a stage when they
were still being denied the nght to seek independent expertise or any
adequate basis for weighing the legal issues and the options available.
Finally, it is obvious that the eccentric system of government and public

finance prevailing bothunder the Mandate and in the tnisteeship period was
essentiallyinimical to the concept of public accountabilityand representative
democracy.

380. The principal facts can be presented with reasonable economy.
Shortly before independence, and when it was clear that that event was not
far off, provision was made (in the Nauru Act 1965 (Cth)) for a Legislative
Council to consist ofnine elected members, the Administrator as President,
and €ivepersons appointed by the Governor-General of Australia on the
nomination of the Administrator: see Commonwealth of Australia, Territory
of Nauru, Report for 1965-1966, Canberra, 1966,pp.6-7. The first general

election of rnembers of the Legislative Councilwas held on 22nd January
1966. The Council could make ordinances for the peace, order and good
government of the Territory, but, even at this stage, it was not permitted to
make ordinances concerningthe phosphate industry,phosphate royalties, and
the ownership and controlof phosphate-bearing land. 381. The establishment of the Legislative Council was no doubt a serious
form of political advancement,but this development appeared some eighteen
years after the beginning of the trusteeship, and the powers conferred still
did not extend to the phosphate industry. Thus the general political
immobility which had prevailed since 1947 -- and, in fact, since 1919 --
continued to apply in respect of the phosphate industry until the time of
independence.

382. The contents of the Nauru Act of 1965 (Cth) provide important
confirmation of the synthesisbetween the formal constitutional arrangements
within the island and the economic autocracy and lack of accountability

which charactensed the operations of the British Phosphate Commissioners.
Just as, historically, the Administrator had played second fiddle to the
Commissioners, so the Nauruan community was left out of the orchestra
altogether until 1966,and then allowed inonlyfor a limited repertoire.

383. The history of political immobility consistsof the central fact that for
nearly al1 of the material penod the Nauruans had been allowed a purely
advisoryrole. This wasthe role of the Nauruan Council of Chiefs (formed in
1927) and this was also the role of the Nauru Local Governent Council
constituted in 1951and composed of nine members elected by adult suffrage
and secret ballot from the district constituencies. The new body had no

functions additional to those transferred to it from the former Council of
Chiefs.

384. As far as it went, the machinery workedwell and demonstrated, if this
were necessary, that the Nauruan people were fully attuned to the
democratic process. However, consistently with the dominant pattern of
government on the island, the powers of the Council, advisorythough they
were, did not extend to the operations of the phosphate industry, and this
reservation of powersrelating to the phosphate industry survivedthe political
changes brought about by the Nauru Act 1965(Cth) and remained until the
achievement of independence.

The picture described in the previous paragraphs is amply confirmed
385.
by the successiveReports of the United Nations Visiting Missions during the
.. trusteeship: see United Nations Visiting Mission to Tnist Territories in the
Pacific,Report on Nauru (1950), TrusteeshipCouncil Official Records, 8th
Sess., Suppl. No. 3 (T/898), pp.2-4, paras. 14-30; United Nations Visiting
Mission to Trust Territories in the Pacific, Report on Nauru (1953),TrusteeshipCouncil Ofjcial Records, 12th Sess., Suppl. No. 2, pp.3-4, paras.
15-31; United Nations Visiting Mission to Trust Territories in the Pacific,
Report on Nguru (1956), Trusteeship Council Wcial Records, (T/1256),
paras. 22-47; United Nations Visiting Missionto the Trust Territories of
Nauru, New Guinea and the Pacific Islands, Report on Nauru (1959),
Trusteeship CouncilOfjcial Records, 24th Sess., Suppl. No. 4, pp.4-8, paras.
25-49 (it may be noted that this chapter is headed "economicadvancement"
in error); United Nations Visiting Missionto the Trust Territones of Nauru
and New Guinea, Report on Nauru (1962), Trusteeship Council ofsicial
Records,29th Sess., Suppl. No. 2, pp.2 (paras 7-12), 5-6 (paras. 36-55), 9-10

(paras. 84-95); United Nations Visiting Missionto the Trust Territones of
Nauru and New Guinea, Report on Nauru (1965),Trusteeshhip Council ofsicial
Records,32nd Sess., Suppl. No. 2, pp.3 (paras. 13-19),7 (paras. 43-9, 10-11
(paras. 92-8).

386. Relevant material can also be found in the Reports of the Trusteeship
Council to the General Assembly and in the Annual Reports on the
Administration of Nauru to the Trusteeship Council.

387. The overall picture of politicalmmobilityneeds to be supplemented
by reference to the small extent of Nauruan participation in the senior posts
of the administration, a feature which persisted until the period of

independence and which was the subject of adverse comment by several
VisitingMissions:see United Nations Visiting Missionto Trust Territories in
the Pacific, Report on Nauru (1956), Trusteeship Council Wcial Records,
paras. 41-47; United Nations Visiting Missionto the Trust Territories of the
Pacific,Report on Nauru (1959), TrusteeshipCouncil OSficialRecords, 24th
Sess.,Suppl.No. 4,p. 8 (paras. 47-49);United Nations Visiting Missionto the
Trust Territories of Nauru and New Guinea, Report on Nauru (1962),
TrusteeshipCouncilOfficialRecords,,Suppl.No. 2,pp.9-10,paras. 85-86.

388. The abiding source of difficultyand the central problem in the context
of political advancement remained the absenceof any Nauruan participation

inthe control, management, andfuture planning of the phosphate industry. I.THE FAILUR TOEPROMOTE ï71EECONOMI COCIAL .DUCATIO NNADCULTURAI.
ADVANCEMENT OFTHE INHABITANIS

389. Article76 of the United Nations Charter provides that one of the
"basic objectives" of the trusteeship system"shall be ...to promote the
political, economic, socialand educational advancement of the inhabitants of
the trust territoriesThis obligationwas incorporated into the provisionsof
the Trusteeship Agreement for the Territory of Nauni both generally (by

virtue of Article 3) and specifically (by virtue of Article(2)(b)). It is
noteworthy that whilstrticle 76 of the Charter brings the different forms of
advancement together in an omnibus formulation, Article 5(2)(b) separates
the other forms from "political advancement" and, incidentally, includes
"cultural advancement".

390. The submission of the Government of Nauru is that, particularly in
the circumstances of the island and the realities of the phosphate industry
prior to independence, there was a total failure to promote the economic

advancement of the inhabitants in relation to the resources available. The
evidence, presented in the earlier sections of this Part of the Memorial,
shows that the three Governrnents simply had no intention to effect the
economic advancement of the inhabitants, and that their clearly articulated
policies had an exclusive object: the economic advancement of the
agriculturalectorsof the economiesof the three partner States.

391. Of course, the inhabitants received "royalties" invarious forms, but

these payrnents were well below an equitable standard and were in reality
simply a minimal form of "compensation" for the expropriation of a major
natural resource. The "royalties"could not in this contextcount as a form of
"economicadvancement".

392. In the case of the other forms of advancement--"social,educational
and cultural"--the failure is relative to the failure to promote political and
economic aùvancement. Schools were built, and health and other seMces

were provided. It is not the intentofnthe Government of Nauru to belittle
the positivesteps whichwere taken and the workof individualofficialsin this
regard. The salient point is that what wasdone wasinadequate in relation to
the relevant standard ofegal entitlement.393. This standard logically depended upon the availability of resources
and the standard of fairness in these matters. The resources were there, but
as a result of a deliberate policy they were not made available, and
consequentlythe advances made, for exarnple,in education, were not related

to the legal entitlement of the Nauruan communityto access to the financial
benefits of the phosphate industry. Political and economic advancement
would have provided accessto those benefits and a proportionate increase in
expenditure on education and other services.

K. mURE TO BEXECT'TliE LANDRlGHTS OFTHE INDIGENOUS IE'alBPITbCtlS

394. Article 5(2)(a) of the Tnisteeship Agreement involved the
undertaking bythe AdministeringAuthority that

"itwill,in accordancewithits establishedpolicy:(a) Takeinto contheeration
custornsand usages of the inhabitantsof Nauru andrespect the rights and

safeguard theinterests, bothpresentandfuture, of the indigenous inhabitants of
theTerritory;andin particensurethatno rights over nativleand infavourof
anypersonnot an indigenousinhabitantof Naurumaybe createdor transferred
exceptwiththeconsentof thecompetentpublic auyi..."

395. This provisionwasintroduced in the firstpart ofArticle 5 as an aspect
of the discharge by the Administering Authority of its obligations under
Article 3 of the Agreement, which referred to "the basic objectivesof the
International Trusteeship System",set forth in Article 76 of the United
Nations Charter.

396. In the submission of the Government of Nauru, the legal regime
established at the outset of the League of Nations Mandate, and which
endured until the independence of Nauru, involvedsubstantial and persistent
breaches of the obligations contained in Article 76 of the United Nations
Charter and elaborated in Article5 of the Tnisteeship Agreement.

397. These breaches were of two kinds. The first consisted of the
institution, in the Lands Ordinance of 1921, of a legal regime which was
fundamentally opposed to the givingof an appropriate degree of respect to
the land rights of the indigenous inhabitants. The eccentricities of this
regime are elaborated in Part 1Chapter 1 of this Memorial (see paras. 80-
100)and the Court is respectfullyrequested to refer to that exposition. Theessence of the matter is that the interest of the individual landowner was
placed at the disposal of the British Phosphate Commissionerssubject to the
payment of "royalties"which were not the result of a process of genuine
negotiation "atam's length and whichwere in anycase unrelated to the real
value of the resources being disposedof.

398. The extent of the powers granted to the British Phosphate
Commissioners both in law and in fact is illustrated by the episode of the
exclusion of the inhabitants of the Aiwo district on the retum of the

administration at the end of the war. The documents availableshowthat the
attitude of the British Phosphate Commissioners and of the Administration
was that the interests of the inhabitants was secondary to the prerogative of
the Phosphate Commissioners(in the view of the Administrator) to take al1
the land it wanted in the Aiwo district for their purposes (Annexes, vo1.4,
Annex 59).

399. The second type of breach of the pertinent legal obligations involved
the failure to returnworked out phosphate areas to the landowners without

undue delay and the absence of any adequate procedures for dealing with
complaints arising from the unjustified retention of land by the British
Phosphate Commissioners.

400. As late as 1959,a Visiting Mission hadto suggestthat the justiciability
of landownership questions should be examined: United Nations Visiting
Mission to the Trust Territories of Nauru, New Guinea and the Pacific
Islands, Repori on Nauru (1959), Trusteesl~ipCouncil Ofj'ïcialRecords, 24th
Sess.,Suppl.No.4, p.10,para. 60. PARTIII

CHAPTER3

BREACHOFINTERNATIONALSTANDARDSAPPLICABL IETHE
ADMINlSTRATIONOF THE TRUSTEESHIP

Section1. Introduction

401. During the currency of the trusteeship regime in the Territory of
Nauru, from 1947 until 1968,the obligations of the Australian Government
and its associates were supplemented by the legal principle of the self-
determination of peoples and its congener, the right of peoples and nations
to permanent sovereignty over their natural wealth and resources. The

principle of equal rights and self-determination of peoples has alwaysbeen a
part of the law of the United Nations Charter and has thus inevitably co-
existed with the legal regime of tmsteeship. The principle of permanent
sovereignty -- in essence, a logical corollary of the principle of self-
determination -- was soon to become an emergent principle of general
international law.

402. Itis generally accepted that an instrument of international law must
be interpreted against the background of the general principles of
international law: seeD. McNair, The Law of Trearies,Oxford, Clarendon
Press, 1961, pp.466-7;Fitzmaurice,British Year Book of InternationalLaw,
vol. 30 (1953),p. 5; ibid., vol. 33 (1956),pp.225-7;Hersch LauterpacThe
Developmentof InternationalLaw by the InternationalCourt, London, 1958,

pp.27-28; Charles de Visscher,Problèmes d'interprétatijundiciaireen droit
internationalpublicParis, 1963,pp.92-6.

403. This principle must have greater cogencywhen the instmment to be
applied or construed is itself a formulation of general international law,
which is tme in the case of the regime of tmsteeship enshrined in Article 76
of the United Nations Charter and thearious tmsteeship agreements.

404. Two other preliminary matters may be considered. Inthe first place,
opponents of the principle of self-determination tend to emphasise thedifficultiesencountered in identifyinga unit of self-determination. This issue
can be dealt with briefly in the present context. Like most concepts, the
application of the principle ofelf-detennination to certain sets of facts may
reveal a penumbra of doubt, but such problems have no place in the present
proceedings. For there can be no doubt about the capacity of the indigenous

inhabitants of Nauru as a unit of self-determination and alsos beneficiaries
of the principle. This capacity is recognised in the provisions of the
Trusteeship Agreement for the Territoiy of Nauru.

405. It has also received explicit and formal recognition in the series of
General Assembly resolutions which preceded the independence of Nauru:
see Resolution 2111 (XX), adopted on 21 December 1965(roll-cal1vote of
84 to O,with 25abstentions) (Annexes, vol. 4, Annex 15); Resolution 2226
(XXI), adopted on 20 December 1966 (recorded vote of 85 to 2, with 27

abstentions) (Annexes, vol. 4, Annex 16); and Resolution 2347 (XXiI),
adopted unanirnouslyon 19December 1967(Annexes,vol. 4,Annex 17).

406. Secondly, whilstthere is sorne debate concerning the precise ambit of
the phrase "national wealth and resources", there can be no doubt that the
phosphate deposits formpart of and, indeed, for al1practical purposes, have
constituted the national wealth and resources of the people of Nauru at al1
material times.

Section2. Breachof thePrincipleof Self-Determination

407. The principle of self-determination has been confirmed by the
subsequent practice of the members of the United Nations as a part of the
law of the Charter. This practice included the Declaration on the Granting
of Independence for Colonial Countries and Peoples contained in Resolution
1514 (XV) adopted on 14 December 1960. This Resolution represents an

authoritative interpretation of the Charter and its significance has been
widely acknowledged. The fifth paragraph of the Declaration provides as
follows:

"Immediatesteps shall be taken, in Trust and Non-Self-GovcrningTerritories or
di other territories whidi have not yet attained independence, to transfer aii
powersto the peoples of those territories, without anyconditionsor reservations,
in accordance with their freelyexpressed wiiland desire, without any distinction
as to race, creed or colour, in order to enable them to enjoy complete
independence and freedom". 408. Moreover, the common first Articlesof the International Covenant on
Economic, Socialand Cultural Rights, and the International Covenant and
Civiland Political Rights,adopted bythe General Assemblyon 16December
1966, provide (paragraph 1) that: "Ail peoples have the right to self-
determination. By virtue of that,right they freely determine their political
statusand freelypursue their economic, socialand cultural development".

The status of the principle of self-determination as a principle of the
409.
United Nations Charter was further enhanced by its inclusion in the
Declaration on Principles of International Law Concerning Friendly
Relations and Co-operation Among States in Accordance withthe Charter of
the United Nations adopted by the General Assembly on 24 October 1970
(Resolution 2625 (XXV)). The first paragraph of the relevant section of the
Declaration of 1970stipulates as follows:

"Byvirtue of the principleof equal rights and self-determinationof peoples
enshriiedin the Charterof theUnited Nations,peopleshavethe rightfreely
to determine,withoutexternalinterference,their politicalstatus andto pursue
theireconomic,socialandculturaldevelopment,andeveryStatehasthe dutyto
respectth'srightinaccordancewiththe proviof the Charter."

410. In any event the Court has recognised that the principle of self-
determination forms a part of the law of the Charter and of general
international law: see the Namibia Advisory Opinion, I.C.J. Reports, 1971,
pp.31-2; and the Western Sallara'Advisory Opinion, I.C.J. Reports, 1975,

pp.31-33.It is significantthat in the relevant passage inthe Namibia Opinion,
the Court expresslyrefers to the regimes of mandated and trust territories in
the context ofself-determination (ibid.,p. 31,para 52).

411. The legal status of the principle of self-determination is generally
recognisedand the followingcitationsprovide an appropriate samplingof the
doctrine: Judge Bedjaoui, Recueil desCours,Hague Academy, vol. 130 (1970,
II), p.493; Professor Jiménez de Aréchaga, Recueil des Cours, Hague
Academy,vol. 159 (1978,1),pp.33-4, 100-11J ;udge Lachs, Recueildes Cours,

Hague Academy,vol. 169(1980,IV), pp.43-54;Judge Elias, New Horizonsin
InternationalLaw, Alphen aan den Rijn, 1980,pp.8-9, 33,95; Judge Mosler
(as he then was), TheInternationalSociev as a Legal Community,Aiphen aan
den Rijn, 1980,pp.26, 90;Pastor Ridruejo, Curso de DereclloInternacional
Publico,2nd ed.,Madrid, 1987,pp.248-56.412. The status of self-determinatiasan original principleof the Charter

has sometimes been doubted. However, Articles 73 and 76 of the Charter
apply the essence of the principle respectivelyto the categories of non-self-
governing territories and territories placed under the international
trusteeship system. As a consequence of the designation of Nauru as a
territory subject to trusteeship, the principle was expresslyrecognised to be
applicable to the affairsof the people of Nauru.

413. In the submission of the Applicant State the policies applied by the
Respondent State during the trusteeship period in relation to the phosphate
industry inevitably involved substantial breaches of the principle ofself-
determination. The economic and political circurnstancesinvolvedthe literal
disposai of the territorial foundation of the unit of self-determination
accompanied by a failure to provide an adequate sinking fund to cover the
costs of rehabilitating the worked out phosphate lands. It is difîïcult to
conceive of a more serious breach of the principle of self-detennination.

Moreover, the breach was compounded by a refusal to provide relevant
economic data either to the Nauruans.or to the Trusteeship Council uf the
United Nations.

414. The link between the implementation of self-determination and
habitabilitisobviousenough, and it is stressed inthe twoGeneral Assembly
Resolutions which preceded the final achievernent of independence. Thus
Resolution 2111(XX), adopted on 21 December 1965, "further requests that
immediate steps be taken by the Administering Authority towardsrestoring
the island of Nauru for habitation by the Naunian people as a sovereign
nation" (paragraph 4). Similarly,in Resolution2226(XXl), adopted on 20
December 1966, the General Assembly "recommends further that the
Administering Authority shouldtransfer control over the operation of the

phosphate industry to the Nauruan people and take immediate steps,
irrespective of the cost involved,towards restoring the island of Nauru for
habitation by the Nauruan people as a sovereign nation" (paragraph 3).In
the preambular part of General Assembly Resolution 2347 (XXII)
coqcerningthe termination of the Trusteeship Agreement these twoprevious
resolutions are recalled. Section3. Breachof thePrincipleof PermanentSoveteigntyoverNatural
Wealth and Resources

415. The pnnciple of permanent s'overeigntyover natural resources is a

logical corollary of the pnnciple of self-determination and has developed as
such in the work of the United Nations. Thus the common Article 1,
paragraph 2, of the two International Covenants on Human Rights adopted
bythe General Assemblyin 1966, providesas follows:

"AUpeoples may,for their own ends, freelydisposeof their natural wealth and
resources without prejudice to any obligations arising out of international
economic CO-operation,based upon the principle of mutual benefit, and
international law. In no case may a people be deprived of its own means of
subsistence."

416. It is significantthat this formulation was adopted in the relevant draft
article by the ThirdCommittee of the General Assembly in 1955. The status
of the provision is enhanced by the provisions of Article 25 of the

International Covenant on Economic, Socialand Cultural Rights:

"Nothingin the present CovenantshaUbe interpreted as impairmgthe inherent
right of al1peoples to enjoy and utilizefuUyand freelytheir natural wealth and
resources."

417. On 14 December 1962 the General Assembly adopted Resolution
1803 (XVII) which contained a Declaration on Permanent Sovereigntyover
Natural Resources of whichthe firstparagraph provided as follows:

"The right of peoples and nationsto permanent sovereigntyover their natural
wealth and resources must be exercised in the interest and well-being of the
people ofthe state concerned."

Paragraph 7 provides further that:

"Violationof the rights of peoples and nationsto sovereignty over theirnatural
wealth andresourcess contraryto the spirit andprinciplesof the Charter of the
United Nations and hinders the developmentof international CO-operationand
the maintenanceof peace."The law-makingsignificanceof this Declaration of 1962is widely accepted:

see Judge Bedjaoui, Recueil desCours, vol. 130 (1970, 1I) ,p.495-6; Lachs,
Recueil desCours, vol. 169(1980, IV), pp.55-59; Higgins, Recueil des Cours,
vol. 176 (1982,III), 287-9; Schachter, Recueil desCours, vol. 178 (1982, V),
pp.296-301; Hossain and Chowdhury (eds.), Permanent Sovereigntyover
NaturalResourcesin InternationalLaw, London, Francis Pinter, 1984,pp.1-

39;Brorns,in Bernhardt (ed.), EncyclopaediaofPublicInternationalLaw, vol.
10 (1987),306-10;and the United KingdomNote to Iraq, 4 September 1967;
BritishPracticein InternationalLaw, British Institute of International and
Comparative Law, 1967, p.121.'

418. Further affirmation of the legal status of the right of peoples and

nations to permanent sovereignty over their natural wealth and resources
may be found in Decree No. 1 of the United Nations Council for Namibia
adopted on 27 September 1974and approved bythe General Assemblyon 13
December 1974 (Annexes, vo1.4,Annex 21); the Vienna Convention on
Succession of States in respect of Treaties, opened for signature on 23
August 1978,Article 13;and the Final Act of the United Nations Conference

on Successionof States in respect of State Property, Archives and Debts, 7
April 1983,Resolution Concerning Peoples StruggiingAgainst Colonialism,
etc.,paragraph 2 (Annexes,vol.4, Annex22).

419. The facts of the present case reveal a particularly grave series of
breaches of the principle of permanent sovereigntyin circumstancesin which

not only was a major resource being depleted on grossly inequitable terms
but the extraction of the resource necessarilyinvolvedthe physicalreduction
of the homeland of the people of Nauru. The evidence reveals that the
Australian Cabinet was taking its decision to accelerate the mining of the
phosphate deposits in 1955, precisely at a time when the principle of

permanent sovereigntywas in the process of recognition as a corollary of the
long-establishedprinciple of self-deterrnination.

Howeucr,arbitraltnbunalshave adopteddiffercntrieas on the preciselegal consequenîesof Rcsolvtion 1803:
seethe T~COAbvor53 I.L.I<.389, pa80.1, 834, ihe UMCOAWard, 20I.L.M.(I!Ml)a<pp.99-
103;and theAnlAward.661.L.R51app587-8.601-2. Section4. The Status ofthe Relevant Principles
as Jus Cogens

420. On behalf ofthe Applicant State it issubmitted that both the principle
of self-determination and the principle of permanent sovereigntyof nations
and peoples over their natural wealth and resources have the status of

peremptory norms (ius cogens). In the alternative, it is submitted that the
relevant principles havethat statusas a result of their functional association
with the fundamental principles of the international trusteeship system,
whichprinciples havethe status ofperemptory noms (see paras. 253-261).

421. On this basis -- as already stated in paragraph 241 above -- the
Government of Nauru reserves its position on the question of the validity of
the Nauru Island Agreement of 1919. This reservation is particularly
necessaryin viewof the provisionsof Article 64 ofthe Viema Convention on
the Lawof Treaties:

"Ifa new peremptorynormof general internationallaw emerges,any existing
treaty whiisin confiictwiththatnormbecomesvoidandterminates."

Section 5. TheInterpretation ofthe United Nations Charter and the
Tmsteeship Agreement:AnAlternativeApproach

422. The position of the Applicant State is tbat the principle of self-
determination of peoples has formed a part of the lawof the United Nations
Charter from the outset and, further, that Artic76 of the Charter and the
various trusteeship agreements are formulations of a regime of general
international law. At the same time the Government of Nauru considers it
necessav to draw the attention of the Court to an alternative position.

423. This alternative approach involves an acceptance of the possibility
that the principle of self-determination crystallised as a legal principle
subsequentlyto the constitution of the international tnisteeship regime. The

appropriate mode of interpretation, it is respectfully submitted, would be
that adopted bythe Court in twostrikingpassages to be found respectivelyin
the Advisory Opinion in the Namibia case and the Judgment in the Aegeun
Sea case.424. In the Advisory Opinion the Court stated the followingprinciple of

interpretation:

"Mindhil as it is of the primary necessity of interpreting an instrument in
accordance with the intentions of the parties at the time of its conclusion, the
Court isbound to take into accountthe fact that the concepts embodiedinArticle
72 of the Covenant -- 'the strenuous conditions of the modem world' and 'the
weli-beingand development'of the peoples concerned --were not static,but were
bydefinitionevolutionary,as also,therefore, wasthe concept of the 'saaed trust'.
The parties to the Covenant must consequentlybe deemed to haveaccepted them

as such. That iswhy,viewingthe institutions of 1919,the Court mut take into
consideration the changes which have occurred in the supemening balf-century,
and its interpretation cannot remain unaffected by the subsequent development
of law,though the Charter of the United Nations andbywayof customarylaw.'
(1.C.J.Reports, 1971,p.31,para. 53.)

425. The principle expressed in the final sentence of this passage is clearly
applicable to any changes in the law which mayhave occurred subsequently
to the adoption of the United Nations Charter.

426. The same mode of interpretation of standard-setting instruments of

continuing duration wasadopted bythe Court in theAegeanSea case:

"While there may weU be a presumption that a person transferring valuable
property rightsto another intendsonlyto transfer the rightswhichhe possesses at
that the, the case appears to the Court tobe quite othenvise when a State, in
agreeingto subject itself to compulsoryprocedures of paufic settlement, excepts
from that agreement a category of disputes which, though covering dearly
specified subject-matters, is of a generic kind. Once it is established that the

expression 'the territorial status of Greece' used in Greece's instrument of
accessionas a generic termdenoting anymatters comprisedwithin the concept of
territorial status under general international law, the presumption necessarily
arises that its meaning was intended to follow the evolution of the law and to
correspond with the meaning attached to the expressicoby the lawin force at any
giventime. This presumption,in the viewof the Court, is even more compelliug
whenit is recalied that the 1928Act wasa convention forthe pacificsettlement of
disputesdesignedto be of the most general kind and of continuingduration, for it
hardly seems conceivable that in sucb a convention terms like 'domestic

jurisdiction' and 'territorial status' were intended to have a fuced content
regardlessof the subsequent evolutionof international law."
(I.C.J.Reports, 1978,p.32,para. 79.)427. It would appear that this logic applies n fortiori to standard-setting
instruments involvinghuman rights and the equality of peoples. The criteria
of performance of the duties of trusteeship specified in general terms in
Article 76 of the Charter cal1for decision-makingwhich takes account of
developments in moral, social,and legalvalues.

428. It may be recalled that the European Court of Human Rights has
found it necessary to apply a similar approach to interpretation and
application of the European Conventionon Human Rights. Thus in the Tyrer
Case, the Court observed: "In the case before it the Court cannot but be

inûuenced by the developments and commoniy accepted standards in the
penal policy of the member States of the Council of Europe in this field
(Publications of the European Court of Human Rights, Series A, No. 26,
para. 31).

429. In any event, and taking the most conservativeviewof the matter, the
principles of self-determination and of permanent sovereignty over natural
resources constitute objective international standards providing aids to the
interpretation of theTmsteeship Agreement and the relevant provisions of
the United Nations Charter (see the Dissenting Opinion of Judge Jessup,
Soutll-WestAfnca Cases (SecondPhase),I.C.J. Reports, 1966,p.6 at pp.432-
433). PART III

CHAPTER4

DENLQL OFJUSTICELAT0 SENSU

430. In its Application in the present case (paragraph 46) the Governrnent
of Nauni claims"that Austrzlia, through its failure to make any provisionor
any adequate provision for the rehabilitation of the phosphate lands worked
out under Australian administration in the period before 1 July 1967,and

havingregard to the terms and conditions on whichAustralia allowed those
lands to be exploited, engaged in a denial of justice in the broad sense
(denial ofjustice lato sensu)withrespect to the Naunian people".

431. The concept of denial ofjustice inthe broad sense is a familiar aspect
of the law of Stateresponsibiliîyand is commonlyapplied in the context of
the treatment of aliens and their property by host States. The Court will
recall that the concept is applicable to the conduct of both judicial and non-
judicial organs: see, for example,M.M. Whiteman, Digest of International
Law, vol. 8, Washington, 1967,pp.726-7;Fitzmaurice, British Year Book of

InternationalLaw, vol.32 (1955-6),p.81,fn. 3 (also reprinted in Fitzmaurice,
The Law and Procedureof the International Court of Justice, Cambridge,
Grotius, 1986,1,p.321,fn.3).

432. The essence of denial ofjustice is the incidence of gross and manifest
error in the application of the relevant legal standards, often associated with
a policy of arbitrariness or discrimination, and, indeed, caused by the
operation of such a policy. This cause of action appeared in the final
subrnissions of the Belgian Government in the Barcelona Traction Case

(SecondPhase), LC.J.Reports, 1970,p.4,at pp.18-22.

432. In relation to the specific allegations of fact concerning the
bankruptcy proceedings in Spain culminating in the sale of the property in
question to aprivate Spanish group,the BelgianGovernrnent formulated the
' followingsubmission: PART III

CHAPTER4

DENLQL OFJUSTICELAT0 SENSU

430. In its Application in the present case (paragraph 46) the Governrnent
of Nauni claims"that Austrzlia, through its failure to make any provisionor
any adequate provision for the rehabilitation of the phosphate lands worked
out under Australian administration in the period before 1 July 1967,and

havingregard to the terms and conditions on whichAustralia allowed those
lands to be exploited, engaged in a denial of justice in the broad sense
(denial ofjustice lato sensu)withrespect to the Naunian people".

431. The concept of denial ofjustice inthe broad sense is a familiar aspect
of the law of Stateresponsibiliîyand is commonlyapplied in the context of
the treatment of aliens and their property by host States. The Court will
recall that the concept is applicable to the conduct of both judicial and non-
judicial organs: see, for example,M.M. Whiteman, Digest of International
Law, vol. 8, Washington, 1967,pp.726-7;Fitzmaurice, British Year Book of

InternationalLaw, vol.32 (1955-6),p.81,fn. 3 (also reprinted in Fitzmaurice,
The Law and Procedureof the International Court of Justice, Cambridge,
Grotius, 1986,1,p.321,fn.3).

432. The essence of denial ofjustice is the incidence of gross and manifest
error in the application of the relevant legal standards, often associated with
a policy of arbitrariness or discrimination, and, indeed, caused by the
operation of such a policy. This cause of action appeared in the final
subrnissions of the Belgian Government in the Barcelona Traction Case

(SecondPhase), LC.J.Reports, 1970,p.4,at pp.18-22.

432. In relation to the specific allegations of fact concerning the
bankruptcy proceedings in Spain culminating in the sale of the property in
question to aprivate Spanish group,the BelgianGovernrnent formulated the
' followingsubmission: "Considerinthata large numbeof decisionsof theSpanishCourts arevitiated
bygrossandmanifesterrorin the applicatiofpanishlaw,by arbitrarineor
discriminationc,onstitininternationalwdenidsofjustice latosensu."

434. This proposition, it is respectfully submitted, is readily applicable,
mutatis mutandis, to the policies, decision-makingprocedures, and specific
transactions, of the Australian Government and the British Phosphate
Commission, inrelation to the obligations of the legal regime constituted by
Article 76 of the United Nations Charter in conjunctionwith the Trusteeship
Agreement for the Territory of Nauru.

435. The formulation of the Belgian Govemment reported above, has not
been the subject of adverse comment from professional opinion, and the
concept of denial ofjustice is not a priori restncted to the relations of foreign
investors and host States. The concept is no less appropriate to the relations
of a host comrnunity(the indigenous inhabitants of a Trust Territory) and
any external actor to whom the powers of govemment have been delegated
suchas an Administering Authority.

436. The analogy is the more compelling whenthe foreign agency consists

in significant part of an economic enterprise (the British Phosphate
Commissioners). It can surelymake no legal differencethat the enterprise is
public rather than private or that the risk-taking associated with enterprise
and investmentwascompletelyabsent.

437. In the submissionof the Government of Nauru whatmatters for legal
purposes is the existence of a frameworkof legal duties and relationships and
a situation in whichthe legal securityof one side is determined by the organs
and procedures of the other side, in this case, the Respondent State. The

framework of duties and relationships in the present context is set by the
TrusteeshipAgreement and, giventhe objectives set forth in Article76 of the
Charter, the concept of denial ofjustice is particularlyappropriate.

438. In the context of the policies and decision-makingprocedures adopted
by the Respondent State in the material period, the denial of justice was
manifested in severalways. The systemof leases of phosphate beanng lands
involved substantial errors of law as to the correct mode of resolving the
tension between the objectives of the Nauru Island Agreement of 1919 and

the Trusteeship Agreement. Whatever the correct viewof the legal interest
which the British Phosphate Coim~issionershad in the phosphate deposits,the modalities adopted in the Lands Ordinances of 1921and 1927enacted by
the AustralianAdministrator couldnot be legallyjustified.

439. The rights of the landowner as such were subjected to a form of
conditional expropriation. The "leases"were not negotiated but imposed.
The "royalty"was not a result of a contractual bargain but was a lump sum
fixed by statute. The (limited) protection of landowners' interests in the

future amenity of worked-out lands, previouslyapplicable under German
law,was simplyrepealed and not replaced: see paras. 16,22-27.

440. It is a striking fact that the so-called "royalty" waspaid not as of right
but as of concession:see the legal opinion of the Australianovernment on
the application of Nauru Island Agreement of 1919 (para. 62). The
Australian view, which was maintained until the the of Naunian
independence, was that because the British Phosphate Commissioners had
title to the phosphate, therefore no royalty was payable. Even if this
assumption were correct(which is not admitted), the conclusionis impossible

to justify, since a right to exploit the phosphate did not involve a right to
expropriate the rightsof the landownersas such.

441. Indeed the 1919 Agreement itself clearly allowedfor royalties to be
paid. The failure to pay adequate royalties flowednot from the terms of the
Agreement as such, but from the refusal of the British Phosphate
Commissionersto pay such royalties,and from the failure of the Respondent
State toinsiston them. (See alsoparas. 504-515.)

442. In the outcome, the "royalty"paid was not a royalty in fact, and the

scale of payment bore no relation to the normal standard of compensation
for expropriatedproperty.

443. Al1these elements combined to present a compound denial ofjustice.
There is yet a further dimension to the conduct of the Respondent State.
The Lands Ordinances provide no machinery by which the landowner could
challenge the procedure of the taking of phosphate lands by means of
compulsory "leases". No procedure was available to test either the
compatibility of the Lands Ordinances with the relevant international
standards or the adequacy of the "compensation" provided for the

interference withthe rights ofthe landowner. PARTIII

ABUSEOFRIGHTS ANDACTSOFMALADMINISTRATION

444. There are certain cases in which the "causes of action" -- the legal
bases of the claim --emerge more or less spontaneously from the evidence,
whilst in other cases the bases of claim, valid though they may be, are very

much legal constructions erected over the facts. The present case is a
strikingexample of the former classof case. The conduct ofthe Respondent
State constitutes a perfect paradigm of abuse of rights in the form of acts of
maladministration within the context of the powers conferred upon the
AdministeringAuthority inaccordance with Article 76 of the United Nations
Charter and the Tmsteeship Agreement for the Territory ofNauru.

445. The principle of abuse of rights has been recognised by the

Permanent Court of International Justice in the case concerning Certain
GermanInterests inPolish UpperSilesia,(1926) P.C.I.J., Ser. A., No. 7. This
decision related to a situation closelyanalogous to the role of the Australian
Government and its partners in Nauru. The Court found that Germany
retained certain powers in Upper Silesia in the period between the coming
into force of the Peace Treaty and the transfer of sovereignty. In the words
of the Permanent Court:

"Germany undoubtedlyretained until the actual transfer of sovereigntythe right
to dispose ofr property, and onlya misuse of thi right could endow an act of
alienation with the charactarbreachofthe Treaty; such misuse cannot be
presumed, and it rests with the party who Statesthat there has heen such misuse
to provehis statement."

(P.C.I.J., Ser.A., No.7, p.30.)

446. Similar references, also in the context of the exercise of certain
powers of government in a particular territoiy, appear in the twoJudgments
of the Permanent Court in the FreeZones Case:see P.C.I.J.,Ser. A, No. 24
(1930),p.12;and Ser. A/B, No. 46 (1932),p.167.447. In the submission of the Applicant State, abuse of rights is a general

principle of law and thus a general principle of international law. This
submission is reflected in the authoritative opinions of publicists of various
nationalities: see, for example, Sir Gerald FitzmauriceBritishYearBook of
InternationalLaw, vol. 30 (1953),p.53; Bin Cheng,GeneralPrinciplesof Law,
London, Stevens, 1953, pp.121-36; M.M. Whiteman, Digestof International
Law, vol. V, Washington, 1965, pp.224-30; Sir Hersch Lauterpacht, The
Developrnentof InternationalLaw by the InternationalCourt, London, 1958,
pp.162-5; Charles Rousseau, Droit internationalpublic, Paris, 1971, vol. 1,
pp.51, 382-384 (and see also the cautious but carefully open-minded
comments by Judge Ago, "SecondReport on State Responsibility", Yearbook
of theI.L.C.,1970,II, p.177at pp.193-4,paras. 48-49).

448. The doctrine of abuse of rights is implicit in at least one of the

judgments of the present Court. As Fitzmaurice has pointed out (BritishYear
Book of I~zternationaLlaw, vol.30 (1953),p.53), the doctrine is implicit in the
passage from the Judgment in the UnitedStatesNationalsinMorocco case in
which the Court stated that "The power of making the valuation rests with
the Customsauthorities, but it is a power whichmust be exercisedreasonably
and in good faith"(I.C.J. Reports, 1952,p.212).

449. In the submissionof the Government of Nauru the principle of abuse
of rightscomprehends three patterns of conduct:

(a) The misapplication of powers of administration and, or, legislation,
with the result that the interests of the administration are persistently
preferred to those of the legallyprotected interests of the inhabitants
of the territory concerned.

The wilful and persistent action, by an administration and the
(b)
Government for which it acts, to frustrate the systemof international
accountability applicable to the territory administered by various
means, and, in particular, by means of the refusa1to report essential
data concerning the policies of the administration and their
implementation.

(c) The formulation of policies and the taking of key decisionsrelating to
the administration of a territory subject to international standards of
treatment without taking anyaccount of those international standards. 450. Inthe submission of the Government of Nauru the responsihility of
the Respondent State for abuse of rights anses from acts of
maladministration falling severally within each of these categories of

conduct. The substantial evidence has been reviewed in Part 1 ahove and
also in Chapter 2 of this Part of the Memorial, andt willsufficeto draw the
attention of the Court to certain leading elements in the picture.

451. The evidence of the persistent preference of the Government of
Australia for itswn interests at the expense, quite literally, of the legally
protected interests of the indigenous people of Nauru, consists (in part) of
the Australian viewthat the legal regime of trusteeship simplydid not apply
to the phosphate industry. This view persisted until the time of
independence, a fact which is established by the Australian Solicitor-

General's paper dated 7 June 1965,which appears as Annex J in the Record
of Negotiations,31stMay- 10thJune 1965behveenDelegationof NauruLocal
Government Council and Australian Qj7cials RepresentingAdministering
Authority (Annexes, vol. 3, Annex 2). The position of the Australian
negotiators reflected the views of the Solicitor-General: see the Record of
Negotiations, Annex K, page 1,where it is stated that "there is no obligation
under the Naum Agreement to pay royalties for phosphate mined at Nauru

452. The second type of abuse of rights --the deliberate and substantial
fmstration of the system of international accountability-isevidenced bythe

extensive material relating to the refusal of the Australian Government to
divulge critical data concerning the financial aspects of the phosphate
industry. This evidence has been reviewed in detail elsewhere (se; paras.
542-559). The persistent refusal to provide information prevented the
Trusteeship Council from exercising its responsibilities effectively in
accordance with the legal standards prescribed hy Article 76 of the Charter
and by the Tmsteeship Agreement. The non-disclosure of essential data in
this contextconstitutes aclassicexample of maladministration.

453. The third type of abuse of rights is a no less egregious case of
maladministration. In 1955the Australian Cabinet was consideringwhether
or not to accelerate the production of phosphate on Nauru. No single

reference is made in the course of deliberation to the responsibilities of the
Australian Government by virtue of the regime of trusteeship. In al1
probability this was a normal pattern in policy-making concerning the
phosphate deposits on Nauru. The consistent Australian view wasthat since1919 the phosphate was no longer any concern of the Naunians. (See
Annexes, vo1.4,Annex 63.)

454. If these three forms of abuse of rights and maladministration are
taken together, what is revealed is a wilful disregard of the trusteeship
regime as a legal process. In the Nauruan context the rule of law, the idea of
due process, was constituted bythe international legal regime of trusteeship,
and accountability to the United Nations. The crucial aspect of the Nauruan
economy, the phosphate deposits, which represented the long-term interests
of the inhabitants of the trusteeship territory, was excluded from the due
process of law in the form of the trusteeship regime. The granting of
"royalties"wasa completelyarbitrary process whichcould notbe evaluated in
the absence of the essential economic data relating to the phosphate

industry.

455. In the Case ConcemingElettronicaSicula S.P.A.(ELSI) the Chamber
of the Court (in the context of a treaty formulation) defined "arbitrariness" as
"not so much something opposed to a rule of law, as something opposed to
the rule of law" (I.C.J. Reports, 1989, p.76, para. 128). Such a degree of
arbitrariness characterised the attitudes and policies of the Australian
Government and the British Phosphate Cornmissioners throughout the
period. At al1times decision makingwasbased either upon the viewthat the
trusteeship regime did not apply to the phosphate industry tout court (as a
result of an entirely unreasonable construction of the Nauru Island
Agreement of 1919), or upon the neglect of the standards of trusteeship

altogether. Consequently,the abuse of rights involveda substantialfailure to
observe due process of law. It also involvedan unattractive double standard,
since Australian entitlement to administer Nauru depended upon the
existence of the trusteeship, whereas the Respondent State looked
exclusivelyto the benefits of its presence as administrator, and ignored the
concomitant responsibilitiesof trusteeship.

456. In conclusion, the Applicant State claims :bat Australia, through its
failure to make any provisionor anyadequate provisionfor the rehabilitation
of the phosphate lands worked out under Australian administration in the
period of United Nations trusteeship and havingregard to the conditions on

which Australia allowed those lands to be exploited, abused its rights over
the Territory of Nauru and with respect to the Nauruan people, and, by
reason of its improper and arbitrary conduct as in Nauru, engaged in acts of
maladministration, contrary to the principles of international law. PARTIII

CHAPTER6

BREACHOF THE DUTIESOF APREDECESSORSTATE

Section 1.A General Principle of Responsibility

457. From time to time claims have been made that a predecessor State
which transferred territory to another, or which granted independence to or
othenvise recognized the independence of a new State formed on its
territory, was liable for injurious consequences to the latter State by reason
of harm caused to, or the damaged or dangerous state of, the territory in
question.

458. Whatever the general position with respect to claims of this kind, the
argument that a State which is responsible for the administration of territory
is under an obligation not to cause long-term damage or harm to the
territory, or a least under an obligation to compensate for any such harm,

is much stronger where the injured State is already in a legal relationship
with the injuring State-- especially when the nature and content of the
relationship relatesdirectly to the legal interest which suffers harm. It is
submitted that it is a general principle of international lawthat a State which
is responsible for the administration of territoryunder an obligation not to
bring about changes in the condition of the territory which will cause
irreparable harm to, or substantially prejudice, the existing or contingent
legalinterest of another State in respect of that territory.

459. Such a principle underlies rules recognized ina number of analogous

areas of the law. These include:

(a) the obligation of a belligerent occupant not to bring about
fundamental changes in the regime or demography of the occupied
territory (cfegulations annexed to the Hague Convention respecting
the Lawsand Customs of War on Land, 18 October 1907,Articles 43,
55,56); (b) the obligation of a State carrying out operations on the territory of
another State with its consent to compensate for substantial injury
caused to the receiving State's territory, according to the normal
principlesof State responsibility;

(c) the obligation of a State whichhas agreed to cede territory to another.
not to derogate from the grant by substantially and materially
damaging or injuring the territory in question, and to transfer public
property located in or properly attributable to the successorState to it
without payment. (See Viema Convention on State Succession in
Respect of State Property, Archives and Debts, 7 April 1983,Articles
9, 11,13:text in (1983)22 I.L.M. p.304.)

460. The existence of an obligation of this general category or class was
also recognized by the Permanent Court of International Justice in the two

German Settlers cases. Botli cases involved the question of the extent of
German authority, subsequent to the conclusion of the Treaty of Versailles,
to alienate public land in territory whichwas to be ceded to the new State of
Poland under Article 87of the Treaty.

461. In German Settlersin Poland, the Court affirmed that the relevant
German authorities, in the period prior to transfer, were "competent to
undertake transactions falling within the normal administration of the
country":P.C.I.J. Ser.B No. 6 (1923),p.28. In similarvein,the Court went on

to say that "the Prussian State was not forbidden to perform the usual
administrative acts under its pre-existing contracts with private individuals,
especially when the delay in the performance of such acts had been due to
the disturbed conditions arisingfrom the war" (P.C.I.J. Ser. B No. 6 (1923),
p.40.) These staternents plainly imply that there were lirnitson the
administrative powers of the German authorities during this period -- even
though the Treaty had notyet comeinto force.

462. The case of Certain German Settlersin Polish UpperSilesia involved

the pzriod after the entry into force of the Treaty of Versailles, and before
the transfer of the territory.Again, Germany continued to.be competent to
administer the territoryduring this period, but again its cornpetence to do so
- wasnot unlimited. The relevant provisionsof the Treaty, the Court held ...

"cannotinvolve the immobilizationof aii movaband immovableproperty
belongingto theStateduringthe periodfromthedayof the comingintoforceof
the PeaceTreatyuntilthe transferof sovereigntyoverUpperSilesia. Germany undoubtedlyretaineduntilthe actualtransferof sovereignrightto dispose
of herproperty,andonlya misuseof thisnght couldendowan act of alienation
withthecharacterofabreachof theTreaty..."

(P.C.IJ.Ser.A No7 (1926),p.30.)

The Court went on to saythat "suchmisuse cannot be presumed, and it rests
with the party who states that there has been such misuse to prove his
statement" (ibid.).

463. It should be noted that in that case the land grants concerned
extended to onlya fraction of the private land in Upper Silesia, and that the
land was not itself harmed in anyway by the transfer: it simplybecame part

of a larger pool of agnculturai land in pnvate ownership, and subject to the
lawfulacts ofeminent domain of the PolishState.

Section 2. Application of the Principle
in the Present Case

464. The "transfer" of the Island of Nauru to the Applicant State on
independence is not to be regarded as a case of State succession operating
against an assumption of a clean slate. The independence of a trust territory
is not a case of transfer of territory, since, first, the Administering Authority
has no sovereignty over the territory, and, secondly, the people of a trust
territory are an already existinginternational entity to whom duties are owed
by the Administering Authority, both under the Trusteeship Agreement or

othenvise under general international law. The emergence of a new State
from the status of a trust territory in accordance with the principle of self-
determination embodied in the trusteeship arrangements is not the
emergence ab initio of an entirely new legal entity, butthe emergence from a
state of dependence of a people whose rightsand status are already distinctly
recognized,and to whichthe predecessor State isin principle accountable.

465. Thus the present claim is stronger again than that whichwas asserted

in thePolish Settlerscases. There the onlyrelevant relationship whichexisted
between Germany and Poland wasthat constituted by the agreement to cede
the territory in Article87-88 of the Treaty of Versailles. In the present case
the arrangements leading to independence were the outcome of an existing
legal relationship betweenthe parties. That relationship had a directbearingon the disposition of the naturai resources of Nauru, as has been
demonstrated (see para. 415-419 above). It gave rise to obligations towards
the Nauruan people, and the eventual grant of independence constituted only
part performance of those obligations.

466. Moreover the Court in the Polk11Settlm cases was influenced by the
principle of respect forprivate rights of the individuals concerned, rights on
which they had relied in settling in the territory.n the case of Nauru, the

BritishPhosphate Cornmissioners -- despite Australian claimsto the contras,
(see paras. 334-336) --werc not a private entity such as a Company. They
were nominees of the partner Governrnents, accountable to them, and
required to operate (as nearly as possible) on a non-profit basis. They were
not separately incorporated and had no limited liability. Theypaid no taxes.
As against the Nauruan people, they are not to be treated as the independent
holders of private vested rights,separate and distinct from the position of the
Administering Authority.

467. That the predecessor State does owe a general duty of this kind is
confirmed by the settled international practice with respect to Namibia.

Decree No. 1 of the United Nations Council for Namibia (Annexes,vo1.4,
Annex 21), which has been affirmed and endorsed both by the Security
Council and the General Assembly (see e.g. Generai Assembly Resolution
9/42, 5 December 1984, para. 14), expressly envisages that "the future
Government of an independent Namibia"may take proceedings to vindicate
its rightsnder the Decree (see para. 6 of the Decree). That Decree is not
merely a self-contained legislative act,but is a reflection of a general legal
concern to preserve the natural resources of a territory from depredation by
the State for the time being responsiblefor its administration, and which has

an internationally-recognizeddutyto the people of the territory to treat their
interests as paramount. (Compare W.M. Reisman, "Reflections on State
Responsibility for Violations of Explicit Protectorate, Mandate and
Trusteeship Obligations" (1989) 10 MichiganJournalof InternationalLaw
p.231 at pp.231-2. See also United Nations Conference on Succession of
States in respect of Sate Property, Archives and Debts, Resolution
Concerning Namibia, (1983)22 1.L.M 305, expresslyrese~ng "al1the nghts
of the future independent State of Namibia":for the text of the Resolution
see Annexes,vol. 4,Annex23.) Section3. Conclusion

468. To summarize, if the clairnsreferred to in paragraphs 457-458above
are the product of a principle of law whichrequires a State not to use itsown
territory in such a way as to cause substantial harm to a successor,then the
present claim presents a much stronger case, since under the regime of

trusteeship, the territory used didnot belong to theAdministeringAuthority,
and since the people of the territory was not, with respectto that territory, a
third party in the sight of international law. It was, quite simply, their
territory, tlieirpatrimony, that wasinvolved. PARTIII

CHAPTER7

THEUNLAWFULDISPOSALOFTHEOVERSEAS ASSETSOF THE
BRlTlSHPHOSPHATECOMMISSIONERS

Section1. Background:TheDisposa1ofAssetsin 1987

469. In accordance with the Agreement relating to the Phosphate Industry
of 1967 (Annexes,vol. 3,Annex 6),between the Nauru Local Government
Council and the Governments of Australia, New Zealand and the United
Kingdom, the assets of the British Phosphate Commission on Nauru were
transferred to the Government of Nauru in 1970(after the finalment for
these assets had been made). That transaction related exclusivelyto the
operations and assets on Nauru. Subsequently,various assets of the British
phosphate Commissionersremained in being overseas, such assets consisting

ofproperty and portfoliosof shares.

470. In1987,the Governments of Australia, New Zealand and the United
Kingdom concluded an agreement effecting the windingup of the affairs of
the British Phosphate Commissioners, and the disbursement of its assets
(Annexes,vol. 4,Annex31).

Section2. TheNauruanResponse

471. The Government of Nauru was disturbed to hear of the impending
disposa1of the overseas assets of the British Phosphate Commissioners and
reacted promptly. In a Note dated 5 January 1987 to the Australian
Government the Government of Nauru expressed its interest in the assets
and requested information. Sofar as is material the text of the Note reads as
follows:

The Department has the further honour to request the Australian High
Commission informationon whether the Press reports relating to the windingup
of the B.P.C. are [rue, and if so, wheiher there is anytentative time schedule for
the windingup. The Government of thelic of Nauru is interested to have PARTIII

CHAPTER7

THEUNLAWFULDISPOSALOFTHEOVERSEAS ASSETSOF THE
BRlTlSHPHOSPHATECOMMISSIONERS

Section1. Background:TheDisposa1ofAssetsin 1987

469. In accordance with the Agreement relating to the Phosphate Industry
of 1967 (Annexes,vol. 3,Annex 6),between the Nauru Local Government
Council and the Governments of Australia, New Zealand and the United
Kingdom, the assets of the British Phosphate Commission on Nauru were
transferred to the Government of Nauru in 1970(after the finalment for
these assets had been made). That transaction related exclusivelyto the
operations and assets on Nauru. Subsequently,various assets of the British
phosphate Commissionersremained in being overseas, such assets consisting

ofproperty and portfoliosof shares.

470. In1987,the Governments of Australia, New Zealand and the United
Kingdom concluded an agreement effecting the windingup of the affairs of
the British Phosphate Commissioners, and the disbursement of its assets
(Annexes,vol. 4,Annex31).

Section2. TheNauruanResponse

471. The Government of Nauru was disturbed to hear of the impending
disposa1of the overseas assets of the British Phosphate Commissioners and
reacted promptly. In a Note dated 5 January 1987 to the Australian
Government the Government of Nauru expressed its interest in the assets
and requested information. Sofar as is material the text of the Note reads as
follows:

The Department has the further honour to request the Australian High
Commission informationon whether the Press reports relating to the windingup
of the B.P.C. are [rue, and if so, wheiher there is anytentative time schedule for
the windingup. The Government of thelic of Nauru is interested to have this information and requests that it be consulted in matters relating to
disbursement of the assets of the B.P.C. The Government of the Repubiic of
Nauru feelsthat such consultationwouldbe particularly relevantin the context of
the pendig hearings of the Commission of Inquiry into the rehabiitation of the

phosphate worked-out lands, issuedby the Cabinet of the Republic of Nauru on
the 3rd of December 1986,whose issue was already notiîïed to the High
Commission."

472. In its reply dated 20 January 1987 (Annexes, vol. 4, Annex 80) the
Australian Government confirmed"that arrangements are in hand and that it

is proposed that the Partner Governments, including the Australian
Government, signan agreement shortlyto bring this about".

473. The reaction of the Government of Nauru was to affirm its interest in
the assets of the British Phosphate Cornmissioners. In its Note of 30 January

1987(Annexes,vol.4,Annex 80) Nauru stated the following:

"The Department of Eaernal Affairs of the Republic of Nauru presents its
compliments to the Australian High Commission and has the honour to
acknowledgewith thanks the High Commission's Noteno. 3/87 dated îû January
1987in respect of the Department's query concerningthe earlier press reports on
the windig-up of the BritishPhosphate Commissioners.

The Department of External Affairs has the further honour to note that an
agreement will be signed shortly among the three partner Governments to
facilitatewinding-upof the affairsof the British Phosphates Commissioners.The
Department expresses regret that the three partner Governments are
contemplating the windig-up of the British Phosphates Commissioners and
distriburioof their funds at the present juncture, when Nauru has set in motion
an independent and impartial Commissionof Inquiry into the question of

rehabiüitation and restoration of the phosphate lands worked-out before the
independence of Nauru.
In view of the above, the Department of External Affairs requests the three
partner Governments of Australia, New Zealand and the United Kingdom to be
good enoughat least to keep the funds of the British Phosphates Commissioners

intact without disbursement, until the conclusion of the task of the said
Commissionof Inquiry.
The Department further requests the three partner Governments that the office
Records and other documents of the British Phosphates Commissionersmay
kindlybe kept preserved and thatthe said Commissionof Inquirybe permitted to

haveaccessto and use ofthese Records and documents,in so far as theymay be
relevant andusefulfor the fulfümentof the mandate of the said Commission."474. The issue was pursued by the Naunian Government after the
conclusion of the tripartite Agreement on the disposal of the assets on 9
Febmary 1987. His Excellency President Hammer DeRoburt raised the
question in a letter dated 4 May 1987to the Honourable Bill Hayden, the
then Australian Minister for Foreign ~ffairs.'

475. Mr Hayden'sresponse, ina letter dated 15 June 1987(Annexes,vol.4,
Annex 80)wasas follows:

"1refer to your letter dated 4 May regarding the disposal of the assets of the
British Phosphate Commissioners.

The agreement signed on9 February 87 which completed the wind up process
followedtermination of the BPC'sfunclionsin 1981. The BPC and the Partner
Governments have discharged fairldl outstanding obligations. The residual
assets of the BPCwere not derived fromils Nauru operations.
Australianpariiamentary practice requires that monies accruhg to the
Government are credited to consolidated revenue for allocation in accordance
with normal budgetary procedures. That courses foliowedin the case of the
BPC residualassets.

The Australian Government is carefullyexaminingNauru's request for Australia
to assist the Commission of Inquiry. We expect shortly to be in a position Io
advisethe eaent 10whichAustralia wiilbe able to meet that request."

476. This letter evoked the following comment from President Hammer
DeRoburt in a letter dated 23July 1987(Annexes,vol.4,Annex 80):

"1am sure, taliing into account my Government's knowledge of the manner of
accumulationof surplusunds by the B.P.C., that you wouldnbe surprised if 1
were to saythat 1fmd it difficultto accept your statement that the residual assets
of the B.P.C. were not derived in part from ils Nauru operations. 1 shd not,
however,pursue that here but leave it perhaps for another place and another
the."

477. In the result the Government of Nauru clearly affirmed its legal
interest in the disposal of the assetsof the BritishPhosphate Commissioners.
ss

'Unfonunatclhsfilcopyothat terrerbeentort Section3. The Nauruan Claims

478. In the submission of the Government of Nauru this correspondence
puts on record the Nauruan claim to an equitable share of the value of the
assets which were marshalled prior to distribution in accordance with the
trilateral Agreement of1987.

479. The "Agreement between the Government of Australia, the
Goverment of New Zealand and the Government of the United
Kingdom ..to terminate the Nauru Island Agreement 1919 concluded on 9

February 1987(Annexes,vol.4, Annex 31) is a remarkable document by any
standard of comparison.

480. It refers to funds derived from the administration of a trust territory
but contains no reference to the Trusteeship Agreement. It involves the
marshalling and disposalof assets in which the Republic of Nauru has a legal
interest but excludesNauruan participation in the procedure.

481. Most remarkable of all, the Agreement recognises the existence of a
Nauruan legal interest. This recognitionis the necessaryconsequence of the
function of terminating the 1919 Agreement. No doubt the role of the
British Phosphate commissioners involved the 1919 Agreement as a
condition precedent, but the legality of the administration of Nauru by the

Respondent State subsequentlydepended, successively,on the Mandate and
the Trusteeship Agreement. The power of the British Phosphate
Commissioners to accumulate and to deal with the assets arose from the
Trusteeship Agreement and, earlier, the Mandate. The consequence of
referring expressly to the1919 Agreement and the Commissioners was to
refer also to the legal concomitant of the existenceof the Commissionersand
the administration of Nauruduring the currencyof the trusteeship.

482. The tripartite agreement of 1987 constitutes an unequivocal
recognition of the Nauruan interest in the assets of the British Phosphate
Commissioners.

483. In this context the basis of liability consists of two independent
elements: The wrongful disposa1of the asset in spite of the recognition of the
(a)
existence of a Nauruan legal interest in the provisions of the
Agreement of 1987.

(b) Alternatively,the wronghil disposa1of assets in which, irrespective of
the provisionsof the1987 Agreement, Nauru had alegal interest.

484. When the relevant documents are available Nauru will be in a
position to present the data establishing the value of the assets marshalled
and the proportion -- that is to say, the Australian allocation--to which
Nauru is entitled. For present purposes, however,such data are not needed
as the Court is requested at this stage to make a declaration as to the
existenceof Nauru'sentitlement without more. PARTIII

CHAPTER8

THEFORMSOFLOSS CAUSEDTONAURU

Section1. Introduction

485. In the previous chapters of the present Part of the Memorial the legal
bases of the Nauruan claim were descnbed systematically. A priority of
significance was given to violations of the provisions of Article 76 of the
United Nations Charter and of the Tmsteeship Agreement, but other
relevant bases of international responsibility were indicated. While it is
necessaryfor the Applicant State provide a full accountof the bases of claim,

the picture is not completeunless the relevant heads of damage, or forms of
loss,are indicated at theame time.

486. The Applicant State has confined its petition for relief to a request for
a declaration concerning Australia's responsibility and the consequent duty
to make appropriate reparation for the damage and prejudice suffered. The
assessment of such reparation, in case this proves necessary, liesin the
future. Nonetheless, it will be of assistance to the Court if in the present
Memorial the Government of Nauru provides an account of the specific

types or heads of lossresulting from the violations of international law for
whichthe Australian government bears responsibility.

487. In the present proceedings the claim of the Applicant State relates to
fiveforms of loss: the costs of rehabilitation, economic loss caused by the
unwillingness of the Respondent State to make an equitable return in
relation to the process of extraction of phosphate; the value of the overseas
assets of the British Phosphate Commission; and reparation in respect of
payment for British Phosphate Commission assets purchased with Nauruan
funds. The wrongfuldisposa1of the overseas assets of the British Phosphate

Commissioners hasbeen examined in the previous chapter. Section2. TheVanous Formsof Loss

A.THE COSlS OFREHABILITA~ON OFTHE WORKED-O PHrOSPX~ LANDS

488. The Governrnent of Nauru considers the claim to the costs of
rehabilitation to be of paramount importance. Since independence the
Government has been able to ensure that proper provisionhas been made to
cover the costs of an eventual rehabilitation programme for those lands

worked out since independence. However, prior to independence one-third
of the area of theisland had been rendered completely unusable as a result
of the radical effectsof phosphate mining,and this had occurred without any,
or any adequate, provision beingmade to cover the costsof rehabilitation of
the worked out areas.

489. Given the extremely recalcitrant environment created by phosphate
mining in Nauru, the extensive character of the mining, the fact thn the
homeland of the indigenouspeople of Nauru has been threatened in terms of
its physical integrity, and the fact that Naunians have a strong sense of

national identity, theailure to make provision for rehabilitation represents
at once a serious affront to the vital interests of Nauru, a major drawback to
the condition of independent statehood, and also a threat to the future
economic needs of the people of Nauru. Consequently, the context of
phosphate rnining is not comparable with the normal context of the
rehabilitation of land affected byminingoperations.

490. This lack of comparability has an additional, and most important,
legal dimension.
The context -- in legal terrn-- is not that of mineral
concessions,or mininglawand practice, but of the entitlements of the people
and Government of Nauru by virtue of the obligations generated by Article
76 of the United Nations Charter and the provisions of the Trusteeship
Agreement for the Territory of Nauru.

491. The regime instituted in 1919 for the exploitation of phosphate
deposits on Nauru involved a massive and consistent exercise in external economic autocracy,consistingof three principal elements: the expropriation
of the phosphate industry by foreign powers;a "trading" monopolyin favour
of the same powers (but especially in the interests of Australia); and the
payrnent of "royalties"to the indigenouslandowners on a basis which had no
connection with royalties as normally understood in legal and commercial
practice.

492. The "royalties"were derisory and inequitable in scale and they were
granted by wayof concession(their legality being doubted by the Australian

Government and its advisers). Howeverat least in principle, the payments
commonlydescnbed as "royalties",had they been paid on an equitable basis,
would have constituted a form of treatment in accordance with the legal
standards of the trusteeship regime.

493. The non-payrnent of an equitable return by the foreign phosphate
operation constituted a form of economic loss flowing directly from the
breach of the obligations of trusteeship and therefore form a proper head of
claim in the present proceedings. The net loss of earnings has been the
subject of expert analysisby Mr. Walker (Appendix2).

494. The inevitable concomitant of the claim to the costs of rehabilitation
is a claim to reasonable compensation for lossof land use. Like the question
of rehabilitation, this stems essentially from the failures on the part of the
Respondent State to comply withthe principles and standards of the legal
regime of trusteeship. Consequently, municipallaw analogies concerning
compensation in cases of wrongful disposition or expropriation are not

directly in point. At the same time, it is relevant to recall that the normal
international law standard in such cases involves compensation for loss of
use.

495. The deprivation of the use and enjoyment of land is generally
recognised as a form of loss calling for reparation, whether the loss is
charactensed in terms as expropriation or as a wrongful deprivation of the
use and enjoyment of property: see Rolland et Consorts (Francv e. Germany),
Franco-German Mixed Arbitral Tribunal, 5 Recueil des décisions des
tribunaux arbitraux mixtes (1926), 121; M.M. Whiteman, Damages in

InternationalLaw, vol. II,Washington, 1937,p.1383;The Lord Nelson(GreatBritain v. United States), Nielsen's Report (1926), p.432 at pp.434G.H.
Hackworth, Digest of InternationalLaw, vol. V, Washington, 1943, p.739;

M.M. Whiteman, Digest of InternationalLaw, vol. 8, Washington, 1967,
pp.1006-20;ForemostTehran,Inc.v. Irun,Iran-U.S. ClaimsTribunal Reports,
vol. 10, p.228 at p.251 (Decision of 10 April 1986);use of Sporrongand
Lonnroth,European Court of Human Rights, Series A, No. 52 (Judgment of
23 September 1982),pp.24-25,para. 63.

-. REPARATIO INRESPECT OFTHE PAYMEN FOR B.P.C.SSm PURCHASED
NAURUAN Fuhm

496. In accordance with the Phosphate Industry Agreement of 1967
(Annexes, vol. 3, Annex 6), the Government of Nauru, in the period
following,paid by instalments a price of 21 millionAustralian dollars for the

assets of the British Phosphate Cornmissioners at Nauru. The process of
payment wascompleted by 18April 1969(see M. Williams& B. MacDonald,
TllePliospfzateers,Melbourne, Melbourne University Press, 1985,pp.502-3).
The Agreement was concluded by the Nauru Local Government Council
prior to independence and was, in a very real sense, a part of the price for
independence: see Nauru Talks, 1967, Sumrnary Records of Discussions,

p.108, Nauruan Delegation 6718,para. 2 (Annexes.vol.3, Annex 5). In this
paper the Nauruan Delegation stated that it was "forced to negotiateder
heavy pressure from their natural aspirations to attain independence by 31
January 1968".

497. The paymentswere made on sufferance and were the precondition for
the return to Nauruan control of the phosphate deposits, a belated act of
restitution, and which,in fact, for Nauru constituted the final episode in the

process of achieving a substantial independence from Australia and its
associates.

498. In the view of the Government of Nauru, the forced purchase of
access to its own natural resources was a further segment in the long line of
inequitable treatment at the hands of the Australian Government and its
collaborators. The payment compounded the unjust enrichment resulting

from the economic management of phosphate affairs in the trusteeship
period and before. It was extracted during the very sensitive period
immediately prior to independence in January 1968, and one of several
unusual features was the payment required by the outgoing authority for thecapital assets of the British Phosphate Commissionerson the island: see the
provisionson capital assets inArticles 7 to 11of the Agreement of 1967.

499. This repertoire of inequitable practices could easilybe extended. Two
hrther examples may suffice. In the first place, the British Phosphate
Comrnissionersretained capital assets outside Nauru, with the result that the
expenditure of 21 million Australian dollars involveda substantial payrnent
in the context of a remarkably incomplete exercise in restitution. Secondly,

the Nauruans, prior to independence, were required to give an undertaking
to supply phosphate "exclusivelyto the Partner Governrnents": see Article
5(1) of the Agreement. After independence, however, this latter
commitment wasrelaxed.

500. In the submission of the Government of Nauru, the forced purchase
of the assets of the Australian Govement and its associates, as a
concomitant of the termination of the trusteeship regirne,was a form of loss
flowing from the cumulative breaches of the legal obligations specified in
Part III of the present Memorial and thus merits appropriate reparation.
The assets purchased were themselves derived from the inequitable conduct

of the British Phosphate Comrnissioners,as the instrumentality of the three
so-calledpartner Governments.

Section 3. Conclusion

501. The iteration of the forms of loss resulting from the breach of the
obligations of the trusteeship regimefives appropriate colour and emphasis
to thewrongswhich are the subject of the present proceedings. At this stage

the account is auxiliary to the issues of liability and therefore to a certain
extent provisional. The Government of Nauru reserves the right to
supplement and modifythe data directly relating to the compensation at the
appropriate time. PART N

CHAPTER1

INTRODUCTION

Part 1 of this Memorial outlined the history of Nauru from the
502.
commencement of the German period until independence in 1968. That Part
provided the necessary background againstwhich to set out the bases of the
responsibility of the Respondent State: thisas done in Part III. It is now
necessary to return to a number of the more crucial incidents and issues
which arose during the period from 1919until 1968,and to demonstrate in
further detail their significanceinterms of the Applicant'sclaims.

503. In this Part, accordingly, it is proposed to deal with the following

matters of specialsignificance:

(a) the Nauru Island Agreements 1919and 1923(Chapter 2);

(b) the relationship between the Australian Administration and the
BritishPhosphate Commissioners(Chapter 3);

(c) inferences to be drawn from Australian reticence over the British
Phosphate Commissioners' Accounts(Chapter 4);

(d) proposals for resettlement and rehabilitation, and in particular the
implicationsof the Australian approach (Chapter 5); and

(e) the significance of the transactions surrounding independence
(Chapter 6). PART Br

CHAPTER 2

THE REGIME OFTHENAURU ISLAND AGREEMENTS1919AND1923

504. The events surrounding the conclusion of the 1919Agreement have
been described in some detail in Part 1of this Memorial (see paras. 36-53).
It is necessary here only to make a number of points arising from the
Agreement.

505. The 1919Agreement was frequently criticizedas inconsistent withthe
Mandate and Trusteeship instruments, and with the principle of self-
determination whichunderlay and grewout of those instruments. Concern at

the provisionsand impact of the 1919Agreement was expressed both by the
Permanent Mandates Commission and within the United Nations. For
example, the United Nations Visiting Mission to Nauru in 1962 drew
attention to four major causesof concern.It obse~ed:

"It is important to note (a) that the main purpose of the Agreement wasto ensure
the maximumsupplyof phosphateaaminimum consumercost for the countries
whichhad provided the capital; (b) that the Agreement preceded the granting of
the Mandate in 1919;(c) that, although the Agreement envisagedthe payment of
administration costs in Nauru from the proceeds of the industry, there was no
specificprovisionat the time when the Agreement wasmade that royaltiesshould
be paid to the people of Nauru; and (d) that no reference was made to the
Agreement either in the Mandate ore TrusteeshipAgreement."
(United Nations Visiting Mission to theerritories of Nauru and New
Guinea, 1962,epoti on Nuiini, Tmsreeship Council Oficiul Records, 29th

Session, 31May-20July 1962,Supplement No.2, paragraph 102. See also above
paras. 65,67-70,112,115-116,323-331,364,370, for further references.)

506. Neither the Nauru Island Agreement 1919 nor the 1923 Amending

Agreement wassubmitted to the League of Nations, nor were theyregistered
under Article 18of the League of Nations Covenant. When the question was
specifically raised in the United Kingdom Parliament, the Government
replied that the 1919 Agreement was "a commercial agreement, and ...a
commercial undertaking is not a subject for the League of Nations" (U.K. PART Br

CHAPTER 2

THE REGIME OFTHENAURU ISLAND AGREEMENTS1919AND1923

504. The events surrounding the conclusion of the 1919Agreement have
been described in some detail in Part 1of this Memorial (see paras. 36-53).
It is necessary here only to make a number of points arising from the
Agreement.

505. The 1919Agreement was frequently criticizedas inconsistent withthe
Mandate and Trusteeship instruments, and with the principle of self-
determination whichunderlay and grewout of those instruments. Concern at

the provisionsand impact of the 1919Agreement was expressed both by the
Permanent Mandates Commission and within the United Nations. For
example, the United Nations Visiting Mission to Nauru in 1962 drew
attention to four major causesof concern.It obse~ed:

"It is important to note (a) that the main purpose of the Agreement wasto ensure
the maximumsupplyof phosphateaaminimum consumercost for the countries
whichhad provided the capital; (b) that the Agreement preceded the granting of
the Mandate in 1919;(c) that, although the Agreement envisagedthe payment of
administration costs in Nauru from the proceeds of the industry, there was no
specificprovisionat the time when the Agreement wasmade that royaltiesshould
be paid to the people of Nauru; and (d) that no reference was made to the
Agreement either in the Mandate ore TrusteeshipAgreement."
(United Nations Visiting Mission to theerritories of Nauru and New
Guinea, 1962,epoti on Nuiini, Tmsreeship Council Oficiul Records, 29th

Session, 31May-20July 1962,Supplement No.2, paragraph 102. See also above
paras. 65,67-70,112,115-116,323-331,364,370, for further references.)

506. Neither the Nauru Island Agreement 1919 nor the 1923 Amending

Agreement wassubmitted to the League of Nations, nor were theyregistered
under Article 18of the League of Nations Covenant. When the question was
specifically raised in the United Kingdom Parliament, the Government
replied that the 1919 Agreement was "a commercial agreement, and ...a
commercial undertaking is not a subject for the League of Nations" (U.K.Pd Debs. (H. of C.),23 June 1920, vol.130col.2182 (oral answers)). Thus
there was a considered decision not to submit the agreement to the League
of Nations. I:wasnever formallyapproved or agreed to either bythe League
of Nations or by the United Nations.

507. Itis submitted, for the reasons developed in detail in PaIIIof this
Memorial, that the actions of the Respondent State were inconsistent with
the Tmsteeship regime and with related principles of general international
law. And these breaches, however much the Respondent State may have

sought to relate them to the 1919 Agreement, were not required by that
Agreement. It is true that the exploitative tendency which, as has been
shown in Part 1, motivated the 1919 Agreement was in tension with the
principle of trusteeship. But the Agreement itself did not preclude the
Respondent State from complying,successively,with the Mandate and the
Trusteeship instruments, and with its related obligations under general
international law. In that sense, which is,it is submitted, the only legally
relevant sense, the 1919 Agreement was not inconsistent with the
international obligations assumed by the Respondent State. This can be
demonstrated, interaliaby,a straightfonvard surveyof its provisions.

508. Under Article 2 of the Agreement, the expenses of the administration
were to be met out of the sale of phosphates, but this wasniyso far as they
are not met by other revenue". There was nothing in the Agreement to
prevent the Australian Governrnent from making grants in aid of the
administration of the Territory. The fact that this never occurred was a
matter of choice, notof anyrequirement under the Agreement.

509. Under Article 8, the capital necessaryfor the workingexpenses of the
Commissionerswas to be contributed by the partner Governments in agreed
proportions. There was nothing in the Agreement which required capital
requirements to be met out of the phosphate revenue, as was almost

exclusivelythe case.

510. Under Article 11,the price of phosphate was to be set at such a level
as would meet certain stated expenses, or costs incurred "for other purposes
unanimouslyagreed on by the Commissioners andother charges". There was
nothing in the Agreement to prevent the Commissioners agreeing on
expenses to be incurred in rehabilitating mined out lands, or othenvise in
pursuance of the trustesponsibility. There wasnothing in the Agreement toprevent the Administrator imposing an appropriate charge to meet costs

associatedwith the fulfilmentof the trust responsibility.

511. Under Article 12,the partner Governments could, separately and of
their own volition, direct that surplus funds accumulated by the
Commissioners wereto be held in trust "to such uses as those Governments
may direct". Those uses could have been in pursuance of the trusteeship
obligationsof the Government in question.

Under Article 13, the partner Governments agreed not to interfere
512.
"with the direction, management, or control of the business of working,
shipping,or sellingthe phosphates". But this didnot mean that the "business"
of the Commissioners was to take place in a legal vacuum, exempt from
regulation by laws dulymade under the authority conferred by the Mandate
and Trusteeship regimes to govern the territoryAs the Court has remarked
in an analogous context, that authority was the sole basis for the presence of
the AdministeringAuthority (Statusof Soutli WestAfnca, I.C.J.Reports 1950,

p.128 at p.133). The Respondent State retained the power, notwithstanding
Article 13of the 1919Agreement, to make lawsfor Nauru, and it exercised
that power, either directly under its legislative power over Australian
territories (as with the Nauru Act 1965 (Cth)), or through its official
appointee, the Administrator (as with the Lands Ordinances of 1921 and
1927). It could have retained in force the existing German laws regulating
the conduct of mining, which required a degree of rehabilitation of mined

lands and the payment of compensation to the landowner (see paras. 24-25,
27). The fact that it chose, by the Laws Repeal and Adopting Ordinance
1922(Nau), to repeal those lawsand not to replace them with anyequivalent
safeguardswasnot somethingwhichwasrequired bythe 1919Agreement.

513. This point was expressly accepted by the Respondent State. For
example during the Trusteeship Council'sexamination of the Annual Report
for Nauru for 1947-8,the following exchangetook place:

"Question20: Does Article 2 of the Agreement of 1919 absolve the
AdministerinAuthorityof anyobligationto make grantsto theTrustTerritory?
Have any suchgrantsbeen made? Has this arrangemenltimitedthe amounts
expendedin the interestsof the weU-beingand progress of theinhabitants?

(Iras).
w: Nauruis administeredin accordancewiththe terms ofTrusteeship
Agreementandthe applicatioof Article2 of theAgreementof 1919wouldnot in an yay affect the obligations of the AdmiterAuthority under the
TrusteeshipAgreement.No grantshavein factbeen made."
(United NationsTnrstees houncilOfficialRecoràs,5th Session,Annex, Doc.
T/347,22 June1949,p.47.)

514. It is subrnitted that the response of the Australian representative in

1949represented the correct legal position. The 1919Agreement left it open
to the Respondent State to comply with the obligations successively
undertaken under the Mandate and Trusteeship instruments.

515. The reai difficultywas not the 1919Agreement as such, but the fact
that in important respects the Respondent State treated the territory of

Nauru as subject to something approaching a disguised amexation, just as
the British Phosphate Commissioners engaged in whatrnightbe described as
a form of creeping and disguised expropnation, one no less real because it
used the tenninology of commercial relationships and dealings. It may be
noted that in determining whether there has been an "expropriation" or

"taking"of property, international law looks to the substance, not the legal
form of the transaction (see the athorities cited in M.M. Whiteman,igestof
InternationalLaw, Washington, 1967,vol. 8, pp.980-97,1006-20). The sarne
approach is taken in national legal systems which have constitutionai
protections in respect of the acquisition of property. This is true, for

example,both of the United States (Penn~ylvania Coalv.Mahon260 U.S.393
(1922); Penn Central TransportationCo v. City of New York 483 U.S. 104
(1978); FirstEnglisliEvangelicalLutlteranChurclzv. Countyof Los Angeles
107 Sup. Ct. 2378 (1987)), and Australia (Trade Practices Commission v.
Tooth & CoLtd (1979) 142C.L.R.397;CommonwealthofAustraliav. Stateof
Tasmania(1983) 158C.L.R. 1)'.

Howevcril shouldbc noted thattheAustnlian constitutionalgvarantceagaimtIhcacquisitionof propenyaihcr
than ojusrems (secl5l(-) of the Constitutionof the Commonwealthof Australia) did no1 apply to
CamtitutiseTeoriTauv.Commonweh fAusfralia(1969) 119C.L.RSM.lebysection 122of therred PART N

CHAPTER3

THERELATIONSHIPBETWEENTHEAUSTRALIAN
ADMINISTRATION ANDTHEBRITISHPHOSPHATE
COMMlSSIONERS

Section1. Introduction

516. Under the 1919Agreement, in conjunctionwith the 1923Agreement,
Australia became responsible for the administration of Nauru, a
responsibilitywhich it exercised on its own behalf as well as on behalf of the
two other Governments. That situation endured until independence. The
effect was that the appointment and dismissal of the Adrninistrator, al1
instructions as to the exercise of the Adrninistrator's powers, the
confirmation or disallowanceof Ordinances made by the Administrator, and
even general legislative power overthe Territory, were al1powers vested in
and exercisable by the Commonwealth of Australia, acting through its
Executive or, in the case of legislation, through the Parliament of the

Commonwealth of Australia. As a corollary of this actual governing
authority, Australianiplomatic personnel acting on Australian instructions
represented the Administering Authority in al1 League of Nations and
United Nations discussions of Nauru from 1920 until 1968. Although
Australia consulted fromtirne to rime with the other partner governments
with respect to the exercise of these powers,the final and operative decisions
asto their exercisewere made byAustralia on its own authority.

Section2. The NauruAct1965(Cth)

517. This situation was confirmed and made even more explicit by the
Nauru Act 1965(Cth), whichwas the governing legislationring the crucial
pre-independence period. That Act gave effect to a further Agreement
between the three partner Governments relating to Nauru, Canberra, 26th
November 1965:A~tstralian TreatySeries1965No. 20; 598 iJ.N.T.S81. The PART N

CHAPTER3

THERELATIONSHIPBETWEENTHEAUSTRALIAN
ADMINISTRATION ANDTHEBRITISHPHOSPHATE
COMMlSSIONERS

Section1. Introduction

516. Under the 1919Agreement, in conjunctionwith the 1923Agreement,
Australia became responsible for the administration of Nauru, a
responsibilitywhich it exercised on its own behalf as well as on behalf of the
two other Governments. That situation endured until independence. The
effect was that the appointment and dismissal of the Adrninistrator, al1
instructions as to the exercise of the Adrninistrator's powers, the
confirmation or disallowanceof Ordinances made by the Administrator, and
even general legislative power overthe Territory, were al1powers vested in
and exercisable by the Commonwealth of Australia, acting through its
Executive or, in the case of legislation, through the Parliament of the

Commonwealth of Australia. As a corollary of this actual governing
authority, Australianiplomatic personnel acting on Australian instructions
represented the Administering Authority in al1 League of Nations and
United Nations discussions of Nauru from 1920 until 1968. Although
Australia consulted fromtirne to rime with the other partner governments
with respect to the exercise of these powers,the final and operative decisions
asto their exercisewere made byAustralia on its own authority.

Section2. The NauruAct1965(Cth)

517. This situation was confirmed and made even more explicit by the
Nauru Act 1965(Cth), whichwas the governing legislationring the crucial
pre-independence period. That Act gave effect to a further Agreement
between the three partner Governments relating to Nauru, Canberra, 26th
November 1965:A~tstralian TreatySeries1965No. 20; 598 iJ.N.T.S81. TheAgreementwas scheduledto the Nauru Act 1965 (Cth): see Annexes,
Volume 4, Annex39.

518. The 1965Agreementprovidedinpartasfollows:

(1) A Legislative Council, a majority of which are to be elected by the
Nauruan people,is to be establishedasfrom the appointed day.

(2) Without affectingthe powers of the Commonwealth Parliamentto make
lawsfor the governmentof the Territory--
(a) the Legislative Council is to have power to make
Ordinances for the peace, order and good government of

the Territory exceptOrdiances with respect Io--
(i) defence;

(Ù) external affairs;
(ïù)the phosphate industry (including the
operation, ownership and control of that

industry);
(iv) phosphate royalties;and

(v) the ownership and control of phosphate-
bearing land;and

(b) the Governor-General is to have power as from the
appointed dayto make Ordinances for the peace, order and
good govemmentof the Territory withrespect to--

(i) defence;internal security and the maintenance
of peace andorder;
(ii) externalaffairs;

(i) the phosphate industry (icludig the
operation, ownership and control of that
industry);

(iv) phosphate royalties;and
(v) the ouaership and control of phosphate-
bearing land.

(3) Ordinances made by the LeyjslativeCouncilare not to have the force of
law until asseuted to by the Adminisrrator, or, if resemed by the
Administrator for the Governor-General's consideration, by the

Governor-Geueral. The Adminisirator is to have a geueral discretion to reserve Ordiices for the Governor-Generai's consideration. The

Administrator isilrequired by an Act of the CommonwealthParliament
to do so in specified cases, to reserve Ordinances for the Governor-
Generai'sconsideration. .
The Governor-General is to have power to disaiiow an Ordnance that
(4) has been assented to bythe Administrator.

(5) Ordinances made by the Governor-Generai are to be subject to
disaiiowance by either House of the Commonwealth Parliament as
providedbyAct of that Parliament.

(6) The application cf its ownforce, in or in relation to the Territoan, of
Act of the CommonwealthParliament, or of a regulation under such an
Act, isnot tbe affectedbyan Ordinance.

Article2

An ExecutiveCouncilisto be estabhhed, consistingof--
(1)
(a) the Administrator; and
members appointed bythe Governor-General.
(b)
(2) The members appointed by the Governor-General are to includepersons
appointed €romamongst themembers of the Le~slative.Council elected
by the Nauruan A person snot to be apiointed as a member of
the Executive Council from amongst the members of the Legislative

Council electedbythe Nauruan people unies he hasbeen nominated for
thepurpose bya majorityof those members of the LegislativeCouncil.
The Executive Council is to have such powers and functions as are
(3) conferred on it by law,includingthe functionof tendering adviceon any

matter referred to it bythe Administrator for advice.

Subjectto the provisionsof thisAgreement, the administrationof the Territory is,
on and after the appointedday, to be vested in an Administrator appointedby the
Governmentof the CommonwealthofAustralia."

519. The first paragraph of the preamble to the Agreement recites that it

has been made "conformablywith the Trusteeship Agreement", a further
clear recognition by those concerned of the legitimacyof Australia's special
position and role withrespect to the administration of Nauru. Section3. Actual Relations betweenAustralia and the British Phosphate
Commissioners

520. Given its general executive and legislativethoritv over Nauru, the
way in which ~uitralia exercised that auihority was cruch in deterdning
whether the international oblieations assumed under the truste es hi^
Agreement and under general international lawwould be compliedwith. Âs
has been seen, the balance between the asserted proprietary rights of the
British Phosphate Commissionersand the manifest economic interests of the
partner Govemments under the Nauru Island Agreement, on the one hand,
and the principle of trusteeship, on the other hand, was a precarious one. It
was, no doubt, possible for a balance to be struck between the rights and
long-term economic security of the Nauruan people and the conduct of
mining operations by the British Phosphate Commissioners. There is no
inherent or necessary confiictbetween proprietary rights and claims, and the
govemmental authority which is to be exercised in the interests of the

relevantcommunity. But in the particular situation of Nauru, any resolution
of the tension between the claims of the Commissioners under the 1919
Agreement and those of the Nauruan people under the Mandate and the
Trusteeship Agreement could only occur ifthe Respondent State was
prepared to direct its mind to that issue, to have regard to the rights of the
Nauruan people, and to resolve any conflictingclaims havingproper regard
tothe principle of trusteeship. Itrecisely thisthat Australia failed to do.

-.DISPUTES OVER THE LANDS ORDINANCm

521. One period which reveals this failure, and which set a pattern which
was not departed from during the period of Australian administration,
occurred during the 1920s. This involved a series of disputes over
amendments to the Lands Ordinance of 1921. The result ineach case clearly
favoured the British Phosphate Commissioners,by reason of the deliberate
decision by Australia to use its governmental powers to give priority to its
own commercial interests over the long-term interests -- and clearly
expressed wishes--of the Nauruans. Sincethe basic provisionsof the Lands
Ordinance of 1921,as amended in 1927,were not changed throughout the
period of Australian administration, this episode assumes even greater

significance.522. Even before the provisions of German law applicable to Nauru were

terminated by the Laws Repeal and Adopting Ordinance 1922, the
Administrator had enacted a Lands Ordinance, Ordinance No. 12 of 1921
(Annexes, ), whichcame into operation on 24 October 1921. The provisions
of the Ordinance are analyzed in paragraphs 84-89 above. The Ordinance
made it an offence punishable by fine or imprisonment for landowners to

grant rights to others without the consent of the Administrator, and
established a scheme bywhichthe British Phosphate Commissionersbecame
the onlyparties to whorna lease of phosphate land could be made. The rnost
significant terms of such a lease (the amounts payable, to whom and when
they were payable, what powersthe lessee acquired over trees and shrubs on
the leased land, and indeed what land was phosphate bearing land for this

purpose) were determined by or pursuant to the Ordinance. There was no
element of freedorn of choice on the part of the landowners as to the terms
of the lease.

523. The substantial increase in the rate of miningthat occurred after 1921
gave rise to considerable concern on the part of the Nauruans, both in terrns
of the extent of royalties paid and the future effects on the habitability of the

island. As a result the Australian Administrator, General Griffiths, issued
the Lands Ordinance 1925 (Ordinance No. 11 of 1925).which provided that
no land could be mined to a depth of more than twenty feet, without the
approval in writing of the Administrator, which would only be given in
exceptional circumstances.'

524. Griffithstook this measure, aswas reported (Unfortunately the text of

the 1925 Ordinance -whichwas never officiallypublished bythe Respondent
State -camot be located) to the Australian Prime Minister,at the instance of
the Nauruans:

"He[Griffiths]saidthatit wasthe nativesthemselveswhomoststronglydesired
thatminingshouldnot exceedthisdepth. They werefumlyconvincedthaithis
depthwereexceededit wouldbe impossiblea plantanyfood producingtrees in
the future.Itwas therefore the representationsof the nativesthat were
responsiblefortheordinance.

He consideredthatthe restrictionof miningto a depthof twentyfeet wasredy
necessaryso that food-bearinglandsmightbe assuredfor futuregenerations.
The Nauruanpopulationwasarapidlyincreasingone,andthenativesandhimself

1 nie 1973Ordina.~ncvcroffiriallypubandnocopyof the mmplctctea apsurvives. were obliged to think of their future. The interests of the nativeswere the fus1
consideration:the phosphate industrywasa secondaryconsideration."

(Memorandum Io Prime Minister, 25 March 1926, Australian Archives CRS
A.518,D 112/6/1; Annexes,vo1.4Annex 50.)

525. Griffiths' rneasurewas vehernently opposed by the Commissioners.
Dickinsonprotested that:

This Ordinance was promulgated without consultationwith the Commissioners
of ihii Board and if it was issued without the knowledge or assent of the
Australian Government such a procecdiig on the part of the Adminiilrator of
Nauru was high-handed. In other respects the Administrator has acted on the
assumption that he is under no obligation to even consult those who are
responsiblefor the conductof the onlyindustryin the Island."

(Letter to Under-Secretary of State, Dominion Office, 31 December 1925,
Annexes,vo1.4,AMeX48)

526. The Australian and New Zealand Cornmissioners united with
Dickinson in his protest, and the Australian Government took the desired

action. Dickinsonwasinforrnedbythe Dominions Officethat ...

"the Commonwealth Govenunent decided in December lasr not to conlirm the
proposed Ordinance until the question had been further considered ..[Tlhe
Administrator wasinîormed of this decision."
(Letter, 27January 1926,Annexes,vo1.4,Annex49)

527. In fact the 1925 Ordinance was not confirrnedby the Commonwealth

of Australia and never entered into force. In response to a question from a
mernber of the Permanent Mandates Commission, Sir Joseph Cook replied
that...

"this Ordinance had been put forward at an inopportune moment. The whole
position was shortly to be reviewed, and al1the new regulations would be
embodied in a single Ordiance. The Government did not, therefore, desire to

deal piecemealwith detailssuchas formed thesubjectofthe Ordinanc..."
(League of Nations, Permanent Mandates Commission, Minitfes O/ ille 11th
Session,Genersa,2OrtJiine-6thJiily1927,p.24.)528. The actual relations between the Commissioners and the
Administrator, as revealed in this incident, may be contrasted with the
position as described by Sir Joseph Cook to the Permanent Mandates
Commission in 1922. When outlining the powers of the British Phosphate
Comrnissioners hestated that ...

"the Phosphate Commissioners were responsibleto the Administrator of the
island, and werebound by the ordiiary laws and regulations protecting the
natives. The Phosphate Commission[sic]had been made independently as a
business concern. This had been done so that the Mandatorymightbe free from
the necessityofmanaging arelycommercial enterprise."

529. The Chairman havingreferred to "Article 13of the Nauru Agreement
of 1920, SirJoseph Cook replied ...

This did not releasethe Phosphate Commissioners fromthe ordinary obligations
of citizenship,or from the observanceof any of the ordinances and laws for the
protection of the natives. The Administrator might, at anytime, if necessary,
interfere to protect the natives, andhad been taken to safeguard native
interests by expressprovisions. It wasnecessaryin this connection to remember
that the island of Nauru was 2,000 miles from Australia, and that a large
delegationof powersto theAdministratorwasessential."

(League of Nations, Permanent Mandates Commission,Miniilesof the Second
Session,Genevu,iigusl1922,llth Meeting, 7thAugust 1922,pp.56-7.)

Similar statements were made by Australian representatives to the
530.
Permanent Mandates Commission and to United Nations bodies: see e.g.
League of Nations, Permanent Mandates Commission,Minutesof the Fifh
Session,Geneva, 23rd October - 6 November1924, p.144 ("the Commission ...
was completely subordinate to the Administration"); Permanent Mandates
Commission, Minutes of the Nintli Session, 8th - 25th June 1926, 14 ("the
Commissionwas alwayssubject to the lawsof the Administration in the same
way as any other private company");Commonweakh of Australia, Report to
the GeneralAssembiy on theAdministrationof the Tem'totyof Nauru,1stJuiy

1947 -30thJune1948,p.24 ("Sofar as the Administration of the Territory is
concerned, the Commissioners are regarded as an enterprise subject to the
lawsof the island).

531. Shortlyafter the controversyoverthe Lands Ordinance 1925,the issue
arose of the terms on whichthe miningprovisionsunder the 1921Ordinance, which were to apply only for 6 years, would be extended. The British
Phosphate Commissionerssought to have the phosphate land vested in them
either for the duration of the concession (at that tirne, 73 years) or at least
for averysubstantial period. Accordingto Griffiths ...

The Commission apparently in its laudable desire to protect the interests of the
natives, suggestedthal1phosphate lands shouidbe permanently vestedin them
at rates less than previouslyagreed--oor if the permanent vesting were not
practicable, that the land be vestedem for 25years. A suggestion worthyof
medievai times when "Barons ruied the swar but certainly an anachroniin
1926."

(Telegram, Griffiths to Secretary, Prime Minister's Department, 9 November
1926;Australian Archives,CRSA518 D 112/6/1; Annexes,vo1.4,Annex 52.)

532. Dickinsonwasunperturbed by Griffiths'antagonism and made further
proposais on behalf of the Board,pointing out that ...

"it is, ofcourse, necessaryin order to satisfythe requirements of phosphate in the
partner countries that sufficieut mining land should aiwaysbe avaiiable for the
operations of the Commission. The Board would, therefore, have preferred that
if equitable terms and conditions couldnowbe arranged, under whichminingand
other land in Nauru would be made avaiiableas and when required for the
operations of the Commission,the new agreement with the Nauruans should be
made for the outstandmg period of the concessionwhich has some 73 years to
run: but, if it is not desired that an agreement should be conduded for so long a
penod, it is considered that it wouid be in the interests both of the undertaking
and of the Nauruans if an agreement,could be made for a period of,say, twenty
fiveyears."

(Memorandum, Secretary of State for the Dominions tothe Governor-Generai of
Australia, 29March 1927,pp.1-2;Annexes,vo1.4,Annex53.)

The communication is urbane in tone: it acknowledges a concern for the
interests of the Nauruans, and speaksof the "equities". Yet it seeks, in effect,
to dispossessthe Naunians, to acquire complete control over both phosphate
and non-phosphate bearing land, and to tie down the Naunians, possiblyfor

generations, to the terms proposed.

533. The partner Governments appear to have been satisfied with the
equity of the measures proposed by the Commissioners. The Australian
Government informed Griffiths that the British and New Zealand
Cornmissionerswere anxiousfor the immediate and permanent vesting in thePhosphate Commissioners of al1 rights in the phosphate lands. Griffïths
replied, on 26 October 1926:

"Your telegram twentphird October much mutilated but suficiently intelligible
for main principlesto be fouowedglad copydecodeby nextmail.

1 consider the proposal that Nauruans permanently or temporarilybe deprived of
or disposeof theu birthright as suggestedisunworthythe seriousconsideration of
a responsibleGovernment and wouldbe foughttooth and nailby the Nauruans.
May 1with ail respect again point out that the phosphate deposits are owned by
indiridual Nauruans and that the BPC only havethe right to exploitthe deposits
subjectto the rights of the owners and thatthe Nauruans look withconfidenceto
the Australian Covt. to protect their rights."

(Lettcr Griffithsto the Secretary,Prime Minister'sDepartment,ober 1926,
Australian Archives,ACT, CRSA518, D 112/6/1; Annexes,vo1.4,Annex51.)

534. The Naunians, supported by Griffiths,were intent on entering into an
agreement which wouldlast for only five years. This wasstronglyopposed by
the Commissioners. Dickinson observed that:

"Whilethe object of the Nauruans in proposiag short period agreements with the
Commission is to secure enhanced terms at brief intervals, it is necessary, in
order to satisfy the requirements of phosphate in the partner countries that
sufficient mining land should always be avaiiable for the operation of the
Commission."
(Memorandum from the BritishPrime Minister'sOfficeto the Governorneral
of Australia,29 March 1927;Annexes,vo1.4,Annex53.)

In the same Memorandum Dickinson suggestedthat if it was unacceptable
for the agreement to last until the end of the Concession, "itwould be in the
interests of the undertaking and of the Naunians if an agreement could be
made for a period of, say, twentyfiveyears" (ibid.).

535. The most detailed account of the negotiations themselves is presented

in a Memorandum sent by Mr Harold Gaze, the General Manager, to the
Commissioners. It is perhaps significant that Griffiths had left Nauru for
Australia on 28 June 1927,another Australian, Newman having taken over
the previous day as Adrninistrator. Newman immediately embarked upon

talks with the Nauruans regarding the new agreement, but with little initial
success,as Gaze recounts: "Afterbis Grstmeeting withthe Chiefs, Mr. Newman informedme that they were
thoroughly imbued with the proposals put fonvard by General Griffiths, and
especiallythat no agreement should be made for longer than fiveyears and that
he would have to gain theu confidence before he could expect to make any
progress towards the acceptance of our proposals as stated inthe provisional
memorandum attached to the British Government despatch dated 29 March 1927

to the Commonwealth Government."
(Board of Commissioners, Memorandum No.96 of 12 September 1927, p.lC>;
Annexes,vo1.4,A~ex 54.)

536. Negotiations appear to havebeen difficultand frustrating.

"At this stage MI. Newman expecied to secure the consent of the chiefswithin a
few days, but on the 22nd July they reverted to the proposal for a 5 year
agreement and evensuggestedthat 1year wouldbe better."

537. The manner inwhichagreement was finallyachieved is then set out:

"On Saturday moming 30 July, the committee cded on Mr. Newman to inform
him that their meetingon the previous day had decided:

a) todeclineto make an agreement for more than 5years,
b) to decline alat price per acrefor phosphate landand ask a rental of
3pounds per acre per annum,withextra paymentfor trees,

C) that land already held by the Commission should be worked out
before leasingfurther land.

The Administrator rehsed to ask the Commission to accept these terms and
suggested that they state them direct to me. Accordingly a meeting with the
committee and Mr. Newman was arranged for the alternoon at the
Administrationofficeand 1attended with Mr. Thompson and Mr. Thom. Several
hours talk ensued as the result of which theyabandoned (b) and (c) but we could

not shake their determinaiion to make no agreement beyond 5 years. It was
evident that Detudamo was their leader and that he was committe10 the policy
of getting terms revised after 5 years which had been strongly impressed upon
him by the previous Administrator. Although Mr. Newman told the committee
that adherence to5years mightdelaya settlement for a year and laid stress upon
the approvalofthe three Governments havingbeen givento a long agreement no

further progress couldbe made.It waspointed out to Detudamo that if the price
of phosphate dropped after 5 ycars the royaltiesmightbe reduced alsoifthey had
an agreement for 5years only,his replybeing that if the Commissioners could not
alford Io payas muchlhe Nauruans wouldlhen accept less. The onlypointwhich
appeared tu make any impression was mystaiement that the Commissioners could not spend the large sums necessary for new machinery and plant to get
more phosphate unless they knew what the phosphate would cost for at least 20
years. Mr. Newman arranged with the chiefs,at ou request, for another meeting

with usat 10a.m. the fouowingday,Sunday,as wewere to leave Nauru a11 a.m.
per "Dagfre". In the eveningI submitted to Mr. Newmandraftclause providing
that-
The royalty of4d.per ton to the Nawuan landowner(s) shallbe adjusted
for the second, third and fowth five-yearlyperiods of this agreement by
increasing or decreasing it pro rata to any inaease or deaease of the

f.0.b.price of Nauru phosphate sold by the Commissionersto the United
Kingdom,Australia and New Zealand for the 6th, 11thand 16th yearsof
this agreement compared with such price for the fust year of th&
agreement, at the rate of Yld.per ton increase or decrease of royaltyfor
every1/- per ton increase or decrease of the price.

He approved thi snd 1 asked him to put it to Deîudamo hisown proposal to
which,ifacceptable to the Nauruans, he would endeavour to secure our consent
in order to close the agreement. This was done and Detudamo accepted the
proposal earlyon Sundaymorning,31st July,undertaking to bring all the chiefsto
the meeting at 10 am. ready to sign if we agree to the clause. At the meeting,
which wasof a formal character and occupied a short time only, an agreement
wassignedas per wpy attached, andwe left Nawu shortlyafterwards. The terms
are in accordance with the propos& of the Board approved by the ihee
Governments, as 1did not fuid it necessary to exercisethe discretion givento me

by the Board to increase the price per acre and the price for trHad. the
negotiations failed then, however, there is little doubt that higher rates would
have been necessq to secure an agreement as the terms for Ocean Island, not
then known to the Nauruans,would have led the latter to make further demands,
although the circumstances of the two Islands are entirely diifere...Mr.
Newman acted with tact and discretion throughout the negotiations, Inhad
pleaswe in conveyingthim the congratulationsof the Board."

(Memorandum No.96of 12September 1927; AM~X~Sv,o1.4,Annex 54.)

538. In the event, although it did not proceed to outright acquisitionof the
lands, the Lands Ordinance 1927removed the power of the Administrator to
refuse to consent to leases, and left the Commissioners to deal directly with

the Nauruan landowners. But it wenteven further than this, since it gavethe
Commissioners the right compulsorilyto lease phosphate-bearing land, on
terms even more elaborately spelt out in the Ordinance. This can be
deduced from the comparisonbetween the provisionsfor phosphate and non-

phosphate leases. Section 4(a)(l) of the Lands Ordinance, as amended in
1927,provided: "(a) TheCommissioners havetheright--
(1) to leaseanyphosphate-bearinlgandon theisland ofNauru,
to mine thephosphate thereto anydepth desire, ndto
useorexportsuchphosphate..."

Bycontrast, section 5 provided:

'TheCommissioners may,subjectto the approvalof theAdmistrator andthe
owner(s),which approvaslhaü not be unreasonablywithheld,lease such non-
phosphatebearinglands on the island of Nauru as may be requiredby the
Commissioners for and in comection with the operations of the
Commissioner..."

Not oniydid section 4 confirmthe viewof the Commissionersas to the depth
of mining, and remove the veto power of the Administrator as to leases of
phosphate land; it appears to have made the consent of the owners legally

irrelevant to the validity ofsuch leases. The machinery of leases continued
to be used on Nauru, but both in lawand in substance these were compulsory
licenses, with no element of choice on the part of individual landowners.
These aspects of the Lands Ordinance as amended in 1927remained in force
throughout the period of Australian administration.

539. The practice of the Commissioners under the Ordinance was to lease

large areas ofphosphate lands for extended periods of time, with rental being
paid in a lump sum rather than amually (as the land-ownershad requested).
In return for certain increases in royalties, the Commissioners acquired, as
has been seen, the express rightto "lease anyphosphate bearing land on the
island of Nauru, to mine the phosphate thereon to any depth desired, and to
use or export such phosphates" (1927 Ordinance, section 4(a)(l)). In 1920,

Dickinson had recommended that the Nauruans be paid a royalty of 6d per
ton, which he thought was "adequate compensation". By delaying this
payment, and by cornmencingroyalty payrnents at half the rate which they
themselves saw as reasonable, the British Phosphate Commissioners
acquired a bargaining position of ovenvhelming strength, and could
represent each increase in royalty to which they agreed asrepresenting a
generous concession. They couldalso use increases in royalties as a means of

extending their rights over the phosphate industry. Thus, in 1927,by paying
slightlymore than the amount they had initially described the phosphate as
being worth in 1920,they were able to complete their armoury of privileges,while avoidinga limitation on the depth of mining which, if adopted, would
have had far-reachingimplicationsfor the rehabilitation of the lands.

540. As this account demonstrates, on key occasions where a confiict
between the British Phosphate Commissioners and the interests of the
Nauruans occurred, it was the Commissionerswho prevailed. In 1925they
did so because the AustraLan Government ovemled the Administrator in
his support for a limitation on the depth of mining. In 1927it is fair to say
that it was only through the connivance of the newly-appointed Australian
Administrator that the Commissioneis' interests prevailed. While royalty
and leasing paymentswere gradually increased, these payments were limited
and, for most of the relevant period, were lessan the payment made at the
nearby British colony of Ocean Island at the same time --a fact which, in
1927at least, wascarefullyconcealed from the Nauruans.

541. On the numerous occasions when the Permanent Mandates
Commission,and later the Trusteeship Council,expressed concern about the
role of the BritishPhosphate Commissionerson the island it wastold that the
Administrator would look after the interests of the Nauruans, and would
legislate inorder to do so if necessary (see paragraph 530 above for sample
references). The reality was otherwise, as no Australian Administrator after
Griffiths took an independent position opposed on any vital issue to the
interests of the Commissioners. Other examplesof this difficultyare referred
to elsewhere in this Memorial: see e.g. paragraph 108 (confiict between
needs of Nauruans and of Commissioners in post-war reconstruction;

proposal to abolish individual landtenure). Taken together, these incidents
powerfully reinforce the submission that the Respondent State acted in
breach of the obligations incumbent upon it in the administration of Nauru,
and in particular of the trusteeship obligation. PART IV

CHAPTER4

THEBRITISH PHOSPHATE COMMISSIONERSA ' CCOUNTS AND
AUSTRALIAN RETICENCE: INFERENCESTOBE DRAWN

Section1. TheAustralianPosition on FinancialReporting

542. A necessary element of the relationship between an Administering
Authority and the United Nations, given the significanceof the supe~sory
role of the latter over the former, was the obligation to provide information
about the Territory and its administration. This made clear in Articles
87(a) and 88 of the United Nations Charter, whichrequire annual reports to

the General Assembly on the conditions in each trust territory, based on a
questionnaire to be formulated by the Trusteeship Council.ose reports
were not limited to the government or administration of the territory, but
extended to social and economic conditions. Article 5(1) of the Trusteeship
Agreement for Nauru implicitlyaffirmed that requirement.

543. Despite this clear obligation, the information provided to the League
of Nations and to the United Nations with respect to Nauru was limited, and
deliberately so. It wasgued by Australian representatives that no further

information was required, since the mining operations were essentially
separate and distinct from the issue of Australian compliance with the
Trusteeship. Forexample at the 11th Session of the Trusteeship Council in
1953 when the Annual Report on Nauru was being examined, MrLoomes of
Australiasaid:

"In regard to parag9aof the draft recommendations, 1 would recd to the
Councilthat duringthe courseof the general debate on Nauru 1suggested(472nd
Meeting) that it would be both improper and undesirable for the Council to
adopt too inquisitorial an attitude into the operations of commercial concerns
carrying on business in the Trust Territories. My delegation adheres to the
position it stated in the debate, and Corthe reasons that 1have stated must vote
against the inclusionof paragraph 9 in the recommendationsof this Council. We
feel that thisproposal raises important questions of principle, not only as to the desirabilityof adopting such an attitude with regard to commercial undertaking
but also as to the extent of the powers and functionsof the Trusteeship Counul.
1feel that the Cound's real interest Liesinthe supervisionof the fulfïof the
Trusteeship Agreement and the promotion of the political, economic, socialand
educational advancement of the indigenou inhabitants. The raising of the
fmancial means necessary for the achievement of these objectives is, we feel, a

matter whichhas to be left to the discretion of the Admistering Authority. The
advantages which the inhabitants of Nauru derived from the operations of the
British Phosphate Commissioners, have, 1 think, been made very clear to the
Council, and this should leaveno doubt that the Commissionershave made, and
willcontinue to make, adequate contributionsto the administration of Nauru and
to the welfareof the indigenousinhabitants."

(Tmsfees;~ipCouncil OffiçialRecordr, 12thSession, 16June-21 July1953,479th
Meeting, 13July 1953,p.309.)

544. Similarlyat the 18th Sessionof the Trusteeship Council in 1956the

Australian representative stated:

"With regard to the subsidiary question of whether the Trusteeship Council
received sufficient information about the operations of the British Phosphate
Commissioners,the AdministeringAuthoritfs position was clear. The Counul
was fuilyentitled to information concerning the quantity of phosphate produced
on the islandand its destination and value,and that information was submitted to
the Council. It was to be found in Appendix VI1 and Appendix XII1 of the
Annual Report. The Admitering Authority felt that in providing that

information it was fdy complyingwith Article 5 of the Trusteeship Agreement.
The British Phosphate Commissioners operated not only in Nauru but also in
Ocean Island and Christmas Island, which were not the concern of the
Trusteeship Council, and it would be impracticable to present completely
separate information relating to Nauru phosphates alone. The Administering
Authority could notemphasise enough its belief that the Couocil did not need

such information and the disclosure of confidential accounts of the
Commissionersin order to perform its taskeffectively. The royaltyrates paid to
or for the direct benefit of the Nauruans are in no way dependent on or
iduenced bythe prices received for phosphate."

(TmsfeesliipCouncilOffifialRecords,18thSessiori,7June -14Augusf 1956,714th
Meeting, 26June 1956, pp.112-113.)

545. Again, the Officiai Records of the Trusteeship Council for the 22nd
Session in 1958 contain the following statement by the Australian

representative: Those who had requested even more detailed information than that presented
might be reminded that the British Phosphate Commissionerswere responsible

not only for the phosphate industry on Nauru but for similar undertakiogs in
other places. Many items in their accounts were commonto theu activiasea
whole and it would be impossible to break down those common costs and
attribute themaone or another specificarea without a verycomplexand largely
hypotheticalsystem ofcos1analysis. Moreover, no case had been made for the
publication of confidential information relating largely to the commercial
operations of the Commissionersin States or territories over which the Council
could have no jurisdiction or responsibiiity. Indeed, the publication of such

information with regard to an industrial undertakingin a Trust Territory might
impede the proper developmentof that territory'seconomic resources.
(TnisteeshipCouncilOfjicialRecords, 22nd Session,9Ju-1Augusf1958,896th
Meeting, 18June 1958,pp.46-47.)

546. The non-production of accounts to the Permanent Mandates
Commission and the Trusteeship Council, despite their repeated requests,
was not the result of any lack of appreciation of the importance of those
accounts. This is shown by the following interna1 minutes of the British

Phosphate Commissioners:

"MinuteNo.683

REQUEST BY UNiTED NATIONS FOR SEPARATE ACCOUNTS FOR
NAURU
Mr Halligan expressed the view.that the Trusteeship Council's request for
separate accounts for Nauru would probably be endorsed by the General
Assemblyand queried whether the partner governmentswould comply.

AUCommissioners opposedanysuggestion that they shouldbe supplied and held
the viewthat U.N.O.is not entitled to such information but onlyto information
concerningroyaltypaymentsto Nauruans."

"MinuteNo.823
Reports bythe General Managerin Memoranda Nos208and 216were noted

1. BnfislrPhospl~ateConimissionersAccoiints
Agreed that pressure forfurther financialinformationregardiig the operations of

the Commissioners at Nauru shouldbe resisted."
(Annexes, vol.4, AM~X 58. Mr Halligan was a former Secretary of the
Australian Department of Territories who later became a Commissioner of the
B.P.C.) Section2. Criticisms ofthe Australian Position

547. This persistent reticence was the subject of persistent criticism. The
position at an early stage of the United Nations' treatment of the issue was

summarized in the 1952Report of the Tnisteeship Council:

"At its f~th session, the Council had requested the AdministeringAuthority to
hirouh in the next annual repofuüinformation on al1operations of the British
Phosphate Commissioners,includii the fuiancialaccounts.
At its seventh session,the Council hadressedthe viewthat the restoration to

fullproduction of the phosphate industry had been of general benefit to the
Territory, but had noted thatthe Councilremained handicapped ints appraisal
of economic conditionsecause of the absenceof informationwhichwouldshow,
in particular, the separate fmanual operations of the British Phosphate
Commissionersin respect of Nauru, andthe actual prices received forphosphate
as comparedwith worldmarket prices.

Endeavouring to learn the costs of phosphates landed in Australia and New
Zealand from various sources, the Viiting Mission was told by the general
manager of the industrythat it was unlikelythe Commissionerscould supplythe
information requested.
At its eighth session,the Councilhad reiterated that it remained handicapped in

its appraisal of economic conditionsbecause of ihe absenceof informationwhich
would show, in particular, the separate fiancial operations of the British
Phosphate Commissionersin respect of Nauru, and the actual prices received for
phosphate as comparedwithworldmarket prices.
(GeneralAssemblyOfficialRecords, 7th Session,SupplementNo.4,ReporIofthe

TrusreeshiCouncil(1952)p.260.)

548. Criticisms came also from individual representatives in the
Trusteeship Council. Two examplesof these maybe cited.

549. In 1950,the representative of the Philippines ...

"consideredthat the Councilwashandicappedin the appraisalof conditionsin the
Territorybecause of lack of information and particularly that relating to the
operations of the British Phosphate Commissioners. He beiieved that pending
more detailed information the Council might reiterate its recommendations of
last year. Further light was desired on the fiances of the British Phosphate
Commissionersso that the Councilmightbe in a positioIO judge to what extent
the industry was being operated in the interest of the people and in particular,
whether the people were receivingan equitable share of the returns from the exploitationof the onlynatural resources of the Territory. The principaldiff~cuity
of the Council arose from the fact that the fmancial accounts of the British
Phosphate Commissionerswvered their operationsboth in Nauru andthe Ocean
Islands, and it was impossible for the Councilto separate these accounts so that
the position in Nauru alone would become clear. The Council had no
information, moreover, as to the actual price receivedby the Commissionersper

ton of phosphate and as to how this price compared withthe worldmarket price.
He considered that these were questions of great importance, since the British
Phosphate Commissioners were a government-established monopoly and also
sincethe three Governments concerned had a monopolyon the entire production
irrespectiveof pricesthatmightbe obtainable elsewhere."

(Generalhsembly OjjïcialRecords,5th Session,SupplementNo. 4, Report of the
TrusteeshipCouncil(1950) p.144).

550. The Guatemalan delegate to the Trusteeship Council at its 22nd

Sessionalso referred to ...

"the importance of the Council's obtaining from the Admitering Authority
information concerningthe internal functioningof the undertaking administered
by the British Phosphate Commissioners and the price received for the sale of
Nauruan phosphates. The special representativehad saidthat it was not usual for

such a request to be made concerning a private industrial or commercial
undertaking in a Trust Territory. The British Phosphate Commissioners,
however, constituted a bodywhich wasin a classby itself;it couid not be called a
private undertaking and it accounted for almost the entire industrial activityof
the Territory. Hence it was natural that the Council shouidbe concerned over
the Commissioners'failure to appoint Nauruans to responsible posts. It could
not judge the validity of the Commissioners'statement that no Nauruans were

qualifiedto fülsuch postsunless it knewsomethingabout the internal functioning
of the undertaking. Similarly,it could not satisfyitself on the vital question of
whether the Nauruans were receiving a fair return on the exploitation of the
island's phosphate beds unless it had information concerning the independent
fmancial operations of the Commissioners and the prices received for the
phosphates. The special representative had explained that as the same

undertaking also exploited the phosphate deposits on Ocean Island and
Christmas Island it could not give a separate accounting for the phosphates
extracted on Nauru without completelyreorganizing its system of bookkeeping.
Tbat answer, which in effect subordinated the interests of the Nauruan
community to the convenience of the undertaking, was not acceptable to his
delegation. The Administering Authority insisted that the royalties and other

benefits the Nauruan community received fromthe Commissionersin retum for
the privilege of exploiting the phosphate beds were reasonable and were not
affected by the sale price of the ore. Yet is was significantthat capital had not heen invested in a single permanent undertaking which would enahle the
Nauruan communityto develop new sourcesof income."
(GeneralAssembiy Oflciul Records, 22nd Session, 894th Meeting,16 June 1958,
pp.31-2.)

Section3. TheAccountingSystemfor Nauru

551. In fact detailed accounts were made available to the three partner
governments from year to year. Annexes, vo1.4,Annex 66 contains a copyof
the Confidential Accounts which wasavailable to the Respondent State in
1965. There were a number of funds into which moneywas assignedwithout
any intimation of that fact to the relevant United Nations bodies. These

were the Ships Replacement Fund, the Marine Insurance Fund, the
Depreciation Fund, the MooringsFund, the Development Fund, the General
Fund, the Contingencies fund. The state of the British Phosphate
Commissioners accounts is further analysed in the Report by Mr. K.E.
Walker set out as Appendii 2.

552. Thus there was in effect a dual reporting system -- one for the League
of Nations and the United Nations, and one for the partners in this

commercial venture. Requests repeatedly made in the Trusteeship Council
and the Permanent Mandates Commission for an amplification of the
accounts could well have been answered by the Respondent State from the
extensiveinformation contained in these accounts.

553. Statements were repeatedly made by the Respondent State to the
effect that,because of the nature of the operation and the commonalty of
costs, it was impossible to isolate the British Phosphate Commissioners

accounts relating only to Nauru. In 1954, to take only one example, the
Trusteeship Council noted ...

"the statement oI the Administering Authoritythat the operations of the British
Phosphate Commissioners at Nauru and Ocean Island are conducted as one
undertaking andthere are noparate fuiancialoperations respecting Nauru, and
requests the Administering Authority, asit did at its twelfth session, to make
everyeffort, in agreement with the British Phosphate Commissioners,to provide
information concerningthe separate fuiancialoperations of the British Phosphate
Commissioners inrespect of Nauru in itsnext annualreport."

1954(1954)p.271.)steeshipCoriiicilcoveringthePeriodfrom 22 July 1953Io 16Juiy554. But the Australian response continued to be negative. In its "next
annual report" on Nauru, the AdministeringAuthority stated:

"It is the desire of the AdmiterinAuthority to continue to CO-operateand
assist theCouncil, but, in view of the impracticabity of establishing and
maintainhg separate accounts for Naunq as explainedat the Fourteenth Session,
and in the absence of any indicationby the Council of ther in whicl: the
keepingof separate accountswouldassist the AdministeringAuthority in carrying

out iis responsibiities, benefit the Nauruans or assistthe Council in carrykg out
its functions, it is îelt that to alter the present arrangement, which affords the
Council sufficient data to enable it to judge how faithfuily the Administering
~uthority is fulfïthe TrusteeshipAgreement, wouldserve no usefd purpose.
It has been made quite clear that the sellingprice of phosphate does not inîluence
the payments to the Nauruans or the paymentstowards the administration of the
Territory."

(Commonwealth of Australia, Report to the GeneralAssembly of the United
Nations ontheAdministrationof the Tenitoy of Naum, 1stlu@ 195- 3hh lune
1954 (1955)p.36. See a150N. Viviani,Nauni. Phosphate andPolitical Progress,
Australian National UniversityPress,Canberra, 1970,pp.126-7.)

555. In fact there was a separate accountant on Nauru. Combined costs
could not in practice have been compiled without individual costinformation
for each island. As Mr. Walker's Report (Appendix 2) demonstrates,
separate on-island costs were accounted for throughout the period of
Australian administration, and it was at al1 stages possible, in accordance

with accepted accounting conventions, to attribute "off-island costs as
between Nauru and Ocean Island'so as to arrive at a separate account of
operating costs and returns for the two islands. This was not done not
because it was impossible, butbecause it suited the Respondent State not to
do it.

556. In the detailed balance sheet subrnitted to the partner governments,
fixed assets are analysed by class, reserves are detailed and stocks and fixed
assets are analysed by island (Le.Ocean Island or Nauru). Historical data is
given in tabulated form for the trading account. Cumulative results are
shown for groups of years -- for the first five years, the next five years on a

year by year basis. These five year and ten year summaries provide an
overview of the operation for overall examination. Comparative costs are
given on a per ton basis for each of the elements in the trading account andsales values are analysed into sales to partner countries and non-partner
countnes.

557. Additional data made available in these accounts include astatement
of phosphate purchased from outside sources for Australia to supplement
supplies from Nauru and Ocean Island, showing source of additional
phosphate, weight, etc. Capital expenditure approved from the development
fund is shown in detail, together with a record of funds spent to date on a
project by project basis and a basic form of funds statement --or rather a

statement showingthe movement in the balance sheet items over the entire
penod of operation.

Section4. Significaneeof theFailureto Report

558. The failure of the Respondent State to produce adequate accounts
has significanceat a number of levels. The first and most obvious level is
evidentiaq. Although the onus is on the Applicant State, as such, to

establish its case of breach of the trusteeship obligation, and of general
international law, on the part of the Respondent State, it must not be
forgotten that the Applicant stands in the place of and represents the real
beneficiary of the Trusteeship arrangement, the Nauruan people. It goes a
considerable way towards establishing abreach of trust to establish that the
trustee has persistentlyand as amatter of deliberate policysought to conceal
what it is doing in the administration of the trust. There is no need to
conceal somethingif disclosurewillbe innocuous.

559. But the matter is more fundamental still. A major basis for non-
disclosure was an artificial conception of the separateness of the mining
operation conducted by the British Phosphate Cornmissionersin the interest

of the partner Governments, especially Australia. The accounting records
presented an image of two separate domains, the fiscaldomain of the mining
operation and the British Phosphate Commissioners, and the residual
domain of the Nauruan people. There wasthus a failure to consider the real
interests of thebeneficiaryof the trusteeship, theNauruan people --a sort of
fiscal marginalization, so that the people lived, to a large extent, as
dependents of a foreign miningconcern on land progressivelyalienated from
them.560. This characteristic was acutely analysed by the United Nations

Visiting Mission in itsReport on Nauru in 1962:

"50. There are three estates in Nauru. The BritishPhosphate Companylivesand
operates in a world of its own. The Administration is aloof and strangely
separate from the Local Government Council. Relations amongst these three
authorities are usuallyfakly cordial, but theymeet as diierent and distinct bodies

each with its ownseparate interests and its own separate obligations a&S.
The result is that the conscientious leaders of the Nauruan people, with no
participation in the exploitation of the one physicalasset in the island, and with
theu duties limited to comparativelyminor communal questions,have not been
giventhe experience of responsibiity to prepare them for the pressing challenge
and the hard decisionsof the future.

(United Nations Visiting Mission to the Trust Territones of Nauru and New
Guinea, Repoti on Nauru,TnisteeshipCouncilOficial Records,29th Session,31
May - 20July1962,SupplementNo. 2,pp.5-6.) PART N

CHAF'TER 5

PROPOSALSFORRESE'ITLEMEhT AND REHABILITATION:
1MPLlCATlONS OFTHEAUSTRALLAN APPROACH

Section1. Introduction

561. The issue of the long-term future of the Nauruan people was raised at
a relatively early stage of the Australian administration of Nauru, and
became ever more pressing as the mining operations continued and
increased in scale. The Respondent State itself acknowledged the problem,
giving a series of commitments to deal with it. For example in 1949 the

Australian representative noted that:

The phosphate deposits wili be exhausted in an estimated period of seventy
years, at the end of whichtime aUbut the coastalwiUbe worthless.
The Australian Government isaliveto the possibiity that the Island maynot then
provide a satisfactory home for the indigenous population and that it may be
necessaryta givethe Nativesan opportunityta transfer to some other island."
(Reponof ihe TmsteeshipCouncil,Augusi 6 1948-July22 1949,GeneralAssembly
OfficialRecords,4th Session,Supp.No. 4 (1949)p.74.)

562. The Australian Government thus seems to have accepted that there
was a responsibility torovide an alternative home for the Nauruans --or
rather, as the Australian representative stated in 1957, "that the
Administering Authority had undertaken to provide for their future"

(TmsteeslripCouncil OfficialRecords, 20th Sessior.,20 May- 12 July 1957,
p.87). This cornmitmentwas also expressed by Australian authorities in less
formal ways. The Acting Minister for External Territories, Mr Chambers,
was reported in the BrisbaneTelegraphas submitting to the Prime Minister,
Mr Chifley,that Australia had a responsibilitytovide a new islandfor the
steadily increasing nativepopulation as work on the extraction of phosphate
deposits hadreduced the islandto a "barren skeleton ofral pinnacles"(see

Australian Archives, ACT,CRS A 518, Item DR 11816Pt 1). And the then
Australian Prime Minister, SirRobert Menzies, before his attendance at the PART N

CHAF'TER 5

PROPOSALSFORRESE'ITLEMEhT AND REHABILITATION:
1MPLlCATlONS OFTHEAUSTRALLAN APPROACH

Section1. Introduction

561. The issue of the long-term future of the Nauruan people was raised at
a relatively early stage of the Australian administration of Nauru, and
became ever more pressing as the mining operations continued and
increased in scale. The Respondent State itself acknowledged the problem,
giving a series of commitments to deal with it. For example in 1949 the

Australian representative noted that:

The phosphate deposits wili be exhausted in an estimated period of seventy
years, at the end of whichtime aUbut the coastalwiUbe worthless.
The Australian Government isaliveto the possibiity that the Island maynot then
provide a satisfactory home for the indigenous population and that it may be
necessaryta givethe Nativesan opportunityta transfer to some other island."
(Reponof ihe TmsteeshipCouncil,Augusi 6 1948-July22 1949,GeneralAssembly
OfficialRecords,4th Session,Supp.No. 4 (1949)p.74.)

562. The Australian Government thus seems to have accepted that there
was a responsibility torovide an alternative home for the Nauruans --or
rather, as the Australian representative stated in 1957, "that the
Administering Authority had undertaken to provide for their future"

(TmsteeslripCouncil OfficialRecords, 20th Sessior.,20 May- 12 July 1957,
p.87). This cornmitmentwas also expressed by Australian authorities in less
formal ways. The Acting Minister for External Territories, Mr Chambers,
was reported in the BrisbaneTelegraphas submitting to the Prime Minister,
Mr Chifley,that Australia had a responsibilitytovide a new islandfor the
steadily increasing nativepopulation as work on the extraction of phosphate
deposits hadreduced the islandto a "barren skeleton ofral pinnacles"(see

Australian Archives, ACT,CRS A 518, Item DR 11816Pt 1). And the then
Australian Prime Minister, SirRobert Menzies, before his attendance at the Trusteeship Council in June 1961, wasreported by the Melbourne "Herald"
as havingsaid:

"Beingin the course usin ghe resources of Nauru, with NewZealand and the
United Kingdom, we recognize an obligation not merely to leave them to their
owndevicesbut to accept a national responsibilityin the matter along with New
Zealand and the United Kingdom.
This involveseither fmdingan island for the Nauruans or receivingthem into one
of the three countries,or al1ofthe three countries.

We standwillmgto honour the implicitobligationof our joint tenancy,but before
anyfinalsleistaken we wd paygreat regard to the viewsof the Nauruans."
(Cited in aemorandum submitted by the Nauru Local ûovermlent Councilto
the 1965 VisitingMission: Tntsteesl~ipCou~tcilOfficialRecords, 32nd Session, 2
May -30June 1965,SuppNo 2,Anncx 1,p.13.)

563. Thus, well before the independence talks, the issue was being

presented in terms of a choice between the alternatives of rehabilitation or
resettlernent, with the Respondent State having the responsibility to assist
the people both in makingand ingivingeffectto that choice.

564. In earlier years resettlernent had been regarded as a secondary and
distant possibiiity,since it was generally expected that rehabilitation of the

land would be feasible. But the longer the issue was postponed, the more
difficultit becarne. Bythe late 1950s,giventhe prevalent (but never properly
investigated) view that rehabilitation was not feasible, the resettlernent
alternative progressively assurnedgreater importance.

565. However, even if the Nauruans were prepared to overlook their deep
attachment to their own island, resettlernent was fraught with difficulties.

Where was it to occur? What would be the status of the resettlement
territory? What would be the status of Nauru after resettlernent? Would the
Nauruans be expected to be assimilatedinto the surrounding community,and
to lose their identity and status as a people? In the event none of the
resettlement proposals (involvine certain Australian off-shore islands)

rnaterialized. On 22 November 1967, the Head Chief, Mr Hammer
DeRoburt, informed the Trusteeship Council at its 1323rdMeeting that, "In
the end the people of Nauru had corne to the conclusion that the Island of
Nauru, to which they had always belonged, must be their permanent
homeland." (TnrsieeshipCouncil~fficial Records, 13th Special Session, 22-23
Novernber 1967,p.4.)566. The difficultywas that, havingsupported resettlement as a method of
discharging its trusteeship responsibility, and after making initial
investigationsinto the options for rehabilitation, the Australian Government
ultimately failed to fuifil its responsibility for the alternative, an alternative

accurately described by the General Assembly as "restoring the Island of
Nauru for habitation by the Nauruan people as a sovereign nation".
(Resolution 2111 (XX), 21December 1965).

Section 2. Resettlement Proposals

567. Resettlement first became a major issueafter World War Two. There
seem to have been various motives for this. For example, in a minute the
Secretary to the Department of Territories of 4June 1953observed:

The General Manager of the British Phosphate Commissioners,seems to be
fairlykeen on the idea of acquiring another island and resettling the Nauruans,
but he has not put fonvard anysuggestion isworth fouowingup. Personaiiy,
1 gathered the impression in discussion with the General Manager, thaishe
pushingthe idea more with the objectiveof getting the Nauruans out of the way
than the desire to find the best avenue for theirfuture when the phosphate cuts
out on the Island."

(Memorandum, "TheFuture of Nauruans", 4 lune 1953, Australian Archives,
ACT, CRS,,4518 Item DR 118/16;Annexes,vo1.4,Annex60.)

569. A feature of the early plans for resettlement was that tended to
envisage the resettlement of the Nauruans as individuals, in Australia or
elsewhere. This was the approach taken in a Departmental minute dated 5
November 1953 by the Secretary to the Department of Territories to the

Minister, which bears the Minister'sendorsement of his general agreement
with the proposal:

"The social developmentof the Nauruans is tendiig more and more towards the
European pattern. The longer they stay on the island of Nauru working in and
for European enterprise, and the morOUIeducation activities developthem
along and fit them for the European wayof life,the more thiwiicontinue
and theless likelihood there WUbe of the problem of their resettlement being
met by transfer an isolated island Me. It is considered that the solution to the
Nauruan resettlement problemlies not in fidianother island Nauru to which
they could be transferrcd as anire community,but in steadiiy educatingthem

to the stage where theyan fit into the economic and social life of Australian Territories, after the European manner, and progressivelyfmdig opportunities
within those Territories to which they could transfer, according to their several
capacities and wishes. From dimatic and opportunity aspects, Papua and New
Guinea seem to offer the best prospects, although possibiities in Austraiia itseU

cannotbe dismissedaltogether."
(Australian Archives ACT CRS A.518,Item DR11816 PT.1; Annexes, vo1.4,
Annex62.)

570. The memorandum went on to specify certain practical courses of
actioii:

'The broad hes of approach.whichit issuggestedbe adopted, are:-

(a) To continue with education and employment poliues on Nauru
duected to training and fitting the Nauruans for social and
employment opportunities after the European manner. As this

advances, so wiii the desire of Nauruans for assimilation in
Australian Territories.
(b) As part of this education, a conducted tour be arranged each year
for four selected Nauruansto Austraiia and Papua and New Guinea,

or to Papua and New Guinea only,to euable them to get first-hand
knowledge of conditions in those countries. The funds for these
tours to be provided fromthe Nauru RoyaltyTrust Fund.

(c) The Department, in CO-operationwith the Papua and New Guinea
Administration and the Nauru Administration, to be charged with
the responsibiiity of finding individual or group settlement and
employment opportunities outside Nauru, for those Nauruans who
express the wish to transfer and who are fit to accept and take
proper advantageof the opportunitiesoffering.

(d) In due course, the Local Government Council to be empowered,
withthe approval of the Administrator of Nauru, to make a gant to
any adult male Nauruan who transfers permanently to a place

outside Nauru, for the purposes of assisting such Nauruan to meet
the costs of removal of hiiself, familyand persoual effects, and to
establish a home for himseUand bis family inthe place to which he
has transfçrred. Such grant to be paid out of the Long-Tenu
lnvestment Fund.

If we settlc obi our bro:id lines of approach, the detailswillwork out as we
proceed.

If you agree that these are the only practical lines of approach at the momenit
wiUbe necessaryfor you to decide whether youwiUdeclare it to the Nauruans as
a fum policy. 1would be inclined not to do so, because 1believe that it would immediately provokethose who are at present advisingthe Nauruans, to organise
open opposition, irrespectiveof anyfair-minded considerationof the realities.
1believethat a policyof encouragingand helpingassimilationcan be pursued by

us steadily and unostentatiously andthat ils prospects of success wiilnot be
afiected if we do nor openly disdose it to the Nauruaos as a deliberate policy.
Assimilation must develop fromspontaneous choiceby individuaiNauruans and
fromopportunities presented. We can steadilyhelpboth of these to develop.

For the time bein& however, 1 believe our best interests wouid be served by
playingdong with the Nauruans on the idea of a new Nauru. For that purpose, 1
think we should replydong lines that put the problem back into the lap of the
Nauru Local Governrnen~Council, by asking questions which it is essentiai we
how the answersto before we caneventhink about moving."

(Australian Archives, ACT, CRS A.518, Item DR118/6 Pt.1; Annexes, vo1.4,
Amex 62.)

571. But there were other reasons than "playingdong with the Nauruans"

for investigatingthe prospect of "separate resettlement":

"A further advantagein still pursuing theidea of acquiringan island or part of a
Territory for the resettlement of Nauruans, isthat we maybe forced uitimatelyto
need such an area as a second string,either because some Nauruans WU not or
cannot be assimilatedor that we are left eventuallywith a residue whichmust be
resettled quickly."

(Ibid.)

572. The Minister minuted on the memorandum as follows:

"1agree with the generai lines of this memorandum, aithough 1wouid qualify or
amend some of the statements in it.
For the guidanceof the dcpt. my minute of 5th June 1953(folio 12) may stiii be

regarded as present policy. Inpracticai terms this means that for the next five
years we proceed on the assumption that works, seMces and facilities will be
required on Nauru for anothcr generation in respect of a population noless than
the present Nauruan population; that during this generation we proceed with the
advancementof the Nauruans to the full extent of their capacityto benefit from
educatior.,tbat the eventual conditionof the Nauruans willdepend on the results

of these efforts at their advancement; that the prospectof their eventuai transfer
to an0tbL.rhome is a real prospect but the exactconditionsof such a transfer wiii
depend primarily on what social and cultural ...[word illegible...takes place
amongthe Naunans themsel\res. The idea of an islandhome isnot disrnissedbut
is made a subject for thinkiig by the Nauruans themselves. The suggestions made in the passage1have marked on page 2 [the proposal marked (c)] of this
memorandum can be put into effect at once. At a subsequent stage we can
proceed, ifit is thought desirable, withsome of the other suggestionsmade in the
memorandum."
(ibid;Annex,vo1.4,Annex62.)

573. Throughout this period, the Australian Government was on record as
acceptingan obligationto assistfinanciallywith resettlement.

574. For example, in 1956 the Respondent State gave an assurance that
financial assistance would be provided in relation to re-settlement. The

Trusteeship Councilin its "RecomrnendationsandConclusions"on Nauru:

"welcom[ed]the assurance given by the Administering Authority that, whatever
fundswiil be needed for the possible resettlement of the Nauruans, these hnds
willbe forthcoming as and whcn required, and that al1the necessary assistance,
whether it be specialtrainingor technical assistance,wüibe amplyprovided."

(Report of TnisteeshipCoiincil 23 luly 1955-14August 1956, GeneralAssembS
Oficia Records11thSessionSupp.No. 4 (1956)pp.325.)

575. Similarlyin 1962the Trusteeship Councilstated that:

"lt shares the viewof the VisitingMission that the strongest obligationrests with
the Governments of the countries which havebenefited liom low price, high
qualityphosphate over the manyyears of the operation of the Commissionersto
provide the most generous assistance towards the costsof whatever settlement
scheme is approved for the future home of the people of Nauru. In this

connexion,ittakes note with satisfactionof the declaration of the Administering
Authority that ample provisionof means for developinga future home is not and
will not be astumbling block towards a solution and that the Administering
Authoritywillbe mindfulofts obligationtopronde suchassistance."
(Report of Trusteesliip Coiiiicil 20 July 1961-20July 1962, Geneml Assembly
OfJa Records17thSessionSupp.No.4 (1962)p.41.)

This undertaking was reaffirmed in 1963 (Report of TrusteeslzipCouncil 20
July 1962 -26 June 1963, General Assemblyûfficial Records 18th Session,
Supp. No. 4 (1963) p.28). The question however was, what was going to be
done to giveeffect to it.576. In 1959representatives of the Department of Territones, the Nauruan
community and the British Phosphate Commissioners met, at which point
Australia put forward what Williamsand Macdonald descnbe as a "crude
assimilationist policy" (M. Williams & B. Macdonald, The Pllolosplzateers,
Melbourne University Press,Melbourne, 1985, p.465). Nauruans were to be

given full citizenship in either New Zealand, the United Kingdom or
Australia, it being expected that most would corne to Australia. This idea
was rejected by the Nauruans, on the hasis that it would involve the loss of
their identity as a people.

578. At the meeting of the Trusteeship Council in May/June 1963, the

Australian Government, through its Special Representative, informed the
Councilthat:

"If an area was chosen which wasnow Australian Territory and which could be
made available, the basis of the administrative arrangement would be that,
subject to the resetiled Nauruanç accepting the prideges and responsibities of
Australian ciiizenship, they should be enabled Io manage their local
administration and to make domestic laws or regulations applicableto their own
community.'

(Trustees CoaiipilOficiRecordî,Uth Session,29 May-26June 1963,p. 6.)

580. The Nauruans were themselves anxious at one stage to resettle on
another island, as they feared that they would not be able to continue to live
on Nauru. But, as has already been recounted in paragraphs 159-174above,
no agreement could be reached on the resettlement option. At the 1964
talks the Naunian delegation summarized their position in the following

terms:

"Wesubmit again that the main need for resettlement arises out of the physical
destruction of the island and its attendant problems. Four-fiîths of our island is
phosphate-bearing andtherelore in the end ihatiilbe destroye...
We feel that we cannot secure a reasonably happy and satisfactoryfuture on your
tcrms for resettlement on Curtis Island and we have decided on behalf of ow
people that the idea should forthwithbe aban...ed

Your representatives pointed out,and we had noted, that the same Australian
attitude wouldapplyto aUits off-shoreislandsirrespectiveof their distances from
the mainland.

We are left th-refore, with no option but to look to our own island for a
permanent future. We willrem& on Nauru."
("Summaryof the ViewsExpressedby the Nauruan Delegation atthe Conference
in Canberra July-August1964"pp.4-5;Annaes vol.3, Annex 1, pp.4-5. See para.
173for thefultlxt of the statement.)

Section3. RehabilitationProposals

585. The effect of the failure of the resettlernent proposal was that the

rehabilitation issue revived. The Nauruan delegation lost no time in pointing
this out:

"Asthe Nauruans,the AdministeringAuthority andthe U.N.Trusteeship Council
haveal1agreed that there would alwaysbe people remainingon Nauru evenifthe
majority were resettled elsewhere, and as itwas further agreed that Nauruans
would not be forced to leave against their WU,the Nauru Local Government
Council thinks it is important for thelivelihoodof such people that lands which
have been denuded of theù natural soi1 for phosphate mining should be
reclaimed.

As the entire Nauruan communitynow willhave to make the island their home
forever because they cannot expect to retain their own nationality on any
Australian islands, the question of rehabitating the quarried lands, in full, has
become imperative and most urgent.
If the lands are not rehabilitated, the idea of a permanent future for our people
on the islandcertainlybe doomed to failure.

We hope the Admitering Authority wüi not take advantage of the situation to
force on us acceptanceofAustralia'sunfavourableterms for resettlement."
(id.,.5.)

586. The viewthat, in the circumstancesthat had occurred, the trusteeship

obligation carried with it an obligation with respect to the rehabilitation of
the lands, was supported by the General Assernbly. In particular in
Resolution 2111 (XX) of 21 December 1965the General Assembly,noting
the inability of the Respondent State to satisfyfullythe Naunians' conditions
that they should be able to resettle as an independent people and have

territorial sovereignty in their new place of residence, recommended that
"immediate steps be taken by the Administering Authority towardsrestoring
the Island of Nauru for habitation by the Nauruan people as a sovereign
nation". (See Annexes, vo1.4,Annex 15.)587. SimilarlyResolution 2226 (XXI) of 20 December 1966recommended
that the Administering Authorily should "take immediate steps, irrespective
of the cost involved,towards restoring the island of Nauru for habitation by
the Nauruan people as a sovereign nation". (Annexes, vo1.4,Annex 16)

588. On the other hand the Agreed Minutes at the end of the 1965talks
recorded the followingwithrespect to rehabilitation:

The Nauruan delegation stated that it considered that there was a responsibiity
on the partner Governments to restore at their costthe land that hadbeen mined,
since they had had the benefit of the phosphate. The Australian Delegation was

responsibilityfor any rehabilitation proposaisthe objectives and cos1 of which

were unknownand the effcctivenessof which wasuncertain".
(1965Taiks,AnnexeL, "Summaryof Conclusions";Annexes,vo1.3,Annex2.)

589. In an attempt to resolve this impasse, it was agreed to establish an
independent technical committee to consider rehabilitation. This was the
Davey Committee, comprising Mr G.I. Davey (Chairman), Professor J.N.
Lewis and Mr W.F. Van Beers, which was appointed late in 1965by the
Australian Minister for Territories. The members of the Cornmittee were

mutually acceptable to the Nauru Local Government Council and the
Respondent State. The Committee was directed, inte alia, in the Terms of
Reference:

'To examine whether it would be technically feasible to refill the mined
phosphatc areas with suitablc soi1and101 other materials from external sources
or IO takc other steps in ordcr to render them usable for habitation purposes
and/or cultivationof anykind."

590. The Davey Committee were given a rather short time in which to
prepare and present its report. In particular therz was no time available to
organise any trial projects or tests. The Committee thus relied entirely on

information as to the composition and formation of the pimacles obtained
from British Phosphate Commissioners engineers with experience on the
island. The same situation applied in regard to Nauru's water resources.
Nonetheless the Committee's Report (Annexes, vol. 3, Annex 3) took the
view that there were real prospects for rehabilitation at least to a certain
level. The Report emphasised the need for water storage and proposed the

construction of a large reservoir in one of the natural depressions onTopside, as part of an overall program of rehabilitation and water and land
management. For a more detailed account of the Davey Committee's work
see paragraphs 178-184 above.

591. Despite its earlier acceptance of a obligationto take appropriate steps
to ensure the long-term future of the Nauruan people, Australia failed to act
on the recomrnendations of the Davey Committee, or for that matter of the
General Assembly. Instead, as discussionswith respect to the future of the
phosphate industry and the timetable for independence of Nauru assumed
ever greater importance, it sought toextract from the Nauruan leaders, as a
price for granting self-government and control over rnining, the
abandonment of their claim to the rehabilitation of the already worked-out
lands. The Australian posture at this stage involved at least a tacit
acknowledgementthat it would otherwise have been necessaryto engage in a

serious rehabilitation programme. That reflected the earlier explicit
Australian acknowledgements as to resettlement. The crucial question is
then whether the grant of independence and control over the phosphate, on
the terms negotiated in 1967, carried with it,either by express agreement of
the Nauruans or othenvise, the implication that Australia was relieved of the
obligation torehabilitate the lands. PART IV

THE SIGNIFICANCEOF THE TRANSACTIONSSURROUNDING
INDEPENDENCE

Section 1. The Respondent'sPosition

592. It has been the consistent position of the respondent State that it
regards "the comprehensive Phosphate Agreement concluded prior to
independence as a just settlement that cleared the partnerovernments of
the former British Phosphate Commissioners of any responsibility for the

rehabilitation of Nauru": see e.g. Note No.4188 of the Australian High
Commissioner to the Department of External Affairs of the Republic of
Nauru, 3 February 1988 (Annexes, vo1.4, Annex 80). But there is no
document of anykind embodyingthis so-called"settlement". On the contrary
al1the records indicate the absence of anysuchsettlement.

Section2. Nauruan Insistence on the Rehabilitation Claim in the
Negotiations Leadingto Independence

593. At the talks leading to the Nauru Phosphate Agreement, the
Administering Authority stated that in itsiew the financial arrangements

that would be made would be sufficientlyiberal to take care of the Nauruan
requirements, including rehabilitation or resettlement. But theo benefits
the Nauruans received --independence and coiitrol over the phosphate
industry-- were no more than they were entitled to. Indeed those benefits
were only obtained at a price, as is set out in detail in paragraphs 127-137
above. In effect the Administering Authority was claiming that the
rehabilitation of the lands already worked out by their instrumentality, the
British Phosphate Commissioners, substantiallyfor theirn benefit, should
be paid for out of the revenue from futureining. The point was, however,
that theyhad failedtomake any provisionfor suchrehabilitation themselves. PART IV

THE SIGNIFICANCEOF THE TRANSACTIONSSURROUNDING
INDEPENDENCE

Section 1. The Respondent'sPosition

592. It has been the consistent position of the respondent State that it
regards "the comprehensive Phosphate Agreement concluded prior to
independence as a just settlement that cleared the partnerovernments of
the former British Phosphate Commissioners of any responsibility for the

rehabilitation of Nauru": see e.g. Note No.4188 of the Australian High
Commissioner to the Department of External Affairs of the Republic of
Nauru, 3 February 1988 (Annexes, vo1.4, Annex 80). But there is no
document of anykind embodyingthis so-called"settlement". On the contrary
al1the records indicate the absence of anysuchsettlement.

Section2. Nauruan Insistence on the Rehabilitation Claim in the
Negotiations Leadingto Independence

593. At the talks leading to the Nauru Phosphate Agreement, the
Administering Authority stated that in itsiew the financial arrangements

that would be made would be sufficientlyiberal to take care of the Nauruan
requirements, including rehabilitation or resettlement. But theo benefits
the Nauruans received --independence and coiitrol over the phosphate
industry-- were no more than they were entitled to. Indeed those benefits
were only obtained at a price, as is set out in detail in paragraphs 127-137
above. In effect the Administering Authority was claiming that the
rehabilitation of the lands already worked out by their instrumentality, the
British Phosphate Commissioners, substantiallyfor theirn benefit, should
be paid for out of the revenue from futureining. The point was, however,
that theyhad failedtomake any provisionfor suchrehabilitation themselves.594. During the 1967Talks, the Nauruan delegation drew attention to this
aspect more than once. For exarnple, Head Chief DeRoburt in the
discussions on 18 May 1967 obsewed that the Nauruans had always had

independence as a basic aim and said that he kas disturbed that in the
current taiks the Partner Governments seemed to want to protect their
interests in the phosphate industrybefore proceeding to the consideration of
the political settlernent" (Nauru Talks 1967p.38; Annexes, vo1.3,Annex 5).
The Secretary'sreply was that the Joint Delegation was not in a position to

taik about political matters at that stage. "What the Joint Delegation
wanted he said 'bas a clear-cut positionon the phosphate issue"(id., p.39).

595. The opposing positionsof the parties on the rehabilitation issue were
stated in the following terrns.

596. The Governments'position on rehabilitation was stated as follows:

"On the question of rehabitation the Partner Governments maintained that it
was not for [hem to decide what should be done for rehabilitation; this was the
decüion for the Nauruans. Fiancial arrangements could be such as to permit
the Nauruans to do what they wished within reasonable Limits,in the way of
rehabitation.As part of the total arrangement the Joint Delegation would like
to see the Nauruans withdrawtheu claimsin respect of rehabilitation."
(Nauru Talks1967,p.56;Annexes,vo1.3,Annex5.)

597. In response, the Nauruan position, as stated by Head Chief

DeRoburt, wasconsistently alongthe followinglines:

"As the Island was to be a permanent home for the Nauruan people,
rehabitation is needed. The Nauruans could nottak about details under a cloud
of denial of broad principles. The land rnust be rehabiOnce agreement
on broad principles was reached technical details could be dis...If the
governmentsclaim that theuproposais[should]be fullyadequate for the present
and future needs of the Nauruanshen we feel that it is up to you to try to
convinceus on thispoint bygivingwhateverdetailsyoufeel appropriate."

(id., p.82(emphasisin original).)

Sirnilarlythe Nauruan delegation stated: "We are not prepared publidy or privatelyto accept the Partner Governments'
viewthat the proposed fuianciaiarrangements are adequate to cover our future
needs includingrehabitation or re-settlement."

(id.,.112.)

598. The draft proposals of the Joint Delegation to the Nauruans referred
specificallyto rehabilitation:

"Rehabilitation

9. The partner governments consider that the proposed fuiancial
arrangements on phosphate cover the future needs of the Nauruan community
includingrehabitation or resettlement."
(id., p.160,Annexes,vo1.3,Annex5)

This clause, one of the most important among the proposals of the partner

governments,wasdropped in the Final Agreement.

599. In their statement at the 1967 talks the Nauruan Delegation asserted
categorically that while the Nauruans were prepared to take fiiancial
responsibility for rehabilitating land mined in the future, the partner

Governments must take responsibility for rehabilitation resulting directly
fiom their miningoperations, and must restore the mined areas whether they
had provided for this in the past or not (Nauru Talks 1967 p.111; Annexes,
vo1.3,Annex 5.).

At one stage in the talks, on 14 April 1967,the Australian Chairman
600.
attempted to place upon the Naunians the responsibilityfor rehabilitation, in
terms that "on rehabilitation you [the Nauruans] have accepted the
responsibility for it provided that al1the proceeds from the phosphate are
available to the Nauruan people." In response the Nauruan position was

formulated in these terms:

"Before going any further the Nauruan delegation wonld like to correct what
appears Io be a misconceptionof the Partner Governments about our attitude to
rehabitation of the mined areas on Nauru. A few days ago (on 14th April) the
Chairman re-stated the Governments' position thatin your view the fuianciai
arrangements would be 'sufficiently liberal to take care of the Nauruan
requirements, including rehabitation or re-settlement'. We do not agree with
your attitude on this matter (for reasons we shail give later) but at least we
understand what youare saying. However the Chairman then said 'on rehabiitation, you (the Nauruans) have
accepted the responsibiity for it provided that all the proceeds from the
phosphate are availableto the Nauruan people'. This is NOT a correctstatement
of what we have been saying. It is correct only regarding areainfuture.
The Nauruan delegatiohasargued from the beginningthat the responsibiity for
restoring the land already mined (about one third of the island) rests with the
Partner Governments who cannot divest thernselvesof this responsibiity merely

by sayingthat theyi not acceptit."
(id.,.140,Annexes,vo1.3,Annex5.)

601. This wasmade clear again in the Phosphate Proposals of the Nauruan
Delegation:

"Wevaluethe freedom that we canattain on Nauru sdîïciently to face the cost of

rehabilitating lands that we mine in the future, but we are weli aware that our
basic opportunities to survive as an independent people are being severely
curtailed by such large expenditures on rehabiitation and we need every penny
that wecanget. We are not prepared publidy or privatelyto accept the Partner
Governments' view that the proposed financial arrangements are adequate to
coverour future needscludingrehabilitation or resettlement."
(196 7auru Talks,p.112;Annexes,vo1.3,Anne5.)

602. In the event the Nauru Island Phosphate Industry Agreement of 14
November 1967was silent on the question of the rehabilitation claim. (See
Annexes,vol.3, Annex6 for the text of the Agreement.)

Section 3. The Rehabilitation 1ssuebeforethe United Nations, 1967

603. Before the United Nations and the Trusteeship Council the Nauruan
position was the same as it had been in the talks leading to the 1967
Agreement. In his opening address to the 34th Sessionof the Trusteeship
Council, Head Chief Hammer DeRoburt stated that, although the Nauruan

Local Government Council worked in a climate of understanding at
Canberra with the Respondent State, the only divergent views which
appeared to be not reconcilable were those dealing with the question of the
rehabilitation of the mined lands. The Council maintained that the
AdministeringAuthority should accept responsibilityfor the rehabilitation of

lands already mined, while the Council would be responsible for the
rehabilitation of lands mined €rom1 July 1967:Repori of Trusteesi~ip Council27July 1966-30 June 1967, General AssemblyOf/iciaaR lecords, 22nd Session,
Supp.No.4(1967)pp.47-8.

604. There were strong observations in the Trusteeship Council on the eve
of independence regarding the obligation to rehabilitate. For example, the
representative of France regretted that no agreement had been reached on
the question of rehabilitation:

"412. The representative of France congratulated the representative of the

Administering Authority, as well as the Nauruan people on the agreement
reached on the question of phosphates. He was particularlyad that the full
ownershipof the phosphatedeposits wasgranted to the Nauruan people.
4U. The representativeofFrance regretted that no agreement had been reached
between the Admitering Authority and the Nauruan people on the
rehabitation of the worked-outminingland despite the effortsundertaken for a
long time. He hoped that an agreement could be reached on this question also,
since many other thorny problems were settled betweenthe Admistering

Authority and theNauruan people.
414. The representativeof France staied that althoughhe was confidentthat the
Nauruan people would administerwith wisdomthe assets accumulated fromthe
sale of phosphate,whichwouldenable them to livein relativeduencein Nauru
itself (or elsewheifthey ever decided to settle dom in another country), the
future of the Nauruan people was darkened by the fact that in aboutty-six

years the phosphate depositswouldcome to an end. He was therefore happy to
note that the Nauruan leaders were thinking of setting up new activitieswhich
could one day at least, in part, substitute the wealth represented by the
phosphate:
(Reporiof the TrusteeslCouncil, 27July 1966-30lune 1967,GeneralAssembly
Oficial Records22ndSession Supp.No.4 (1966)p.50.)

605. The view that the question of rehabilitation was a separate and
distinct issue had also been supported by the Liberian representative, who
said that:

The question of the restoration of the worked out phosphate land could not
delay theranting of independence. Neitherthe question of ownershipnor the
question of restoration of the worked out phosphate lands were contingentone

uponthe other."
(Reporiof tlze TrusteeshipCounc1lIII&1965 -26 lune 1966,GeneralAssembly
OftifialRecords21stSessionSupp.No.4 (1965)p.44.) 606. The representative of the SovietUnion urged the RespondentState to
abandon any manoeuvres with regard to resettlement and to undertake, in
accordance with General Assembly Resolution 2226 (XXI), the restoration
of the rnined out land at its own expense in order to create conditions

permitting the people of Nauru to exist as a sovereign nation (Report of the
Tmteeship Council, 27 July 1966-30June 1967, General Rrsernbly Official
Records22nd SessionSupp.No.4 (1966)p.50.)

607. It is true that the Trusteeship Council in 1967rejected a Liberian
draft resolution whichprovided inpart asfollows:

"TheTrusteeship Council,

4.Recomntendsthat the AdministeringAuthority take immediate steps towards
restaring the Island of Nauru for habitationby the Nauruan people asa sovereign
nation;
5.Considersthat it is the responsibiity of the Administering AuthorityIo restore
at its cos1the worked-out landon the island untii the time when the Nauruans
receivethe fulleconomic benefit fromthe phosphates.

This draft resolution was rejected by a roll-cal1vote of five against (France,
New Zealand, United Kingdom, United States, Australia) and two in favour
(Liberia, Soviet Union) with one abstention (China) (TrusteeshipCouncil
OfficialRecords,34th session,29 May -30 June 1967,p.137. For the French

and United States explanations of vote see ibid. For the text of the Liberian
draft resolution (TlL.1132) see id, Annexes, p.2). But that rejection did not
imply a rejection of the Nauruan claim: the matter was simply left to be
resolved between the parties. This is made clear in the Report of the
Trusteeship Council, which noted the difference of views between the two
delegations and stated:

'The Councii, regretting that diferences continue to exist on the question of
rehabiütation, expressesearnest hope thwilbe possibleto fmd a solution to
the satisfactionof both parties."

(Reporrof TnisteeshipCouncil27 Juiy 1966-30June 1967, GeneralAsseinbiy
OfficialRecords3rd SessionSupp.No. 4 (1967)p.49.)

608. In addition the Committee of Twenty-Four in its resolution of 27
September 1967 requested the Administering Authority "to rehabilitate
Nauru accordingto the expresswish ofthe people so that they may continueto live there": GeneralAssembb Official Records, Twenty-Second Session,
Annexes (XXII) 23/Add. l(Part III) (Doc.A/6700/Rev.l, 1967), p.112.

609. At the 1323rd Meeting of the Trusteeship Council, Head Chief
Harnmer DeRoburt (who was present in his capacity as Special Adviser to
the Australian delegation) spoke on the issue of Nauruan independence, and

in particular referred to the still outstanding question of rehabilitation in
these terms:

"20. On au those matters, full agreement had been reached between the
AdministeringAuthority and the representatives of the Nauruan people. There
was one subject, however, on which thereas still a difference of opin--n
responsihiiityfor the rehabilitation of phosphate lands. The Nauruan people full~
accepted responsihiity in respect ofland mined subsequentlyto 1 July 1967,since
under the new agreement they were receivingthe net proceeds of the sale of
phosphate. Prior to that date, however, theyhad not receivedthe net proceeds
and it was therefore their contention that the three Governments shouid bear
responsibity for the rehabitation of land mined prior to 1 July 1967. That was
not an issue relevant to the termination of the Trusteeship Agreement, nor did
the Nauruans wishto make it a matter for United Nations discussion. He merely
wished to place on record that the Nauruan Govemment wouidcontinue to seek
what was,in the opinionof the Nauruan people, ajust settlement of their claims."

(TnisteesliipCouncil Officia1Recordv, 13th Special Session, 22 November 1967,
p.3.)

610. This clear statement that the rehabilitation issue had not yet been the

subject of agreement was not contradicted by any delegation. On the other
hand, the Soviet delegate expressed his confidence that the legitimate
demands of the Nauruan people for the rehabilitation of the land would be
fullymet: id.,p.6.

611. When the rnatter came before the Fourth Comrnittee of the General
Assembly at its 1739th Meeting on 6 December 1967,the President of the

Trusteeship Council (Ms Brooks,Liberia) welcomed the agreement reached
with the partner governrnents. These views were echoed by Mr Rogers of.
Australia and Head Chief DeRoburt. In his speech on this forma1occasion
Head Chief'DeRoburt did not mention the Nauruan claim to rehabilitation
from the partner governments. He spoke of it in these terms:

"Thateconomic base, of course, presented its own problems. One whichworried
the Naurums derived from the fact that land from which phosphate had been mined would be totdy unusable. Consequently,although it would be an
expensive operation, that land would have to be rehab'itated and steps were

already being taken to build up funds to be used for that purposeThat
phosphate wasa wastingasset was,in itself,a problem:in about hventy-fiveyears'
time the supplywould be exhausted. The revenue whichNauru had receivedin
the past and would receive during the next hventy-fiveyears would, however,
make it possible to solve the problem. Aiready some of the revenue was being
docated to development projects, so that Nauru would have substantial
alternative sources of work and of income longbefore the phosphate had been
used up. In addition,a much larger proportion of its income wasbeing placedin
a long-term investmentund, so that, whatever happened, future generations
would be provided for. In short, the Nauruans wanted independence and were
conlidenttheyhad the resources withwhichto sustainit."

(GeneralAssembiy OfficialRecords 22nd Session, 1739thmtg, 4/C.4/SR 173,
p.395.)

612. Head Chief DeRoburt was speaking as a member of the Australian
delegation. His speech must be read in the context of his earlier
uncontradicted assertion of the Nauruan claim at the Trusteeship Council
proceedings. The formal nature of the proceedings before the Fourth
Cornmittee and the spirit of the occasion made it an inappropriate forum

before which to voice a note of discord. Thus there was no inconsistency
between Head ChiefDeRoburt's speeches on these two occasions. He had
made his point with sufficient force and clarity before the Trusteeship
Council. These two sessions leadingto independence, held within a few days
of each other, formed a comected set rather than a series of disparate and

severable occasions.

613. It is clear that the General Assemblydid not endorse the viewthat the
rehabilitation claimwas merged in or lapsed with the grant of independence.
General Assembly Resolution 2347 (XXII) of 19December 1967,adopted

unanimously, recalled the earlier Resolutions 2111(XX) and 2221(XXI),
both of which had contained strong recommendations with respect to
rehabilitation, noted the agreement that Nauru should become independent
on 31January 1968and resolved:

"Inagreement with the AdministeringAuthority, that theTrusteeship Agreement
for the territory of Nauru approved by the General Assembly onvember
1947 shd cease to be in force upon the accessionof Nauru to independence on
31January 1968..."614. Havingregard to the resolution of the Cornmittee of TwentyFour, the
views expressed in the Trusteeship Council, and the reference in General
AssemblyResolution 2347 (XXII) to the earlier Resolutions 2111 (XX) and

2221 (XXI), it is impossible to construe Resolution 2347 (XXII) as an
adverse determination upon Nauru's claim or as purporting to terminate any
liabilityof the Respondent State to rehabilitate the worked-out lands --even
on the assumption that the General Assemblycouldvalidlyhave made such a
determination.

Section 4. Affirmationof the Claim aRer Independence

615. The Nauruan clairn was affirmed by the President of Nauru
immediately upon Nauru's attaining independence. President DeRoburt's is
reported as sayingon 31January 1968that:

"We hold itagainsi Britain, Austrdia and New Zedand to recognize thaisit
their responsibilityto rehabiitate one thud of the island."
("7ïte Sirit" (Sydney), 2 February 1968See also the extracts from other
Australian newspapersset out inAnnexes,~0, nnex69.)

616. That viewalso found expression inthe Nauruan Constitution. During
the Proceedings of the Nauruan Constitutional Convention on 23 January
1968, a proposal was made to add a clause dealing with the Nauruan
rehabilitation claim. That proposal was withdrawn,because, in the words of

Professor Davidson, the Adviser to the Constitutional Convention, such a
clause ...

"couldn't, inanyway,improvethe situation,because it is a mawiürhaveto
be dedt with by negotiation at a govermental level,and this Con..can'ton
impose an obligationon a foreigngoverment ..."
(Territory of Nauru, Record of Proceeditlgsof the Cc~zsiinttioitalCottvetition,23
January 1968,p.38,Annexes,vo1.4,Annex68.)

The clause under debate became Article 83of the Constitution:

"83.Except as othenvise pronded by law,the right to mine phosphate iinested
the Republicof Nauru."617. Nonetheless concem continued to be felt on this issue, and four
months after independence Article 83 of the Constitution was amended to

provide:

"(1) Excepasothenviseprovidedbylaw,thenghtto mine phosphisvestedin
theRepublicof Nauru.
(2) Nothingin thisConstitutionmakestheGovernmentof Naururesponsibicfor
therehabilitatof land fromwhichphosphatewasmined beforethefust dayof
Juiy,Onethousandninehundredandsixty-seven."

618. The Nauruan claim was taken up, orallyand in writing, in discussions
with Australian leaders at intervals thereafter. For the diplomatic
correspondence see Annexes, vo1.4,Annexes 76ff.

Section5. Conclusion

619. It is clear from the record that, despite the earlier acceptance by
Australian representatives of an obligation to assist the Nauruans towards
achieving astable long-term future through suchmeasures as resettlement, at
the crucial time the Respondent State failed to satisfywhat the Trusteeship
Council had described in 1962as "itsobligation to provide such assistance":

Report of Tmteeship Council 20 Juiy1961-20 Juiy 1962, General Asxembly
ûjj7cial Records 17th Session,Supp. No. 4 (A15204) p.41. That obligation
was one the Respondent State had consistently accepted in earlier
discussionsin United Nations forums, as has been demonstrated above. It is
also clear from the record that the Nauruan claim for the rehabilitation of
the mined-out lands was not withdrawn, was not traded away or denied by
the Nauru Island Phosphate Industry Agreement 1967,and was not treated

bythe General Assemblyor the Trusteeship Council as havingbeen negated
by the conferral of independence. PART V THE REMEDIALPOSITION

Section 1. TheRelief Requested

620. By its Application the Republic of Nauru requests the Court to
adjudge and declare that Australia has incurred an international legal
responsibility and is bound to make restitution or other appropriate
reparation to Nauru for the damage and prejudice suffered. Nauru further
requests that the nature and amount of such restitution or reparation should,
in the absence of agreement between the parties, be assessed and
determined by the Court, if necessary, ina separate phase of the proceedings
(Application, para 50). In respect of the quantification of damages, the
Republic of Nauru alsoreservesthe right to ask the Court, at the appropriate
stage of the proceedings, to reflect the particular elements of excessand the

lack of ordinary consideration in the conduct of the Respondent State by an
award of aggravated. or moral damages (in the compensatory mode)
(Application,para 51).

621. At the present phase of the proceedings before the Court, the
Applicant's primary request is for a declaration of the liability of the
Respondent State with respect to the various breaches of obligation detailed
in Part III of this Memorial. The substantive relief soughtby the Applicant
consists of restitution or other appropriate reparation to Nauru for the
damage and prejudice suffered, and in particular for the cost of the
rehabilitation of the phosphate lands worked out before 1 July 1967. Since

the necessaryreparation or restitution in respect of Nauru'slosscould take a
number of forms, including material assistance in an agreed programme to
rehabilitate the lands in question, it appropriate that the parties be given
the opportunity to discusstheform and precise quantum of reparation in the
light of the Judgment of the Court. If the parties fail to agree on these
matters, the Republic of Nauni reserves the right, pursuant to paragraph 50
of its Application, to have the amount of damages or other reparation
assessed and determined bythe Court in a separate phase of the proceedings. Section2. Basis of AustralianResponsibiliîy

622. It is submitted that the responsibility of the Respondent State in

respect of Nauru'sclaim is not qualified, limitedor excluded in international
law by reason of the involvement of the Governments of the United
Kingdom and New Zealand in the arrangements for the administration of
Nauru or the exploitation of its phosphate resources from 1919 onwards.
This is so for the followingreasons.

623. As a matter of international law, the presumption is that twoor more
States which are involvedin some form of common enterprise are separately
responsible fortheir ownacts, notwithstandingthe participation or support of
other States. In other words the presumption is one of the several or
concurrent responsibilityof States.

624. The consistent jurisprudence of the Court in relation to decisions

attributing responsibility to a particular State, as well as to applications to
intervene under Article 62, bears out the essentially bilateral character both
of international responsibility, and, correlatively,of contentious proceedings
at the internationallevel. Cases which illustrate this thesis include thCo&
CflannelCase I.C.J. Rep. 1949p.4 and the NicaraguaCase (Jurisdiction and
Admissibility) I.C.J. Rep. 1982 p.392, whichis analyzed in paragraph 647

below.

625. The point has also been underlined by the International Law
Commission, for example, in its commentary to the Draft Articles on State
Responsibility:

"Asimilar conclusioniscalledfor in casesof pardel artributionof a singlecourse
of conductto severaiStates, as whenthe conductin question has been adopted by
an organ common IOa number of States. Accordmg to the principles on which
the articles of Chapter II of the draft are based, the conduct of the common
organ cannot be considered othenvise than as an act of each of the States whose
common orsan it is. If that conduct is not in conformitywith an international
obligation, tIWO or more States dl concurrently have cornmitted separate,
aithough identical, internationallywrongfulacts. 11is self-evidentthat the parallel
commission ofidenticai offences by two or more States is altogether different from participation bone of those States in an internationaiiy wrongfui act
committed bytheother."
(I.L.C.Ybk.1978vol2(2) p.99.)

626. A similar view has been taken in the decisions of various arbitral
tribunals. For example In Eamsllawv United States(The Zafiro) ((1925) 6

R.I.A.A. 160) the Arbitral Tribunal held that the United States was wholly
liable for damages substantially caused through the misbehaviour of its
forces,because it could not showwhat proportion of the losseswas caused at
the time byFilipino insurgents (id.,pp.164-5).

627. There is no support in the literature for a system of non-severable
joint liability. For example Professor Brownlie, in one of the few textbook
discussions of the subject, comments that "the practice of States is almost
completely non-existent, or, seen differently, strongly suggestsby its silence
the absence of joint and several liability in delict in state relations": State

ResponsibilityPan I, Oxford, Clarendon Press, 1983, p.189. See also J.
Quigley, "Complicityin International Law: A New Direction in the Law of
State Responsibility"(1986) 57Britisl~ Yearbookof InternationalLaw p.77 at
pp.127-9.

628. As these authorities demonstrate, the principle of separate or solidary
liabilityis a generalmle ofinternational law. No other mle could sensiblybe
applied to international disputes, given the basic principle that no State is
subject to international adjudicative jurisdiction without its expressconsent.
In addition under its Statute the Court lacks any means by which it can

require the participation in a proceeding of third States with an interest --
even an interest of a legal character --in the proceeding. The onlymeans by
which interested third States can become parties to a proceeding is by an
application to intervene under Article 62 of the Statute. As the use of the
permissive "may" (in French "il peut") in Article 62 demonstrates, that
machinery is not compulsory: it is entirely a matter for a State which (in the
words of Article 82 of the Rules) "desires to avail itself of the right of
intervention" to apply to do so. The Court thus lacks entirely the power,

which in municipal law isthe necessarycorrelative of a mle that al1necessary
parties must be joined in particular proceedings, to require that interested
third States be mad parties to proceedings before it.629. The strong international policy favouring peaceful settlement of
disputes by adjudication or other forms of third party settlement would be
frustrated if any otherrule were to be applied. Shared or co-operative

activities by several States are increasinglycommon. Butif the international
law rule in relation to the shared activities of States involveda form of joint
responsibility,uch tbat no individual Stat--including the State with the
primary or even sole operational responsibilityfor the conduct inquestion
could be made liable unless in proceedings to which al1the States concerned
in the activity were parties, a State wouldonly have to co-opt another
appropriate State, or obtains consent or use its territory or facilities, inthe
course of committingsome international wrong,to obtain immunityfrom the
possibilityof international adjudication or some other form of agreed third
party dispute settlement. Its subrnitted that this is not the present state of
international law.

630. The corollary of the concurrent or several responsibilityof States for
their acts at the internationallevel -- and the protection extended by

international law to third States who have participated in some common
activitybut who do not elect tontervene in proceedings against some other
State which instigated or was equally involved inthe activityis that the
decisions of the Court as between the parties in no way bind third parties,
even indirectly. The rule is expresslyand emphatically affirmed in Article
94(1) of the Charter and in Articl59 of the Statute of the Court. Under
Article 94(1) of the Charter, the obligation to complywith judgments of the
Court is limited to those States which are parties to the case in question.
Article59of the Statute of the Court provides:

"Thedeckion of theCourthasnobidiig force exceptbeiweenthe partiesandin
respectof thatparticularcase."

No other legal protection for third parties in respect of international
responsibilityis necessaryor desirable.

B. APPLICATIO ONFTHE PRESUMPTIO INTHE PRESEN T ASE
-

631. Australia was a party to the various legal instmments concerning the
administration of Nauru from1919onwards. The terms of these instruments have been examined in Parts III and IV of this Memorial. The following
observations are applicable to those instmments.

632. So far as the Mandate was concemed, the preamble to the
Trusteeship Agreement recognized that Nauru "has been administered ..by
the Government of Australia on the joint behalfof'the three Governments.

633. Article 2 of the Trusteeship Agreement designated the three
governments as "the Administering Authority". But Article 4 of the
Trusteeship Agreement stated that "Australia,on behalf of the Administering

Authority...illcontinue to exercise full powersof legislation,administration
and jurisdiction inand over theTerritory"until otherwise agreed between the
three governments. It was never "otherwiseagreed.

634. The 1965Agreement between the three partner Governrnents went
even further in recognizing,"conformablywith the Trusteeship Agreement",
Australia's unique and directive role in the administration of the Tmst
Territory: see paragraphs 517-518 above for an analysis of the 1965
Agreement, and see further paras. 150-151.

635. Nothing in any of these instruments expressly or by implication
created a systemof non-severablejoint liability,preventing or precluding the

individualStates from being called to account with respect to their acts in the
administration of the trusteeship. In other words,the normal presumption of
solidary or separate liability in international law was not displaced by the
relevant legalprovisions,so far as Australia isconcerned.

636.Ifthe joint administration of Nauru under the Mandate and Trusteeship
instruments had entailed a form of joint responsibility of a non-severable
character, the result would have been, in practice, that the degree of actual
responsibilityof anyof the governments,including responsibilityfor decisions
taken and implemented by a Government on its own account, would have
been attenuated, if not avoided entirely. Each government could deny its

ownresponsibilityfor acts done or decisions taken by claimingthat the other
parties were not, and could not be made parties to the claim without their
consent. 17ie result of this view would have been that the involvement of
more than one State in the Trusteeship Agreement would have substantially
reduced the level of international accountabilityfor the administration of the
Territory, rendering the "securities for the performance of the trust" that
much lesssecure.637 As the historical record (analyzed in paragraphs 29-35, 109-116
above) shows, the addition, and retention, of the United Kingdom and New
Zealand as parties to the Mandate and Trusteeship instruments was done not
with a view to reducing the level of Australia's international accountability
for the administration of the Territory -- if anything, the situation was
entirely the reverse.

638. It is also significant, in this context, that the Respondent State has
never denied its responsibilityfor the rehabilitation of the phosphate lands

on Nauni by relying on the non-involvementof the other two Governments
in the claim. That position was never taken in the proceedings relating to
Nauru before the League of Nations and the United Nations, and it has
never been taken in the diplomatic correspondence between the parties
relating to the claim:see Annexes,vo1.4,Annex76ff.

639. It may be noted, in passing, that the possibility of claims being
successfullybrought against a singleState in respect of the administration of
Nauni is expressly contemplated in the Agreement between the
Governments of Australia, New Zealand and the United Kingdom of 9

Febniary 1987, terminating the Nauru Island Agreement Act 1919
(Australian Treaty Series 1987 No. 8; Annexes, vo1.4,Annex 31). Under
Article 2 of that Agreement...

"Eachof thePartnerGovernmentsshallindemnifythe Commissioner appointed
by ihatGovernmentwho holdsofficeimmediatelybeforethe entryintoforceof
thisAgreementin respectof liahiities incurredin the courseof his duties as a
Commissioner."

The Agreement goes on to provide in Article 3(3)(b) for consultation
between the parties in respect of legal claims brought against any of them,
and for contribution to be made as between them to meet any claims,inter
alia, where...

"aPartnerGovernmentis obligedto make a paymentfoiiowingan order of a
Court ofcompetenturisdictionadjudicaupona claim..."

This clearly envisages the possibilityof successfulclaims against one of the
parties only,while making provision for contribution as between the parties,
in unequal shares (viz. Australia, 47.5%; United Kingdom, 31.5%; New
Zealand, 21.0%, corresponding to the proportions in which the property of the Nauru Phosphate Commissioners was divided up between them). Any
claimant would necessanly be a third party both to the 1987Agreement and
to the earlier arrangements between the three Governments. Such a
claimant could not be expectedto make claims againsteach of them in these

-or indeed in an--fractions.

640. It should also be noted that throughout the period of the
administration of Nauru, a claim brought in the courts of of the three
Governments against any partyotherthan that Government wouldhave been
liable to a successful plea of state immunity. Atal1 relevant times the
common law rule applied by the courts of the three States was that a foreign
State and its agents or functionaries was absolutely immune from local
jurisdiction. Unless the claim had been brought against the forum
government alone, there was accordinglyno means of secunng jurisdiction
over suchclaims.

INTHEADMINISTRATIONOF NAURU
AND IN NEGOTIATIN THE TERMS OF NAURUAI NNDEPFNDENCE

641. Even if the international law rule were simply one of several or
solidary liability, it mube the case that a State remains separately
responsible for its ownactions and decisions,evenhose are taken with the
agreement of or in the interests of other States or on their behalf as well.
Whatever the position with respect to a State whose participation in an
activity was secondary orimited;a State which was the effective agent in

carrying out an activity must be responsible for its consequences,
notwithstandingthe additional involvementof some other States.

642. Australia's role inthe administration of Nauru, and in negotiating
with Naunian representatives with respect to phosphate royalties, control
over mining, possible resettlement or rehabilitation, and ultimately
independence, was not secondaryor peripheral but primary. See paragraphs
50-52,57, 64, 101,130,134, 151, 156, 166,177,516-540.

643. This primary responsibility, reflectein the various international
arrangements and agreements for the administration of Nauru, was
voluntarilyassumed by Australia. It was so pronounced that some writers go

so far as to treat Australia as the realstering authority over Nauru, onthe basis that the reference in the Tmsteeship Agreement to the three
govenunents as "the Administenng Authority"was a kind of "legal fi~tion".~
It is not necessaryto go as far as this to establish the propriety of proceeding
against Australia alone in respect of the Trusteeship Agreement. Even if the

Court were to adopt a different view of the international law rule of state
responsibilitythan that contended for in paragraphs 5-13 above, this would
not absolveAustralia as the principal actor, the "directing mind and will",in
the administration of Nauru. In determining responsibilityfor the outcome

of that administration, the substance of the situation, recognized in Article4
of the Trusteeship Agreement, cannot be ignored.

IL . s
INTHEPRESENT CASE

644. For these reasons, Australia is itself liable for any breaches of the
Trusteeship Agreement and of any associated des of general international

law. It must follow, itis submitted, that there is no difficultyin the Republic
of Nauru proceeding against Australia alone in respect of its claim.

645. In onlyone case hasthe Court refused to decide a contentious case on
the ground that a "necessaryparty" was not a partyto the proceeding. That

was the MonetaryGold Case (I.C.J. Rep. 1954p.32), where --at the instance
of the Applicant State itself -- the Court declined to hear a case which
involvedproperty acknowledgedbythe parties to belong to another State not
a party to the proceedings (Albania).

646. In later cases,the Court has been careful not to extend the Monetary
Gold principle beyond the specific circumstances of that case, where the
rights of a third State were the very subject matter of the claim. In the
Libya/Malta Case (ItalianApplicationto Intemene)the Court stated that:

3
practical purNauruuasan Australian mandate'); RN. Choadhun, lnrmarional Mandarer and Tnisreerhip
Sysrems,The Hague,Kijhoff,1955,p.96 (in realityaradminirtcringaufhH.tDuncanHall,
MandareDependenciéarTmreesIup.London. Stcvens, 1944p.147(10cstablish a mndominium on
Nauru;Australia actedas "agent');WJ. Hudson,Aurnalia and ththeUniredNariom. Sydney,
force, Australia had bccome the administenuasthus the actual mandato*. citingArt. 81 of thecd into
Chaner: C.E.Toussaint, TheTSysreof rk UnilcdNnriom(London, Stevens, 1956)pp.80,97, 169.205. "ln the absence in the Court's procedures of any system of compuisory
intervention, whereby a thirdState couid be cited by the Court to come in as
party, it must be open to the Court, and indeed its duty, to give the fullest
decisionit mayin the circumstancesof each case,unlessof course, as in the case
of the Monetary Gold Removed from Rome in 1943,the legal interests of the
third State 'wouldnot only be aiYectedby a decision, but would form the very
subject-matter of a decision',whichisnot the case here."

(I.C.J. Rep.1984p.3al p.25.)

This was despite the fact that Italy was potentially affectedby aspects of the
Libya/Malta continental shelfdelimitation in arelativelydirect way.

647.Similarly,in the NicaraguaCase (JukdictionandAdniissibility) the Court
flatly rejected the argument that the Central American States on whose
behalf the United States claimed to be acting in self-defence were

indispensable parties in whose absence the case could not proceed. The
Court stated:

"There is no doubt that in appropriate circumstancesthe Court willdecline,as it
did in the Case conceniingMonetay Gold Removedfrom Rome in 1943, to

exercisethe jurisdiction conferred upon it where the legal interests of a State not
party to the proceedings 'wouldnot only be affected by a decision, but would
form the very subject-matter of the decision'.Where however claims of a legal
nature are made by an Applicant against a Respondent in proceedingsbefore the
Court, and made the subject of submissions, the Court hasin principle merelyto
decide upon those submissions,with bidig force for the parties oniy, and no
other State, in accordance with Article 59 of the Statute. As the Court has

already indicated, other States whichconsider that they may be affected are free
to instituteseparate proceedings, or to employ the procedure of intervention.
There is no trace, either in the Stature or in the practice of internationaltribunals,
of an 'indispensable parties'rule of the kind argued for the United States,which
would oniy be conceivable in parauel to a power, which the Court does not
possess, IO direct that a third State be made a party to proceedings. The
circumstances of the Monefay Gold case probably represent the liit of the

power of the Court to refuse to exercise itsjurisdiction; and none of the States
referred to can be regarded as in the same positias Albania in that case,so as
to be truly indispensableto the pursuanceof the proceedings."
(I.C.J. Rep.984p.3Z al p.431.)

On this point the Court wasunanimous.648. This emphasis on jurisdiction over individual States, irrespective of
the involvement or participation of other States, is consistent with the
modern lawon State responsibility(see paras. 623-630 above).

649. It is submitted that the Court should not decline to exercise
jurisdiction over a State in respect of an allegedrong committed by State

oficials under the direct authority and control of the State, on the ground
that another State is equally responsible for the wrong-doing, or that the
official was also authorized to act as agent on behalf of some other State
involved. Againstthe background of the circumstancesof the administration
of Nauru, the negotiations relating to its independence, and the subsequent
relations between the various parties, it was open to Nauru to commence
proceedings claiming appropriate relief against the Commonwealth of
Australia alone. The possible liability of the other partner Governments
would not "formthe verysubject-matter of' any decision by the Court in this
case (cf. I.C.J. Rep. 1984 p.3atp.25), nor is the participation of any other

State "trulyindispensable to the pursuance of the proceedings(cfL.C.J.Rep.
1984p.392at p.431).

Section3. Libertyof Nauruas to Choiceof Remedies

650. In the same context, it is submitted that Nauru is acting within its
rigbts in electing to pursue one remedy, or one form of relief, and not others

that might be available to it, and inseeking its primary relief in respect of
one description or categoryof damage suffered,rather than another.

651. The ne ultrapetita rule, universallyapplied by international courts and
tribunals, recognizesthat a State mayclaim lessthan its entitlement, and may
elect as between the remedies available to it which to pursue in particular
proceedings, while resewing its rightsin respect of other remedies. CONCLUSION

Affirmation

652. The systernof government established in Nauru as a consequence of
the 1919Agreement, rnaintained in al1its essentials until the independence

of Nauru, involvedan entire structure of inequitable practices. Despite the
obligationsof the Mandate and subsequentlyof the regirneof trusteeship, the
system of removing the phosphate at cost consisted of a set of entrenched
and extensive economic prerogatives. This systemof ecoiiomic autocracy
was combined with a failure to report fully and fairly to the Trusteeship
Council.

653. The consequences of this situation for the Nauruan people included
the physical destruction of much of their homeland without adequate
arrangements to provide for the costs of rehabilitation, the build up of a
serious loss of earnings (and thus of loss of capital for development), loss of
land use, and the denial of the legal interest of Nauru in the overseas assets

of the BritishPhosphate Commissioners.

654. In contrast Australia did not have to pay anyadministration costs in
respect of Nauru, received high quality phosphate on what was in reality a
basis of subsidy,paid no resettlement costs, and at independence required
Nauru to pay for the assets on the island which should have passed to the
successor State as public property. Moreover, long after independence
Australia obtained a major allocation of the overseas assets of the British
Phosphate Commissioners as a consequence of the trilateral Agreement of
1987.

655. It would be paradoxical if a people who had been the subject of a
regime of trusteeship shouldbe muchworseoffthan a communitywhich,as a

state, had been subjectto the procedures of state succession. Confirmation

656. A great deal of evidence has been presented in the body of the
Memorial and here it is necessary simplyto highlight two important sources
of confirmation.

657. The first source consists of the statement by Mr. Hamrner DeRoburt,
Head Chief, Nauru Local Govermnent Council (Appendix 1). This
statement provides a first hand account of the key episodes from one who
had a leading role in the attainment of independence by the Nauruan people.
The statesmanship and moderation which characterised Mr. Hamrner
DeRohurt are acknowledgedbycontemporary observers.

658. The second source of confirmation takes the form of the three leading

historical accounts of the relevant period:

(a) Nancy Viviani, Nauru: Pl~ospllateand Political Progress,Australian
National University Press,Canberra, 1970,chapters 3 to 9.

. (b) Maslyn Williams and Barrie Macdonald, The Phosphateers,
Melbourne University Press,Melbourne, 1985(passim).

(c) Barrie Macdonald, In Pursuit of the Sacred Trust: Trusteeshipand
Independence in Nauru, New Zealand Institute of International
Affairs,Occasional Paper No. 3, Wellington, 1988(passim).

659. The essential elements in the case are confirmed bythese three works
and this congruence of judgment cannot readily be ignored. The work of
Williams and Macdonald is of particular intcrest, partly because of its detail
and partly because its authors showno disposition to be unduly critical of the
operational styleof the BritishPhosphate Commissioners.

660. The work of Williams and Macdonald, Th?Pliospliateers,includes a
striking passage which involves the reporting of the following series of
admissions:

(a) A statement by the Australian Secretary of the Department of
Territories, Mr Lambert, to Mr Bissett, General Manager of the
BritishPhosphate Commissioners (1954-66). A statement of a senior official of the Commonwealth Relations
(b)
Officeto the Britishmember of the Commissioners,Mr Calder.

(c) A statement by Mr Bissett to the New Zealand Commissioner, Mr
Tennent.

661. The relevant passage(at page 472) is as follows:

"Hahg bought a respite in the Trusteeship Councilwith its resettlement plans in
1961t,he Department of Territories had made Littleprogress with the Nauruans
since. With a VisitingMissiondue in Nauru in May 19,nd a further round of
Trusteeship Council hearings in June, the Department was left in a vulnerable
position. It was in this contextthat Lambert informed Biisett that 'It isfelt that
the Government can no longer sustain its objections that there are no separate
figures availablefor Nauru', andthe Commissioners were askedto release f.0.b.
MS~S for Nauru with the implication that members of the Trusteeship Counul
could then compare these costs wiLhthe price of phosphate sold on the open
market.

Neither the UnitedKingdom nor New Zealand was prepared ta accept the
necessity forsuch a drastic step at this stage.A senior official of the
Commonwealth Relations Officetold Calder that:

'If we can improve the kindOC case we presented to the Trusteeship
Councilin the past 1shouldbe in Cavourof doing this but 1suspect that
we may be in danger af givinginformation whichwould onlybe used to
make Lifemore dicult for us.'
Bissett acknowledgedthat 'wewouldbe regardeds a poor outfit if we could not

determine Nauru costs separately' and admitted to Tement that the
Commissioners 'had beenlucky to get away with this attitude for so long', but
even he was surprised to find the exient to which economies of scale and the
relativelylow royalties and government levies payable resulted in an f.0.b. cost
significantlybelowthe costof phosphate from other sources."

Documents

662. The parties to the present proceedings have exchanged
correspondence on the subject of the production of documents and the

relevant items are to be found in the annexes (Annexes,vol. 4, Annex 80).
On the general question of the production of documents, the Govenunent of
Nauru acknowledgesthat the Australian Government has extended a degree
of CO-operation. But the fact remains that the process has been slow,

reluctant and incomplete.663. In the circurnstancesthe Government of Nauru bds it necessary to
reserve its position on the production of documents. This reservation aiso
extendsto the related question ofaccessto Austraiian archive material.

664. The Govemment of Nauru has a specific interest in the matenal in
the Australian archives which relates to the administration of Nauru under

the Mandate and the United Nations trusteeship. Suchmaterial in factforms
a part of the national patrimonyof the Republic of Nauru.

665. The legal interest GE a State in the position of Nauru in its pre-
independence archives was given clear recognition by the United Nations
Conference on Successionof States in Respect of State Property, Archives
and Debts in its Resolution Concerning Namibia (Annexes, vol. 4, Annex
23).

666. This legal interest should be recognised by allowing access on
reasonable tenns. The issue has already been raised by the Government of
Nauru in a Note (No. 252) dated 22 November 1989(Annexes,vol. 4, Annex
80),whichreads (in material part):

"On the wider point of access to archives documents, the Department has the
further honour to point out that the Department's issimply for access.
The documents relating to the Mandate and Trusteeship over the Territory of
Nauru are custodiallywith the Australian Government, and have never since
independence been placed withor generally been accessibleto the Goverment
of the Republic of Nauru.uch documentation relating to the former Trust
Territory of Nauru is not the documentation in wbichthe Australian Goverment
has an exclusiveinterest. The Department has ther to point out further
that isnot therefore alwayspossiblein advanceto identifyparticular documents
and hencethe request for access."

667. In this same connection the Government of Nauru would recall its
statement (in the same Note) "that in legal proceedings between Nauru and
Ai!straliathe municipal archivesrule should haveno operation".

668. The Guvernment of Nauru considers it necessary to focus on the

question of access to archives in view of the continuing insensitivityof the
Australian Government to the question of principle involved. Thus in a Note
dated 30 January 1990 (Annexes, vol. 4, Annex 80) (in response to the
Nauruan Note (No. 252) of 22 November 1989)the Australian Government
stated the followingopinion' "TheHigh Commissionwishesto explain and confirm the viewsof the Australian

Government on these matters. The Australian Goverment cannot accept that
thereis any special or general right of accesson the part of Nauru to Australian
archival material during the period of the mandate or the trusteeship. Such a
right would be inconsistent with the sovereignty of States.. The only possible
exceptionin the present case wouldppear to be those documents relating to the
local Administration of Nauru, which were in fact made available to Nauru on
independence."

669. It is evident that Australia cannot have an exclusive interest in
archiva1material relating to the trusteeship administration.

670. Prior to presenting its Submissionsthe Republic of Nauru respectfully
reserves the right to supplement or amend its claims.On the bais of the evidence and legal argument presented in this
Memorial,the Republicof Nauru
Reauests the Court to adiudee and declare

that the Respondent State bears responsibiity for breaches of the
fc;Uowinglegalobligations:
m: the obligations set forth in Article 76 of the United Nations
Charter and Articles3 and 5 of the Trusteeship Agreement for
Nauruof 1 November1947.

M: the international standards generdy recognised as
applicable in the implementation of the principle of seif-
determination.
W. the obligationto respect the nght of the Nauruan people to
permanent sovereigntyovertheir natural wealthand resources.

the obligation of general international law not to exercke
powers of administration in such a way as to produce a denial of
justiceato smu.
a the obligation of general international law not to exercise
powers of administrationn such a way as to constitute an abuse of
rights.

Si&: the principle of general international lawthat a State whichis
responsible forthe administration of territory is under an obligation
not tobring about changesin the conditionof the territoryWUhich
cause irreparable damage to, or substantiallyprejudice, the existing
or contingent legal interest of another State in respect of that
territory.
the CourtLm&u&s and declare.further

that the Republic of Nauru basa legal entitlement to the Australian
allocation of the overseas assets of the British Phosphate
Commissionerswhichwere martialled anddisposed of in accordance
withthe trilateral Agreement concludedonFebruary 1987.
&gests the Cam to adiub and declare

that the Respondent State isunder a duty to make appropriate
reparation in respect of the loss caused to the Republic of Nauru as a
result of the breaches of its legal obligations detailed above and its
failuretorecognise the interest of Nauru in the overseasassets of the
BritishPhosphate Commissioners.

(Sigried) V.S.MANI
Agetrtforthe Governinentof
[lieRepiiblicofNaunc APPENDICES

1."StatementbyHammer DeRoburt, O.B.E.,G.C.M.G., M.P.,Head Chief,Nauru

LocalGovenunent Counul"

2. "Esthnatesof the F.O.B.Cost of Nauru Phosphate,the CommercialPrice for
Nauru Phosphate and the Lossof Earnings from the Underpricing of Nauru

Phosphate"byMr. K.E. Walker

3. "AComparativeSUNC~ of the Lawof Trust and Trust-like Institutions"by
ProfessorA.M. Honore, Q.C.,.BA. STATEMENTBYHAMMERDEROBURT,O.B.E.,G.C.M.G., M.P.
HEADCHIEF, NAURULOCALGOVERNMENTCOUNCIL

[President of Nauru, 1968-1976,1978-19891'

1. 1 was born in Nauru in 1922, educated mainly on Nauru and was fus1 given an
opportunity to visitAustralia through my membership of the Boy Scouts movement
ou Nauru and attended a corroboree there in South Auslralia in 1937. It was during

those times that Scout Commissiouer Harold Hurst of Geelong had taken up the
cause of Nauru and was intluential in persuading the Administration to aliow some
Nauruan boys to train in Geelong under hisguidance as educational opportunity on
Nauru was limitedseverely,with no secondary educationavailable. 1was fortunate to
be one of these and before World War II attended the Moorabool Street Junior
Teehnical School and also partly at the then Gordon lnstitute of Technology in
Geelong Victoria. The Nauru ScoutsAssociation had then been adopted into the
Victorian Scouting movement as part of the Geelong County, but Geelong was also
one of the principal citiesof Australia where superphosphate was manufactured so
there wassome naturai comection betweenNauru and Geelong.

2. Upon my return to Nauru in late 1939,I taught in the Primary School. War between
the AUiesand Japan commenced in 1941. Japanese forces occupied the island in
August 1942. 1wasone of the twelvehundred Nauruans deported by the Japanese to
the island of Truk in Micronesia to undertake forced labour fouowing their
occupationof Nauru. 1remaiued at Truk until the conclusionof the war.
3. At the end of the war, Nauru was in a sad state. Due to extremely heavy allied
bombig, lack of food and medication anda very oppressivesituation in Truk, more

than thirty per cent of the entire Nauruan population haddied or been killed in those
few years of the war. Furthermore, Nauruan housing had beeu destroyed. The
phosphate industrywas at a standstill due first to destruction of major installationsby
the British Phosphate Commissionersbefore the Japanese occupation, and then by
bombingof the plant by AUiedaircraft.
4. In the period immediatelyafter the War, the British Phosphate Commissioners,aided
bythe Administration. placed theirhighest priority ou gettingthe industryworking. It
was not diificult for the Nauruan people and their leaders, the chiefs, to see that

Adminisirator Mark Ridgway was more anxious tu assist the Commissioners to
restore as quicklyas possiblethe phosphatetrade, and wewere eoncerned that he had
very little regard for Nauruan sensitivities, welfare, or long-term interests. His
overbeariug attitude resulted in, amongst other things, a petition to the Trusteeship
Council fromthe Councilof Chiefs.

Note:This iraropyof a statemcntmadcby.Ur.HanirncrDeRobun. The signedoriginalof the rtatcmcnrhas
been depooitcdwiihthe Registrarofthe Coun.11. The records of the Trusteeship Council from1960onwardsrefiect these issues yearby
year. 1 must say that it was very diificnit for us, the Nauru Lod Government
Council, and our Nauruan Community, with our extremely limited resources, to
maintain the offensiveon aU three fronts. Initialiywe had no advisers and, in fact,
were denied (hemparticularlyin relation to the difficnitphosphate negotiations which
were conducted with an extraordinarily experienced operator, the British Phosphate
Commissioners, who could cal1on the Administration to assist where required. In
these events, 1have never known of any instances where the Administration has not
assistedthe BritishPhosphate Commissionersmore than the Nauruan Community.
12. Apart from our own efforts, considerable help came though the visits of the U.N.
VisitingMissionsto Nauru everythree years. Butthe Administration was slowto act
upon U.N. proposais stemming from the Viiting Mision Reports. Concem was felt
by the Nauru Local Government Councilthat there was no Nauruan representative
present on the occasion of at the examination of the Annual Reports of the
Administration and the triennial Reports of the U.N. Viiting Missions to Nauru.
Aher a good deal of pressure was applied directlyto the Administration and though
the Viiting Mission procedure, Australia fmaUyrelented in 1961 and aüowed a

Nauruan representative as part of the Austraiian delegation to the Trusteeship
Council meetines. This oresence before the Trusteeshio Council was considered bv
us as crucial inCnabling ;s io present our vieas effeciivelyas possible. ~oreovc;,
the continuingcriiicîl appr&al of the Adminisiration deriving from ihc Trusteeship
Council annual reports and recommendations were having some effect. 1 also recaü
the considerable effect in the Trusteeship Council of the 1962 Vkiting Mission
Report, chaired by Sir Hugh Foot, which recommended practid measures for
immediate self-government. This 1 regarded as a good exampleof the contribution of
the VisitingMission procedure.
13. We were aware that the British Phosphate Commissionersstronglywishedto hold the
ground of the 1919 Nauru Agreement, that is, in their understandimgof il. The
Administration, forits part, took a paternal stance, and refused to let go the reins of
government even with the Trusteeship Counul urging the grant of internal self-
government.

14. Ever since 1920, royalties had been paid to Nauruans by the British Phosphate
Commissionerson the basis of so-calledneeds --in reality mere hand-out payments.
From 1959onwards, the Nauru Local Government Council wanted royalties paidon
the basis of a fair return. In the new of the Nauruan Community, there was no
justification for Nauru being usedsimply to subsidise governments and farmers in
other lands. The British Phosphate Commissioners and the Administration fought
the fair return argument bitterly to the end. Withthe initial negotiations at thisthe
the Nauru Local Government Council experienced some difficulty from the
Australian Government and the then Minister, Mr. C.E. Barnes, in obtaining
competent independent advisers to assist us. With the aid of some prodding from
various directions withm the Trusteeship Council, the Australian Government
somewhat reluctantly accepted independent advisers. Fust, it was Dr. Helen Hughes
of the Australian NationalUniversity,and then soon after, the fum of PhilipShrapnel
and Co., of Sydney. This was in 1964. A glance at a table of royaltyrates paid over
the yearswillquicklyindicate the sudden changewhichcame in 1965,when rates rose
from a total ofs.8dto 13s.6dper ton.

15. A table of royalty rates, such as you see in Viviani(Viviani,Nuum -Phosphate und
Political Progress,A.N.U. Press, Canberra, 1970,Appendix p.189), is instructive in describingsomething of Nauruan societyand the manner and style of the Ausuaiian
Administration.

16. The total royalty paidis made up of four component parts: (a) royalty paiddirectlyto
the landowners; (b) Nauru RoyaltyTrust Fund; (c) Nauruan Landowners Royalty
Trust Fund; and (d) Nauruan Community LongTerm Investment Fund. The first
and third payments,that is, direct to landowners,and the Landowners RoyaltyTrust
Fund, involve recognition of the nature of land ownership on Nauru. Nauru is a
patchwork quilt of pnvate ownership, with land being passed on through heirs and
successors. All of the land is owned by Nauruans and there is now no foreign
ownership. The ownership of land is crucial to a Nauruan's Iife. It provides an
important attachent to his country which is both physical and spiritual. Every
Nauruan understands this. This attachent is the basis ofursense of identity. Of
all the Paciîïc island communities, so far as 1am aware, Nauru is one country from
where but a handfd have ever emigrated. The Nauruan Communitycontinues to
grow in size without any thought that it should ever migrate. A bitter moment in
Nauruan history took place soon after World War II when the Australian
Administrator, %dgway,urged on bythe BritishPhosphate Commissioners,proposed
getting rid of pnvate ownership of phosphate lands on Nauru. It was a further
exampleof his complete misunderstandiig of the mores and customsof the island.

17. In relation to the above royalty payments, the other feature of Austraiian
Administration was the tact that in administeringNauru and its phosphate industry it
never cost the Austraiian Government or taxpayer a cent. Capital costs in the
industry were financed fromphosphate, the costs of the Administration andsalaries
were paid out of phosphate proceeds, and, further, the Nauru Local Government
Council current expenses and the education of Nauruans came out of the Nauru
RoyaltyTrust Fund as a benefit to Nauruans, andthe Nauruans'future was wrapped
up in the longterm investment fund.
18. On Nauru, wewere wellaware of what took placewith respect to the resettlement of
the Banabans. In contras1to Banaba where there is only a very small coastal area,
there exists on Nauru a coastal fringe where most of the population resides. On
account of thisfringe, it was not immediatelysignifzcantto the Australians that eitber
tbere had to be rehabilitation or that there should exist some plan for resettlement,
even though the population of Nauru wasgrowingand usable land was at a premium.

It was the Partner Governments'viewthat a cheap and easy optionto rehabitation
was to bundle up the Nauruans and place them somewhere else. Initially, it was
proposed by the Partner Governments that Nauruans should simplyleave the island
and become citizensof one of the three partner government countriesas theywished.
This constituted a policy of disintegration of Nauruan society and total assimilation
into a metropolitan society. It had to be rejected by the Nauru Local Governent
Council.
19. The Nauruan, due to his upbringingin a closelyknit family,with his attachent to his
land, and situated on an island, which hadprovided the wherewithal of Lifefor him
from as far back as he knew,was not partial to resettlement andwas not prepared to
see his societydisintegrate. The Nauruan has alwayshad a close aff~ty to the island
and a real sense of community and national identity. In this easy solutionof
resettlement, the wishesofthe Nauruan were too easilylost.

20. Irwasno good presentingthe Nauruan with a new land area where he was not in sole
control. In the bid for self-determination under Trusteeship, the Community could
not be bought off bysomething that did not present the Nauruan with all the benefits the other Partner Govements were willing to fmance the move of Nauruans, the
establishment of housingand industry, andthe constructionof a deep-water port and
other infrastructure,nevertheless it was never the new of Nauruans, nor of the
Trusteeship Council, so far as 1 am aware, that the independence of Nauru Island
would havebeen made redundant by resettlement nor that the Nauruans could not
have gainedcontrol overthe phosphate industryon Nauru.

21. Sofaras resettlement on Curtis Islandwasconcerned,it wasweUknownthat a goodly
number of Nauruans would have remained on Nauru and not resettled on Curtis
Island. The mere act of resettlingNauruans on Curtis Island would not by itself have
changed thenature of Nauru asa trust territory. The Nauruan CommunitywouldstiU
have movedfor politicalindependence for Nauru andwouldhave still sought control
of the phosphate industry. In discussionsbetweenus and the Australian Govenunent
with respect to a possible resettlement on Curtis Island, that Govenunent was not
prepared to entertaingivingus anything more than local government control,which
feu far short of what was requested by the Nauruan Commnnity. So far asCurtis
Island was concerned,we were not seeking fulsovereign independence, but anything
whichdid not preserve and maintain our separate identitywasquite unacceptable.

22. We were clearin our own minds and made it clear to the Australian Government that
we would want sovereign independence for Nauruwith fuUcontrol of the phosphate
industry, and with respect to resettlement on Curtis Island, a laige measure of
autonomy which wouldpreserve our identity as a distinct community. This was in
answer to the overtures from the Austraiian Governent for deals involvingvarious
proposals of Nauruan majoritycontrol of the phosphate industry, andresettlement on
Curtis Islandon their ternis.
23. Once resettlement on Curtis Island was abandoned, the nature of the problem
changed. Rehabilitation again became a major issue. In our talks with the former
Partner Governments over the four year period 1964-1967,we persistently expressed
our concern at the lack of progress on the matter of rehabiitation. The conventional

view of the Austraiian Administration fostered by the British Phosphate
Commissionerswas not that rehabiitation was impossible but that it was fiancially
too costly. AU estimates to that time obtained by the British Phosphate
Commissioners andthe C.S.I.R.0 report of 1941had indicated this, based largely on
the maximumimportation of soil.
24. Mer pressure from the Nauru Local Government Councii,for the rehabitation
question to be resolved to the satisfaction of the Nauruan people, the Australian
Administration proposed the setting up of a Committee of Experts (the Davey
Committee) in 1966 to investigate rehabiitation, to which we agreed. It spent a
relatively short time on the island, about ten or eleven days. Nevertheless, it
demonstrated that the island could be rehabiitated. Unfortunately, it opted for a
modifiedscheme,with wbichthe Nauru Local Government Councii disagreed,rather
than total rehabiitation. The report was the fust to challenge some of the

conventional views of the Australian Administration and the British Phosphate
Commissioners. Whilstwe never at any stage reduced our demands for rehabilitation
in the lead up to Independence, targetted for January 31, 1968, the Partner
Governments curiously avoidedattention to this matter even though they nowhad in
hand the DaveyCommittee Report.
25. At various times leadiig up to Independence, we could not have made it clearer that
the issue was alive and quite unresolved,but the Austraiian Administration and the
Partuer Governments refused to consider rehabiitation on grounds of expense. In Partner Governments refused to consider rehabiitation on grounds of expense. In
fact, it was our viewthat we had adopted a very fair stance. We told the Australian
Administration and the former Partner Govemments, that we wanted and expected
them to pay for rehabiiitation of ail lands mined befoJuly 1, 1967-- the date when
we assumed responsibility formining. We told the Administration that lands mined
after 1967wouidbe the responsibiity of Nauru to rehabiitate. For that purpose we
had set np a special fund, the Rehabiitation Fund, and our own Constitution makes
the division of responsibilityclear (Art. 83(2)). On Nauru achievingindependence,
we agreed withAustralia and NewZealand to maintain a continuation of mining wiih
priority, if not exdusivity, of supply to both those countries. At the same the, we
took the view that the Nauru Government should assumethe responsibiity for
rehabiiitation of lands mined since 1 July 1967because such miningwouldtake place
in accordance with our owndecisions and for our purposes. The amounts paid to the
Rehabiitation Fund came out of the normal price paid for each ton of phosphate
whichwe mined andsold.

26. Once the Curtis Island option had been ruled out, it was quite apparent that
Nauruans were goingto achieve both independence and control over the phosphate
industry, livingtheir liveson the island. Thus, rehabiitation became quite crucial to
the futureexistenceof the people. Once the nightmare of a giant extraction industry
had come to an end, and the myriads of contract workers had gone home, it was
imperative for the Me of its people that Nauru shouldbe able to make the maximum
use of its island livingspace as it had done in the years before miningwas inflicted on
us. Of course, wewere weUaware, as was the DaveyCommittee, that in other lands,
Florida, USA., for example, phosphate extraction carried with it the required
obligationimmediatelyto rehabiitate. Al1that we sought was an acceptance by this
sophisticated mining establishment of the former Partner Governments of a similar
obligationin a confined island area, where eventuaüyfour-fdttbsof the surface wouid
be totaUymined-out and unusable.
27. As the 19641967 taks progressed and the days drew closer to the target date for
Independence, the Nauru Local Government Council could seethat the issue of
rehabiiitation was not going to be resolved. Because this was the case, 1made the
position absolutely clear in my statement to the Trusteeship Council at its Special
Session on 22 November 1967,jus1Iwomonths before Independence. 1said at that
time that rehabiitation remained an unresolved issue but as it was not a matter
relevant Io ihc sctual termination of the Trustecship Agrccmr.nt and the grÿnting of
Indcnc.ndrncr. it should. thrrcforc. no1hold UD those ororeedines. But Iolaced on

recoid that the Nauru Government would continue 10 seek on-rehabiitâtion what
was, in the opinion of the Nauruan people, a just settlement of their claims. On the
day of lndependeoce in Nauru, before the representatives of the former Partner
Governments, 1 reiterated that the issue was unresolved and that the Nauru
Government expectedthe former Partner Governmentsto bear their responsibiity.
28. Dnring the course of the First Parliament of the newlyformed Republicof Nauru, a
motion was moved by the Hon. Kenas Aroi, and seconded, that Parliament request
the Government to pursue the question of rehabilitation with Australia and the other
Partner Governments. The resolution waspassedunanimously.

29. Nol long after lndependence in 1968,when President of Nauru, 1raised the matter of
rehabilitation, in conjunctionwith the 1966DaveyCommittee recommendation for a
topside plateau air-strip, with the then Minister of External Affairs of the Australian
Government, now Sir Paul Hasluck. In his reply, inFebruary 1969,he said that the phosphate lands. He said they remained convincedthat the terms of the settlement
with my Government were suniciently generous to enable it to meet its needs for
rehabitation and development. Inthe circumstances the Partner Governments, he
said, would not agree to my proposal. Of course, it was initiallynot myproposai but
that of a Committee set up before Independence by Australia. The Miter, in his
reply, merely reiterated a formula for denying rehabitation which had been trotted
out to usad infinitum during the earlietalks,1964to 1967,to fob off our arguments
for rehabitation of the island.

30. On a State Visit to Canberra in 1973, 1 raised with the then Prime Minister, the
Honourable E.G. Whitlam, the question of rehabitation as a matter of concern.
Again,when Senator Wiesee, the Acting Minister ofForeign Affairs in the Whitlam
Government in Austrdia, visited Nauru in 1974,1 raised the matter with himbut to
no avail. A subsequent approach to the Australian Prime Minister, the Honourable
R.J.L. Hawke, in 1983met with a similarresponse. At Ihatpoint, my Government,
weU understanding that primary miniingof phosphate was within a few years of
completion, decided that anindependent study of the rehabitation problem shotdd
be set-up, andso the Commissionof Inquirywaslater launched.

31. In concludingmy statement, 1wotdd simply draw attention to the conclusion of the
Commission of Inquiry set up by my Government in 1987. Not only did that
Commission state that the former Partner Governments were responsible for pre-
independence miningbut that rehabilitation wascost feasible. The simple method of
extraction orpushing over of corai pinnacles and regeneration of soi1was explained
and demonstrated. It would have been surprisiig had the British Phosphate
Commissionerswith al1their resources been unaware of this. But they were never
goingto do it.

Hammer DeRoburt APPENDIX2

'ESTlhlATESOFTHEF.O.B.COSTOFNAURUPHOSPHATET , HE
COhlMERClALPRlCEFOR NAURU PHOSPHATE ANDTHE LOSSOF
EARNINGSFROMTHEUNDERPRICING OFNAURUPHOSPHATE"

Mr.K.E.Walker TABLE OF CONTENTS

GENEPAL INiRODUCTlON

1. B.P.C. ACCOUNTING METIIODS

1.1 Iritroductioii

! 1.2 Accouriting Records

1.3 ~ateç of r;xtrnctioii of I~liospliotc from Nauru and mean Islaiid

1.4 Aiielysis or B.P.C. f.0.b. COS~S

1.5 Alinlysis of B.F.C. f.0.b. Costs for Nauru

2. TllE COWRCIN, PRlCE Of NAURU PIIOSPIWE

2.1 The quality of Pliosplinte

2.2 Geograpliical I'roximity

2.3 Makaten As A Comparable

2.4 M..katea Pliospliate Frices- 1920 Tü 1943

2.5 Mnrnten Priccs 1946 TO 1966

3. CALCUIJITION OF TllC NET MSS OF ENUIINGS

APPENDIX 1.A Diççectioii of B.P.C. Costs of Obtain Total f.0.b. Costs of

Nauru aiid Oceaii IslandGENERAL INTRODUCTION

My name is Kenneth Edward Walker of 23 Spring Street, Beecroft,

New South Wales, Austcalia.

My academic qualifications include a Bachelor of Economics degree

from the University of Sydney (1950) aiid a Master of Economics

degree from the Uiiiversity of Sydney (1953). From 1961 to 1975 1
vas a member of the part-time teaching staff of the University of

New South Wales.

From 1953 to 1957 1 worked with the Commonwealth Bureau of Census

and Statistics in Sydney and Canberra rising from Graduate Clerk
to Acting Senior Researcli Officer Grade 1. From 1957 to 1960 1

vas a Professional Officer (Grades 1 rising to Grade 2) with the

United Nations Statistical Office in New York. In 1960 1

returned to Sydney and worked as an Economic Consultant witti W.D.

Scott 6 Company, a leading firln of management consultants. In
1964 1 helped form Philip Slirapnel 6 Co. Pty Ltd. (subsequently

B.I.S. - Shrapnel Pty Ltd.), a firln specialising in econoinic

consultancy and market research, rising €rom Economic Consultant

to Elanaging Director. In 1981 1 resigned frotn D.I.S. - Shrapnel

Pty Ltd. and formed Economic and Marketing Services Fty Ltd.
where 1 am currently ernployed as Managing Director.

During the last 26 years 1 have been actively engaged in tlte

phosphate industry both as an Adviser to the Nauru Local

Government Council (and from 1968 the Governrnent of Nauru) and as

an Adviser to the Rabi Council of Leaders (the elected
representatives of the Banaban people who were the indigenous

population of Ocean Island, a phosphate-bearing island some 145

miles east of Nauru).

From 1965 to 1967 1 vas involved in al1 of the negotiations
between Nauru and the Pactner Governments that dealt witli

phosphate, financial and political matters. These negotiatioiis resulted in a substantial increase in royalty payments to Nauru

as a commercial price vas established for Nauru phosphate and in

early 1968 Nauru obtained its Independence. 1 continued to advise

Nauru on phosphate and economic matters until tlie early 1970's
and subsequently from 1979 to date. ln 1983 1 was appointed

tlonoracy Consul for Nauru in Sydney.

1 have had virtually continous association with the Rabi Island
Council as an Adviser on phosphate and other economic matters.

In this connection 1 participated in phosphate and related

negotiations with the U.K. Government in 1966 (~iji) and

1968 (London). 1 vas extensively involved in tlie United Kingdom

High Court legal actions against the British Phosphate
Commissioners in 1975 and against Iler Majesty's Government in

1976. 1 vas also involved in negotiations regarding mining

leases on Ocean Island (1975), the winding up of the phosphate

industry on ocean ~sland (production ceased in 1980) and the

possible re-mining of Banaba (Ocean Island). From 1981 to date 1
have been Economic Adviser to the Banaban Trust Fund Board vhich

administers a $A 10 million Fund establislied in 1981 as part of

the ultimate settlement following completion of the High Court

legal actions.

1 In October 1989 1 was asked by tlie Chief Secretary, Republic of

Nauru to study the following mattecs:

"(1) A detailed but clear description of the accounting

metliods of the B.P.C. from 1919 to independence,
demonstrating among other things the essential nature of

the B.P.C. operation. and the tact that separate

accounts were kept at al1 times for Nauru (as distinct

from Ocean Island).

(2) An economic valuation and evaluation of the pricing
metliods aopted by the said Governments and B.P.C. III

this context, you should avoid tying the argument too closely to the question uhetlier thece uas at any given

time a world market or a world price for phosphate. ft

vil1 be sufficient to demonstrate that the price

operating vas well belov the average market price at
various periods.

(3) An assessment of the economic loss sufEered by the

Nauruan community as a consequence of development

capital not being available, that is to Say, as a
consequence of tlie absence of an equitable return

combined uith the absence of an adequate sinking fund."

This Report is in response to that request. Section 1 deals vith

the Rccountlng Methods adopted by the British Phosphate
Commissioners (B.P.C.) and culminates in estimates of the f.0.b.

cost of Nauru phosphate wliicli is equivalent to the "selling

pcice" charged by the B.P.C. to consumers in Australia, ~ev

Zealand and the United Kingdom.

Section 2 deals vith the Commercial Price of Nauru Phosphate and
estimates the price that could have been obtained for tliis

phosphate had it have bee'n sold on the open market. The Net Loss

of Earnings (the difference between the commercial price and the

actual "price") is measured in Section 3.

A major problem encountered in this Report, particulacly in

Section 1, is the difficulty in obtaining reliable Source
Material regarding the operations of the B.P.C. Some very

limited information is available in Annual Reports on Nauru

prepared for the League of Nations and for the United Nations

Trusteeship Council. ~hese reports are available as public

documents. llovever the rnost useful sources are the "Confidential

Report and Accounts" prepared aiinually by the B.P.C. for each of
the Partner Governments. Prior to 1925/26 tlie Reports were

entitled "Detaiied Trading Account arid Balance Sheet". A

virtually complete set of these Reports is available for theperiod 1920/21 to 1964/65 (with the only omission being foc the

years 1949/50 and 1950/51). Ilouever the 1951/52 Report does

coiitain information relatirig to 1950/51. Apact Erom these
Confidential Reports 1 have studied information publislied

annually by the League of Nations and by the United Nations but

as discussed in Section 1 this information is highly aggcegated

and of little real use.

In addition to the Reporta refecced to in the preceeding

paragraph during the preparatiori of my evidence in the 1974-75

High Court Actions iniated by Banaban land-owners 1 had access to

a considerable volume of coccesporiderice, interna1 reports etc.
held by the U.K. Goverriment. In some instances (noted in the

source notes to Attachment l.A) this information vas used to

identify Ocean Island f.0.b. costs. Since total combined

Nauru/Ocean Island f.0.b. costs are knownt it was possible to

decive total Nauru f.0.b. costa by subtracting Ocean Island costs
£rom the combined total.1. B.P.C. ACCOUNTING METHODS

1.1 INTRODUCTION

rhe British Phosphate Commissioners (B.P.C.) wece establislied in

1919 in tecms of the Nauru Agreement, 1919. They assumed control

of the assets and operations of tlie pacific Phosphate Company on
Nauru and Ocean Island and were responsible for the mining arid

marketing of phosphate rock [rom these two islands. The B.P.C.

comprised one Commissioner from eacli of the ~overnments of

Australia, New Zealand and tlie United Kingdom. '~he B.P.C.
repocted annually to the tl~cee Governments who, through their

individual Commissioners, exercised general overall supervisory

control over the activities of the B.P.C.

The responsibilities of 5he B.P.C. included the mining, sliipping

and marketing of phosphate rock from Nauru and Ocean Island. Iii
addition, from quite early in the operatioiis of tlie B.P.C., it

acted as agent for the Eertilizer manufacturers of Australia and

New Zealand. Under this orrarigemeiit tlie manufacturers notified

the 6.P.C of their likely phosphate rock requicements. It was

expected by al1 parties that Nauru and Ocean Island vould be the

main, if not the sole. source of supply but over time the demand
by manufacturers in the two countries exceeded supplies available

from Nauru and Ocean Island. Tlie B.P.C. therefore imported

phosphate rock from a range of countries in amounts that varied

with total demand and available supplies from Nauru and Ocean

IslanJ.1.2 ACCOUNTING RECORDS

The financial accounts of the B.P.C. can be viewed as comprising

three levels:

* reports to outside bodies
* reports to the three Governments

interna1 accounting records.

Before reviewing these it is necessary to stress that while
mining operations on each Island were separate there vas a high

degree of integration between Nauru and Ocean Island as Far as

shipping (both export and import), marketing and flead Office

activites are concerned. Thus 8:P.c. ships (owned or chartecedl

would supply both Nauru and Ocean Island, which are approximately
145 miles apact, on the one voyage. Similarly ships could part-

load phosphate at Ocean Island and complete loading at Nauru (and

vice versa)

From an accounting point of view there were therefore individual
Island costs that could be separately identified and recorded,

and joint costs that reflected "off-isla~id" activities. flowever.

as vil1 be discussed below, these "off-island" costs are capable

of being allocated back to the respective islands.

(a) Reports to Outside Bodies

It should also be stressed tliat the D.P.C. vas a highly secretive

body that publically reported tlie bacest minimum of financial

information. As a public body there has been a responsibility to

report to parliament at least in Australia and probably in New
Zealand and taie United Kingdom. Moreover since Nauru vas a

League of Nations Mandate Territory and then a United Nations

Trust Territory there vas an obligation to report to these

international bodies. flovever the reports are virtually useless TADU 1.1.

BI\LRNCE SIiEET INfQRnATION IN PUBLIC RI'PORTS

1 LIABILITIEs ASSFTS 1
-
United Kingdom Goverment Nauru and Ocean Içlaiid Pliospliate
Australian Government
niglitç, Buildiriqç and Plniit,
New Zealsnd Govermenit Moveable Plant. Moorings, Sliips,
Frceliold Property and Investmeiits
lesç Provisions for Eepreciation

and otheï diarges in accordarice
witli Article 11 of the Agreement
Sinkinq Fund For Redemption of 2nd July 1919.
O€ Capital

Sundry Creditors Sundry Dehtors
Outstandings Stocks of Pliospliate in Australia
Australian and New Zealatid and New Zcaland

Pliopsliate Diçtribistion P1iosf>liate Cargoes in Transit
Account Balance Voyaqes in Frogress
Trading Account Balance Stocks at Nauru, Oceati Islaiiù,

Bank Overdraft in Transit alid Elsewliere
Net Ilalarice ot Baiiks
Cash in linnd

TOTAL LIABILITIES TOTAI. ASSFXS

SOURCE : B.P.C. ANNUAL REPORTas a source of meaningful information.

Thus the trading account, as published. combines Nauru and Ocean

Island and typlcaly contains only the follouing information

TRADING ACCOUNT

f.0.b. cost of phosphate including Phosphate sales and
interest on capital, contribution sundry credits

to a sinking fund for the redemption less freight and

of capital and other changes in insurances etc.
accordance with Article 11 of the

Agreement of the 2nd ~uly 1919.

Government Appropriation Account

TOTAL DEBITS TOTAL CREDITS

The B.P.C. Balance Sheet also combines activities at Nauru and
Ocean Island ind typically contains the information given in

Table 1.1. The balance slieet information is very general in
nature and supplies little information regarding the activities

of the B.P.C. In the early years the Reports did not

differentiate be'tween shipments from Nauru and shipments €rom
Ocean Island although this deficiency was remedied in the post-

World War II era.

(b) Reports to the Three Governments

The B.P.C. vas more focthcoming in confidential aniiual reports to

the Three Governments. The accounts do not differentiate betveen
Nauru and Ocean Island (apart from a narrative that describes

capital investment in plant and equipment at each island and

other matters) and are presented on a combined basis.

The standard form of Detailed Trading Account is typically as
given in Table 1.2. altliougltsorne variation rnayoccur from year TABLE 1.2.

THE BRITISII PIIOSPIULTE COMMISSIONERS

DnAlLED TRADING ACCOUNT

F.O:B. CDST OF PI~OSPIIATE

Delivered veiqht of carqoes shipped

ISLAND WORKING COSTS

ROYALTIES

' RDMINISTPATION EXPENSES

ImEREST 6 SINKING FUND

STAFF BONUS 6 PROVIDm FUND

HOURINGS RESERVE €UND

DEPRECIATION FUND
,
EXTM mm OF SPECI~
SERVICE STEAMERS

DISWSITION OF SU* SUNDRY PROFITS

(a) At discretion of Comnisçioiierç :- COMMISSION

F.O.B. EQUntISATICN FUND STNEWRING

ISIiAND TRADE STORES

(b) Subject to approvill of ISLAND SUNDRY PROFITS
Goverment s

F.O.B. EQUILLISATION €UND

BRLNICE CNUIIED FORWRRD

ADD :-

BAIANCE FOR YEAR ENDED
30th JUNE,

SOURCE : B.P.C. CONFIDENTIAL REPORTS TmLE 1.3.

TllE BRITISll PIIOSPIVLTE COMMISSIONERS

DETAILED DALANCE SIIEET

ASSETS

CAPITAL ADVANCES PIIOSPIVLTE RIGlrPS

United Kingdom Government Nauru and Ocean Içlaiid

, Commonwealtli Government BUILDING & FIXED PWWi
(Including
NEW ZENANU GOVERNMENT
expended on epproved
Works fiiianced from
Development Futid)

. .
SINKING €UND Nauru

for redemption of Capital Oçein

MCORINGS

Nauru

SUNDRY CREDITORS

SUNDRY STAFF CREDITQRS

INVESTMENTS
(at or below market
STAFF PROVIDENT €UND
value)

Menbers' Accounts

Less -

MCORINGS

DEPRECIATION
DNEmPmNT
F.O.B. EQUALISATION

GENERAI. RESERVE
GOVERNUENT APPROPRIATION ACCOUNT MARINE INSURANCE

TRN>ING ACCOUNT BALANCE CN(RIED MRWARD

SUNDRY DEBTORS

SUNDRY STAFF DEBTORS
BILLS RECEIVMLE
VOYAGES IN PROGRESS

FllOSl'llATE CARGOES IN
TRANSIT
GOODS IN TRANSIT

STOCKS

Nauru
Oceùn
sunùry

CAS11 AT BANKS AND IN IVLND

SOURCE : B.P.C. CONFIDENTIAI. REPORTSto year. The items "Island Working Costs" and "Royalties" refer
to expenditures incurred on Nauru and Ocean Island while other

items refer to expendituce etc. away from Nauru and Ocean Island.

A single sales price (f.0.b.) is usually shown in the accounts
for both Nauru and Ocean Island phosphate though the Confidetitial

Reports for 1927/20 and 1928/29 shows that the Nauru f.0.b. price

vas 3/- per ton lower tlian the Ocean Island f.0.b. price in the

years 1926/27, 1927/20, 1920/29 and 1929/30. This undoubtedly

reflects the lower unit costs on Nauru compared to Ocean Island.
These lower units costs are due primarily to the higher tonnages

mined on Nauru. '

A somewhat more detailed balance slieet (See Table 1.3) is also

contained in the Confidential Reports. There is relatively
little difference between Table 1.3 and Table 1.1 as far as

Liabilities are concerned but much more information is ptovided

on the Asset side of the balance sheet. Of particular interest

is the separate allocation of Buildings and Fixed plant between

Nauru and Ocean Island a a similar allocation for Moorings.
These Confidential Reports refer to the peciod 1919/20 to

1964/65 but, as noted e.arlier, copies for the years 1949/50 and

1950/51 have not been able to be located. Figures for 1950/51

are given in the Confidential Report for 1951/52.

(c) Interna1 Accountinq Records

It is quite certain that the B.P.C. would have detailed '

accounting records for those costs incurred on Nauru and for

those costs incurred on Ocean Island. It is known that there vas

a sepacate Accounts Branch located on Nauru and on Ocean Island
and that the Accountant for eacli Island compiled accounts

relating to monies spent on each Island.

It was also reported during meetings between the Nauru Local

Government Council and the Partner Governments in 1966 and in1967 that Island costs are recorded Cor each Island separately

but that joint costs (depreciation, sinking €und, interest, llead
Office expenses etc) are not recorded for each Island separately

since they are incurred for the B.P.C. as a whole and were not

allocated back to the individual Islands. Actual Island vorking

costs foc Nauru and for Ocean Island are given in a B.P.C.

interna1 document for the period .1920/21 to 1953/54. It should
be noted that these costs refer to tons of phosphate raised

whereas in the other Reports summarised above the tonnage

figures refer to tons of phosphate shipped. The costs refered to

do not include Royalties, payments to the Austalian Government

(for administcation costs on Nauru) or to the Government of,the
Gilbert and Ellice Islands Colony (for taxation, Administration

costs on Ocean Island and in the G.E.I.C. generally) etc. and

therefore reflect only the physical mining costs on the two

Islands.

1.3 Rates of Extraction of Phosphate €rom Nauru and Ocean Island

Statistics on the volumes of rock phosphate shipped from Nauru by

the B.P.C. are given in the hnnual Reports and Accounts of the
B.P.C.

Table 1.4 and Chart 1 records the tonnages shipped from Nauru

in each financial year from 1920/21 to 1964/65. As well as the

information on Nauru. data is also provided on shipments from

Ocean Island, the total for Nauru plus Ocean Island and the
proportion of the total which came from Nauru.

When the B.P.C. began operations in the early 1920's production

on Nauru averaged around 200,000 tons per year and accounted for

about 55% - 60% of the combined volumes from Nauru and Ocean
Island. By the end of the 1920's total sliipments were above

500,000 tones of whicli Nauru vas supplying in excess of 60% or

300,000 tons per year. 'I'MLE 1.4

PllOSPliATE SIIBYB.P.C.FROH NAURU
NI0OCW( ISLnNOS
cmusl
YENl 1 1
1"E" ( NAURU NAURU PLUS
I rn Year onded 30 Juns

SOURCE : Table 1.4
1

Tons
Chart I

PHOSPHATE SCllPPED BY B.P.C.
FROM NAURU AND OCEAN ISLANDAfter overcoming the effects of the Depression of the 1930's the
level of shipments £rom Nauru were rapidly expanded and in

1938/39 some 930,000 tonnes were shipped by the B.P.C. Over the

same period shipments £rom Ocean Island also increased but at a

much slower rate than those from Nauru. Tlie effect was to raise
Nauru's share of total shipments to around 75%.

In 1940/41 and 1941/42 production on both Nauru and Ocean Island

vas affected by the War. Production ceased with tlie Japanese
occupation in Auqust 1942 and was not effectively resutned until

1946/47.

It vas not until 1949/50 tliat shipnients £rom Nauru (and Ocean

Island) approached their pre-war levels. For inost of the 1950's

shipments from Nauru were between 1.1 and 1.3 million tons
annually with a peak of 1.468 niillion being recorded in 1955/56.

During this decade Nauru supplied about 80% of the total B.P.C.

shipments £rom Nauru and Ocean Island.

Shipments £rom Nauru increased further in tlie 1960's reaching a
Peak of 1.906 million tons in 1966/67. Production on Ocean

Island averaged around 321,000 tons per year between 1960/61 and

1964/65 compared to the 1,566,000 tons per yeat shipped £rom

Nauru in the corresponding period. Nauru's share of total

shipments also increased marqinally to average 82% O the Eive
years to 1964/65.

From 1920/21 to 1964/65 the B.P.C. sliipped 30.529 millions tons

of rock phosphate £rom Nauru and 10.078 million tons' from Oceaii

Island. The comined total of shipments £rom Nauru and Ocean
Island amounted to 40.607 million tons.1.4 Analysis of D.P.C. f.0.b. Costs

Table 1.5 records B.P.C. f.0.b. costs (per ton shipped) for the

joint Nauru/Ocean Island Operation. They are taken €rom the
Confidential Reports of the B.P.C. to each of the Tliree

Governments. It is cleac from the Table that in the period

1920/21 to 1940/41r when expressed on a per ton basis, the main
cost items were "Island Working Costs and Royalties" and "Interest

and Sinking Fund Contribution". When the volume was 500,000 tons

or less these two items were approximately equal but at higher

tonnages"Is1and Working Costs and Royalties "were around 50% of

total costs. In the period 1946/47 to 1964/65 1sland"Wotking
Costs and Royalties" increased as a proportion of total costs and

towards the end of the period were around 75% ot costs.

The cost items shown in Table 1.5 comprise the following:

Island Working Costs and Royalties: Al1 costs incurred in the

mining and loading of phosphate on Nauru and Ocean Island plus

al1 payments in the form of Royalties. These latter include

payments to Jaluit Gesselshaft (until 1928/29 as royalties on the

mining rights), payments to the Australian Government (for
Administration costs on Nauru) and to the Government of the

Gilbert and Ellice Islands Colony, and payments to the Nauruan

and Ranaban people. It should be stressed that while the R.P.C.

regarded al1 payments to "outside" bodies (Governments.

landowners etc.) as "Royalties", pay:nents to the Nauruan people
formed only a part of wl~at the B.P.C. called "Royalties" (see

Table 3.3 below).

Interest and Sinking Fund Contributions: The R.P.C. paid the

Partner Governmerits interest of 6% on the capital subscribed by
the Thcee Governments and in addition made annual Sinking fund

contributions for the redemption of this capital over the

estimated life of the phosphate deposits. The combined costs

were relatively Eixed in absolute terms $224.054 per annum until 'Y'Al3Ll:1 .5.

NAUIIU/.OCERN ISLAPlU F .O .O. COSTS

(sliillings/pcrice pcr tori sliipped)
!

! ISIAND WlW- INTEREST DEPRECIA- ADIIIN- OTIIER TOTAL
~NNAGE
ING COSTS 6 6 SINK- TION & ISTMTION OVERIIEM F.O. n.
! ROYUTIES ING FUPID H00RlNGS EXPENSES EXPENSES COSTS

1920/21 363,475 16/8 1213 2/6 1/1 2/5 34/11
1921/22 363.9 14/11 12/4 2/6 1/3 1/4 32/3

1922/23 311.3.X' 13/10 1415 2/G 1/7 1/G 33/9
1923/24 450,924 11/6 9/11 2/4 l/- 1/1 25/10
. . 1924/25 473,647 IO/- 9/6 2/4 l/- -/9 23/7

1925/26 393,037 12/3 11/5 2/4 1/6 -/Il 20/5
1926/27 594.825 9/10 7/6 2/5 -/9 -/5 2/-
1927/28 501,907 11/3 6/11 -17 -/il 24/-
2/5
1928/29 575,393 10/4 7/9 2/5 -/O -/7 21/10
1929/30 449,4Y 10/11 9/- 2/3 -/ 10 -/O 23/0
329,939
1920/31 13/3 11/5 1/5 1/2 -/6 27/9
1931/32 434.0% 10/5 10/4 2/5 l/- -/O 24/10
1932/33 664.550 7/10 619 1/9 -/9 2/7 20/1
-/il 21/11
1933/34 556.002 O/- 0/1 2/1 2/9
1934/35 694.726 0/2 6/5 2/4 -/O 2/8 20/4
1935/36 031,047 7/9 5/5 2/4 -/U 1/5 17/6

1936/37 1,007,990 7/1 4/5 1/11 -/7 1/1 1511
1937/38 1,169,361 G/6 3/10 1/11 -/6 -/9 13/5
1938/39 1.228.59C 3/U -/il 13/4
6/8 1/0 -/G
1939/40 1,243,421) 7/3 3/7 1/0 -/7 -/5 13/6
1940/11 626.14: 9/9 7/2 2/2 112 I/S zi/n

1946/47 213,875 20/5 8/9 5/2 3/5 1/10 47/6
1947/48 468.039 26/3 8/9 2/4 2/11 -/IO 41/1

1948/49 851,82( 19/3 0/9 2/- 1/4 2/5 33/9
1949/50 ".a. n.a ri.a ,>.a 13.a nia 11..7
1950/51 1,170,465 21/R 4/5 2/- 30/1
1/6 -/6
1951/52 1.330.15! 23/1 4/4 2/- l/5 -/6 31/0
1952/53 Ii519.31/ 23/6 4/4 2/- l/5 -/G 31/10
1.,381.757 35/-
1953/54 25/G 3/9 3/6 1/7 -10
1954/55 1,549,07C 25/- 3/4 4/3 1/4 -10 34/5
. , 1955/56 1,771,353 23/7 3/4 4/4 1/4 -/B 33/J

1956/57 1,578,047 25/B 3/4 34/11
1957/58 1,456,76[ 31/1
isse/ss 1.535.031 3o/i1 3/5

1959/60 1.550.43P 33/0 3/4 44/4
1960/61 1,649,912 34/11 3/2 3/4 1/10 -/9
. ,
1961/62 1,845,204 35/3 2/10 2/11 44/-
1962/63 1,926,692 3G/2 2/0 6/10 1/5 49/4
1963/64 l.971.930 40/4 2/0 6/2 2/5 1/10 53/5

1964/65 2,037,951 4G/3 2/7 6/2 2/13 5/- GU0

-

SOURCE : Confidentin1 Reports ancl Accoiirits. n .P.C1940/11 and $259.965 per onniim froin 195?/53 oiiward). Between

1946/47 and 1951/52 tlney varied from year to year but averaged

aroundi 290,000 duciiig tliis poriod. Recause the amounts were

fixed in absolute tecms t),ey tell quite sharply wlien expressed on
a per ton basis. Tliis was especially true €rom 1931/33 on as is

sliown iii Table 1.5.

5reciation and Moocirigs: Tlie accounts provided foc a cost
allocation to cover uepreclatlon aiid Moorings. Tlie Depreciatioii

reserve vas a normal annual allowance to ce'cover the cost of

plant and equipment over tlie expected life of the assets. Tlie

Moorings resecve was established to provide funds as cequired for
the periodic replacement of moocinqs at Nauru and Ocean Island.

As Table 1.5 shows, the cost allocation for these items averaged

around 2/- per ton in the pre-Wocld War II period and around 1/-

per ton in the post war period opart from a sharp increase to

over 6/- per ton in the last three yeacs covered by the Table.

Administration Expenses: The costs of B.P.C. administration on

Nauru and Ocean Island wece iiicluded in Island Working Costs.

Admiriistration Expenses refer to B.P.C. adininistration costs in

Austcalia, New Zealand and the United Kingdom. They are thus
overhead expenses and averaged acound 1,'- per ton to 1940/41

followed by an average of nearly 2/- Fer ton in the post-war

period.

Other Overtiead Experises: Tliese inainly coinprise annual payinents

to various Reserve Funds ottier tliaii Depreciation, Moorings aiid

Sinkinq Fund. Included (at various times) in these Reserve
Funds were a Development Reserve (to €und future capital

expendituce),an f.o.1,. Equnlisation reserve (to equalise prices

at al1 works and in al1 ports of Austcolia alid New Zoaland, to

fuiid differences between listed prices nriù actual f.0.b.

pcices,and to taks açcount of Iiigl,ec prices paid for phospllate
froin sources otlier tliari Nauru and Oceail Island), a General

Reserve, a Marine Ilisuca!,ce Reserve, a Currericy A<ljustinentResecve, a War Contingenciea Reserve and a Ships Replacement
Reserve). hs Table 1.5 sliows, the cost per ton varied from yaar

to year but In the post-wac period vas lover than other cost

items.

The B.P.C. operated esseritially as a cost-plus operation i.e.
prices for phosphate sold by the B.P.C. wece set to cover the

costs of extraction, administration, shipment, and of the various

Reserve Funds. Allowaiice vas also made for the cost of imports

of phosphate €rom sources other than Nauru and Ocean Island.
The general practice of the B.P.C. vas to €und operations from

phosphate revenue and, with the exception of one or possibly

several vessele, it did not resoct to bocrowiiigs. The Reserve

Funds were used to meet expenditures of a capital nature.

1.5 Analysis of B.P.C. F.0.b. Costs for Nauru

The B.P.C. has never published separate total f.0.b. costs for

Nauru and Ocean Island. It is known tliat Island Working Costs

and Royalties wece recorded separately for Nauru and Ocean Island

but there is no evidence that allocations were ever made for
costs incurred outaide Nauru and Ocean Island.

During the course of the British High Court action between the

Banaban people (the landowners of Ocean Island) and the. U.K.

Governrnent iii the middle 1970's 1 preserited evidence on belialf
of the landouners and 1 aùopted allocation procedures to arrive

at estimates of total f.0.b. costs for Ocean Island and Nauru for

the peciod 1924/25 to 1910/41 and 1946/47 to 1961/65. The

detailed tables produced at that time have been taken back to

1920/21 for the purposes of tliis Report and are set out iii

Attachment I.A. The figures are summarised in Table 1.6 and
Chart 2 whicli show for Nauru orinual tonnage sliipped and f.0.b.

costs per ton divided into Island Working Costs and Royalties,

Interest and siilking Furid Contributions, Depreciation and

floorings, Administration ~xpenses aiid Other Ovechead Expenses. TAULE 1.6

NAVllU F.O.COSTS

N A U R U OCEAN
ISLANDWRX- INTEREST IsLmn
COSTS.
1Y_ 1-1 ROYiUTIES INSIFU-N0

SOURCE : CILAIZT 2

NAURU F.O.B. COSTS
Al- PER TON
60 . ---. ........-.... . -. .........
JO . .................. ........

,,, . .

........ , . ......-.......
/
\,'

-,;: ",-.\ .............................................
I - --..-.-- .,............. ......; .................................
7 - .......... ?.\ ........... ............. ;. ...... ....--......
6 - - .....,,,,. .... \ .......... ..
I - ............................. .............. ...
. . ... ......
rn 4 - -. .-........... ..._:
.. ........... -. ..... .
.
8
- . . . , . . .. .....

i 1./\ ::
J / 1
,. -L\ \.: : ..... ...... : .. . \ . /
II \ 1
1 /
' 1
r-
\ 1' \/ .. \: -
\..A
'J .d~1
ISLAND "ORKINO COSTS ROV.4I.TIES
----------------
.........................IND
-DEPR.C-ATIO.- k .-ORIN.-S
ADYIN EXPENSES
-OTllER DVERIIEAI> EXI'CNSES
- - - - - - .
TOTAL FOU COSIS

SOURCE :TAULE 1.6For compacison purposes, estimated Ocenn Island total C.0.b.

costs are also given.

The allocation procedures used are as follows:

The B.P.C. Accounts record total Nauru/Ocean Island f.0.b. prices

and f.0.b. costs. From this a Surplus (DeCicit) is calculated as
the diffecence between prices and costs. Estimates were made of

f.0.b. prices for Ocean Island pliospliate and were maiiily decived

€rom Export Statistics publislied in tlie Reports of tlie Gilbert

and Ellice Islands Coloriy. The B.P.C. itself lias given sepacate

Nauru and Ocean Islands C.0.b. prices O the years 1926/27 to
1929/30 inclusive. Tlle Surplus (Deficit) per ton is assumed to

be applicable equally to Ocean Island and Naucu prices and costs

pec ton and €rom the Ocean Island f.0.b. pcice the Ocean Island

f.0.b. cost vas estimated. Total f.0.b. costs were therefore

decived for each island.

Within this total the individual cost comporients were obtained

from the combined island figures as follows:

Interest and Sinking Fund: Allocation based on tonnage.

Depreciation and Moocings: Allocation based on sliare of fixed

assets.
Administration Enpenses: Allocated one-tllicd Ocean Island

and two-thirds Naucu which

broadly corresponds to the

overall distribution of tonnages.

Other Ovechead Expenses Allocation based on tonnage.

Island Working cost aridxoyalties: Obtained as a residual

between total f.0.b. costs aiid the sum of tlie above items.

These two components are sliown separately in Tabls 1.8 below. AsTable 1.8 shows, Royalties as defined by the B.P.C. includes

payments to the Ailstralian Government to meet Government

administration costs on Nauru as well as payments to the Jaluit
Gesselshaft.

As in the period 1920/21 to 1940/41, the conibined Nauru/Ocean
Islarid figures are takeii fros tlie D.P.C. Corifideritial Reports to

tlie Three Goveriiments.

The detailed dissection of costs (by type of cost and foc each

Island separately are as given in Appeiidix l.A are estimated as
per the sources given for each year. In general Ocean Island

costs have been identified, in part by information obtained

during the U.K. Iligli Coi~rt actiori -- the "Buridles" wliicli contaiii

interna1 papers of the U.K. Colonial OCfice ùealitig witli Ocaan

Island, or by reference to otl~er source sucl, as the Report of
the Tecliriical Advisory Groiip wliicli reported oii R.P.C. operatioris

on Ocean Islarid (1975). In al1 cases costs for Nauru Iiave beeri

obtained as the difference between Naucu/Oceari Islniid combiried

costs and costs for Ocean Island.

Table 1.6 shows that apart Erom the very early years of

operations of the B.P.C. costs per ton were mucli lower for Nauru

than for Ocean Island. Tlie main ceason for this is the highec

tonnages of phosphate inineil ori Nniiru (çee Table 1.4 above). It

is clear from Table 1.6 tliat duririg the 1920's Island Working
Costs and Royalties wece, on a tonnage hasis, rouglily OC the same

magnitude as Interest and Sinking Fund Contributions. Ilovever

ducing most of the cemainder oL tlne period covered by tlie Table

Interest and Sinking Fund Contributions fell wlien expressed on a

per ton basis.

Table 1.6 combines Island Workiriq Costs and Royalties and it is

of interest to seporate these two components of costs incurred on AOMINISCRATIOEXPENSES AND 1\OTAROYAIJ'PAYMENl'S
TO NAURUANSFAIDDY B.P.C.ON NAURU

ENDED JUUIT ADMINISTIUITION ROYALTYPAYMEN~ WAX. ~O~UTY
JUNE GASSELSCIIMT Aust.Govcrn.) M COEIMIINITY PAYNAURUM
-
1921 l/- -/G - 1/G
1922 1/- -/G -/3 1/9
1923 1/- -/6 -/3 119
1924 1/- .-/G -/3 1/9
1925 11- -/G -/3 1/9
1926 -/G -/6 -11 1/3
1928 -/G -/6 -/3 1/3
1929 -/G -/G -/73 1171
1930 -/5 -/G -171 1/14
1931 - -/G -/71 1/13
1932 - -/G -/73 1/11
1933 - -/6 -/O 1/2
1934 - -/G -/O 1/2
1935 - -/G -/Il 1/2
1937 - -/G -/O 1/2
1938 - -/G -/O 1/2
1939 - -/G -/O1 1/21
1940 - -/G -/O 1/2
1941 - -/G -/Il 1/2
1942 - -/G -/O 1/2
1943 - - - -
1944 - - - -
1945 - - - -
1946 - - - -
1947 - -/6 -/O 1/2
1949 - -/O l/l 1/9
1950 - -19O1 -/los 1/71
1951 - 1/11 1/2 2/91
1952 - 1/7 1/2 2/9
3/9

R/21
1950 1 q
19GO 2/71 9/31
1961 7/- 3/<) 10/9
1962 3/51 9/10!
1963 6/7 3/[4 IO/]
1964 10/71 4/l 14/83
1965 7/2 11/5
1966 - 11/31 17/7 2tl/101

--
SOURCE: Iiiformatioprovidc<lbyO.P.C.(1920/211-0l<Jf11/42')Nauru. Table 1.7 gives details of payments (per ton) to Jaluit

Gesselshaft, to the Australian Government and to the Nauruan

community. The Table shows tliat payments to Jaluit Gesselsliaft
terminated at the end of 1928/29 while payments to the Australian

Government (for Govecnment Administration costs on Nauru) and to

the Nauruan community continued thcoughout the period covered by

the Table, apart Eroin years affected by World War II. Tliece was

only minimal change in pre-world War II payments to the
Austcalian Govecnment for administration expenses and in paynients

to the Naucuan community. llowever in tlie post-World Igar II

period administration costs rose quite steeply, especially in tlie

latter years of this period. A much smaller rise occurred in

payments to the Nauruan Coinmuiiity with the 'major increase not
occurring until 1965/66. Tliese payments increased sliarply iii

1966/67 and 1967/68 as tlie B.P.C. paid a full commercia,i price

for Nauru phosphate.

Payments to the Nauruan community were partly in the form of
direct payments to landowners and partly in the form of payments

to various Trust Funds. The period of operation of these Funds

(prioc to the Independence of Nauru in 1968) was as follows:

-UND PERIOD OF OPERATION

Naucu Royalty Trust Fund 1924 - 1967
Nauru Royalty Trust Fund - Ilousing 1959 - 1967

Nauruan Landowners Royalty Trust Fund 1928 - 1967

Nauruan Community Long Term Investment Fund 1948 - 1967 ,

The Naucu Royalty Trust Fund was established to provide soney for

the benefit of the Nauruan Community and vas the main source of
finance for the Nauru Local Government Council. A separete

Housing Fund was established to be spent on the provision of

Naucuan housing. The Nauruan Landowners Royalty Trust Fund

contains a portion of the pI~oap1)ate royalties paid to individual

landowners. The Nauruan Comtnunity Long Term Investlnent Furid vas
created to help provide for the economic needs of the Nauruon lsliillitigs/pertcper toi> slilppedl

ISLAND WORXING
TOTAL ISUND WORKING
COSTS 5 ROYALTIES ROYALTIES COSiS TONNAGE

1920/21 19/5 1/G 17/11 200,399
1921/22 17/3 1/9 I5/G 214,01<J
1922/23 1G/2 1/9 14/5 176.979
1923/24 13/10
1/9 1211 261.449
1924/25 12/1 1/9 10/4 267.19G
1925/26 10/0 1/3 9/5 205.576
1926/27 0/7 1/3 7/4 336.004
1927/28 10/3 1/71 8/71 311.401

1920/29 9/1 1/7 7/5 341,551
1929/30 9/0 l/l1 8/61 296,371
1930/31 12/G 3/11 11/41 242.92G
1931/32 10/11 1/11 9/91 291,003
1932/33 7/3 1/2 6/1 430,571

1933/34 7/6 1/2 G/4 300.002
1934/35 610 1/2 516 460,106
1935/36 G/U 1/2 5/6 507,477
1936/37 5/7 1/2 4/5 570,714
1937/38 G/1 l/lb 4/111 030,945

1930/39 5/10 1/2 4/0 930.702
1939/40 G/1 1/2 4/11 920,35<1
1940/41 0/2 1/2 7/- 370.101

1946/47 20/5 1/2 27/3 96,413
1947/40 25/3 1/9 23/G 263,507
1948/49 15/1 1/9 13/4 680.746
1949/50 I..a. 1/11 8t.a.
1.009.2GG
1950/51 17/5 2/91 14/71 950.774
1951/52 19/5 2/9 16/0 1,061,797
1952/53 19/7 3/9 15/10 1,227,103
1953/54 19/11 4/5 15/6 1,103.726
1954/55 20/0
G/41 14/31 1.237.23r-
1955/56 4/11 14/4 1,467,794
1956/57 4/71 15/61 1,270,17(.
1957/50 26/4 7/2 19/2 I.IG7,lUI'
1950/59 0/9 16/11 1,201.13LI

1959/60 27/7 9/31 18/31 1,233,007
1960/61 1710 1.330.601
1961/62 9/10! 10/01 1,541.G52
1962/63 10/3 1019 l.GOG.425
1963/64 33/11 14/01 19/21
1,653,09(
1964/G5 39/10 11/5 20/5 1,600,991

- -SOURCE :TABLE 1.8people when the phosphate cesoiirces are exhausted.

Having estimated Nauru Island Workinq Costs and royalties in

Table 1.6 and the level of royalties in Table 1.7 it is possible

in Table 1.8 (and in Cliart 3) to arrive at an estimate of island

working costs per ton of pliosphate sliipped. Ducing the pce-World

II period Island Working Costs Eell as tonnage increased making
possible increased economies of scale. Tliere "as less scope for

this Erom 1950 on but the hiqh extraction levels did at least

help to contain the increase in production costs.2. TIIE COMMERCIAL PRICE OF NAURU PIIOSPHATE

Nauru phosphate duriny virtually the whole of the mininy of

phosphate by the B.P.C. vas sold in Austcalia and New Zealand at
cost. In terms of the Nauru Ayreelnerit, no attempt vas made to

sel1 it at commercial pcices in these coutitries. It is tlterefore

not possible to take the selliriy price (f.0.b.) in Austcalia and

New Zealand as any yuide to the commercial price of Nauru
phosphate.

It is necessary thecefore to take some comparable commercial

prices for application to Nauru phosphate. Before takiny such

prices it is necessacy to take account of two important factors:

(i) the quality of phosphate: and

(ii) the yeograpliical proximity of potential compacable

phosphate sources to Nauru's potential markets.

2.1. THE QUALITY OF PIIOSPIIATE

The most important single deterininant of quality is tlie phosphate

content pliospliorous pentoxide 0, ) of the deposit biit it is
also important to take account of the presence of iron oxide

(Fe, 0,) and alumina oxide (Ali 03) since a hiyli percentaye of

iron and alumina reduces the suitability of tlie deposit Cor

fertilizer manufacture.

Table 2.1. yives details of the average Pa 0,- content of
phosphate in tlie vacious deposits toyetlier with average ( Fe, O)

and ( Al2 O3 ) content. The table is arranyed in broad order of

quality and it also shows the average f.0.b. price per ton of

pliosphate in 1963 and in 1951 and tlie volume of phospliate

exported in eacli of tliese years. Tlie E.0.b. prices have been
calculated €rom external trade statistics while the years sliown

have been selected because 1963 is close to but prior to tlie end

of the Makatea deposit and 1951 is a relatively early post-var -
W.-. .: O W
cc 7-U c m
N +O ;ug; 0,
IU = mLio N
mu O CUd rr P
UO -4nrwn U
Y c e m
00" OW*, u
0.0 ce= a U
0 MT1 9 U >
TI,, du-4+ O
UC ,CUL U
Un 9 Me 3
Ça 3 n44a" .O
0.m mcnrx b<
111 U OUD 4
ç m YU-A.,,m 4
&TI WmUU O
U.4 U Y,."-
OU *mua Y
m U U C ~
u- nir c ~ 2 . v.
SU B m
u* OWdC v.
-4m <uOU0 Li.< U N
)?ou C O
c T10l..*. a0
4u >C .ET: ;<
OU dUW0d O
3+ Li* .UÇ O.
<W w O,.= ~ cr<!+ -m e
O c
I 0 * *
.-. .-. t..i4 a
"7 P. U4
- - CC"
O O .a Ye O
Y " W CL:
- - u O
4 U e3x 4
- - -4 n T:

4 4 ---
O O *nu
U uyear after immediate post-var dislocations liad been overcome.

Unfortunately it vas not possible to obtain separate prices for

individual deposits in Mococco, Tuiiisia arid the Uriited Arab
Republic. In the case of 'Tunisia alid the 1J.A.R. tliis is not

serious since the deposits are of roughly the same quality. In

Morocco the Sidi Daoui deposit is of siqnificantly higher quality

but production only commenced in 1961 and in 1962 accounteZ foc
only 5% of total exports Crom Morocco.

Table 2.1 cleacly shows the relative effect on price of a hiqli Pl

O,. content and the presence of impurities in the form of iron and

alumina. The only instance wliere the price appears higli in
relation to quallty 1s in Montana in 1950. llovever costs would

be very high for Montana phospliate since undergrou~id inining is

involved. Moreover ttie phosphate is exported to the Canadian

parent of the mining company for fertilizer manufacture in Canada

and in these circumstances normal pcicing procedures may not
operate.

Nauru phosphate has a particularly hiqh Pa 0,content (38.9%) and

is relatively Cree of impurities (the combined Fe. Or and Al4 03

content is only 0.3%). It would ttierefoce attract a commercial
price hiqlier than for any source shown in Table 2.1. iiowever a

conservative estimate would place it as beinq at least comparable

with the price obtained for Makatea pllosphate (36.7% P1O, and a

combined Fea O,/Ala Oz of 1.0%).

Table 2.2 gives information 011 f.0.b. prices for Morocco, Makatea
and Seneqal ttiat enables a comparison of f.0.b. price per unit of

triphosphate of lime (TPr.). TPL is used to indicate the

concentration ol. calcium pliospliate (Ca3 PO,,) in ttie ore e.g. 80%

TPL ore coritains 00% by weiqlit of tricalcium pliospliate. P 0,-

is used to iiidicate the pliospl~orous content of tlbe ùeposit (alid

of phosphatic fertilizers). Tlie P, 0, contelit is related to the
TPL content whicli is equal to P, 0,- multiplied by 2.185. Tllus TABLE2.2.

~SOf?'P'~EP&~ F.O.B.PRIE$?ER U&IT OF +L

-OüRCE: 1964 (BritishSulphurCorporation).rTPL -o2.185PiOs contenthate Deposics- 2ndEdition

îi0ROCCO:f.o.b(sterling)1949150to 1954155 -Bundle42-67
1956 to 1962-Bundle03-136
f.0.b.(Australia) 1963and 1964 -DerivedfromStatiscics publishedin U.H.Yearbook
of InternationaTlradeStatistics
x0~4TE~:f.o.b.(Auatra1ia)Derive frw infornacionauppliedby Servicedes Douanea,Tehit!,83 amended 1
B.P.C.Sources.
-ENEGAL:1960to 1966as forMoroccoMakatea phosphate has a P, O, content of 36.7% vliicli equals 805
TPL.

Because of the difficulty in obtaining reliable price information

the table covers only a limited period of time and the major
comparison is only between Morocco and Makatea since these are

the only countries for whicli data is available extending over 15

years. However Morocco is a very large sxporter of phosphate

rock and Morocco phosphate is shipped to a large nuinber of
countries though of course its major markets are to be found in

Europe. The United States is also a large exporter of phosphate

(from Florida )but it is difficult to obtain adequate price

information, especially on an f.0.b. or f.a.s. .basis. Some price
data 1s available on an ex-mine basis but transportation costs to

theport of shipment are high and inadequate data is available to

enable the ex-mine prices to be converted to f.0.b. or f.a.s.

prices. Moreover Florida phosphate is sold in a variety of

grades and while average f.0.b. prices can be deduced from
external trade statistics it is not possible to relate these to

the grade of phosphate, wliich is the wtiole purpose of this study.

The figures of f.0.b. per unit of TPL given in Table 2.2. show

that there is a broad similarity between the sources of supply

quoted in the table. Of course the cocrespondence is not exact
since there are other factors affecting f.0.b. prices.

Nevertheless there is sufficient similarity between the figures

to show that the TPL content is an important determinant of

price.

2.2. GEOGRAPIIICAL PROXIMITY

.\
8 <
Phosphate is a bulky substance and freiqht rates are high in

relation to its value. llence most importers tend to purctiase

phosphate £rom their nearest supplier so as to minimise freiqlnt

COStS.In some instances a major importer, such as Japan, may follow a

pollcy of dlverslfying lts purchases and obtain Its phosphate

€rom a vide variety of sources. Morocco, a very large exporter

of phosphate rock, has for many years sold to customers al1 over
the world.

During the period under review, Australia and New Zealand

obtained the bulk of their supplies from Nauru, Ocean Island and
Christmas Island. Phosphate has hovever been imported €rom

Makatea, Florida, Morocco, Togoland, Senegal. Egypt etc.

The nature of the market is therefore that a supplier would look

first to the nearest geographical market and then move further
afield as the need (and opportunity) arose. Most suppliers do

not like to bedependent on one market alone and hence attempt to

diversify their markets. Thus when the aur ru Phosphate

Corporation was established it deliberately undertook sales to

markets other than Australia and New Zealand.

aur ru's principal potential markets have always been Australia,

New Zealand and Japan. In fact, relatively little phosphate lias

been sold to Japan during the period when the B.P.C. operated the

phosphate industry on Nauru but that lias largely resulted from
the absence of a commercial market by reason of the Nauru

Agreement.

2.3 MAKATEA AS A COMPARABLE

Apart €rom the fact that the Makatea deposit is, like the Natiru

deposit, a high quality phosphate (though not as high as Nauru

phosphate) freight rates from Makatea would be broadly similar to

(though slightly higher than) freight rates €rom Nauru to markets

in Australia and New Zealand and to possible markets in Japan.
The geographic proximity of Nauru and Makatea reinforces the

conclusion that Nauru phosphate, if sold at commercial prices

would have, at the very least, attracted the same price as didMakatea phosphate.

The use of Makatea prices as the measure of the commercial value

of Nauru phoaphate can be suppocted also by reference to the

pricing of Nauru phosphate in the middle nineteen-sixties.

During negotiations in 1965 and 1966 with the Partner ~overnménts
of Australia, New Zealand and the united Kingdom the

representatives of the Nauru Local Govecnmcnt Council argued that

the commercial worth of their phosphate vas the same as the price
at vhich Makatea phosphate was sold. This vas finally accepted

by the Partner Gavernments and the Makatea price vas used to

determine the commercial selling price of Nauru phosphate.

2.4 MAKATEA PHOSPHATE PRICES - 1920 TO 1943

There are basically two available sources for pre var Makatea

prices - the prices paid by the 0.p.C. For Makatea phosphate

imported into Australia and New Zealand and export statistics

compiled by the Government of French Polynesia.

The B.P.C. figures are undoubtedly reliable. It is best,

therefore, to atart with them. Phosphate vas imported by the

B.P.C. into Australia and New Zealand in the years 1925/26 to

1933/34 and 1941/42 to 1944/45. From 0.P.c. voyage statements,
Makatea contracts. etc. it is clear that the Makatea price in

1927/28 and in 1928/29 was stg 32/6d. Prices then eased to stg

32/- by 1931/32 and remained at that level in 1934/35. It als0

is clear from B.P.C. sources that when the O.P.C. recommenced
pucchasing Makatea phosphate in 1941 or 1942, the price vas stg

29/6d rising to stg 37/9d in 1944/45.

A second source is data publislied by Service des Douanes,

Polynesie Prancaise. The relevant statistics on Total Exports of
Phosphate from Makatea from 1919/20 to 1965/66 and given in Table

2.3. Table 2.4 provides data on Exports of Phosphate €rom

Makatea to Australia. TMLE 2.3.

WTEA: TOTU EXPORTS OF PIIOSPIIATE

SOURCE: Valeur and Poids: Statistics supplied by Service des nouanes, Polynesie
Francoisc

Exchange Rates: 1920 to 1935 - old gold franc par value
1936 to 1940 - based an changes in the gold content of Iraiic
1961 to 1945 - derived from Uarcime excbmpe rates franc/stcrlinl

1946 aiid 19L7 - rate assumed unchanged at 159 FCP to CA
1948 to 1966 - rates supplied by Reserve Bank of Australis
HOT?! 1950 figures [rom Pacifie Islands Yearbaok TABLE 2.4

HAKATEA: EWORTS TO AUSTRAL5I

AVERAGE
POIDS QUhlJTlTY PRICE
('00~) (tons) (FCP per
tonne)

SOURCE: Valeur and Poids: Statistics supplied by Service des Douanes, Polpnerie
Francaise
Exchange Rates: 1926 to 1934 - old gold franc par value

1942 to 1945 - derived from Yartime exchange rates franclsterliag
1946 and 1947 - rate assumed unclianeed et 159 FCP to LA
1948 to 1966 - rates supplied by Reserve Bank of Auscralis

(a) <Includes exports ta New ZeelandAlthough the figures given in these Tables are derived Erom
Government sources there ace special problems of interpretation,

particularly in some of the pre-World War II years. Makatea
phosphate was generally priced in pounds sterling but the expoct

statistics are expressed in local French Polynesian francs. For
the period 1919/20 to 1934 the old gold standard rate of fnl:

25.225 gold francs has been used in the conversions in Tables 2.3

and 2.4. In fact in June 1928 the old gold franc vas converted
into new fcancs and the rate 1 old gold franc = 4.925 new francs.

However to use this makes nonsense of the conversions given in

the Tables and it must be assumed that the export statistics ace
based on the old gold franc. The conversions €rom 1936 to 1940

have been based on changes in the gold content of the franc while
from 1941 to 1945 they were derived from Wartime exchange rates

franc/sterlinq.

It vil1 be seen Erom Table 2.5 that there are some differences

between B.P.C. statistics and those derived from Makatea export

data. Apart from several individual years the differences are
not unduly alarming reflecting, as they undoubtedly do, the

effect of changing exchange rates, particulacly in the period
1938 to 1940.

The "Consolidated Estimate" in Table 2.5 refers to the "best
estimate"of the Makatea pcice during the period covered in the

Table. Erom 1920/21 to 1924/25 the total phosphate export price

€rom Makatea is used. In 1925/26 and 1926/27 the export price to
Australia is adopted. Erom 1927/28 to 1934/35 (and again in

1942/43) the B.P.C. price is considered the most reliable.
Between 1935/36 and 1941/42 the B.P.C. price is assumed constant

at stg 29/6d. This assumption was made because of the severe

exchange rate problems involved when working with French
Colonial PaciEic francs. There may well have been some variation

but this is likely to have been minor. TABLE 2.5.

MAKATERPRICE : 1920/21 TO 1942/43
(A/- E.0.b.)

FRENCI1 POLYNESIA CUSTOMS STATISTICS CONSOLIDATEC
BPC PRICES EXPORTS TO AUSTNU.lA ESTIMATE
I I I TOTAL EXPORTS

SOURCE : Col- (1) - B.P.C. Sources
Columns (2) and (3) - Tables 2.3 aild2.4
Colmns (4) - Columit (2) to 1924/25, Columii (3) to 1926/27
Column (1) to 1931/35, prices assumed constaiit
to 1911/42 at ! 37/-2.5 MAKATEA PRICES 1946 TO 1966

The position in the period 1946 to 1966 is much more straight-

forvard as far as determining the Makatea price. Information is

available £rom B.P.C. sources for the years l946/47 to 1950/51,
1955/56 to 1957/58 and 1959/60. Makatea export statistics cover

the vhole period and there is no excliange rate problem as

exchange rates between the Australian pound and the French

Colonial Pacific franc are readily available £rom the Reserve
Bank of Australia. These rates have been used in Tables 2.3 and

2.4 to convert the post-War export statistics into Austcalian

currency.

A cornparision between the B.P.C. price information and unit

values derived €rom French Polynesian export statistics is given

in Table 2.6. The Table shows that B.P.C. prices are reasonably

close to the export unit values thought in most instances tliey

are somewhat higher than these values.

A consolidated estimate of the Makatea export price for phosphate

in the period 1946/47 to 1964/65 is given in Table 2.7. COM'ARISON BETUEEN D.P.C. PRICES FOR IWTEA PIIOSPIIATENID

EXPORT PRICES FROH FRENCll POLYNESIA CUSTOHSSTATISTICS : 1942143 to 1964165

(A/- per toi, - C.o.b.)

B.P.C. PRICES FRENCll POLYNESIA CUSTOtiS STATISTLCS

TOTN. EXPORTS EXPORTS TO AU5TWiI.IA

SOURCE: B.I9.C. Pciccs: B.P.C. Sources (Voyn~e ntetcwnts, Anriunl Accounts or
Correspoiiile!icc).

Frencli Polyiicsin Export Statisticr; (Tal,les 3 and 4). avernge of
cnleirdar yiinrs. TMLE 2.7

Estimaterl pricea for Efakatea Plioaphata - 1946/47 to 196'1/65

Vy: par ton - f O b)

Note: (a) From Dit sources

(b) From Frencli Polynesian export statistics
(avernge of cnlendar ycars)3. CALCULATION OF NET LOSS OF EARNINGS

In Section 1 of this Report estimates were made of the total cost

of extractinq Nauru phosphate including an allowance for off-
Island and overhead costs. These costs included a return of 6%

on capital subscribed by tlie Partner Governments together with a

Slnkinq Fuod contribution. In terms of the iiauru Agreement of
1919 the B.P.C. sold Nauru phosphate to the Governments at the

cost of extraction as defined above.

Section 2 of this Report considers the f.0.b. price that could be

obtained for Nauru phosphate if it were sold on the open market
and the conclusion is reached that it would sel1 for at least the

Makatea price.

In this Section the actual sellinq value of Nauru phosphate is

subtracted €rom the estimated commercial value of Nauru phosphate
to arrive at a calculation of the net loss of earnings as a

result of the under-pricing of this phosphate.

The relevant calculations are given in Table 3.1. Column (1)

gives the annual tonnage figures for Nauru. The commercial price
(from Section 2) is given in Column (2) and the resulting figures

of commercial value are obtained in Column (3). Column (4) gives

the estimated f.0.b. costs (and hence tlie Nauru selling price)

and the B.P.C. sales value (Column 5). The Net Loss of Earnings

1s shown on an annual basis in Column (6) and is cumulated in
Column (7). The annual commercial price foc Nauru phosphate and

Nauru f.0.b. costs are shown in Ctiart 4. The difference between

the two lines represents the annual loss of earnings as a result

of under-pricing Nauru phosphate.

The table shows that over the period as a whole there vas a net

loss of earnings of 3 91.0 million as a result of the pricing TABLE 3.1.

NEC LOS5 OF EARNINGS TllROUGll UNDER-PRICING OF NAURU PIIOSPLINPE

COMMERCIAL COMMERCIAL AURU RU B.P.C. EST.
PRICE FOR VALUE NAURI F.0.n. SALES VALUE
NAURU PllOSPllATE COSrS ANPIUIU CUMULATIVE
PIIOSPIIATE l

shilli ngç/ $'OOO) L8'000)
pence

16/2 -216 -216
32/2 - 25 -241
- 34 -275
60 -215
92 -1 23

05 - 38
265 227
153 300
209 509

152 741
128 869
235 1.104
457 1,561

365 1.962
500 2.462
522 2,904
676 3,660

1,021 4,601
1.160 5,841
1,161 7.002
310 7.312

80 7.392
366 7,758

1,456 9.214
1.761 10.975
2,763 12,730
3.575 17,313

4.070 21.383
4,304 25,687
5,545 31,232
7.253 30.485

6,204 44.689
5,009 49,690
5,065 54,763
5,350 60.121

5,034 65,955
6,009 72,764
G.647 79,111
6,144 85,555

5.482 91,037

SOURCE : Column 1 - Table 1.6 Coliiiin 5 - Columii (1) x Columri (4)
Column 2 - Tables 2.5 aiid 2.7 Colulnti 6 - Coluniii (3) millus Colimri (5)

Column 3 - Colwnti il) x Columii (2) columii 7 - Crom Col.wi (61
Columri 4 - Table 1.6 1949/50 estimntcd. CIIART 4

NEI um OP EARNINGS nmuclx WW-PIUWC OF NAURU PH OS PI^
AC FER TON

100 .-............

COMMelCllL PRlCE FOR NAURU FIIOSPIIATE
NAURU PO.ll.COSlS
- - -- - - - -

100 -- -.- .......

90 . .....................

. -. .... .. .- ..

10 . . .............

60 - - - -- ..... ......... ....... - .......

.,
. . ... . .. f
2 30 \ 1
O \ 1
2 \ f
........... 1 . .. 1
l 1 --
I -,--{
I 1
I 1
,O - - :.. ....... .- .- ....?.. I ...
-\
\ \ \ T3 / \-l
\/'\ I\ \/
1 1 \

1, 1 1
Il \"/ l
2, v .. \.11\ .... ,.. ...........
\ 1
\ 1
\ 1
\ 1
\ 1
\ 1
\ 1
\ 1
- 1

In --7--TT17-1-r-l..TT-7..T?. i-'Y-TTTI-TT71-1717-iiirr7-TT- ' 1 1 5
?,>Sz,.: .'*.'. .2~.~b'I.~,,~.,".~>a.>a~~.~""",'.,",""',""~,.,"~~r,*,.~s"~,.~.~,.~r~î
,",*,"Jga,

YEAR ENI>I!IIItINI!policy of the B.P.C.

This shortfall occurred as a result of selling Nauru phosphate

for less than it vas Worth. The f 91.0 million did not thecefore

end up in the pockets of either the D.P.C or the Partner

Government but vas "distributed" as an implicit subsidy to
farmers in Australia (mainly), New Zealand and the United Kingdom

(to a very minor extent).

Nauru phosphate could have been sold at a commercial price in

Australia, New Zealand and the United Kingdom during the whole
period covered by Table 3.1. Theoretically tlie "Surplus" of

.l? 91.0 million could have been distributed between the B.P.C. (as

the mining operator) and the Nauruan community (as landowners).

In fact the Partner Governments limited the profit-making of the

B.P.C. to a return of 6% on subscribed capital plus a Sinking
Fund Contribution, both of which items uere already included in

COStS.

The whole of thef 91.0 million could therefore have been paid to

the Nauruan community whicl~ would have allowed the community to

have faced Independence with much higher financial reserves than
wae the case. The Nauruaii community could, witli prudent

investments, have increased that sum quite substantially over the

years. Since the Partner ~overnments regarded a 6% profit rate

as being reasonably tliis figure has been used in Table 3.2 which

~ssumes that the "shortfall" was invested antiually to earn 6%.
The figures in Column (3) of tlie Table are derived by taking tlie

cumulative net loss (including interest) at the start of the

financial year, adding 50% of the loss during the year and

calculating interest at 6%.

Table 3.2 shows that if invested in tliis mannec the Nauruan

community would have accumulated an additional?! 172.6 million by

the end of 1961/65. Such an amount (which would have been even

larger by Independence in January 1960) would have placed the new NET MSS OF EAIWINGS TIIHOUGII UNUI?R-I'HlC1NG OF NAUIIU F110S1'11AT~
AI>JUÇTED "Y INC1.11510t4 01' 6% 1NTL:RESC
--

NET LOSS OF EARPIIIICS
ANNUAL CUMUWITlVE

YEAR (f'oO0)

12,730
J7.313

21.303
25.687
31,232

30.405
44.GO9
4'J,G9U

54,763
GO, 17.1
65,955

7%.7C,4
7'1,illl
115,555

31.037

- Iiiclusioii of Ge iinleiest eaiiiirig::
oii cuinuliitive ligiiic loi ]>icccrliii<i ).car.Republic of Nauru in a much better position to cope with economic

development projects in Its early years and to have a much larger

sum available to finance economic activity wlien the phosphate

deposit 1s exhausted. It would also provide for a significant
degree of rehabilitation on land mined by the D.P.C. on behalf of

the Partner Governments. As it is, the actual cost of

rehabilitating this land could well exceed the funds

theoretically available from mining duriiig the period when Nauru
phosphate vas sold foc less than the commercial price because of

the impact of inflation on rehabilitation costs.

Prior to the discovecy of pliospliate Nauru was essentially a fish-

and-coconut economy. No agriculture was possible on a scale tliat
permitted any vorhtwhile variation in diet and as time progress

after tlie establishment of the mining industry the Nauruali

population became dependent on a European-type diet. Virtually

al1 foodstuffs are imported at significant cost and even water is

imported.

Financial pressures have resulted in overseas borrowing to

finance euseiitial Government expenditures aiid, twenty tvo years

after Independence a growing shortage of l~ousing has emerged.

Access to the funds that would have been generated by the sale of
phosphate at commercial prices would have avoided many of these

problems and enabled tlie Nauruan people to face the future witli

greater confidence than is currently possible.

Table 3.3. shows the absolute amounts that were paid toJaluit
Gesseischaft, to the Australian Goverliment (for administration

expenses) and to the Nauruan community during the period 1920/21

to 1964/65. The major payments are slrown in Cliart 5. The totalamount of these payments ducing this peciod vas as follows :

jc-

Jaluit GesselschaLt

Australian Government

Nauruan Community

The total payments made by the B.P.C. amounts toj 8.6 million
whereas the direct beneiit to consumers of Nauru phosphate

arnounted to 5 91.0 million. Tlie amouiit lost by tlie Nauruan

communlty wasf172.6 million if account is takeii of potential

interest earnlngs of 6% per annum. TMLC 3.3.

AUMLllISTMTIOll EX13EIISES AND TOTAL ROYAI.TY PAYEIEtmS

TO NA~RUAIIS PAID DY D.P&OIl NAURU

2-000

ROYALTY PAYHEIff

TO NADRUAN
COMMUNlTY NAURU

SOURCE : Calcula1:ert froni 'l.i>lilcl.G and 1.7AD~STRIUION EXPENSE Rr TOTAI. ROYAU'Y F'AYM-3. P.C. ÏR+D:NC ACCOWT NALJRU/OCEkh' O:ZAN .. .
HÿRU
w: 1920/21 - c&- TER TON L- PER m‘I -z? TC^
XSSACE 363,475 163,076
200,399

F.O.3. CCSÏS
(1) IslandVorking Coscs and Pnyalties

(2) Inccreac and Sinking Fund

(3) Daprcciacion and tborings

(6) id=iniscracion Expenser
(5) 0:her 0veib.eaC Lxpe-ces

(61 TOTM F.3.:. :>SIS

?!iCSPH,'.IE SUES
(7) ?ar:ner Sovcm.=encs

(8) Ocher Cscncries

(9) TOTAL SALS

S'J-S!.US/(DEFiClT)

(10) Sales :O Parcrier Covernîencs

(Il) ' Ocher Councriea
(12) IOÏAL SUWLUSI(DEZ1C:T)

(13j sti~oa~ PRCFII~

(14) TOTALPROFIT (12 + 13)

kacrie Funds (Codssiorcers' Discrecion)
hllocrcion Subjecc Co Governnenc Approval N ,-
Y U., mu>
U N C YU
P 40
4 o.,

r N ,-
. \*,dm,,
:;. 1 <DIAm
,A

C
C Cu> LI",
: Y;% :u - L - W
Y y> mm, A iDm W "i
+. m .,w W a io a
O W -WOU - -mu

- U 1_1 ,.,
......d W N U ... o
m -+.- V) .m u

t-> r -
m y> ma-., r
N 10_ yl u m
4-M

N 8 0 . 8 W W u
w m ,-wu wmu o
O -

- - -
< D u r P N N
P m a m u W m, mio,-
w m -r-. - 4 m4.b
N

- - U W <.,
.....N PIV) ...m Ci
- m -4- O wmu
-B.P.C. TF.ADIXCACCL)~T NAVRUIOCEAN: OCUN .. .
A PER 10N d- H*URU
-UR: 1923/24 PER -PER :tx
iUSXAG2 450,924 189,475 261,449
-

0 COSTS

(1) Island Working Coicl and Royilciei
(2) Incere?c and Sinking iund

(3) Daprceiition and Morings
(6) Adainiacririon Lxpenaei

5 Ocfier Overbead Expeniei
(6, 'IOTN F.O.B. COSTS

PIIOSPHATESMEf
(7) Parcner Covornsenci

(8) Ochar Councriea
(9) TUTALSUS

SWLUSl(DEF1CIT)

(10) Srlei Co Parcner Gova~urri
(Il) 'Ocher Countrier

(12) TOTALSURPLUS/(DEFICIT)

(16) 10TAL PR= (12 + 13)
bacne Fundi (co~ii~ioireri' Diicrecion)

Allocation Subjecc CO Givernaenc Approvil ...
.DoIo. U> u-4-
a iD Yi L. ... Ir, Co
mmm u> .-Zo ~i

...
N U m 8.4 P P W
....... r
...0 r - I 4

Id
_ Y * N a>-_ +- Ne-
mm... Yi mr'.Vi *-r-mom m m m r
* R P.,., -OIO\Nm*
f-m~ . vi-r W U O I ~ ~ N

YiWrn N au- ... N
....... ...... I N'OU
*W.- O ... eV<... O ,A'OYrnW

.-_Yi N W.-_ P.-rNNm ..
* C U m m...,,, N0*3>Yi.-
-NU> m orau w=uw\Om*S-
POL- m auw " 7 - N c O r

I " P N N,dC.-
-Y.-..... -
O ,m... .J,"h?"". w
., 2- &, -. "1 ,-
>. m ,...< <o u o
t-'3 cI"(1> m a .-t
' < " B " T : 'O vi
O ni i< n O
w:100D*-D., 1ij
. D O 1 n r.
no.= II Cio
z t.1 ,- 0. 2 n
vi .O .O 8 U:
220 O .m'" ,.
M
YI YI :J ..t 1
Y1 Ci. 0.
r
Y
L..

P * C ru * "7 N N
W U - W NN*u ,'.C m-1mUiP--
m u - m O - N 'N U> I* NRU>ViV>rn
--04 - '-'Ou ......

II 1 N NYiN c. N W N
W-W.... VI ...ui
-ey - WU>- O

Ac. N h" W *-N N U -
. uuU>" O -moi O, Y. Y,O mm'O.-O,N N O W
'OW m u m w '-O* P--'OuVI0
- - - - '-Oh ' m ' O 0 r"

h h ,-. -
......... m u - N .... r r
. - - Y) - m - "m.- 'O-... l *UN
- O r

-- c. N N N ..
V I Vi * U N . 'O m rI U>'O'OhUU>N r O
--O,m u O r - m'OmO u N-rNNn
mol* O - D'Or -Pu'-Wm,

1 rr N , O , - NUN
........ ...Y,
-- - W U I O - - -A,.
r ,- ,- +. ,- <n
-- -. - - r o .,:
iU
r
r m o1 c onmm
,- Y, rl 'A 4 7 3 .ri ri r
" > c' C!g +" - 'r ni
,>,,r 2 v * V I r , 60
:: D .d ui n r< *Li S., O VI b Y:
' < n Y n C
> C .il 'O >4 'N""-, u *'. * * O
.., t- n BJ w:<'r<o 1 k
.C7 Y, ;; .-I ui II. rt 2 . m+,ar-
v --.m.ms nKSumo. 1
LA. A r -mm 1
" OON m r< ,i X
<, '1 -1- ..l O ui 'e .O F O
O I.. i- r< O mNL';:
O V I W $4 m 2 ; o m V-4
YI - bi -4 N D h1
g !P. - 8 wms
< 1 Zn Q
o m ;
3t VI Y,
LI -

*- r u .,
ru", Vi w w IJ N
r r N Id W . w U. U
' U W r U U Vi Vi
W U 0 w r r r r

N ,J
PrVi r W . W P. C
.I..w u r P P 1..
.- P P

N-c N N N + r
wmVi P r- r W . w
*NU 0i O. O NI. Ni
P m 0 Vi Yi Ln w w

N r w r r. r p.- P N l l NU- . r
....... ... ......
- W U .. m m P El mVIUUmm

W N r r W U U O P
'Dr0 N U. U W. z
rnViN ui m. h N-N N
-.-O C m m N N

N N
Vi-m c c.. P C. P
PU.,... - m m .C. El
- NAURU/OCE&Y OCEAN . . . .
.- -AURU
A4- PZR TON f- TERTON . ?ER TON

501,908 190,507 311.401

7.0.3. C$STS

(1) is1;nd Working Costs and byalties 281208 1113 121081 12/11 160127 1013

(2) Incerest aad Sinking hiia 224054 8/11. 84934 8/11 139120 8/11
(3) SepraciatLon and Y~orin3s 60647 215 27570 2/10 33077 2.L

(6) XPr;nis~racion Expcnses 14504 -17 4835 -16 9669 -17
(5) OcherOveriead 'ilpenses

(6) TO?:.L i.0.3. COSTS

?!iOSP!!.\T:s.x:s

(7) Parcnez Governrnents
(6) Othe? Councries

(9) 7OTAL5.a-S

S~L~LUS/ (OLFZCITY

(10) Sales :O Parzner Governnents 1732 -/l (17439) (1110) 19170 113
(LI) ' OtherCoïntries .. .. .. .. ..
..
(12) TOTALSüWLUSI(DZ:ICII) 1732 -11 (17439) (1110) 19170 113 S I m
- W .-, Z
O " > O
Y << r T:
n ID .u
OL g ,.
3 2' O
VI II .-, a-<
0."- w i
u. h r
n D O N
4.
,< P. .-
" W U
-a -
6 0
< m1
:, UI

3"-
" r

OI

"7. US
Ln Vi

W . W.>
...
N N

N N
o. O4
D . *
N N

N N
.... W
,a N

W W
Ln. '">
O. O
u, W

W - N
. . .
N N H.P.C. TRMIBC ACCOWT NAURU/OCEIIU OCEAN '..: NAL'RU . .
-
YEAR: 1929130 A PER ïûN ..J- PZR TON PER ms
TOSNACE 449,456 203.085 296,371

F.O.B. COSIS
(1) Island Uorking Cosrs and Payalties

(2) Incercs: and Sinking P~nd
(3) Depreciacion and ?borings

) Adniniscracion Experses
(5) Other. Sverhead Expenses

(63 .3ïALF.0.3. COSIS,.

?%OS?AATESJLES

(7) Parczer Governments
(6) 0:her Councries

(9) TOTALSALES

jü.,O?.L!S/!DE?ICi?)

(iO) Sales to P3r:ner Governzents (550531 (212) (401971 (3111) (14855) . (II-)
(11). Ocicr Councries

(12) TOTALSURPL'JSl(DEF1CIT)

:14) TOTIL ??.OFIT (12 * !3)

Xeserve Ïunds (Cii~z.issioners' Discracion) 3. P.C. TUDING ACCOLNT
NAUiIU1OCE.W OCEAN . ' ..' -AURU .": '
-EIR: 1930131 PEB TON 'd - PER TON . L Tot
YOSYAGE - -
329,939 150,013 242,926

F.O.B. COSYS
(L) Island IJorking Coscs and Royalties

(2) incerese and Sinking Ïund

(3) Depreciacion and Iborings
(4) Adminiseracion Fxpenses

(5) Ceher Ovcrhead Zxpeises

(6) TOTAL F.0.3. COSTS

?!!OSP9iiTE S;ES

(7) ?artcer Gavernnents
(6) Other Couneries

(9) T0TA.L SALES

su~=r~~s/(~~crcryy

(10) Sales to Partner Covernsents

(11) ' 5th~ Couneries
(12) TOTAL SUWLUS/(DE;ICI?)

(12) SUNDRYXOFITS

(14) TOTAL ?SOFIT (12 + 13)

Xescrve Fcr.2~ (Cîmissioners' Discrecion)

Allacaeion Subjecc Co Gsverî.cenc Approval UN- r P. W mrm .UI
m-m - NPm ON- N
mw.i- m'. -arU mm-
UI<m

"N 1 r m r mrmW ta
mW-.... w .-rr wwm
"-0

r r
-mu r UI NrO .- LO m
--O ui ru., UIW-
Wmw W m.-- U-El0 m

N W N
....... , r m r ...
NWUI a mm* wam

N r n - Y Y W
WmN - ONU N WNm
f:%:: U W,,m W W U
murn UI w.,m rwm

--,Y 9 NU,.. m-m N
u,> .. 0 .-..-a WWOD
O ...
Ti..C.. TMEINC ACCOIJNT NALTRUIOCEP-Y OCFAN -AURI . ' '
-EAR: 1932133 25- PER TON PER ïûN PER ïûN

TONSAGC 664,550 225,979 438.571

--.O.B. COSTS
(1) Island Working Coscs and Royalties

(2) 11i:ercsc and Sinking Fund

(2 Ucpreci;icion and Xaorings
(4) ,\lz:nls:rnclon Expenses

(5) Othe: OveriLead Expenses
(6) TOTALF.O.B. COSTS

?AOSPSLITESALES

(7) Parcnez Csvernmenrs

(6) C:?er Councrles
(9) TOTALSALXS

SLF\?LVS/(DilIC:1)

(10) Sales :a ?armer Goverm.encs
(11) Ocher Cou~trics

(12) TOTALSUWLUSI(DEF1CIT)

(11s CLTDÇY ?I(OFI?S

(1:) 7OTAL?SOFil (12 - 13)

3cserve Fu7.i~ (Csmissioners' Discrecion)
.illoc;clsc Sïjjcc: cs &ver-zer.: Approval NAURU/OCZAN ' OCEAN .. .
-AURU ,'.''.
2 PER MN 'A-- PEI TON . -,. mN
556,802 176.500 380.802

F.O.!.. COSTS
(1) Island Uork?ng Cascs ar.d Uyalcies

(2) Inccrrsc and Sinking Fund
(3) Deprcciatl> n-d ><30riz&s

(1) Adziniscracion Zxpenses
(5) Oc!>cr Overtenà Expenses

(6) TOTALT.0.9. COSYS

?!!OS?E1\TZSALES
(7) Parzner Govensencs

(8) Ocher Councries
(9) TOTALSALES

(131 SSXDW ?~OÎITS 45348 1/8 14375 118 30973 118

(!4) TOTAL?<O?iT(12 + 13) 114518 414 20268 214 99250 . 513
Raserve Ssds (C3miss_ior.ers' Discrccion) 67075 2/5 20268 214 46807 2/6

'. Allocation Subjecc :O Ciivernze~c Approwl 52hh3 1/11 ... .. 52443 219 .4
. PP mi N r, rmw OI
. " U - U)U)U) ' W U
r- U) NNO* - *-"

r-r 8 . 4 , 0.4-
...-... U WNLn mm..
O 0 - r

. NN.P. - W E. P N W N
. "U .- UUN m-m
NN. U) e-N " mm., m
- - - -

. ,rr - - W W P O .4 U)
....-r. U LnU I .mm-
0 I - - -

mm w L--w *Ln- P
. Ln- "4 ""N WNO b> 0
W W O W - N \Owa

. W W C ,..O*-
...mm.. .4 .-mm B.?.C. TWIXC ACCOUNT NAURU~OCEAY. OCEAN .. .
. - NAURU .' ' ',
-EAR: 1935136 PER TON 25 PER ïüN PPER10?1

TONNAGE 831,847 324,370 507,477

F.O.B. CCSTS

(1) Island Uorking Costs and Rnyalzies
(2) Inzeresc and Sinking Eund

(3) Licprcciarion and Ynorings

4 Ad=Laiscracion Expenses
(5) Ocher Overhead Expenses

(6) TOTAL F.0.3. CCSTS

süwrvs/(-,~crcr.~)

(10) Siles CO ?ar:ner Governç.en:s
(11) Ocher Cauncries

1 TOTAL SUX?LL'S/(DE?ICIT)

(13j SGNDIY ZROFITS

(1h) 13Ti.L OSOFIT (12 i 13)

%serve Funds (Comissioners' Oiscr~rion)

Allocation Sujjec: :O Covera-.es: Approval

..
- w m u ~
.'Y v - w
21
r-l O .i> X
2-mnT-1
r- .< 9
"7 n* O Y>
r-6 'i n:q F
w n <
P, 0
; 3
<n 3
8,
YI

-VI r oi mee 2-mm ., ., N W
. O 04 W WN., wmo U>V<wEPmI
mm U> w ~ m u>-m ZUZ,"EZ
mm n ,via oi r VI NWNW2-O)

. WU r rw,-r - id
....C C ... ...... -P.,
2- U>W I O2-- rr-4rVlr W . . a

NN la -WC mWN W O. N WWW .-.
. WW, ., WNO. Umm oYl.,m*m
WU W m N o mu-0 ' mm'.WWviNWm P $.
-O N E
N

m
?. - A r
........ r , r 0 , -mm N *. oir i .-&a
WU 2- -VI- Y'..- ......
- - O - O (a': ::

r 2- 2- w ..
- WU> m.. -uw u o m Ol'lDPmL-
. mm, U> -0.4 mm*?VI Viu2-mmm
m..... O oi 2- 0iomoww uI

C-

. 2 - - - .W. -
. 0.0 n 1.. N 1.. m m ...... I - '. vi
N ~ V I Os-- ...... +. B.P.C. TTADISC AC-
NAWXUIOCEN OCEAN . ' . . -AURU ' ' '
-EAR: 1937138 PER TON k-- PEX X)N ?ER 10s

TUYXAGE 1,169,361 330,416 838.945

P.O.S. COSTS

(1) Island IJorking Cosls and 3Dyalcies

(2) Incerrsc and Sinking Luzd

(3) Dcpreciacion ar.d ?norings
(1) Administration Expenses

5 Ocher Overhead Zxpenses

(6; lOTXL E.0.3. COSTS

?!!OS?RATTESALES
(7) ?,rrner Gaverxrenrs

(8) Other Councries

(9) TOTAL SALES

SÏ?2L:'S/(3EFZCI1)

(10) Sales r3 ?armer Goverzzents

(11) ' Other Cîuncries

(12) TOTAL SUIL"LÜS/(DEFICIT)

(1;) susosv ?sorrrs

1 7OTAL PROFIT (12 + 13)
XesLrve Fuads (Co-issisners' Ciscretion)

- .a--an Sujjecc Co GJveri.-ien: Approval 3. P.C. TRA3:YG i\CCOINI NACRUIOCE.4'i OCEAN . . ?rnüai: : ''.

-Y : 1538139 L- ?ES TON 24- -?EB TON .d ?ER TON
TOYXAGE 1,228,590 297,888 930,702

F.0.3. COS??

(1) 1n:anC liocking Coscs and Fnyaltias

(2) I-cerest and Sicking Tund
(3) De?raciacior. and E!oorir,gs

(4) Ai-iniscracion Zxpecses

(5) Orkar 0verk.cad 3xpenses
(6) TÛ?.\L F.O.3. COSiS

?%3S?54?Z SiLEi
(7) ?ar:aer Gave-z?n:s (a)

(t; O~h2r Cocnrrics
;s) rc:iL sarrs

S7fi?'?SI(3C:ICI:)
(i9) Sales ;J ?sr:-er Goverr.ze~:s (a)

(11) Ocber Ccun:ries

(12) TOT:.- SCQLüS/ (DLFZCIT)

A-,9A<- Sec: :a (;sve:xzen: A?p??val . . . .
-.'.. TYkDXSi: ACCCL?!? Xi\LT\U/0C?.bY OCWN Ni\l:X
Y6hR: 1939140 .f ?ES TON .d- PERTON PE?.?ûX
--
TOSXACS 1,243,428 315.069 928.359

F.O.S. C3S?S

(1) 1s:;i.dUorking Ccsts and ibya1:ies 450881 713 ' 167857 1018 283024 611

(2) incsrest and Sinking Fund 224054 317 56775 317 167279 317
(2) Cz?reziacicr and Y~o:lzgs 103619 1/23 41396 218 62223 114

) ;~~=.:~is;:;tia:Expccsss 3?840 -17 11?80 -19 22560 -i6

(:j 0:ker Cverhead Xxpesses 2Li.50 -15 6254 -,5 18426 -15
(6) TOTALT.0.3.CSSTS 837074 1316 283562' 181- 553512 11/11

(7) ?ar:ner Governnents (a) 763044 13/23 193355 1318 569669 13/23

(23; Ccber Countries 208329 3312 52791 3312 155538 3312
(9) ?Oï.;L S.uZs 971373 . 1517 246146 1517 725227 1517.

(1) ::C?U~CS rdsrrve phas2Sa;c s:ocks valued sc cost. ~~o~u/ccr.nu CCE4N . . NALRU . .
- -
& ?E?. TON A. PEB TOY ?ER TOX

626,149 255.968 370,181

F.C.S. CCSTS

(1) Island !:orl<;ng Cos:s and &y-ltics

(2) Ir.:ercsc and Sinking Fu:id

(2) Cc-rcclacion and ?!oo:ings
(Lj .\l:.i:ils::acicn Expenses

(5; @cher Ovcrhcnd Sxpe?.ses

(i) TC?AL F.û.3. C3STS

?<::j?!:.+>::S:%2?S
-
(i! ?rr?:.er Gîverxnencs

(Y! Giksr *>unirLes

(4) israi. SALES (2)

(aj Ir.clules sales irc-3 rescrs-e srscks vaiued a: suqlus over clst , n.a. : noc availajle

and r.svec;.en:s irico r2serl.e 5:ocks valued nc ~3s:.Cn W
O NW UQ O
No~uub.
N O 40.1mO u r
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!slandVarking Costs and Royalties 824884 1913 321500 35/- 513384 15/1

Interestand SinkinqFmd 375298 8/9 77874 8/9 297b24 8/9

Depreciation acd Moorirqs 85783 2/- 31491 316 54292 1/7

Adnin1strat:on Expenses 57862 1/4 19287 212 38575 1/2

Orher OverheadCxgennes 102238 ' 2/5 21214 215 81024 2/5

TOTAL F.0.9. COZ:'T,. 1446065 33/9 461366 51/10 084699 29/-

--- .
NAURU/OCEAN - B.P.C.AnnualAccounts
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-
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1578,842
300,666 1278,176

:.o.B. COSTS
'1) Island kiorkin~ Costs and Royalties'
.2) Inrerest and ;Sinkinq Fmd

') Depreciation and Ploorinqs

Administration Expenses
.5) Other Overhead Expenses
.-
b) TOTAL F.O.B. COS'I'S.

-OURCI:
NAURU/OCEAN - B.P.C. Annual Accomts
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NALXU/OCCAN - 9.P.C. Annual Accollnts
OCEAN - T.A.G. Xe?Or:
NAURU - Cbtained 3y difference -,.0.9. COSTS
, Island Uor~lng Costs and Royalties

(2) Inzsresi and 'Sinkln:?w.d
(5) Depreciation and Mooriags

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-CAR: 1964/65 c PER TON 2 PER TQN c P:.R T?::

:OrlblACE 2,037,951 348,953 1,688,998

:.o.B. COSTS

:1) Island Working Costs and Royalties 471 3492 46/3 1350739 77/5 3362753 39/10
:2) Interest and Sinking Fund 259965 2/7 44506 2/7 215459 2/7

3) Depreciation and Moori~gs 624213 6/2 235473 73/6 388740 4/7 w
ii:
:a) Administration Ex?enses 273418 2/8 91130 5/3 182288 2/2

:5) O~b.er Overhead Zxoensrs 512663 5/- 1L1-7 812 371076

:fi) TOTAL F.0.R. COS'?S. 6383751 62/8 1863435 106/10 4520316 53/6

-: NAURU/OCEAN - B.P.C. Annual Accounts
OCEAN - T.A.C. Report
NAURU - Obtained by difference. ACOMPARATIVE SURVEYOFTHELAWOF TRUSTSANDTRUST-

LIKEINSTITUTIONS

1
BA. (S. AC.):BB.CL.(Oxon.);D.C.L.(Oxon.);Q.C..F.BA.; Asmiatc, InternationalAcadernyof
ComparativeLaw. ProfessorHwasRcgiusProfessorofLawintheUniversityof Oxford,1971-1988. A COMPARATIVESURVEYOF THE LAWOF TRUSTS AND TRUST-
LIKE INSTITUTIONS

AM. HONORE

1.Scopeof memorandum. This memorandum deals with the extent to which

tmsts and tmst-like institutionsare recognized inthevarious legal systemsof
the world. It pays particular attention to one of the functions which that
institution serves.Thiss the functionofprovidingprotection for persons who
suffer from a legally recognized incapacitysuch as minority or who, though
not legally incapable, are thought to be either temporarily or permanently
incapable of managingtheir own affairs.

2. Sequenceof topics. The memorandum deals successively with(i) the main
features of the Anglo-American law of tmsts as it has developed from its

originsin Englishlaw,or, specifically,the branch of Englishlawcalled Equity
(paras. 4-32); (ii) the spread of the trust to and its reception by systemsother
than English law, mainly but not exclusivelythose of countries in which
English is a main language (paras.33-43); (iii) those fiduciary institutions
whichhave developed independentlyof the Anglo-Americantmst (paras. 44-
61).in particular those which can be regarded as tmst-like2.Special attention
is given to tmst-like institutions in civil law systems belonging to or

influenced by the Romano-Germanic family.Paras. 3 and 62 summarize the
findings.

3. Summary. The picture that emerges is of the universal availability and
pervasiveuse of protective institutions,bywhichpersons (tmstees, guardians,
curators, administrators or the equivalent) hold an office which involves a
fiduciary duty to administer for purposes other than their own private
interest assets which are separate from their own private property. These

persons are subject to the supervisionof a court or administrative body, and
are legally accountable for their administration of the assets under their
control to the personswhom it is their dutyto protect.

2 This terni iseinparu.belowA THEMAINFEATURES OF THEANGLO-AMERICAN LAWOF
TRUSTS.

4. Description of Anglo-American trust. The first of these protective
institutionsis the trust3.Whatis nowcalled the trust has evolved overseveral
centuries from its roots in the English mediaeval 'use'.In its present form it

maybe created by a person (the settlor or founder) in various ways(contract,
will,unilateral declaration) without anyneed for state approval.When a trust
has been validly created one or more persons (the trustee or trustees) are
under a fiduciary obligation to administer property (the trust property,

consisting trust assets) exclusively for another person or persons (the
beneficiaries) or for some other lawful purpose and not for their own
benefit4.Though the trustee has title to the trust assets they are not part of

his patrimony. The trustee is accountable for his administration of the trust
and the court, if approached, takes steps (e.g. by appointing or removing
trustees or givingdirections for its administration) to see that a trust, once

created, is carried out.

5. History. In England the trust developed frorn the sixteenth century
onwards under the aegis of the King'sChancellor and the courts of Equity

which came in the course of time to exercise the Chancellor'sjurisdiction.
These courts existed for a long time alongsidethe ordinary English cornmon
lawcourts. In particular courts of Equity developed remedies different from

those available in the common law courts. Though in England the courts of
Cornmon Law and Equity were fused in 1875,that process of fusion has not
yet taken place, for example, in rnany States of the USA. Hence some
definitions of 'trust'still require that a trust create an 'equitable' obligation.

For example the American Law Institute, under the guidance of the late
A.W.Scott,the outstanding modern authorityon trust law,defines 'trust'as a
fiduciary relationship with respect to property, subjecting the person by

whom the title to the property is held to equitable duties to deal with it for
the benefit of another person'.

3 Comparativesunvy by W.F.Fmlcher. Inrpma,ionolE,!O/Coi»por<îLnw (Ilarnbu196)
Vol.6ch. II.
4 Exreptfor the fartthat the trusiec ma).he anc of the benehisduliesand poweiias
irurteemurisbe exrreiimpariialand nfor hOan plivatebenelii.

5 AmencaiiLawInrliluResrotemr"/,lLaw Second(195S.?.6. Courts of Equity. While the reference to equitable duties explains the
historical originof the trust and isaccurate in the US context, the existence
of separate courts of Equityis not a necessarycondition for the existenceof a
systemof trust law.For example, trusts are recognized and the obligations of

trustees enforced in Scotland, India, Pakistan, Sri Lanka, Malaysia and
Singapore much as they are in England, though the countries mentioned
have never possessed separate courts of Equity.

7. Equitable interests in property. Some Anglo-Americanlawyerstake as an
essential feature of the trust institution therallel existence of two types of
ownership or property interest. They have in mind the legal ownership of

trust assets by the trustee which in English law and many systemsderiving
from it existsalongside the equitable ownership or interest of the beneficiary
in the same assets. It so happens that in England the existence of two
separate court systems led to the recognition of a subordinate 'equitable'
ownership or property interest alongsidethe superior ownership or legal title
recognized in courts of common law. But this is an accidental feature of
English law rather than a necessary element of the trust. 'The distinction

between the legal and the equitable estate is really a red herring drawn
acrossthe trai16Trust beneficiaries can be adequately protected though they
do not possess thistype of 'equitable'interest in the trust assets (belowparas.
25-27). That this protection is possible is demonstrated, again, by the
example of Scotland, India, Pakistan, Malaysia, Singapore and Sri Lanka. In
those countries the trust has been received and is regulated along lines
similar to those of English law, although equitable interests in property are

not recognized in those countries.

8. Ownership of trust assets. It is however an essential feature of the trust,
and one which marks it off from other trust-like institutions,that the trustee
has title to the trust assets. In this respectthe trust may be contrastedwith
trust-like institutions such as guardianship (below paras.44-57). curatorship
(ibid .nd,the Dutch administratorship (bewind: belowpara 59). From the

point of view of ownership of the assets in question there are indeed three
legal techniques by which provision can be made for the fiduciary
administration of assets. Under the first the assets are owned by the person
whoseduty it is to administer them for another or for an abstract purpose. Of
this technique the Roman fiducia provides an early model and the trust and
Germanic Treuhand (below para.58) contemporary examples. Under the

6 F.H.hwxon, rotnntlonglooksor rhzchi(AnnAhor1953p.203.second technique the assets are owned by the ward but the guardian or other
person charged with adrninistering them has powers of management over
[hem to the exclusion of or in conjunction with the ward. Roman
guardianship (rutela) and curatorship (cura) provide early models of this
technique. These Roman institutions havebeen copied with modificationsby

virtually al1modern civil law systems (below paras. 46-57). In a third mode1
the oivnership of the assets is vested neither in the person administering
them nor in the person for whose benefit they are administered but in a
juristicperson, such as a foundation (below para. 60) or deity (below para.
61). Such a juristic person is conceived as embodying the abstract purpose
for whichthe assets are to be managed. This technique isused mainlyfor the
promotion of pious, charitable and religious causes, where the emphasis lies

in the promotion of a worthy object rather than on the benefit to identifiable
individuals. The trust can however alsobe used forthese purposes.

9, Title to trust assets. Though the trust clearly falls under the first of these
models it is not quite accurate to Saythat the trustee must own the trust
assets. As Maitland pointed out the trust property may consist in an interest
lessthan ownership,such as a life interest (usufruct), a contractual obligation

such as that underlyinga holding of shares in a Company,or even the interest
of a beneficiary under another tmst7.Indeed any type of property maybe the
subject of a trust. The correct proposition is therefore that the trustee must
hold the title to the assets which are subject to the trust, whether that title
amounts to ownership or to some lesser right or interest. The Hague
Convention on the Law applicubleto Trustsand tlteir Recognition (10 Jan.
1986) provides that one of the characteristicsof a trust isthat 'titleto the trust

assets stands in the name of the trustee or..another person on behalf of the
trustee".

10. Definition of 'trust'. The Hague Convention, which provides a recent
synopsisof the essentials of the law of trusts from an international point of
view, provides that for purposes of the Convention "theterm 'trust'refers to
the legal relationship created- inter vivos or on death- by a person, the

settlor, when assets have been placed under the control of a trustee for the
benefit of a beneficiary or for a specified purpose". The present
memorandum like the Convention is not principally concerned with the
method of creating a trust. That depends on howobligationsare created, how

7 F.W.>lairland,f(Cambridge193p.SD.
8 ad.2. went on to conclude that the trust assets must constitute ajuristic person. As
a matter of positive law that conclusionwas mistaken, for though a trustee
such as a trust corporation may possess juristic personality the trust itself
does not. Lepaulle'sconclusion was indeed not necessary,since the concept

of aseparate fund (peculi~irnp ,atrimoine affecté,Sonden~emogen)is familiar
in civil lawsystemsand does not require that the separate fund be treated as
a juristicperson.

14. Trusteeship an office. The separation of private and trust assets is
perhaps best explained by the fact that as trustee a person has an official
capacity separate from his or her private capacity. Arnong the minimum
features prescribed by the Hague Convention for those states recognizing
foreign trusts is recognition that "the trustee may sue and be sued in his
capacity as trustee and that he may appear or act in this capacity before a

notary or any person acting in an official ~apacity'~." Moreover trustees own
or hold the title to the trustssets byvirtue of their officeand not othenvise.

15. Trustees as joint tenants. This conception of the legal position may owe
something to the rule that when there are two or more trustees they hold the
trust assets as joint tenants. Joint tenancy is a forrn of property holding
known to English law and most systems derived from it.Its special feature
(the rule of survivorship)is that ifone joint tenant dies or his share in some
other way comes to an end, that share goes not to the trustee's executoror
heir but tothe survivingjoint tenants. Hence when a trustee dies, resignsor is

removed from office continuity in the administration of the trust is made
easier because the survivingtrustees automatically succeed to the previous
trustee's share of the trust assets.. There is no need for that share to be
transferred to the survivingtrustees. Likewiseany new trustee automatically
becomes on appointment a joint tenant and so obtains a share of the trust
assets for the duration of his or her trusteeship.

16. Trusteeship partly private, partly public. The fact that trusteeship is an
office distinguishes the trustee's position from, for example, that of the
Germanic Treuhander (belowpara.58). The position of a trustee is private in

the sense that a trust (itnlike a foundation: below para. 60) may be created
without state authorisation. Moreover trustees do not in general need
administrative or judicial sanction inorder to be appointed or to manage the
affairsof the trust. It is sufficientthat the settlor appoints them as trustees orprescribes the manner in which trustees are to be appointed. This the settlor
normally provides for in the instrument which sets up the trust. On the other
hand trusteeship is an office in the sense,just explained, that a trustee owns
or has title to the trustassets onlyso long as he or she remains trustee. The
office is not passed on to the tmstee's executor or heir. Moreover, though a

trustee isusuallyappointed bya pnvate juristic act, there is a public element
to the office,since it is subject to the jurisdiction of the cour"Le trust vità
l'ombredu Palais de justice"15. Unlike, for example,a private property owner
trustees can be deprived of their rights by the court. The court can ifcalled
upon remove a trustee and substitute a new one, whereas it could not
expropriate a private property owner and substitute another. Trusteeship is
therefore an office which,though in important respects private, is subject in
other respects to public control. Though not an 'upper tnistee', the court

possesses far reaching supervisory powers overtmsts; but it will exercise
them only when asked to do so by a trustee, beneficiary or, in the case of
charitable trusts, a public official.

17.Trust a legnl entity.Although a trust is not a juristic person, it is a legal
entitywhich, once created, continues until the trust object has been fulfilled.
Two features of trust law in particular show this. First, by the rule of real
subrogation, when tnist assets earn income the income is added to the
existing assets which together constitute an ongoing trust fund.The same is
true of assets acquired through the sale, exchange, takeover etc. of trust

assets or income. The ongoing fund constitutes the trust estate, the
composition and value of whichvaries from time to time. Secondly, in order
that the trust object may be realised the trust estate is if necessary
administered by a successionof trustees. A well-knownmaxim provides that
a trust once created will not fail for want of a trustee. It is the continuity of
the trust estate despite changes in the individual assets, together with the
continuity of administration secured if necessary by the appointment of
successivetrustees, whichmake the trust alegal entity.

18. Jurisdiction of court overtrusts. The court, though it does not possess

active powers of supervision,has jurisdiction and in a proper case a duty to
intemene in order to safeguard the continuity and probity of the trust
administration. The court exercises its supervisory powersonly when called
upon to do so bya beneficiaryor trustee, and when satisfiedthat intervention
is necessary in order to secure the proper administration of the trust. In that

15 Lepaulle,op.cit. p.207 event it may appoint or remove trustees and in general do what appears
necessaq to ensure that the trust object is fulfilled.A trustee whois in doubt
about the interpretation of the trust instrument or his powers under it may
apply to the court for guidance. The court givesguidance on matters of law
but normallyleaves the exerciseofdiscretion to the trustees.

19. Variation of trusts. These supe~sory powers include in most
jurisdictions power to Varycharitable trusts under the cy près doctrine, by
substituting a closelyrelated charitable purpose for the one prescribed by the
settlor if the latter has become impossibleor impracticable to fulfil.In rnany

jurisdictions courts also have power to vary non-charitable trusts so as to
secure that the trust object is so far as possible achieved in changed
circurnstanceswhichthe settlor failed to foresee or provide for.

20. Duty of trustee, The Hague Convention also mentions as a feature of

trusts that 'the trustee has the power and the duty, in respect of which he is
accountable, to manage, ernploy or dispose of the assets in accordance with
the terms of the trust and the special duties imposed on him by lawI6.'The
trustee's duty is to carry out the terms of the trust, which are norrnally
embodied in a trust instrument". The instrument may consist of a contract,

will,unilateral declaration of trust, transfer of property, or other juristic act.
Generally speaking it is open to the settlor, in creating the trust, to fix
whatever terms he wishes so long as these are not unlawful or contra bonos
mores. But the source of the trustee'sfiduciary dutyis not the contract, willor

other juristic act which sets up the trust but the general law relating to
fiduciary duties.

21. Duty of loyalty. The most fundamental duty of the trustee is what Scott
calls the 'duty of 10yalty'~'" .This duty is imposed upon the trustee not

because of any provision in the terms of the trust but because of the
relationship which arises from the creation of the trust. A trustee is in a
fiduciary relation to the beneficia~ of the trust. There are other fiduciaries,
such as guardians, executors, or administrators, receivers, agents, attorneys,
corporate directors or officers, partners and joint adventurers. In some

relationsthe fiduciaq element ismore intensethat in others; it isparticularly

16 art. 2(c).
17 Ingenerüirusmayhowcvcralrbe creatorally.

E!~irgld4th rml. 4(I9S4)s.821.rhe of TrumS.170.An alternalem is 'fidcliry':HalsburyofLowsintense in the case of a trust. It is the duty of the trustee to administer the
trust solely in theinterest of the beneficiaries. He is not permitted to place
himself in a position where it would be for his own benefit to violate his duty
to the heneficiariesI9."

22. Avoidanceof self-interest.The duty of loyalty carries with it the duty to
administer the trust purely in the interests of the beneficiaries or trustbject,
and to avoid conflict between the private interests of the trustee and those of

the trust beneficiaries. This peremptory duty cannot be set aside by the terms
of the trust. A contract or will whichpurparted to exclude the fiduciary duties
of the 'trustee' would not be construed as creating a trust but might amount
to an outright gift or legacy.

23. Dealing in trust assets. The duty of loyalty applies in particular to the
purchase or sale of trust assets by the trustee. On a strict, traditional view
such purchases or sales, whether direct or through an intermediary, are
forhidden no matter how clear the tnistee's good faith and how beneficial the
contract to thebeneficiary. On a less strict view, whichis gaining ground, the

court will confirm such transactions if beneficial to the trust, provided that
the trustee has made full disclosure to the beneficiaries and to CO-trustees
and secured their agreement.

24. Dutyto givepersonalattention.The duty of loyalty further carries with it
the duty to attend personally to the affairs of the trust and not to delegate the
responsibility to others, not even to CO-trustees.Al1 CO-trusteesare jointly
responsible for the trust administration no matter how the task is in fact
divided between them. A trustee may and in appropriate circumstance
should employ professional or expert assistance to help with the trust

administration, but he is bound to monitor to the extent that he reasonably
can the performance of those professional advisers or experts whom he may
thus employ.

25. Accountabilityof trustee.Trustees are accountable for the conduct of the
trust administration during their period of office. One aspect of this
responsibility is that they have a duty to account to the beneficiaries at
regular intervals, generally not less than once a year. A trustee who violates
the terms of the trust is guilty of a breach of trust and is responsible for the

consequences of the breach. The same is true of a trustee who violates the fiduciary obligationof loyaltydescribed above.In suchcasesthe beneficiaries
or CO-trusteeshave a number of possible remedies.They maysue the trustee
for breach of trust and recover any loss whichwould not have been suffered
bythe trust estate but for the breach. Alternatively they mayclaimany profit
made by the trustee as a result of the breach. These rights of the
beneficiaries and CO-trustees are inpersonam.

26. 'Followingtrust properiy'. Moreover when the trustee has alienated a
trust asset in breach of trust, the trust asset can generally be recovered for
the trust estate unless it has been acquired by a person who has in good faith
given value for it. The beneficiary may also 'follow'the asset which has been
wrongly alienated or mingled with the trustee's personal patrimony in the
sense that, so longas the proceeds of the asset can be traced, the principle of
real subrogation applies. Any substitute asset acquired with the one

improperly disposed of can be treated as formingpart of the trust estate. On
this point the Hague Convention laysdown that a state recognizinga foreign
trust shall, if the law governing the trust so requires or provides, recognize
that the trust assets may be recovered when the trustee, in breach of trust,
has mingled the trust assets with his own patrimony or has alienated trust
assets2'.

27. Whether beneficiary's right in rem. These rights of the beneficiary to

recover trust assets can be regarded on one view as resting on his equitable
ownership of or interest in the assets. On that view they constitute a species
of right in rern.Alternatively, (particularly in a jurisdiction which does not
recognize equitable interests), they can be construed as rights, derivingfrom
the trustee's fiduciary duty, to have certain improper alienations rescinded
and to rely as against the trustee on the principle of rea: subrogation. On this

viewthe beneficiary'sright is analogous to, though more extensivethan, that
of a creditor who seeks to rescind fraudulent dispositionsby the debtor and
thereby to restore the assetsso disposed of to the debtor'sestate.

28. Removal of trustee. A further remedy open to the beneficiary or co-
trustee in the event of breach of trust is to ask the court to remove the
trustee who is guiltyof the breach or whose interest conflictswith that of the

beneficiaries. This the court will do in the event of a sufficiently serious
1)reachof trust or conflictof interest.

?O lhir irriibjcriin aqualiregardthe ri~htsandobligationsof ihirdalihe asscts29. Trusteeship normally gratuitous. Trustees are entitled to be indemnified

for expenses incurred in the administration of the trust. But in most
jurisdictions they are not entitled to be remunerated for tbeir services unless
(as is normal in the case ofprofessional trustees such as banks) they stipulate
for payment. In principle the officeof trustee is therefore gratuitous.

30. Standard of care and skill. Nevertheless, irrespective of payment, the
standard of skilland care to be exercised bya trustee in the administrationof
a tmst is that which a reasonable person would employ in his or her own
affairs. The trustee is personally responsible not onlyfor violating the duty of
good faith and loyaltybut for any failure to displayreasonable skilland care.
lndeed it is not unknown for strict liability to be imposed on a trustee in
regard to certain matters. On the other hand courts increasingly assume a

jurisdiction to relieve the tmstee of liability for breaches of trust comrnitted
in goodfaith ifin al1the circumstancesthis seemsjust.

31. Salient features of the trust. In sum the trust has by a historical evolution
acquired the following characteristics which may, in a comparative
perspective, be regarded as its salient features:

1. A person (settlor) may create a trust privately, without state
approval, for any lawful object involving the administration of
assets

2. The trustee has title to the trust assets

3. Though the trust is not a juristic person the trust assets form an

estate or patrimony which is separate from the trustee's private
patrimony

4. The trustee holds an officeand is subject to the jurisdiction of the
court, which has a duty, if properly approached, to see that the
trust objectdoes not fail

5. In the executionof their officetrustees have a fiduciaryduty

6. Trustees are accountable for their administration

7. Trust beneficiaries have remedies for breach of trust both against
the trustees personallyand in relation to the trust assets32. Tmst-like institutions. Other institutions in various legal systems share
some but not a11of these features. For example agents have fiduciary duties
but do not hold an office and are not subject to the control of the court.
Guardians hold an office but do not own the assets they administer. The

creation ofjuristic persons (e.g. companies and foundations) usually requires
state approval or at least registration. Company directors must act in the
interests of their shareholders but the latter do not have the remedies
available to a trust beneficiary.

Some but not al1of these other institutions may be regarded as trust-like in
that they share the substantive, though not al1the technical, features of a

trust. In this mernorandum the expression 'trust-like institution'refers to an
institution which shares with the trust the incidents of separation of assets,
office-holdingby the trustee, supervisoryjurisdiction of the court or a public
body, fiduciary duty and accountability on the part of the trustee together
with legal rernedies on the part of the beneficiary (para. 31, items 3 to 7

above). On the other hand an institution maybe described as 'trust-like'even
though the title to the property is not in the trustee but rather in the
beneficiary or a juristic person, and though the scope of the purposes for
which the institution may be used are more restricted than in the case of a
trust (para. 31, 1 to 2 above). This is because such institutions are in
substance and function similar, though technically different, from trusts

proper.

B. SPREADANDRECEPTIONOF THEANGLO-AMERICAN TRUST

33. Wide diffusion of the trust. The institution described forms an integral
part of English law. It has been received as such in countries of English or
British settlernent, particularly the USA, in which it has attained a high
degree of sophistication. It has also been received in most of the forty-eight

sovereign states of the British Commonwealth outside than the United
Kingdorn2',along with some other states which were forrnerly under British
control". It has been thus incorporated into legal systerns with widely
differing origins and in societies with contrasting levels of social and
economicdevelopment.

21 GeneraruweyinG.W.KeeionandL.A.ShcriThecontparorivela%.of misisin ilzeCominonwralrhond
rhlnrlRepirb(London197pp.321.335.
22 Irelan.%uihi\frirï- Pdhstan.34. Countries of British settlement. Among territories of British settlement
may be mentioned the common law states of the USA and Australia, the
common law provinces of Canada23,and New zealand2'. A similar reception
has taken place in the legal systems of territories now or formerly part of the

United Kingdom (Republic of Ireland, Northern Ireland), other than
Scotland, for which see para 38 below.

35. The trust in Asia. In India, the trust was introduced to a limited extent by

custom during the period of British administration. It was first put on a
statutory basis by the Indian Trusts Act 1882, the last of the nineteenth
century Codes to be introduced into India. The Indian law on the subject was

inherited by Pakistan and later Bangladesh. The Indian 1882Act formed the
model for the Sri Lanka Trusts Ordinance of 1917,though with some
variations. The author of this Code, Whitley Sheldon, was at pains to avoid

introducing to Asia the cumbrous English division into legal and equitable
estates in property (above para.7). This was the easier as there were no
separate courts of Equity in India. The Act does not apply to the charitable
endowments of Hindus, Bhuddists and Muslims which are regulated by

separate legal institutions derived from their respective religious systems
(below para.61).Nor has the law of trusts been applied to property holding by
the Indian joint familys. Nevertheless the trust Iawof India and of the states

which derive their law €rom India or from statutes modelled on the Indian
follows the English model in al1 essential respects and dispiays the salient
features outlined in para. 31 above.

36. The trust in Africa. Similarly the law of trusts operates in Nigeria and
Ghana within limits set by Nigerian and Ghanaian family law, and the same
is true of other African territories formerly under British administration.

37. The civil law trust. The trust or a trust-like institution copied to some
extent from the Anglo-American trust has also been introduced in a number
of countries with a civil rather than a common law tradition. These include,

among states and jurisdictions subject to English or U.S. influence, Scotland,
Quebec, Sri Lanka, South Africa, Cyprus and Louisiana; and among states
not so subject, Liechtenstein and Ethiopia. The reception has taken place

either by custom (Scotland), by statute (Quebec, Liechtenstein, Ethiopia,

23 Detailed acîount in Il.W.W.Watlo~~~oJmrsiCorindo(2nd rd.Toronto 19%).

24 Account in I..hlrL~y,<iir<lii!iO!/nrsr(Wellington 1980).
25 Keeton& Sheridan op.ci!. p.194Il'.Louisiana), or by custom supplemented by statute (South Africa, Sri Lanka,
Cyprus). As would be expected, civillawtrusts differ in minor respects from

trusts under English law and the systems derived from it, apart from the
obvious distinctionthat civillaw systemsdo not recognize equitable interests
in property. Insome cases (Ethiopia, South Africa) the differences between

civil and Anglo-American trusts relate to one of the features of trust law
outlined in para. 31 above, such as the location of title to the trust assets in
the trustee. From a substantive and functional point of view, however, both
these are properly regarded as trust-like systemsin terms of para.32 above.

38. Scotland.There is some doubt howfar the lawof tmsts in Scotland is an
indigenous customary creation and how far influenced by the proximity of
England. The leading case on the subject decides, contrary to earlier views,

that a Scottish trust is not a form of contract or a combination of contracts
(e.g. deposit and mandate) but is suigeneris26T . he essential features of trust
law listed in para.31 are observed in ScotlandZ7,and it is even possible,

contrary to the practice in some other civillawjurisdictions, to create a trust
byunilateral declaration inter vivos2'.

39. Quebec.The law of trusts wasintroduced bystatute into Quebec, the only

civil law province of Canada, in 1879and the statutory provisions were
incorporated in the Quebec Civil Code in 1888". They provide that those
who may directly make gifts or legacies may instead create trusts inter vivos
or on death in favourof donees or legatees. After some hesitation it hasbeen

decided by the Supreme Court of Canada that the trustee is owner of the
trust assets. His ownership is however suigeneris (viz. of an administrative
~haracter)~. Unlike in EnglishIawand derivative systemsit is not possible to

create a trust by unilateral declaration inter vivos.There are some other
minor differences. Despite these a Quebec trust conforms to the criteria set
out in para. 31. in al1 respects, except that it .can be created only for the
limited purposes of a gratuitous disposition in favour of a beneficiary, and

not, for example, to provide for the orderly payment of Companydebts by
means of a trust for debenture holders.

26 Allak Tnisteif~rdA&mafe 1976S.C.(1I.I..)453
27 Detviledoccauntin WA.Wils&A.G.M.Dunron,Tnts~. irleanderecurorEdinburgh1975).

28 Ibi'l.
29 ans.981(ato(n). Faribaullfidiicor,m<sde droitcivildons leProvQtlJbcWatcr;,op. cil.
Pan VI!.
M Rojal 7ii,rt3%,c& 19821S.C.RBO.40. South Africa.The trust was introduced by custom into South Africa after

the British occupation, where it existed alongsidethe Dutch institution of
administratorship. The main difference was that the trustee owned the tmst
assets while the administrator did not. The legislator regulated these

institutions in the same way as regards administrative control and the
jurisdiction of the court3'.It is nowprovided by statute that a 'trust'can exist
whether the ownership of the trust assets is in the trustee or the beneficiary

on whose behalf they are to be administered". A South African 'trust' in
which the beileficiary owned the assets would not count as a trust by the
standards of the Hague Convention on the Recognition of Trusts, or the

criteria of para.31 above. But it would count as a tmst-like institution under
para. 32, since the trust assets are separate from the private patrimony of the

trustee and the trust issubject tojudicial supervision.

41. Sri Lanka. Sri Lanka dBers from India in being a civil (Roman-Dutch)
law jurisdiction. Nevertheless the trust was received on a customary basis

after the British occupation and in 1917the Trusts Ordinance, the provisions
of which largely follow those of the Indian Trusts Act, was enacted. This
legislation did not extend to the fideicommi~sum~~ a, civil lawinstitution

which coexisted with the trust. The trust having provedthe more convenient
and flexible fiduciary institution,the fideicommissumhas been abolished3".

42. Liechtenstein. In 1926%and 1928%many of the rules of American trust
law were introduced into Liechtenstein in two voluminous statu te^^^.
Amendments were made in 1980 to ensure better control over the

registration and administration of trusts3'. Under these statutes trusts can be
created for natural beneficiaries, the trustee (Treuhander) being a natural
person, firm or legal entity (Treuunternehmen). The court has powers of

31 EspeciallyAdministrationof EstatesAct 1913;Tmst MoneysCantrolAct 1934.DetailedaccountinT.Honaré,
TheSourhA/ricanLow of Tnr(3red. CapeTown1%).
32 TrustPmperryControlAct57of 1988(stibebmughtinto force).

33 A deiailed treatmentof the Romanrideimmmirsuntis thatof DJohnston, TheRomanLaw ofTntsrr (Oxford
1988),buiis onlyina loosescthntthe fideicomrnicanberegardedasa trust.
34 Law20of 1972.

35 Law of personsandcompanics.20Jan.1926(PGRans. 897-932).
36 Law oftmstentcrprixr 10Apr.1928.

37 Dctailed arcount by KBiedemann, Tmirrin LiechrensrInw (London 1W) cf, H. Coing, Die
Treriha>idbafipmsanech1sg'~schirsunich1973)ch. 15.
38 Lawof 15Apr.1980. supe~ision~~.The Liechtenstein trust, unlike the Treuhand of Germany,
Austria and Switzerlahd (below para.58) is subject to the supervisory
jurisdiction of the court and conforms to the cnteria set out in para. 31
above.

43. Ethiopia. Though drafted by the French comparatist René David, the

Ethiopian Civil Code, unlike the French, has a chapter on juristic persons
and separate estates ("Des personnes morales et des patrimoines
d'affe~tation~~"w, ith a section on what are called in French translation
fidéicommisand in English translation trusts4'.The chapter provides that the
'trust' is an institution by which goods are constituted as an autonomous

mass, with juristicpersonality, to be administered by a trustee according to
instructionsgivenbythe creator of the trust. The object can be the benefit of
person, a workor an idea, so longas the object is not contrary to public order
and morals. In contrast witha foundation, no state approval is needed for the
creation of a trust. In the absence of a trustee nominated by the settlor as the
creator of the trust, the court nominates a trustee. The Ethiopian trust

conformsto the criteria in para.31above,with the exception that the trust is a
juristicperson, and the trust assets are not therefore owned by the trustee. It
maytherefore be accounted a trust-like institution withinpara. 32 above.

TRUST-LIKEINSTITUTIONSINDEPENDENTOF THE ANGLO-
C
AMERICANTRUST

44. Guardianship and curatorship: historical origin. Apart from the
instances of trusts and trust-like institutions in civil law systems already
mentioned (paras. 38 to 43 above), which no doubt owe something to the
hglo-American model, other trust-like institutions also exist in all, or

virtually all, civil law systems. The principal institutions of this sort are
yardianship and curatorship, which are historically based on the Roman
tutela, designed especiallyfor the protection of children under age, and cura,
designed for other categories (e.2. the insane, prodigals) seen as in need of
protection. The modern equivalents of these legal terms are used in many

systemsto describe the correspondinginstitutions,but they do not necessarily

39 Biedemann op. rit. pp. 437467.

40 ans516544.
41 Detailed accbyN.C.VosikLemirdanslecode civilél(Gencva1975).apply to the same categories of incapable persop as in Roman Iaw.
Guardianship (tutelle, Vormundsclzafr)is now the more important category
and the discussionwhich followsconcentrates on it. The term 'ward'is here
used for theperson subject toguardianship, whetherunder ageor adult.

45. Guardianship in modern systems.In modern systems4'the range of
persons to be protected has been in some cases widened, to include for
example alcoholics, dmg addicts and persons guilty of misbehaviour
(inconduite) or without regular occupation (oisif Th)e.function of the
guardian is normallyto represent the ward in civilacts, less often to assistor
authorise the latter's acts. The organs of guardianshipgenerally comprise (a)

the guardian, (b) a guardianship authority, either judicial or administrative,
and often (c) an official (counter-guardian) appointed to monitor the
administration bythe guardian, and in some systems(d) a familycouncil.The
supenisory jurisdiction over guardianship is vested in a court or
administrative agency, in former times often, and today sometimes, a
municipal body. Ata lower level the monitoring official (counter-guardian,

protutor, surrogate tutor, supervisor, curator) supervises the guardian's
administration. In certain systemsthe familycouncil hasimportant duties e.g.
as regards the appointment and dismissal of guardians. It generally consists
of a small number of close relatives. It is the modern equivalent of the
Roman familycouncilwhichhad advisory functionsin family affairs.

Some modern systemstreat parents as (natural) guardians of their children.

The institution of parental guardianship is not sufficientlyanalogous to the
trust to bedealt with inthis memorandum.

46. Salient featuresof guardianship.The substantive features, as opposed to
the terminology, of the institution of guardianship do not Varygreatly from
one system to another. The substantive features mentioned include the
following:

1. Unlike the trust, guardianship is available only for the protection of
persons who are judged incapable of managing their own affairs. Again
unlike the trust,it mriyextend to responsibilityfor the person, as opposed to
the property, of the incapableerson

vol. IVch.7 (1973).taljar.'Children.parentsaIniernoriEn-lopediofConiparoLawe 2. The assets administered by the guardian are owned by the incapable
person on whose behalf theyare being administered but the exclusive(or in
certain case the joint) right tominister thernisvested in the guardian

3.The guardian has a dutyto keep hisor her private assets separate from the
assets of the ward

4. Guardianship is an office subject to the jurisdiction of the court or of an
administrative authority.It is notinherited bythe guardian'sheir or executor.
In manysystemsa citizen has inthe &sence of a validexcusea public dutyto
undertake the office

5. The guardian is subject to a fiduciary obligation to conduct the
administration in the interests of the incapableperson to the exclusionof his
or her own personal interests.

6. When the guardianship ends the guardian is accountable to the ward for

his or her administration

7. Apart from the remedies they may have as owners ofthe assets subject to
guardianship, wardshave legalremedies against the guardian personally

47. Guardianship a trust-like institution. It will be seen by cornparisonwith
para. 31 above that guardianship corresponds in its salient features to the
trust so far as points 3 to 7 are concerned but not as regards points 1 and 2
(location of ownership, breadth of purposes for which the institution can be
employed). Guardianship may therefore be classed as a trust-like institution

with para. 32 above. It would not be practicable to mention the form which
rhis institution takes in the rnany civillaw or related systerns in which it is
found. Illustrative systems have been selected by way ofshowing its wide
diffusion.

48. France. French law provides an example of a system in which a
prominent role is accorded to the family council. The law of 14 Dec. 1964
reformed the regime for the protection of incapable pers on^^ T^.e organs

involvedare the guardian (tutor), the surrogate tutor, the tutorshipjudge and
the family council.The gicardian takes care of the person of the ward and
i'epresentshim or her in al1civil acts. The guardian administers the ward's

13 CiiiCodearc388-514.assets as a good head of the family would and is responsible for damage

resulting from faultyadministration. The guardian cannot acquire the ward's
property or take cession of debts which the ward owes without the authority
of the family council. The counter-guardian (surrogate tutor) supervises the
guardian and represents the ward whenthere is a contïict of interest between
him or her and the guardian. Guardianship of minors is a public duty. The
guardian must render annual accounts to the surrogate tutor. At the end of

the guardianship the guardian must account to the ward for his
administration and is responsible for maladministration. The state is
responsible for faultscomrnittedbythe guardianshipjudge.

49. West Cermany (CFR). The Federal Republic provides an illustration of a
system of guardianship in which the family council has been abolished and

the court has correspondingly a more prominent role than in France.
Guardianship (Vormundscltaft4"a )ims at the general protection of a person's
concerns, whether minor or adult, personal or proprietary, while curatorship
(Pjlegschaft"s)concerns the need for protection on a more limited basis. The
Guardianship Court has a general duty to supervise the activities of
guardians and can by appropriate orders and prohibitions take action to
prevent violations of duty by the guardian or counter-guardian. A counter-

guardian (Gegenvormund)may be appointed to monitor the guardian when
there is property to be administered and only one guardian is in office.The
guardian must account to the Guardianship Court and important decisions
require the assent of that court. The guardian must keep his private assets
strictlyseparate from those of the ward. Guardianship is in principle unpaid,
though the Guardianship Court may for good reason allow remuneration. It

is a civic duty to act as guardian. Both guardian and counter-guardian are
liable to the ward for loss caused by their fault. Not only an individual but a
body such as the Youth Office can be appointed guardian. Except as
orhenvise provided the same provisions applyto guardianship of adults as of
minors.

50. Other West European countries. Similar systemsof guardianship, though
naturally with variations in detail, are to be found in other European States
which follow the Romano-Germanic civil law tradition. This is the case for

41 CiviCodess1773-1908.
45 Ci\Code sa.1909-1921. exampl with Belgi~m~~, the Netherlands4',Spain4q~witzerland'~and
51
Greece .

51. Eastern Europe: Hungary, Romania. The political distinctionsbetween
western and eastern Europe do not carry with them any notable differences

in their respective systemsof guardianship, though public control is more
strongly emphasized, on the whole, in the eastern countries. In Hungary the
operative legislationisAct 1of 1974on Marriage, Familyand Guardianship".
The guardianship authority, an administrative body, appoints guardians. lt
must if necessary take action ex officio for their appointment and may

relieve a guardian of office.To act as guardian is a civicduty. Theguardian is
the keeper of the ward, the administrator of the ward's property and the
ward's statutory representative. The guardian must account to the
guardianship authority at least once a year. The office is not remunerated.

The guardian is bound to make good damage caused by breach of duty. In
Romania the Family Code provides for both guardianship and curatorship
and for the supervisoryjurisdiction of a guardianshipauthoriS3.

52. Scandinavia: Denmark, Sweden, Finland. Though the legal tradition of
the Scandinavian States differs somewhat from that of the countries to the
south the tutelary institutions of these countries conform to the general
pattern. In Denmark guardians may be appointed by official decree, which

must be registered, to look after the financial affairs of the incapable person,
and, if the decree so provides, personal affairs also. Besides the usual
grounds on which a compulsory guardian may be appointed, a person
sufferingfrom diminished capacityrnayvoluntarilyapplyfor the appointment

of a guardian, who then administers the person's property jointly with the
ward. Money belonging to the ward is paid to the Public Trustee
(Ovetfon~zytfderiet w)hile immovables and movables other than money are

46 CivilCodans.8&515.
47 CivilCod=ans. 313-399.
48 CivilCodBwk Iti15.

49 CivilCodeBook IlIL;.
50 CivilCode arts.3u0456.

51 CivilCodeuns. 1589-1709.
52 sr. 93-110.
53 FamilyCode.Law4 0119ti111.Gh.BLI~c,wpl CivilPerro(Bucare1982)ss.ff.administered by the guardians4. In Sweden the municipal Chief Guardian

exercises supervision over guardianship. Important acts of administration
have to be approved by the Chief Guardianss. The pertinent legislation in

Finland is the 1984Act on Guardianship and Custody of Childrens6.A court
order is required to place an adult under guardianship. A curator can be
appointed instead of a guardian for specificor temporary tasks.For al1major

acts of administration the guardian requires the authority of the guardianship
authority,whichiseither a court of lawor a municipalguardianship board.

53. South America: Argentina. The states of South America follow the civil
law pattern, naturally with modificationsin detail. The Argentine legislation
is contained in the Civil Codes7. The guardian (tutor) is the legitimate

representative of the minor in al1 civil acts. The guardian manages and
administers in bis or her own name without regard to the minor'swill. The

guardian must manage in good faith and is responsible foral1damage caused
byhis or her fault. For manytransactions the guardian requires the assent of
the court. Supervisory functions are exercised by the Public Ministry of

Minors. In Chiles8and Colombias9the law of guardianship is slightlybut not
radicallydifferent.

54. Central America: Mexico.Much the same is tme of the states of Central
America. In the Mexican Civil Code the Title on guardianship includes
curatorshipbOT . he curator is a counter-guardian; the curator supervises the

guardian's (tutor's)administration of the ward's affairs. In a conflict withthe
guardian the curator must defend the ward's rightin or out of court, watch

over the guardian and bring any danger to the attention of the judge. On a
vacancy in the guardianship the curator advise the judge on a suitable
guardian. Each municipality has a guardianship council. There is also a

familycouncilwithadvisoryfiinctions6'.

54 Art 277 oM June1922,aniendeby Arr 244 of 8 June1978.Il.Gammelioft-Hansen and orhers,Donirlt
I.oi(Copenhagcn 1982).
55 S.SrroniholrAn irinodrrcliottroSii.c(Stockholm 198pp.19%.

56 J.liarila. TheI~ilirgnl Spte(2nded. 1985).
57 ans.37749-1.

58 CivilCodeans.338.541.
59 CiviCode arts. -128-632.

60 Uouk 1tilXarts449-NO.
61 For Panansçç Civil C<idrIlotirX\'IIarts. 246309. 55.Africa: Ethiopia, Senegal.The Statesof Africa, other than those formerly
under Britishadministration, followthe civillawtradition with modifications.
In Ethiopia the CivilCode of 1960 provides for the protection of minors6"the
infir~n~~ T.here are different offices for protecting the minor
insane and the
in his persona1 needs (governor) and as regards his property (tutor). The
same régimelargely applies to the protection of aduits in the categories
mentioned. The tutor's administration is supervised by a familycouncil and a

counter-guardian (surrogate-tutor). The office of guardian is gratuitous.
Both governorç and guardians may be dismissed for failure to perform the
duties of their office. In Senegal" guardianship (tutelle) falls under the

FamilyCode6'.The organs involvedare the guardianshipjudge, the guardian
(tutor), the counter-guardian (surrogate tutor) and the family council.

Incapable adults mayalsobe placed under guardianship66.

56. East Asia: Japan, China. The Civil Code of Japad7 provides for the
appointnient of a single guardian to manage the ward's property and

represent the ward in juristic acts concerning the latter's property. He may
resign officeon reasonable grounds with the leave of the family court. His
administration is monitored by a supervisor. In China6' in default of parents

other close relatives assume the guardianship of minors. Non-relatives may
be guardians if they obtain the approval of the neighbourhood committee,
village committee or work-unit. The same applies to guardians for the

mentally ill, except that a spouse is preferred in this role. The court may
decide disputes as to the appointment of a guardian. The guardian has a
fiduciarydutytowardshisor her ward and isliable for losscaused byfault.

57. Guardianship in Anglo-Americansystems. Paras 48 to 56 above have
stressed the wide diffusionof guardianship in systems directlyor indirectly

influenced by the civil law.States whose legal systemsstand whollyor partly
in the Anglo-American tradition also recognize guardianship, but in a less

62 arts.2M-338.

63 arts.339-393
64 DManin, Droit ~iclcumm~cinls6,tégo(ixakar1985)

65 ans39.5If.
66 FamilyCodeans.31011.ForRaandaree FamilyCodeans 249-266.F.Rc)nt& J.Gouus.Codereloirdu
Rwanda (Ilrusels 1979).
67 Book IL'chVans.838-876.FoSouthKorearee CivilCodeans 928-959(guardianship),960-973(family
rounrilofilitoien membcn).

68 CivilCodeans. 16,17.II.P.ZChinaciilandcomn~ncialaw(Singapor1988)pp.28-9.developed form. There is often no guardianship authority or family court.
Counter-guardianship and family councils are rare or unknown. The reason

why guardianship is less developed in these systems may be that when
substantial assets are given to a minor or other person under disability the
giftnormallytakes the formof a

58. Treuhand,fiducie. It is not necessary to do more than touch on certain
fiduciary institutions of the civil law7'which would not count as tmst-like
according to the criteria of para. 32 above. One is the Treuhand of German
speaking states such as Germany, Austria and Switzerland7'.This is an

institution by which the ownership of property is transferred to a person of
confidence (Treuhünder) to be administered for another and not in the
latter's owninterest. It is disputed whether there is a separation between the
Treuluïnder'sprivate assets and the fiduciary assets such as to protect the

latter from the Treuliünder'screditors. In any event it is clear that the
Treuhünder holds no office and his or her administration is not subject to
judicial or administrative supervision. Incontrast the Liechtenstein Treuhand
(above para. 42) is a genuine trust. Similar remarks may be made about the

fiducie of French law and its analogues. Like the this involves the
transfer of property to a fiduciary to be administered for another. The
fiduciary assets are not separate from the other assets of the fiduciary; they

do not form a separate estate (patrimoineaffecté),and the beneficiary is no
more than an ordinary creditor of the fiduciary.The institution is again not
subject tojudicial or administrativesupervision.

It rnay be suspected that the reason why trust-like institutions have not

developed in most civil law systems in relation to persons of full age and
capacity lies in the view that protective arrangements of that sort a
justified for adultswho are in lawcapable of managingtheir ownaffairs % .

59, Bewind.The Netherlands bewind(administration) is the converse of the
Treullandorfiducie. The ownershipof property to be administered on behalf
of the beneficiary is transferred not to the adrninistrator but to the
beneficiary. The administration of the property is however vestedexclusively

6H.H.Clak. TlawofdomesncrcloriocheULI(St Paul,1968).yLaw (7th. ed. ch,10; fotheUSA.

70 C.de WulfThemisrandconespondinginrfinrfkochil law (Brussels1965).
71 Detailedaeeauntin II. Coing.op. ritScealso H.K6tz,TntsfirndTrpithand(Gottingcn1963).

72 V.Bolgar,AmcricanJournolofComporoliwLaw ()041f.;Fratcher,op.cil.n.?s.110in an administrator. Bewind is at present used in order to provide for the

administration of gifts and dispositions by Iast will, mainly the latter. The
New Civil Code proposes an extended regime which would include the
principle of real subrogation and so protect the beneficiary better". It is not

clear that this extended regime, if finally accepted, would turn the bewind
into a trust-like institution within para.32, since the court would, in contrast
with guardianship and ~uratorship~~,apparently not possess a supervisory
jurisdiction over it.

60. Foundations and religious endowments. A foundation is a juristic person
represented by assets devoted to an abstract purpose, normally cultural,
charitable or religious. It is managed by administrators. In many systems
official sanction is required for the creation of a foundation, in order to verify

that the purpose is one-which conforms to the public interest. The institution
is one which bears analogies to a trust, but, since there are no defined
beneficiaries in a position to cal1 on the court to exercise a supervisory
jurisdiction, it would not count as trust-like within para; 32 above. Since its

~~urpose is not primarily the protection of the incapable, it is not necessary to
analyse it further for the purpose of this memorandum.

61. Wakf, debutter. The charitable foundation of Islamic law is the wakf,
which is set up by a settlor (waw and managed byan administrator

with fiduciary powers. The ownership of the wakf assets is vested not in the
mutawalli but in Allah or in the beneficiaries. The administrator's position is
from this point of view closer to that of a guardian than a tmstee. According
to most schools of Islamic law a wakfmust be perpetual and irrevocable. The

Kadi has a supervisoryjurisdiction in so far as he can authorise the sale and
reinvestrnent of wakf assets7'.Hindu religious endowrnents (debutter) consist
of property dedicated to an id01or deity, the ownership being in the deity or
foundation (Sansthan). The manager (shebait) is answerable for

maladministration, and can be removed by the court. But his duties are not
purely fiduciary. His position constitutes a combination of office and
pr~~ert~'~. Though there is some analogy between these institutions and the
trust, they are not aimed at the protection of the incapable and so need not

be further considered here.

73 Dwk 3 lit.6

74 Uook lits. 15-19
75 Fntcher,op.cil1S.136ifSyedAmcer Ni, MohammedïnLaw(5thcd. Lahorc1976).
76 N.R.Chakrabar,onreniporaryprobisIlindit rcligiousend(thesiLandon1982)62. Conclusion: wide diffusion of trust and trust-like institutions. The wide
diffusion of guardianship in a form close to the Romano-Germanic civil law
model justifies the conclusion that this trust-like institution prevails in
virtually al1those states whose legal systemsare not derived from or strongly
influenced by English law. Almost universally, therefore, the legal systems of
the world make provision eitlier for the trust or for a trust-like institution of a
protective character, such as guardianship, and often for both. These
protective institutions exhibit the common features that the person
administering the assets on belialf of the persori irineed of protection holds a

protective office; isubject to an ultimate supervisoryjurisdiction vested in a
judicial or administrative body; must keep the assets to be administered,
which are either separately owned or are regarded as forming a separate
patrimony, apart from his or her own; owes a fiduciary duty towards the
person to be protected to the exclusion of his or her private interests; and is
accountable to the beneficiary or ward, wlio has, at least when the period of
administration ends, legal remedies against the former office holder for
maladministration.

Tony Honoré LISTOFANNEXES

VOLUME3

A. The Nauru Talks, 1964-1967and Relaled Documents

Annexl. Summary of the Views Expressed by the Nauruan Delegation at the
Conferencein Canberra July-August 1964
Annex2. Record of Negotiations between Delegation of Nauru Local Government

Council and Australian Officiaisrepresenting Administering
Authoriiy 31May -IOJune 1965
Annex3. Report by Committee appointed to investigate the Possibilities of
Reliabiliiation of Mined Phosphate lands 1966 ("The Davey
Report")
Amex?. Nauru Phosphate IndustryRecord of Discussionsheld in Canberra, 14 June -

1July 1966
Annex5. Nauru Talks 1967 -Summary Records of Discussions and Related Papers
from beginning of Talks (12 April) to Heads of Phosphate
Agreement (16June)
Annex6. Agreement relating to the Nauru IslandPhosphate Industry1967

B. United Nations Visiting MissionReports

Annex7. United Nations Visiting Missionto Trust Territories in the Pacific, 1951,

Repori on Nauru (Trusteeship Couneil Official Records, Eighth
Session,SupplementNo.3)
Annex8. United Nations Visiting Missionto Trust Territories in the Pacific, 1953,
Report on Nauru (Trusieeship Council Official Records, Twelfrh
Session,SupplementNo.2)
Annex9. United Nations Visiting Missionto Trust Tcrritories in the Pacific, 1956,

Report on Nauru (Trusteeship Council Official Rccords,
EiglitcenthSession,SupplementNo.?)
Annex 1O.Uniied Nations Visiting Missionto the Trust Territories of Nauru, New
Guinu and the Pacific Islands, 1959, Repori on Nauru
(Trusieeship CouncilOfficial Records, Twenty-Fourth Session,
SupplementNo.?)

Anneï 1l.United Nations Visiting Missionto the Trust Tcrritories of Nauru and New
Chinca, 1962, Report on Nauru (Trustecship Council Olficial
Records,29thScssion,Supplïmcni No. 2) Amex 12.United Nations VisitingMission Io the Trust Territories of Nauru and New
Guinea, 1965, Report on Nauru (Trusteeship Council Oficial
Records, 32ndSession,SupplementNo. 2)

C. United Nations Resolutions,etc.

1. General Assembly

Annex 13.General Assembly Resolution 140(II), Proposed Trusteeship Agreement for

Nauru, 1 November 1947
AM~X14.General Assembly Resolution 322(1V), Economic Advancement in Trust
Territories 15November 1949
Anncx15.General AssemblyResolution 2111(XX),Question of the Trust Territory of
Nauru, 21December 1965

Annex16.General AssemblyResolution 2226(XXI),Question of the Trust Territory of
Nauru, 2û December 1966
Annex 17.General AssemblyResolution 2347(XXII),Question oftheTrust Territory of
Nauru, 19December 1967

II. Trusteeship Council

Annex 18.Resolution 11(II), Transmission of the Provisional Questionnaire Io the
Government of Australia with Regard to the Trust Territory of
Nauru, 2December 1947

Amex 19.Trustceship Couneil Resolution 2149(S-XIII), The Future of Nauru, 22
November1967

III. Spccial Committee on the Situation with Regard to the Implementation of the
Declaration on the Granting of lndependence to Colonial Countries and

Pcoples

Annex20.Conclusions:Trust Territory of Nauru, 27September 1967

IV. United NütionsCouncil forNamibia

Annex 21.Decree No. 1 for the Protection of the Natural Resources of Namibia, 27
September 1974

V. United Nations Conference on Succession of States in Respect of State Property,
Archivesand Debrs,7April1983

Annex22.Resolulion Conccrning Peoples StrugLing Against Colonialisni, Alien
Doniinaiion, Alien Occupation, Racial Discrimination and
Apartheid
Anncx23.ResolutionConcerningNamibia V. League of Nations,Permanent MandatesCommission

Annex24,Permanent Mandates Commission, Minutesof the Third Session, Geneva,
July 20th-August IOtb,1923(A.19.1923.VI)pp.56-57

D. Treaties and Agreements

AM~X25.Leagueof NationsCovenant,Article 22

Annex26.Nauru IslandAgreement, 2July 1919
Aunex27.Mandate [or Nauru, 17December 1920
Anncx28.SupplementaryAgreementconcerning Nauru,30May 1923
Annex 29.TrusteeshipAgreement forthe Territory ofNauru1 November 1947
Annex3O.Agreement benveen the Three Partner Governments relating to Nauru,
Canberra, 26 November1965

Annex31.Agreement between the Government of Australia, the Govcrnment of New
Zealiind and the Government of the UNted Kingdom of Great
Britaio and Northern lreland to Terminate the Nauru Island
Agreement 1919,9February 1987

Annex32.Nauru IslandAgreement Act 1919(Cth)
Annex33.Nauru lslandAgreement Act 1920(UK)
Annex34.Lands Ordinance 1921(Nau)
Annex35.LawsRepeal and AdoptingOrdinance 1922(Nau)
Amex 36.Lands Ordinance Amendment Ordinance1927(Nau)

Annex 37.Nauru IslandAgreementAct 1932(Cth)
Annex38.Lands Ordinance 1939(Nau)
Annex39.Nauru Act 1965(Cth)
[email protected] IndependenceAct 1967(Cth)
Amex 41.Nauru PhosphateAgreement Ordinance1968(Nau)
Annex42.Constitutionof Nauru 1968(Nauru)

F. Phosphatc Documents

Annex43.Guano Concession of the Jaluii Gesellschaftfor the Marshal Islands, issued
by the lmpcrial Chancellor, 21 Novcmber 1905,and Supplcmïni,
27February 1907

AnnexW.AssignmçntbyJaluit Gesellschaftto PacificPhosphate Company, Il January
1906,plus Amending Abreemeni bciween Jaluit GesïIischafi and
PacifiePhosphate Company, February1906
Annex45.Agrermcnl betwecn King Georgç V & Others and Pacific Phosphatc
CompanyLtd,25 June 1920,FirstSchedule Annex46.lndenture, datïd 31 December 1920, between the Pacific Phosphate

Company,KingGeorge V & Others

G. Interna1Memoranda, etc.

Annex47.Memorandum [rom Griffiths to the Secretary,Prime Minister'sDepartment,

14 September 1925; Australian Archives, ACT, CRS ,4518, D
112/6/1
Annex48,Dickinson, Letter to Under-Secretary of State, Dominion Office, 31
December 1925
Annex49.DominionsOffice,Lener to A.R. Dickinson,27January 1926,D 794/26

Annex50.Memorandum Io Prime Minister, 25 March1916,Australian Archives,ACT,
CRSA518,D 112/6/1
Annex51.Lt!ller, Griffiths to Secretary, Prime Miniter's Department, 28 October
19%;Australian Archives,ACT, CRSA518D 112/6/1
Annex52.Lctler, Griffiths to Secretary, Prime Minister's Department, 9 November
1926;Australian Archives,ACT, CRSA518D 112/6/1

Annex53.Memorandum, Secretary of State for the Dominions to the Covernor-
General ofAustralia,29March 1927,pp.1-2
AMCX51.Board of Commissioners, McmorandumNo.96,12 September 1927,Item 2.5
"LandQuestion",pp.16-18
Annex55.Australian SolicitorGencral, Opinion No.111,22 October 1936(file36/438)
Annex56.Australian Prime Ministerto British Secretaryof State for DominionAffairs,

10May1939,British PublicRecords OfficeNo. 140/259
Annex57.Pacific Conference Papers, Notes for Minister No. 5, "D. United States
Intcrest in the "2 Mandates" (Advice by Sir Kenneth Bailey),
January 1944, Australiao Archives, ACT, CRS A989, Item
44/735/321/4

Annex58.BritishPhosphate Commissioners,SelectedMinutes (1946-1956)
Annex59.Documents rclating to the Exclusionof the Inhabitants of the Aiwo District,
1945-6
Annex6O.Secretar},,Auslralian Department of Territories (Lambert), Memorandum,
"The Future of Nauruans", 4 June 1953, views of Minister
(Hasluck) attached, Australian Archives ACT CRS A 518, Item

DR 118/6
Annex6l.Notes of Meeting of Board of Commissioners with Representatives of
Common\r~calth Bank, 21August 1953
Annex62.Sccrctary. Australian Department of Territories (Lambert), Memorandum,
"Resettlement of Nauruans", 5 November 1953,viewsof Minister

(Hasluck) attached, Australian Archives, ACT,CRS A 518, Item
DR 118/6 Pt. 1
Annex63. P.Hasluck,Ministcr for Territories, "Cabinet SubmissionNo. 588:Australian
Phosphate Supplies", 12 Ociober 1955, and attached "Notes on
Csbinct Submission No. 588, Auslralian Phosphate Supplies",

Australian Archives,A4906/XM, Item vol.22 Annex64.Advice of the CrownSolicitor,23 April 1956,in response to a requesi from
the Department of Territories, and attached documents,
Australian Archives,ACT, CRSA432,Item 52/237

A~ex 65.Australian Interna1Memorandum, undated (?1950s)
Annex66.British Phosphate Commissioners, "Conlidentiai Report and Accounts for
45th Year ended 30th June, 1965",hlelhourne, 19th Novemher,
1965

H. Miscellaneous

Annex67.United States, Draft Convention concerning the Territory formerly the
German Protectorate of South West Africa, the Island of Nauni
and the former German Island Possessions in the Pacific Ocean
South of the Equator otherthan the Island of Nauru and former
German Island of Samoa, London, October 1923, Australian

ArchivesACT CRSA989,Item 44/735/321/4
Annex68.Extract from: Territory of Nauru, Record of Procecdiigs of the
Constitutional Convention,23rdJanuary 1968,p.38
Annex 69.Extracts from Australian Newspapersreporting Nauruan independence:"The
Sun"(Sydney),2 February 1968 & others
Annex 70.Report on Exchange of Viewsbetween President of Nauru and Minister of

Foreign Affairs Australian, Nauru Government "Bulletin" No.
21/86,28 May 1986
Annex71.Commission of Inquiry into the Rehabilitation of Worked-out Phosphate
Lands of Nauru, Report, vol. 5,1988,pp.1019-1027(vegetation of
Nauru)

Amex 72,Commission of Inquuy into the Rehabiitation of Worked-out Phosphate
Lands of Nauru, Report, vol. 5, 1988, pp.1028-1031(history of
miningon Nauru)
Annex73.Evidenceof Mr. R. Marsh, Commissionof Inquiry into theRehabilitation of
Worked-out Phosphate Lands of Nauru, Transcript of
Proceedigs, 8July 1987, pp.851-865

Annex74.B. Dowiyogo, "The Law of Land Holding in Nauru" (unpuhlished paper
prepared for the Nauru Commissionof Inquiry,1989)

1. DiplomaticCorrespondence

Annex75.French Ambassador, London Io British ForeignOffice,1934:Public Records
Office,London: Dominions Office140/258
Annex76.Lette1, President of Nauru to Australian Minister for ExternalAffairs, 5
December 1968
Annex77.Lette1, Australkm Minister for External Affairsto President of Nauru, 4
February 1969

Annex78.Lctter, President of Nauru to Australian Prime Minister,6 October 1983 Annex38

LANDS ORDINANC1 E93(NAu) ANNEXES TO MEMORIAL

'~III;ISI,ANII UF NAU~~U

NG~ 1l GIF 1YJV
AN URUIN~KCI .:ru hiiiir;li 'rlrl!I.AHI)S IiIiIiINA ~;i:iriyni-iez~.

BE it arrluintdby tlic ArliiiiiiULiniii,I iliii 1nl:iiiil iil Nniirii. iicl iiiy iii ~iiir~iI'Uwuac ul ~lrc I,
hticlc 1 01 tlnc Agfrcn~cut ~InhtJttbc ~SL~II~tIlu~yrd Jutly, lQl!l,IJVIU*VJ Ibia hlnj~.mjy' :DX,C~I~~UTC,j,, h,,dol,
Elsjcaty'ri Gorerooicrit of tlio Curnoiriii~-ciillli uI Air*lruliii Ili*Eilinjc~ty'a[:urcriiiiiciul dit Uou~iliiolr ol'Re:
Zurland, ia Iollows :-
Shorr Tiik nrid L'iiurbii.

1.-(1.) Tliis Ordininci miiy bc riicd n3tlic Luirdr Ordiiiriiicc1939,
(2.) TIIL Loi& Ordimiice 1821-1927 i*iiiLliiii (Iiiliiiiiri~c rcl4iiciliIis I'riiicil,Uriliiiniicc.
(3.) TLia Priocipml Ordibaiicn. ma iniciidcil liy itiia Oriliiiniirc, wbc ciicil .aIli.Le*,& Ordiriaam 1')21-19~~,

I'ny,iir!dIby Coiir~iiiariuiicra.
2.-(i.) &etion lnur 01LLCI'rinrilinl Ordiriniire iawmciiilcd Ly oriiiitirig ]i=ru~ru~ILI iiridii~scrriii~iii iin abad
tbi LeUowin p,aiagiiipha :-

(b) Duriii~ tht period oi lCti).ciira comiiiciiriiig un Ili~ liiat olJuly. Vile Ihouuiid niiie liuadiadand
thirty-&ven, the Commk*ioiicra alinll-
(il puy tn eichInnd.oanir Iiom whoni plioililiiilt-bc~riug luud ia Ic;cqcd-
(a) a lump auui it tlic rik 01 f40 ici iicicol LL~ClcrlR[.O IFOLC~ ,iltlu niiiiiiriun,u,

al S5 ahcro tlit nrca ni 1ticIirtiao lohicd ia tcav tliun 1 -cri; bnd
(b) n ioyelLy O[ 441.Iiïr laiiul ~iliwliliuic tokcti lrom Lbiolniiii uccuriling tu rcrGli.<l
wtigLLa :
Plorirlcd Oint il, oii üicTirhi<lnyDI July. One Ltiousin<l iiino Iiulidrcil
lotLy.Lwo. Ibo piirc ul lhoalitiotc 1-u.b.Voiiru txtecrlt lia. lier ho, tlia 1.0ya11~

syable in ruptrt ol .uttralinc >ieriwls QI firi ycara E~IPI~be io~rmwd b;
id- Po r ton for cacli In. pcr uin Iiy wliich tliot ~irict cxcccdi Ili. ~icrion, Gui
the roynlty alnnllnoL nt mnylinkt exitcd U. pcr toii ; onil
(ii)pag Cothe AdrniniatrnLor,jn rtapcct ol riirli t~ii ol plr~ptiiite cxporlerl Iront Nnurii, mcr-oriliiiC
to the crrtified aeinlit ul tlie qiiliialiippcrl-

(O) i roynlty ol Ilil.jer ion luIre used%olclyIiti itic IiciicfilolttNeutunn ptnplf ; nrid
(b] 4 to elty ni21d. pci toii Io liohcld iii iriirllor the-lund-osncrs Iiom vlioaa lariil
L ~ Bpliwpbiiic woa talicii nnil iiitcaicilnr reccir-eil linll-ytnily,nt mnipuiiib
- iolercsl, foi n itriail 01 twcnly )-?ara Iriim Llio hic of nuclr iircatmrur wliiii
thc tlren ciiliiln[ olibl rc-iiirc~iriiiiiiiniercnl tlicrron ~iniil Iioll-~corly ta tlir

Iinrl-onncra or Lhcii lc~ul 13rwiiil ieyrcrcnbiii~cr. iii IiroliorlioriIo ilirii
rcspeclirc iiitctcata in ttir oripinzi ini'crlmtnl:
(hl During tbt parid oi Lwcuty )-ter&comme~ciii~eii ihr! FIiii rlnj,of Jiily, Oiic Ilieirrnnd iiinc liuridinl
ioti lorty-acveo, Lht Commi~ioncrs rkalC
(i) piy to cnch 1ond.ownai lrom whompliaipliet@-bc~riiig llnd ia lcnwil-

(a) e lurn aiiro PLtlie 01L45 ~(r ncrc ul tlie land za Itnatil, wiLli minimum vum
QI I% alicrc Uic aice ol tlio liiiiil ro luiscd lcia Uinn 1 ncic; nnd
(1) B ioyoliy of kl per tan ni l~bio=ltliolcinkco (rom Lliit lnnd oriroritinl: Lo~crllfitd
aiigbk :
- PioviJed tLnt iloii tlic 6rslilay ol Jiily, Ont Llioitsmniluiiic: Iiundrrd inil

Ioity.ae~rn, tire prire oi ~ilioal~lioicI.o.li. Knuru cx~ccdIPr. pci tan, Lhaioy~lLy
pngiblo in rtspct of ~urc~e#iil#,~trmde oi 6~e yuhrn C~III~~ùc inrwed by Id.
per Mn for eich la. by i3-hiclichnt larire cxrccde 12.. {*r ion iud 6Irnll. si UN?
end 01tncli peiid el fivc yeara Iruni llmt duk, Lc insrcnwJ iti r~5pttt al tnvll
euccceding pcriod of buc )Tora liyii ]il.pcr Luii Ilir crcry la. pcr lun I?y*I~ir!i

ihc prirr 01 ~iliniplinlc1o.b. Xnuiu FXF~~I I2s. ion. 111lt111.ribvi~lh*II.!!
not nt mnyiimr LXCCC Id1pcr CII .La11tI
(ii]yry b LlicAdrninistrntor. iiireriiccl ol cnrli Ion ol plirir[il-.lie ~xliIruriiNiurii, mcçorrkin~
ta tlm ccrtificd wvi~ld 01t1wqaimntiIj*.mlhippcJ-
(O)a ioynlly of 1 Jil pi ton to be iisciwlcly Ior llic bciicfiDI tlic Kniiriinri ~rmlblr;und

(b)n rojaliy 01 Plil. par ton la bc Iirlrl in Iriisl lor tlic Iliirl-uurifiorn rliw lunrl
tlitplosphab .ana Liikciiand inueaicd, iir rwcirril liull-yc:irly.lit. ruiii[uiin~l
interest, lora pariod ol L\vcnly+-car@ITOIUIli6 ~lnic 01 iucli inresllucnL whtn lh
then capital ibnll bo rci~\.esl;d onrl iiikresl Iliercon ]siid Iiolf-ytnrly la Ili*
loorloaoiia or tl~cir IvfinI pet~on~l ~C~~C~~CIL~~~TPI, iii lbr~l~rlion la lhir
rra cclive inkrerts in Ilin ori#iiid inreslrncnl.".

(a.)This sietion abell bc decmr!to Ii~vceoninicnrcd on the fiih ilny ol Jiily.One il~ouwnil iiinc Iiuiiilirnnd
tliiity.iivin rad eny royslty dcrnnndcrl or c~ll~ctcdsiibc~1I1nt rtnlr il,PX~W rif LIiiiE ~>nyiiblcuiidcr LlrrLaiid1
Wiww 19X-3921 ihell be dcomcd Lo Iinvc bcin Inaliilly iniliow-liiiiiIiixliillyrlcriinnilarl or ~ollcrlal.

3. AIhr sçction Iour DI tlio Ptiiirilinl (Irilinniite tlic iulluwiirrriiuiiix iriscitcil :--
nnyulti~~.

"4~, RopItic% inhpowdlby ~.rriioal 101~7of ll!in ~r#lith811c,LII iw lpi~h ],y t11c~o~%I~~lki[~[~~:~
Janusry anil July ol carli )'en iri icrlsrrri{ ~ilirrxlilisir rlriliIrrini Niiiiiiiiliiriiitlic nix niuult15
i-edisbly prcccdiofi Ltic mnnili of Jniiii,iini JiiI!,iirtlic rjiw iiinyItr"

4, &&on fiva~l LLc I'ii1~ci]mt Ordi71mnr~i* fiiii~nultn1t~yatz~ii~,iii~LILC~-ural'' twcn"yihnd innwcri.it~liiu
iicad lhi aoro :ity ".

Dotcd thia thifticthday al DcceinLci. OLL IIIO~I~III~InI i~IIIIII~IC11111tl1~irl.).i>ine.
F. il. Cl$AI.MERS,
AJiuioratrntci- CERTAINPHOSPHATELANDSINNAURU

Anne77

LETTERA, USTKAL~M INISTEFOREXTERNA LFFAIS
TOPRESIDEN TFNAURU 4, FEBRUARY969 ANNEXESTO MFMOKIAL 387

ÇOPY FOR THE WÇTER'S OFFIGE

File: 311/4/7 JCI/3McL

Canberra

4 FEB 1969

Your Excellency ,

New Aimir, for Nauru.

In your letter of 5th December, 1468 you proposed
that a meeting be heLd between representatives of the
Partner Governments and repreçentatives of the Government of
Nauru to discuss haw best the airstrlp on Hauru could be
constructed as a rehabilltation prolect, and to determins
the degree of financial and technical assistance and the
Partner Governments would be able to offer.

1 have consulted the New Zealand and British
Governments on your proposal. You uill recall that the
Partner Governments, in the talks precedlng the termination
of the Truateeship Agreement, did nct accept responsibility
for the rehabilitation of mined-out phosphate lands. The
Partner Governments rernain convinced that the terrnsof the
settlement uith Your Excellency's Government were

suff~ciently generous to enable it to meet its needs for
rehabilitation and developmect . In the circumstances,
therefore, you rrillunderstand that the Partner Governments
are not able to agree to yaur proposal,

The Auçtralian civil aviation authorities would,
however, be ready to have talks confined solely to technical
problems associated w~th the construction of a new or
irnprovedairstrip on Nauru and to give technical advice. If
Your Excellency wishes 1 shall be happy to arrange with the
Department of Civil Av~ation fur its representatives to hold
discussions with representatives of tne Government of Mauru
at a mutually convenient tlme

Yours sincerely,

(Paul Hasluck)

His Excellency Hammer DeRoburt,
O.B.E., M.P.,
Presidant of the Republic Of Nauru,

Off~ce of the Nauru Government
Representative,
227 Collins Street,
Melbourne.CERTAlNPHOSPHATE LANDS INNAURU

Annex78(5271 ANNEXES TO MEMORIAL

The Honourable Robert J. Hawke,
Prime Minister of Auçtralia,
Office of the Prime Minister,

Parliament: Building,
CANBERRA. A:C.T.

Dear Mr Prime Minister,

1 thanlc yau very much for sparing me some time
Erom your very busy schedule on the Puesday, 30th August,
at the takeside Hotel in Canberra, to enable me to mention
two outstanding matters which have been of serious concern
to successive Governments of Nauru. As I had undertaken, 1

am now writing on one a£ these matters, the rehabilitation
of worked-out phosphate lands on Nauru.

Prior to, and at the tirne of, Nauru's achievement
of independence £rom the Partner Govermentç of Australid,
New Zealand and the United Kingdom, we had requested
Australia and the other Governments to rehabilitate that part
of the phosphate deposit which had been mined by thern for the
benefit of the~r countries. Hcwever our requests were

relected by the three Governments, the last occasion beinq at
the General Assernbly of the United Nations in Oecember 1967.

My Goverment, acting out oL necesçity and in
pursuance of a forma1 resolution made during the First
Parilament (1968 - 1971) of Nauru, has now deciàed to approach
the present Government qf Australia to seek a sympathetic
reconsideration of Nauru's position in this matter.

We are presently in the process of preparing a
detail~d document for discussion with your Goverilment but am
attaching in advance thereof a brief summary of our views on
the matter.

There are four basic facts that are of critical
j,mportançe ta us and wlilch, we believe, should colcur the

chi~nhing oc each of thc GoverriirienLs of Australia, New Zcaland
aiid the unlred Kit~ydoin. 'I'hese facts are :

WLL~~~UI- ~-ehalllllt;ltiot) NFIUPLI Cilmlnever lie uii~
~~c~'iii;iricIiriiir~iticc ;iro!tnd 67 F QI ÇIic 1diirl
t;ticl,ic~will tic ptiy!;ic:illy dcstiroy~*rl l~y Flic
111iiirii111ucri:c; CERTAIN PHOSPHATE LANDS IN NAURU
[5281

. rchabllitation would bc costly and it will bc
bcyond our capacity to Ez~ance

. we contînue tu expect the Governmcnts of
A~stralia, New Zealarid and the Vn~ted Kingdotii
ta :ontribute to the cost of rehabilitatlon

. it 1s vital that WOK~ commence in the near
future since rehabilitationmust be spread
over a number of years and as much as
possible must be completed before phosphate
minlng ends so that there is an experienced

work force on the island and adequatc
shipping for back-loading soi1 etc.

1 cannot possibly over-ernphasise the importance
that rny Government and the people of Nauru place on
restoring'the wholeness of Our island for future generations
of our people. We sincerely hope that the Government of
AustraLia, (and the Governments of New Zealand and the
United Kipgdom) wilL glve very sympathetic consideration to
our requeht when we again present it forrnally.

Yours siiiçerely,

PRESIDENT