INTERNATIONALCOURTOF JUSTICE
CASE CONCERNINGCERTAINPROPERTY
(LIECHTENSTEIN v.GERMANY)
OBSERVATIONS
OF
THE PRINCIPALITYOF LIECHTENSTEIN
15NOVEMBER2002 INTERNATIONALCOURTOF JUSTICE
Principalityof
Liechtenstein
CASE CONCERNING CERTAIN PROPERTY SpecialCommissioner
and Agentfor the case
(LIECHTENSTEIN V.GERMANY) broughtbeforethe
International
Courtof Justice
OBSERVATIONS
OF
THE PRINCIPALITYOF LIECHTENSTEIN
15November2002 TABLE OF CONTENTS
INTRODUCTION ................................................................5.......
..............
PART ONE THE DISPUTE BETWEEN LIECHTENSTEIN AND GERMANY ... 16
CHAPTER 1 GERMANY'S ARGUMENT THAT THERE IS NO DISPUTE .. 17
........................................................................
............
A .Introduction 18
B .Liechtenstein'sclaims are opposedby Germany..............................19.......
C .Thepartiesto thepresentdisputeareLiechtensteinandGerman.................22..
D .Conclusion..............................................................23........
.............
PART TWO THE COURT'S JURISDICTION OVER THE DISPUTE UNDER
THE EUROPEAN CONVENTION FOR THE PEACEFUL
SETTLEMENT OF DISPUTES ....................................24.........
CHAPTER 2 GERMANY'S ARGUMENT THAT ITS TREATMENT OF
THE LIECHTENSTEIN PROPERTY IS WITHIN ITS
DOMESTIC JURISDICTION ................................25........
A Introduction..................................................
.........26.........
B.The interpretationof Article27 (b) EuropeanConvention....................27....
C The Court'sapproachtoissuesof domesticjurisdictionunderinternationa..... 29
D The test fordomesticjurisdictionunderinternationallaw applied tothepresent
........................................................................
......................
case 33
CHAPTER 3 GERMANY'S ARGUMENT THAT THE DISPUTE FALLS
OUTSIDE THE COURT'S JURISDICTION RATIONE
TEMPORIS ..................................................38..............
A Introduction..................................................
..........39.........
B .The Court'sapproachto rationetemporisreservations.......................41...... C .Applying the Court'sapproach.the present caseis within itsjurisdiction.......48
1. Germany's attemptto rewritethe Court'scase-l....................................
2. Germany's attemptto rewrite Liechtenstein'sApplicat............................
3. Germany'sattemptto avoid a merits hearingby repeated conclusory 54
assertions.......................................................................
............
PART THREE THEADMISSIBILITYOFLIECHTENSTEIN'SCLAIM AGAINST
GERMANY .........................................................56.............
.
CHAPTER4 GERMANY'S ARGUMENTBASED ONLACKOF
SUBSTANTIATION .........................................57.........
A .Introduction.................................................................58.....
.............
B .Germanyactuallyunderstandsthe object and scope ofthe present dispu...........59
C .The Liechtenstein's ApplicationandMemorialmeet the requirementsof the Court's
Statute andRules.............................................................62.........
.......
D .Lack of sufficient evidenceisnot apreliminarymatt............................69....
CHAPTER5 GERMANY'S ARGUMENTRELATINGTO THEABSENCE
OFTHE CZECH REPUBLICFROMTHE PRESENT
PROCEEDINGS ...............................................73..........
A .Introduction.................................................................74.....
............
B .The "indispensablethirdparty rul.............................................74..........
C .The CzechRepublic (or Slovakia)is not anindispensablethirdparty in the present
case........................................................................
79....................
1.The lawfulnessof the Bene5decreesis not a stakeand the Court does not need
to decidethis poin.........................................................80.............
.
2. The existence of a Czechoslovaluanright to reparations has no relevance with
regard to the unjust enrichmentcla.........................................86........ CHAPTER6 GERMANY'SARGUMENTBASEDON THE LOCAL
REMEDIESRULE .............................................93..........
A .Introduction..................................................................94....
.............
B .The Liechtensteinnationalshave.in effect. compliedwith the local remedies
rule........................................................................
.94....................
1. In the presentcase.the exhaustionof local remediesis not req...............96
2. Germany'sreferenceto localremediesin Czechoslovakia ......................101..
C .The local remediesrule is not applicablein thatthe claimsubmittedby Liechten-
steinis a claim for directinj................................................104...........
SUBMISSIONS .....................................................................114
..................
LIST OF ANNEXES .................................................................115....
............
LIST OFAPPENDICES .....................................................
......116......... TheSix GevmanPreliminaïy Objections
These Written Observationsrespondto Gerrnany'sPreliminaryObjections of 27 June
2002.Theyare filed.inconformitywiththePresident'sOrder of 12July 2002.
2. In an attempt to prevent the Court fiom considering the ments of the dispute, Ger-
many presents six rather disparatePreliminaryObjections to the claims presentedby
Liechtenstein.These objections are:
fir hatt,here is no disputebetweenthe parties;'
secondlv, that any dispute arose prior to 18 February 1980 and is accord-
ingly excluded fiom the Court'sjurisdiction by Article 27 (b) of the Euro-
pean Convention forthe Peacefùl Settlementof ~is~utes;~
thirdl~, that (if there is a dispute) it relates to a matter within Germany's
domesticjuri~diction;~
fourthlv,that Liechtenstein's claimsare not adequately substantiatedand are
inadmissiblefor thatrea~on;~
fifthlv, that the dispute really concerns the Czech Republic alone, and that
Germany is protected by the Monetary Gold principle fiom being sued for
decisionsof its own courts and otherorgans;'
1 Preliminaiy Objectionsof theFederalRepubIicof Germany(hereafierGPO)1,paras34-63.
2
GPO, paras64-105.
3 GPO,paras.106-114.
4
GPO, paras. 115-150.
5 GPO,paras.151-180. sixthly, that Liechtenstein's claimis inadmissible because there has been a
failure to exhaust local remedies, and this notwithstanding the decision of
the highest German court, which Germanyitselfpresents as a~thoritative.~
3. In these Written Observations, the six German Preliminary Objections will be ad-
dressed in turn, in the order set out above.Part 1deals with the existenceof a dispute
(Prelirninary Objection 1). Part II deals with issues of jurisdiction under the Euro-
pean Convention (Preliminary Objections 2 and 3). Part III deals with issues of ad-
missibility(Preliminary Objections 4 -6).There follow Liechtenstein's submissions.
4. It may be noted that Germany's PreliminaryObjections do not cover the whole field
of Liechtenstein's claimas presented in its Application and developedin its Memo-
rial. For example, Germany fails to deal directlywith the argument that it was lawful
vis-à-vis Liechtenstein to treatthe Liechtensteinproperty as fallingwithin the scope
of the Settlement Convention on condition of payrnent of compensation for that
property. Likewise the argumentthat localremedieshave not been exhausted clearly
can have no applicationto Liechtenstein's claim affectingthe property of the Prince
of Liechtensteinpersonally; it is plain that he has exhausted al1localremedies avail-
able in Germany. Since, forthe reasons to be given below, each and every one of the
German Preliminary Objections shouldbe rejected outright, no question arises as to
the possible severanceof any aspectof Liechtenstein'sclaims.
5. Before turning to the Preliminary Objections,four remarks of a general characterare
called for.
6 GPO,paras. 181-208. Germanypreviously acceptedthat there wasa dispute between
theparties underinternationallaw
6. In the first place, the Preliminary Objections now presented by Germany stand in
marked contrast to its own earlier attitudes towards this dispute, as revealed in the
two rounds of consultations between German and Liechtenstein delegations and in
certain other public statements of German officials. For example, during the consul-
tations between the two States on 14June 1999,it was recognized by the head of the
German delegation as stated in aninterna1report of Liechtenstein:
"Deutschland konne auch nicht einraumen, daJ es volkerrechtlicheAn-
sprüche bzw. Volkerrecht verletzt habe. Es sei damit ein Gegensatz an
Rechtsau-assungen entstanden und dieser Meinungsgegensatz bestehe
auch nach dieser Konsultatzonsrundefort. Eine Auflosung konne nur auf
hoherer Ebene erfolgen. Es bestehe die Moglichkeit des Austauschsvon
Aide-Mémoires vor einer moglichen nachsten Runde oder aber eine ge-
richtliche RegelungohneweitereSchritte."
Translation:
"Neither could Germany concedethat it had violated international law or
claims under international law. As a result, contrary legal opinions had
been created and this divergence of opinion would continue to exist even
after this round of consultations. A solution could only be found at a
higher level. There was the possibility of an exchange of Aide-Mémoires
prior to a possible furtherround or othenvise a settlementby judicial de-
cision without any Iùrther steps."
It is preciselyuch a settlementby judicial decision that Germany now seeks by any
and al1means to avoid.
Germany misapprehendsthe dispute beforethe Court,seeking to
convert it intoa dzferent dispute involvingdzijerentStates
7. In the secondplace, Germany seeks to hide behind the Czech Republic, consistently
misrepresenting the dispute Liechtenstein has brought to the Court and confusing it with a separate dispute between Liechtensteinand the Czech Republic. In short, it
rewrites Liechtenstein'sApplication with a view to formulating preliminary objec-
tions against the rewritten version. But the Court has to treat the claim actually
brought by Liechtenstein against Germany,notthe (different) claim Germanywould
have the Courtbelieve has been brought.
It is fair to state at once - and Liechtenstein has never made any secret of it - that
there is a dispute between Liechtensteinand the Czech Republic concerningthe ap-
plication of, in particular, Bene$Decree No. 12 to the Liechtenstein property. That
unresolved situation is part of the factual background to the present dispute.8If the
Czech Republic had not seized the Liechtensteinproperty in 1945, the present dis-
pute would never hüve arisen. But the disputes are nonetheless completely different;
they arose between different partiesat differenttimes and they concern differentfac-
tua1and legal issues. Germanyseeksto confuse the two at every step, asserting (con-
trary to the clear terms of the Application andthe documentaryrecord) that Liechten-
stein's "real"case is againstthe Czech~e~ublic.~
The present Application is not based on a mistake of identity. Liechtenstein may
have a dispute with Germany and at the same time a distinct disputewith the Czech
Republic, eachof them foundedon its own factual and legal grounds.And thatis, in-
deed, the case. Germany fails to confront Liechtenstein's actual case against it, and
thereby commits the sin of "inventiveness"of which it several tirnes accuses Liech-
tenstein.'' More importantly,it thereby fails to bring its Preliminary Objections into
any actualrelation with the casethat is beforethe Court.
7 Annex48, para. 20.
8 Germanyinfers that the legal issues raisedas a result of the Bene: Decrees are dead issues,of purely
historicalsignificance. 'fis is of course not the case: on the contrary, they remain matters of active
public and international controversy,includingGennany itself.
9
GPO,paras. 59-60.
IO E.g., GPO, para. 8 ("an artificialconstructpurposefullyinvented").10. That case is, in surnrnary,as follows." Both Liechtenstein and Germanybefore 1990
treated the questions arisingfrom the Bene: Decrees, and in particular BeneEDecree
No. 12, asopen questions. Inparticularthe regime of the Settlement Conventionwas
not applied by Germany to the neutral Liechtensteinproperty; there was at no stage
any suggestionby Germany that the Liechtensteinproperty constituted "German ex-
temal assets or other property, seizedfor the purpose of reparation or restitution,or
as a result of the state of war" within the meaning of Article3 of Chapter Six of the
SettlementConvention.Had the regimeof the SettlementConventionbeen appliedto
the Liechtenstein property, Germanywould have beencalled upon under Article 5 of
the Conventionto compensate Liechtensteinnationals for doing so.
11. In 1990, at Germany's suggestion,in its negotiations with the United States, the
United Kingdom and France, the compensation obligation in Article 5 was termi-
nated, on the basis that no new categoriesofproperty existedwhich couldbe brought
within the scope of the regime. At the sarnetime the Settlement Convention regime,
previously envisaged only as a temporary measwe pending a final peace treaty, was
made permanent. Then, by a decision in 1995finally endorsed by its highest courtin
1998, Germany decided that the Liechtensteinproperty was subject to the regime of
the Settlement Convention, Le.,that it was after al1to be treated as "Germanextemal
assets or otherproperty, seized for thepurpose of reparationor restitution,or as a re-
sult of the state of war", and this despite the acknowledged facts that Liechtenstein
was neutral in World War II, that Liechtenstein property was not included in the
category of "German extemal assets", and that suchproperty was not "seized for the
purpose of reparation or restitution,or as a result of the state of war". Liechtenstein
imrnediately protested against these decisions and was met with the reply by Ger-
many that they werebinding,were correct or at least reasonable, and were of general
application,not being limited to the single painting that was at issue in the German
courts. This was the first time that Germanyhad taken such a position vis-à-visthe
Liechtensteinproperty.
1I
See the Application and Memorialfor further detail. Germany thus took the position thatit was entitled vis-à-visLiechtenstein (which,of
course, as a neutral was never party to the Settlement Convention)to treat its prop-
erty as German and as covered by the regime of the Convention, while at the same
time denying any obligation to compensate Liechtenstein forthe loss of that prop-
erty. In consequence Liechtensteinnot merely lost any claim to individual assets lo-
cated in Germany (includingthe Pieter van Laer painting), but is now faced with the
prospect that any personswithin German jurisdiction will be able, for the first time,
without any fearof claimsby Liechtenstein owners, toacquire and deal with itemsof
the Liechtenstein property -al1this to the evident detriment of Liechtenstein and its
nationals.
13. It will irnmediately be seen that the dispute outlined in the previous paragraph has
the followingcharacteristics:
(il it arose between Liechtenstein and Germany and involved a differenceof
opinion on legal andfactual issues betweenthetwo States;
(ii) it involves the question whether Germanyis entitled to apply provisions of
the Settlement Convention, an international treaty, to a neutral, non-party
Stateand to its nationals;
(iii) it arose after 1990(and thus after 1980);
(iv) it is amply substantiated in Liechtenstein'sApplication and Mernorial, and
in the documents annexedthereto;
it does not involve as a precondition the resolution of any legal claim
(VI
against athrd State,or anyjudicial findingas to any such claim; and (vi) it does involve a final decision of the highest German courts on the very
question in issue, a decision whch Germany adrnits is irreversible and of
general application.
14. As will be demonstrated in more detail in later Chapters, it follows fiom these six
characteristics of the situation that eachof the six GermanPreliminary Objections is
untenable andmust be rejected.
Germanydenies that it has changed itsposition
with respectto theLiechtensteinproperty
The third preliminarypoint is as follows.Again and again, Germany seeks to defend
itself against Liechtenstein's claimby arguing that it had always taken the position
espoused by the German courts in the 1990s.12Germany (by this account) had been
perfectly consistent as to the scope of the Settlement Convention throughout. There
was accordinglyno change ofposition. If there is now a dispute,it is a dispute which
arose fiom a legal situation pre-dating 1980,thus falling outside the temporal scope
of the European Convention for the Peaceful Settlement of Disputes. Moreover the
substantive Liechtenstein clairn based on the change of position is without founda-
tion; there was no such change.
16. This leitmotifof the GermanPreliminaryObjectionscalls for a number of comrnents.
It is based upon a German reading of German case-law. But the assertions
(a)
Germany now makes were never at any stage articulatedbefore 1990.The
shared assumption was that the Settlement Convention applied to German
extemal assets, i.e., to assets having some proper (albeit possibly indirect)
relation to Germany itself,and not to neutral third States. It cannot seriously
be suggested that Liechtenstein,or any other State,would have sat by, con- tent to see its property classified as "German extemal assets", especially
when such a classification carried with it significant adverse legal conse-
quences. Yet Germany now suggests that Liechtenstein accepted this situa-
tion for many years.Thereis not the slightest evidence thatit did so. Indeed,
the evidence suggests the contrary, both so far as Liechtenstein and Ger-
manywere concemed.
Even if, for the sake of argument,it be accepted that earlier decisions of the
(b)
German courts carriedthe potential thatLiechtensteinproperty would in fi-
ture be subjected to the regime of the Settlement Convention, that was a
mere potentiality. None of the earlier cases concemed Liechtenstein prop-
erty. It is not incumbentupon thrd States to dissect the intemal case-lawof
other States in matters not concerning them directly, in order to discem
some threat of future detriment. The dispute between Liechtenstein and
Germany arose in fact in the 1990s as a result of actual decisions in that
decade by the Geman courts. Even if academic observers could have seen
in the earlier decisions the potential for this to happen (and could have
agreed on this), the fact is that it did not happen until after 1990.13Intema-
tional disputes arisewhen they arise, notbecause they might be predicted as
possible or evenlikely fiom some vantagepoint of perfect foresight.
(c) In any case, the position taken by the German courts in the 1990swas not
contained in the earlier case-law. It is a new development. The position is
dealt with in some further detail in an Appendix to these Written Observa-
tions, to which the Court is respectfully referred.14The following points as
to the German case-law emerge. None of the previous cases concemed
Liechtenstein or other neutral property. None concemed BeneS Decree
13 In fact, however, German scholars at no stage suggested or anticipated that the Liechtensteinproperty
fell withm the scope of the inadrnissibilityrule in the Settlement Convention. The position in the Ger-
man literatureis briefly analyzed inthe App1,paras. A12-AlS.
14 See the Appendix1,paras. A2-A11. No. 12,underwhich al1ormost of the Liechtensteinpropertywas seized.In
only two of themwas the "no objections"rule of Article3 of ChapterSix of
the Settlement Conventionapplied.One of these cases concernedassets al-
ready identified by a United States' courtas "enemy-associated"assets.15
The other concernedGerman-ownedsharesin a DutchCompanywhich were
seized under the Dutch enemy propertylaw.16Taken as a whole the pre-
1990cases supportthe conclusion (which German legal thoughtat the time
also s~~~orted'~t)hat the Germancourts retainedKompetenz-Kompetenzin
terms of the scopeof applicationof the Settlement Convention.The analysis
of al1the cases (in its PreliminaryObjections Germany ignored several of
them)doesnot support Germany'stheoryofjuridical stasisinany event.
(d) Finally, even if, for the sake of argument,it is accepted that there wasno
change of position by Germany,but simply an as-yet-unrealizedpotential-
ity, the fact remains that the positiontaken in the 1990shad never actually
been taken before.What its international legalconsequencesare in terms of
the relations between Liechtensteinand Germany is evidently a matter for
the merits.
Germanytries to convertissuesconceming the merits
into issuesofjurisdiction or admissibility
17. This leads tothe fourthpreliminarypoint.It is evidentfroma reading of thePrelimi-
nary Objectionsthat Germany attempts tointroduceconsiderationsessentiallyrelated
to the meritsinto the caseat this stage. Seekingto avoidan open considerationofthe
merits of the claim after a full and orderlypreliminary objectionprocess, it calls on
the Court to inject an (evidently partial) consideration of merits issues into this
phase. Indeedat onepoint Germany accordinglyopenlycalls on theCourt todevelop
15 See GPO,Annex3.
16
See GPO,Annex2. beyond the existing law of adrnissibilityin order to encompass its position.18In
Liechtenstein'sview, there is no need or justification for such a development.It is
true that the Court retainsthe power to join preliminary issues tothe merits, where
this is nece~sary.'~But it has exercisedthatpower sparingly.The conversepower(al-
lowingmerits argumentsto obtrudeinto and affectthe preliminaryobjectionsphase)
does not exist?' and for good reason. Germany's arguments would tend to produce
the result thatthe preliminaryobjectionsphasewas a "dressrehearsal"forthemerits,
producing difficulties for the Court and inequality betweenthe parties. In such cir-
cumstances,theDefendant Statewouldbe fiee to changeits position on themeritsin
line with the Court'sdecision on the "preliminary"objections, while the Applicant
wouldhave no suchfieedom.Thetimeformeritsargumentsis whenthe phase ofthe
meritshasbeen reached.
18. For these reasons, Liechtensteinrespectfully suggests that the confusionattempted
by Germany as between genuinely prelirninary issuesand the merits of the present
disputeoughtnot tobe entertained.A clearunderstandingof the disputepresentedby
Liechtensteinreveals, clearly, thatthe Court hasjurisdiction and that Liechtenstein's
claim is admissible.That beingso,remainingissuesofproof andof legal analysison
questionsof substancecan andshouldbe leftto the meritsphase.
17 Seethe Appendix1,paras.A11-A17.
18
GPO,para. 43.
19 Compare Article79 (7) ofthe Rules.
20 On the contrary, on the presentation of preliminary objections, consideration of the merits is sus-
pended, seeArticle79 (5) of theRules. PARTONE
THE DISPUTE BETWEENLIECHTENSTEIAND GERMANY CHAPTER1
GERMANY'SARGUMENTTHAT THERE IS NO DISPUTE A. Introduction
1.1 In its First Preliminary Objection,Gennany alleges that no dispute exists between
Liechtenstein and ~errnan~.~'Germanydoes not supportthis allegation but,in es-
sence, usesthis objectionto accuse Liechtensteinof having inventeda dispute." In-
deed, Germanyitself proceeds toillustratethe existenceof a disputeby settingoutits
disagreement with Liechtenstein's positionisn detail.Therefore,Germany'sFirstPre-
liminaryOjectionmust fail.
1.2 Liechtensteincannot agree with Germany thatthe Court must "further develop and
specify the concept of 'dispute"',in order to enable it to decline "artificiallycon-
structed cases".23The jurisprudence is clear that it is for the Court - and only the
Court - to decide on an objectivebasis whether a dispute exists.If the Court should
be confrontedwith a casethat it doesnotregardas a "realdispute",the existinglegal
principles already allowand require the Court to declare such a case inadmissible.
However,thepresentcaseis not sucha case.
1.3 The Court has established clearcriteria defining whether a dispute existsbetween
two states under international law.In nurnerousjudgments, the Courthas referredto
the definitionof disputeasa
"disagreementon point of law or fact, a conflict of legalviews or inter-
estsbetweenparties".24
21 GPO,paras. 35-63.
22
GPO,paras. 37, 50 and 51.
23 GPO,paras.42-43.
24
MavrommatisPalestine Concessions,JudgrnentNo. 2, 1924PCIJ, Ser. A, No. 2, p. 11;NorthernCa-
meroons,I.C.J. Reports 1963,p. 27; Applicability ofthe Obligation toArbitrate underSection21 of
the United Nations Headquarters Agreement of6 June 1947,dvisoryOpinion,I.C.J.Reports 1988,
p. 27, para. 35; East Timor (Portugav.Australia), 30 June 1995,I.C.J.Reports 1995,pp. 99-100,
para. 22; Land and MaritimeBoundarybetween Cameroon andNigeria, Jurisdictionand Admissibil-
ity,1.C.J.Reports 1998,pp. 314-315,para. 87. Accordingly, in order to establishthe existence of a dispute,
"itmust be shownthat the claim of one party is positively opposed to the
other".25
It is, in addition, not for one of the Parties to decide whether there is a dispute or
not. As the Court has stated:
"whetherthere exists an internationaldispute is a matter for objectivede-
terminati~n".~~
1.4 The established criteria are fùlfilled in the case at hand. The submissions to date re-
flect, quite starkly, that Liechtensteinand Germany have different legal opinionson
many issues, including whether Germany'sconduct in subjecting neutral Liechten-
stein property to the scope of the reparations regime of the Settlement Convention
without compensating Liechtenstein was lawful under international law (B). This
dispute is squarelybetween Liechtenstein and Germany(C).
B. Liechtenstein'sclaims areopposedby Germany
1.5 As set out in the Memorial, followingthe decisions of German courts fiom 1995to
1998, Liechtenstein has - on numerous occasions - presented its legal position
regarding Germany'swrongful conduct to the German Government. The German
Governmenton every occasionhas opposed Liechtenstein'sview. Quite surprisingly,
and without explaining how and why the dispute that undoubtedly existed has
vanished, Germany now asserts that there is no dispute since there are no claims
positivelyopposedto each other.
25 SouthWestAfiica,PreliminaryObjections,I.C.J.Reports1962,p. 328.
26
Interpretationof Peace Treaties with Bulgaria,Hungary andRomania,FirstPhase,AdvisoryOpin-
ion,I.C.J.Reports 1950,p. 74.1.6 It is hard to imagine a more striking oppositionof views. At the second consultation
held on 14 June 1999 in Vaduz the head of the German delegation, Dr Hilger, de-
clared accordingto aninterna1report of Liechtenstein:
"Deutschlandkonne nicht einraumen,daJ es volkerrechtlicheAnsprüche
bzw. Volkerrechtverletzthabe.Es sei damztein Gegensatz anRechtsauf-
fassungen entstanden und dieser Meinungsgegensatz besteheauch nach
dieser Konsultationsrundefort. Eine Auflosung konne nur auf hoherer
Ebene erfolgen. Es bestehe die Moglichkeit des Austauschs vonAide-
Mémoires vor einer moglichen nachsten Runde oder abereine gerichtli-
cheRegelung ohneweitereSchritte." 27
Translation:
"Neither could Germany could not concede that it had violated interna-
tional law or claims under international law. As a result, contrary legal
opinions had been created andthis divergenceof opinion would continue
to exist even afier this round of consultations.A solution could only be
found at ahigher level. Therewas thepossibility of an exchangeof Aide-
Mémoiresprior to a possible fùrther round or othenvise a settlementby
judicial decisionwithout any fùrthersteps."
Moreover, the German ForeignMinister'sletter dated 20 January 2000, referring to
the aide-mémoireof Liechtensteinof 9 December 1999(Annex 44 of the Memorial)
containsthewording:
"Die Bundesregierung teilt die darin vertretene Rechtsaufassung be-
kanntlich ni~ht."~~
Translation:
"It is known that the Government does not share the legal opinion ex-
pressed therein."
It is therefore simply wrong for Germany to maintain that Germany agrees with
Liechtenstein'sopinion arising from the decisions of German courts fiom 1995 to
1998.~'
27 Annex48, para. 20.
28
Mernorial,Annex45, pA 505.
29 GPO,para. 55. The Parties also have opposing viewsas regards the lawfulness of Germany'scon-
duct under international law. Liechtensteinasserts that a change took place when
Germany included Liechtenstein property in the scopeof the Settlement Convention,
thereby applyinga reparations regimeto neutralpropertywithoutcompensation,and
thus failing to respect Liechtenstein's sovereigntyndneutralityas well as the rights
of Liechtensteinand its nationals. Germanydeniesthat a change ofposition everoc-
curredandthereforeis ofthe opinionthatits conductis, and alwayshas been, lawful.
This oppositionofviewsclearlyevidences a dispute.
1.8 Liechtensteinarguesthat Germanyandits courtsinterpretedthe SettlementConven-
tion in a way that isnot requiredunder the Conventionitself or by the exchangeof
notes with the three Western Allies,and in a way that violates internationallaw. On
the contrary, Germany contendsthat it was required,by the SettlementConvention
and the Exchange of Notes, to interpret the Convention to include the property of
Liechtenstein,a neutral state,in thepost-warreparationsregime.
1.9 Furthermore, the arguments brought forwardby Germany to support its First Pre-
liminary objection3' go to the merits and not the admissibilityof the case, thereby
having the effect of underscoringthe existence of a dispute on the merits.Germany
declaresthat there might be a possibledisagreementconcerningthe interpretationof
the exclusion ofjurisdiction of Germancourtsover property "seized forthe purpose
of reparation or restitution, or as a result of the state of war by a third country".31
However, Germany is of theopinion thatit is legally obligedto conform to the pro-
vision of a treaty, the Settlement Convention,validly concluded with other States.
But - and this is the core issue- Liechtensteinquestions whether it was lawful for
Germany toapply the Settlement Conventionto Liechtensteinpropertyand - if Ger-
many was entitledto do so - argues that Germanythen failed to compensateLiech-
30 GPO,paras.56-58
31
GPO,para58. tensteinfor the lossesincurred.It is apparent thatthe Partieshave opposingviewson
theseissueson the merits.
C. The parties to the present dispute are
Liechtensteinand Germany
1.10 Similarly misconceived is Germany's "adrnissibility" argument that Liechtenstein
should demand compensation exclusivelyfrom the Czech Republic, butnot from
Germany, and that therefore thereis no dispute between Germanyand Liechten-
stein." Whetheror not Liechtensteinmay demand compensationfi-omGermanyis a
questionthat belongsexclusivelyto the merits. When Germanystates,withoutgiving
reasons, that "evenif al1statementson the factsmade by Liechtensteinwere heldto
be correct, they still wouldnotjustify a claim to compensationby ~erman~",~~ Ger-
many objectsto applyingthe compensationprovisions in the SettlementConvention
as well as the law of State responsibility. Germanyitselfis articulatinga disputethat
the Court has todecideon themerits.
1.11 Germany further asserts that somehowthere is no dispute between Germanyand
Liechtenstein because there is (also) a dispute between Liechtenstein and former
Czechoslovakia,whichinitiatedthe confiscation^.^^
1.12 Here, it is Germany thatartificiallytries to put another dispute before theCourt.As
noted already,there is a dispute between Liechtenstein andthe Czech Republic.But
the existenceof such a disputedoes not negate theexistence of the separatedispute
between Liechtensteinand Germany,whichis based on Germany'sunlawfulconduct
vis-à-vis Liechtenstein.
32 GPO,para. 62.
33
GPO,para. 60.
34 GPO,para. 59-60. D. Conclusion
1.13 In sum, by objective standards, a disputeexists between the Parties as to the lawful-
ness and legal consequencesof Germany'sconduct.There is, in particular, disagree-
ment between the Parties as to whether Gennany changed its position in the 1990s
vis-à-vis Liechtenstein property when including it in the scope of the Settlement
Convention, thus applying the reparations regime to neutral property. There is dis-
agreement between the Parties as to whether Germany must compensate Liechten-
stein.Thereis also disagreementbetween theParties as to whether Germanyfailed to
respect Liechtenstein's sovereigntyand neutrality as well as the rights of Liechten-
stein and its nationals. Hence, Germany'sFirstPreliminaryObjection must fail. PARTTWO
THE COURT'SJURISDICTIONOVER THE DISPUTE
UNDERTHEEUROPEAN CONVENTIONFORTHE
PEACEFUL SETTLEMENTOFDISPUTES CHAPTER2
GERMANY'SARGUMENTTHAT ITS TREATMENTOF THELIECHTENSTEIN
PROPERTYIS WITHIN ITSDOMESTICJURISDICTION A. Introduction
2.1 In its Preliminary Objections, Gemany argues that the dispute between the parties
concerns a matter within Gennany'sdomesticjurisdiction, which is correspondingly
excluded fiom the Court'sjurisdiction by Article 27 (b) of the European Convention
for the Peaceful Settlernentof Disputes (the European onv vent ion )h.i^provides
as follows:
"Theprovisionsof this Conventionshallnot applyto:
...
(b) disputesconceming questions whichby internationallaw are solely
within the domesticjurisdiction of States."
2.2 The three pages of Germany's Preliminary~bjections~~devoted to this issue are cur-
sory in character. Not a single case of the Court dealing with the issue of domestic
jurisdiction is cited; not a single authority is relied on.37Nor is there any detailed
analysis of Article 27 (b) itself. Gemany's pleading on this point is a summary at-
tempt to avoid the Court dealing with the merits. As a preliminary plea it should - it
is respectfully submitted - be summarilydismissed.
35
Strasbourg,29 April 1957,464 UnitedNations TreatySeries,p. 243.
36 GPO, paras. 106-114.
37
The literatureon domesticjurisdiction is of course extensive.See, e.g., C.B.H. Fincham,DomesticJu-
risdiction: the ExceptionofmesticJurisdiction asa Bar toAction by theLeague of Nationsand the
UnitedNations,A.W. Sijthoff,Leiden, 1948;H. Waldock, "The Plea of Domestic Jurisdictionbefore
International Legal Tribunals", 31 British Yearbookof International Law, 1954,p. 96; M.S. Rajan,
UnitedNations and Doniestic Jurisdiction,2nded.,Asia PublishingHouse, London, 1961;R. Higgins,
The Development of International Law through thePolitical Organs of the United Nations, Oxford
UniversityPress, London, 1963;D. Ciobanu,Preliminav Objections Related to theJurisdiction of the
UnitedNations Political Organs,MartinusNijhoff, The Hague, 1975,pp. 37-45; A.A. CançadoTrin-
dade, "TheDomestic Jurisdictionof Statesin the Practice ofthe United Nations andRegionalOrgani-
zations", 25 International and Comparative Law Quarterly,1976, p. 715; A.A. Cançado Trindade,
"Domestic Jurisdiction and Exhaustion of Local Remedies: A Comparative Analysis", 16 Indian
Journal of International Law, 1976, p. 187; G.J. Jones, The United Nations and theDomestic
Jurisdiction of States: Inteipretations and Applications ofthe Non-Intervention Principle, University
of Wales Press, Cardiff, 1979; G. Arangio-Ruiz, "The Plea ofDomestic Jurisdiction Before the
International Court of Justice: Substanceor Procedure?"in V. Lowe and M. Fitzmaurice (eds.),FifS,
Yearsof the International Courtof Justice, CambridgeUniversity Press, Cambridge, 1996,p. 440; S.
Rosenne, The Law and Practice of the International Court,1920-1996,31ded., Nijhoff, The Hague,
1997,pp. 774-778. B. The interpretationof Article27 (b)European Convention
2.3 The concept of domestic jurisdiction goes back at least to the Covenant of the
League of Nations, and is of course reflectedin the United Nations Charter, Article2
(7). It has been dealt with on nurnerousoccasions by the Court and its predecessor,
so that questions of its interpretation are well enoughknown. This makes Germany's
failureto refer to any ofthe authoritiesin point the more noteworthy.
2.4 Under Article 27 (b) of the European Convention,the obligationsof peaceful settle-
ment of disputes entailedby the Conventiondonot applyin certain limited cases.Ar-
ticle 27 (b) is thus an exception to a general provision intended to provide for the
peaceful settlement of international disputes,and it should not be given an extensive
interpretation. In any event its terms are clear and precise: it is only those disputes
which "by international law" fa11"solely" within the domesticjurisdiction of States
that are excludedfromthe obligationofpeaceful settlement.
"byinternationallaw"
2.5 The phrase "by international law" excludes any form of independentjudgement on
the part of the Defendant State,such as is implied in the so-called "automaticreser-
vation" to the Statute of the Court. It picks up the Permanent Court's insistence,in
the Tunis andMoroccoNationalityDecreesopinion,38on international law as the cri-
terion for what falls and what does not fa11within the domestic jurisdiction of any
State. Thus it is irrelevant that the object of a complaint is a law of the Respondent
Stateor a decision of one of its courts; what maybe domestic in originmay nonethe-
less concem a matter not within the domesticjurisdiction of that State. Al1this was
well understood at the time ofthe conclusionofthe European Convention.
--
38 Tunis and Morocco Nationality Decree1,923PCIJ,Ser.B,No. 4.2.6 Secondly, under Article 27 (b) it is necessary that the dispute fa11"solely"within the
domestic jurisdiction of the State invoking that exception. The negotiators of the
European Convention would have needed no reminding of the significance of the
tenn "solely" in this context. It was taken fiom Article 39 of the General Act forthe
Pacific Settlement of ~is~utes,~'which in turn reflected Article 15 (8) of the Cove-
nant ofthe Leagueof Nations.Undertheseprovisions,it was only when a matterwas
found to be solely within the domesticjurisdiction of a State that the Council was to
abstainfiom making any recornmendationforpeacefùl settlement.Thus a matterhad
not only to fa11in principle within the reserved domain of domesticjurisdiction, it
also had to do so "solely", i.e. exclusively or entirely. This contrasts with Article2
(7) of the United Nations Charter, which uses the more flexible term "essentially".
Faced with the choice between the terms "solely" and "essentially" - a choicewhich
had been debated at the San Francisco Conference -the drafters of the European
Conventionopted for the more restrictive ter~n.~'
39 Geneva, 26 September1928,93 LeagueofNations TreatySeries,p. 343.
40
See "FinalReport of the Committeeof Expertson thePeacefulSetdement of Disputes and the Crea-
tion of a European Court of Justice",in Council of Europe, Committee of Ministers, 13~Session,
Strasbourg,22 May 195.3,CM (53) 58,p. 14("TheCommittee recognised thateachof these texts had
advantages and disadvantagesand finally decided to adopt the formula of the General Act,as
thereforebeen used as the basis of its ciraft."). For discussions ofthe significance of the term "essen-
tially" instead of "solely" seeH. Lauterpacht, "The InternationalProtection of HumanRights",Recueil
des Cours,1947-1,Vol. 70, pp. 5et seq., pp. 23-30; C.B.H. Fincham,Domestic Jurisdiction:theEx-
ception ofomesticJurisdiction asa Bar toAction by theLeagueofNationsand the UnitedNations,
A.W. Sijthoff, Leiden, 1948,esp.pp. 100-102;L. Preuss, "Article2, Paragraph 7 of the Charterof the
United Nations and Matters ofDomestic Jurisdiction",Recueildes Cours, 1949-1,Vol. 74,pp. 553 et
seq.,pp. 597-604; M.S. Rajan, United Nations andDomestic ~urisdiction,2'*ed., Asia Publishing
House, London, 1961,pp. 78-83; B. Simma(ed.), TheCharterof the UnitedNations:A Commentary,
Oxford University Press,New York, 1994,p. 142;H. Kelsen, TheLaw of the UnitedNations:A Criti-
cal Analysisof itsFundumentalProblems,Lawbook Exchange, New Jersey, 2000,pp. 776-779. C. The Court'sapproach to issuesof domesticjurisdiction
underinternationallaw
2.7 The Court's predecessorfirst addressedthe issue of domesticjurisdiction in its Advi-
sory Opinion No. 4, Tunis and Morocco Nationality ~ecrees.~' The question there
was whether Article 15 (8) of the League Covenant prevented the League Council
dealing with a dispute conceming the conferral of Tunisian or Moroccan nationality
on persons bom respectively in Tunis or Morocco andhaving at least one parent born
there. The Court held that this did not involve a matter solely within France'sdomes-
ticjurisdiction under international law. Inparticular, the Court noted that
- Although paragraph 8was intended to protect "the intemal affairs of a coun-
try", it was in the nature of an exception and did "not therefore lend itself to
an extensive inter~~retation".~~
-
The issue of domestic jurisdiction was a preliminary question. That is to
Say,"when once it appears that the legal grounds (titres) relied on are such
as to justify the provisional conclusion that they are of juridical importance
for the dispute submitted to the Council, and that the question whether it is
competent for one State to take certain measures is subordinated to the for-
mation of an opinion with regard to the validity and construction of these
legal grounds (titres),the provisions contained in Article 15(8) cease to ap-
ply and the matter, ceasing to be one solelywithin the domesticjurisdiction
of the State,entersthe domain govemed by international ~aw".~~
-- -
41 Tunis and MoroccoNationali~Decrees, 1923PCIJ,Ser.B, No. 4.
42 Ibid.,p. 25.
43
Ibid.,p. 26. - In that case, the parties reliedonvariousinternationallaw instruments(e.g.,
the protectorate agreements concerningTunis and ~orocco),~~on argu-
ments drawn frominternationallaw (e.g.,the rebus sic stantibusdoctrine)45
and on the practiceof the parties (e.g.,the allegedrenunciationof rightsby
Great Britain or its alleged recognitionof France'sexclusivecompetenceto
legislateon matters of the nationalityof unis).^ T^ogether and separately,
these arguments and instruments justifiedthe provisional conclusion "that
the dispute [arose]out of a matter which, by international law, [was]not
solelywithinthe domesticjurisdictionof rance".^^
2.8 Three points may be drawn from the Permanent Court'scarefùl and authoritative
handlingof the matter.
2.9 First,it is significantthat TunisandMorocco Nationality Decreesconcernedanissue
- the conferral of nationality - which has always beenconsidered in the first place
and in principle as amatter for each individualState,and thus in principleas falling
within the reserved d~main.~~ Yet even with respect tosuch a matter, the Court was
at pains to stress that the invocationof a legal title and its denialby the other party
was sufficientto take the matter outsidethe reserveddomain,provided onlythat the
Court couldprovisionally concludethat the title relied on was "ofjuridical impor-
tance forthe dispute".49
2.10 Secondly,the primary effectof the challengedlegislationin TunisandMorocco Na-
tionality Decreeswas a matter which was interna1to the territories in questionand
44 Ibid.,p. 27.
45 Ibid.,p. 29.
46 Ibid.,pp. 29-31.
47 Ibid., pp. 31-32.
48
Ibid., p. 24. See also Nottebohm caseI,.C.J. Reports 1955,pp.4 etseq., p. 20; ConventiononCertain
QuestionsRelatingto the ConflicofNationaliîy Laws,The Hague,12April 1930,179LeagueofNa-
tions TreatySeries,p. 89,Articles 1,2.
49 Tunisand MoroccoNationaliQDecrees,1923PCIJ, Ser.B,No. 4,p. 26. operated as a matter of their domesticlaw. Again, these considerationswere not suf-
ficient to trigger Article 15(8).France's right toact in the matter was challengedby
Great Britain, and the challenge involved arguments which the Court held, provi-
sionally,were "ofjuridical importance". That determination inno way prejudged the
merits ofthe dispute,on which the Court carefullyrefused to expressany view what-
ever.
2.11 In the third place, the arguments and instruments relied on by the parties included
treaties (the protectorate agreements) to whichthe United Kingdom was not a party.
This did not prevent the Court from characterisingthe resulting situation as one fal-
ling within the international domain. France having invoked the protectorate agree-
ments as a basis for its action, the interpretationof those agreementswas thus provi-
sionallyof juridical importanceto the dispute and prevented thematter falling within
the scopeof France'sdomesticjurisdiction.
2.12 The approach of the Permanent Court in Tunis and Morocco NationalityDecrees
represents the approach of the Court to the present day. In fact the Court has never
upheld a preliminary objection based on the characterisationof a dispute as falling
within the domestic jurisdiction of the Defendant State under international law. It
specificallyrefrained from doing so in the Nonvegian Loans case, instead upholding
Nonvay's invocation of the automatic reservation contained in France's Optional
Clause de~laration.~~)
2.13 The approach of the present Court can be seen in the Right of Passage case. There
India'sfifthpreliminary objection concerned its reservationfor matters "whichby in-
ternational law fa11exclusivelywithin the jurisdiction of the Govemment of India".
India argued that there was no "reasonably arguable case" that any right of passage
existed across Indian territory, and that therefore the matter fell within its domestic
50
Nonvegian Loans case,1.C.J.Reports 1957,pp.9 etseq., esp.p. 27. j~risdiction.~'It also arguedthat the parties (Portugalon the one side,the Marathas,
GreatBritain and India as successive territorialsovereignson the other side)had al-
ways dealt with theissue "on the basis thatit is a questionwithin the exclusivecom-
petence of the territorial ~overei~n".~~ The Court did not address the question
whether the claim was "reasonablyarguable"; instead it noted that to interpret the
practice of the parties "as signifyingthat the right of passage is a questionwhich ac-
cordingto internationallaw is exclusivelywithinthe domesticjurisdiction of theter-
ritorialsovereign"wouldrequireit to considerandinterpreta substantialbodyof his-
toncal and other material,and thatto do so wouldrisk prejudgingthe me rit^ .^^c-
cordinglyjoined the fifthpreliminaryobjection tothe merits.
2.14 The Courtreturnedto the issuein itsmeritsjudgmentin 1960.Itbeganby noting that
the mere assertionbyIndiathat therights invokedby Portugaldid not existwas nota
basis forinvoking its domesticjurisdiction. The point was that the Court could only
determinethat the rights didnot exist"after first establishing its competenceto ex-
aminethe validity ofthese [Portugueçe]title~".~~ It went on to rejectIndia'sfifthpre-
liminaryobjection,inthe followingpassage:
"In the presentcase Portugal is claiming a right of passage over Indian
temtory. It assertsthe existenceof a correlativeobligationupon India.It
asks fora finding thatIndiahas failed tofulfilthat obligation.In support
of the first two claims it invokes a Treaty of 1779, of which India con-
tests both the existence and the interpretation. Portugal relies upon a
practice ofwhichIndiacontestsnot onlythe substance,butalsothe bind-
ing characterasbetweenthe two Stateswhich Portugal seeksto attach to
it. Portugalfurtherinvokes international customand the principlesof in-
ternational law as itinterpretsthem. To contendthat such a right of pas-
sage is one which canbe relied upon asagainstIndia, to claim thatsuch
an obligation is binding upon India, to invoke, whether rightly or
wrongly, suchprinciplesis to place oneself on the plane ofinternational
law ...To decideuponthe validityofthoseprinciples,uponthe existence
51
Right ofPassage case,I.C.J.Report1957,pp.125 etseq., pp149-150.
52 Ibid., p150.
53
Ibid.
54 I.C.J. Report1960,pp.6 etseq., pp32-33. of such a rightof Portugalas againstIndia,upon such obligationof India
towards Portugal,and upon the alleged failure to fülfil that obligation,
doesnot fa11 exclusivelywithin thejurisdiction of~ndia."~~
It may be noted thatthe fi% preliminaryobjectionwas rejected,despitethe fact that
in one crucialrespect the rights of passagereliedon by Portugalwere heldnot to ex-
ist.
2.15 The authorities -in particularTunisand MoroccoNationalityDecrees andRights of
Passage -demonstrate that amatterwill not fa11solelyor exclusivelywithin the do-
mesticjurisdiction of a Defendant Stateif, in respect of the disputed conduct,it has
invoked argumentsand instrumentsof intemational law, and 1 or the claimant State
has invoked such arguments and instruments against it,with the result that the de-
termination of the dispute may be considered - provisionally and without entering
into the merits-to involveconsiderationof those argumentsand instruments.Inthis
respectno bettertest existsthanthat formulatedby thePermanent Courtin 1923:is it
provisionally the casethat the argumentsand instrumentsrelied on by either party
maybe considered "ofjuridical importance forthe dispute"?
D. The test fordomesticjurisdictionunderinternationallaw
appliedto the presentcase
2.16 Applying that test tothe circumstancesof the present case,the answeris unequivo-
cally yes, and consequentlythe matter is not solely within the domesticjurisdiction
of Germany.
2.17 The present case concemsa dispute whicharose when Germany,in and after 1995,
asserted forthe firsttime theright toapplythe SettlementConvention totheproperty
of Liechtenstein,a neutral in World WarII. It arose with respect to property which
55 Ibid .,33. had been seized by a third State. Sucha disputeis transparentlynot one solelywithin
the domesticjurisdiction of Germany.
2.18 In the present case, Germany invoked the Settlement Convention, an international
treaty, as a basis for its treatment of the Liechtensteinproperty. In and of itself that is
sufficient to refùte the argumentbased ondomesticjurisdiction. There is a question,
ofjuridical importance, whether the Settlement Convention is properly invoked vis-
à-vis neutral property. There is a question, of juridical importance, whether a de-
feated State in a war is entitled to rely on a treaty such as the Settlement Convention
vis-à-vis a non-party to that treaty. There is a question, of juridical importance,
whether the Settlement Conventionrequiresor permits Germany to defer to the erro-
neous classificationof property as enemyproperty by an allied Power responsible for
its seizure. There is a question whether, if so, any such provision of the Settlement
Convention could be opposable to Liechtenstein. Not one of these questions (and
they are only examples) is within the domesticjurisdiction of Germany even in prin-
ciple- let alonesolelywithin its domesticjurisdiction.
For its part, Liechtenstein claims that Germanywas not entitled to treat the Liechten-
stein property as coming within the scope of the Settlement Convention. It claims
that Germanytherebyhas failed to respect Liechtenstein'ssovereigntyand neutrality.
In the alternativeit claims that Germany couldonly bring the Liechtensteinproperty
within the scope of the Settlement Convention,as a matter of international law,on
the condition that it pays compensationfor the loss of that property. It claims that by
treating Liechtenstein property as covered by the Settlement Convention, Germany
was unjustly enriched; that Germany thereby acted to the manifest detriment of
Liechtenstein, and that in consequence as a matter of international law Germany
breached its international obligations to Liechtenstein.These claims may or may not
prove to be ultimately well foundedunder international law - that is a matter for the
merits. But they self-evidently do not raise issues which are solely or exclusively
within Germany's domesticjurisdiction. Asa result of the arguments and instruments
relied on, the parties are placed "on the plane of international law" - to use the lan- guageof the Court in the Right ofPassagecaseS6 -andnot solelyor exclusivelyupon
theplane of the domestic law orjurisdiction of Germany.
2.20 It is relevant to note that in the two rounds of diplomaticnegotiations on the present
dispute, Germany never suggested that the matter was exclusivelywithin its domes-
ticjurisdiction, with the result that Liechtensteinhad no standing even to inquire into
the treatment of the Liechtenstein property. On the contrary - as shown in Part One
above and in further detail in the Appendix - Germanysoughttojustify its conductas
valid and lawfùl, or at any rate as involving an arguable construction of the Settle-
ment Convention.
2.21 In fact other aspects of Germany's pleato the Court'sjurisdiction themselves illus-
trate that the matter is not solely within its domesticjurisdiction. For example, Ger-
many argues that issues of international responsibility cannot be determined in the
absence of Czechoslovakia (or its successor States), which should properly be the
Defendant. In short it relies on the Monetary Gold argument. The reasons why that
argument cannot avail Germany in the present case are set out in Chapter 5, below.
But in any event, it cannot be the case both that the Monetary Gold principle even
arguably applies and that the matter falls solely within the domesticjurisdiction of
the Defendant State. By definitiontheMonetary Goldprinciple involves caseswhere
the legal positions of two States,the Defendant State and an absent State, are so in-
tertwined that the former's rightsor obligations cannot be determined in the absence
of the latter.57Merely to invoke the Monetary Gold principle is, in effect, to accept
that the matter is one on which certain international legal grounds (titres) are of ju-
ridical importance forthe dispute - in other words, that the matter is not solelywithin
the domesticjurisdiction ofthe State invoking that principle.
56 Ibid.
57
SeeCaseconcerningEa,stTimor,I.C.J.Reports 1995,p.90.2.22 Germany argues that because "a rule of public international law which German
courts should have applied in this case does not exist", therefore the matter falls
within Germany's domesticj~risdiction.~~That argument is strongly reminiscent of
India'sfifth preliminary objection in the Right ofPassage case - discussed above -
that Portugal'sasserted rights did not exist or were not reasonably a~-~uable.~ S'uch
an assertionis a matter forthe merits.
2.23 But in any event (1) Germany's argumentassumes that the issue before this Court is
exclusively the issue that was before the Germancourts, concerning the Pieter van
Laer painting; and (2) that al1this Court can do is to ask how the German courts
shouldhave decidedthe PietervanLaer case. Inboth respects Germanyis wrong.
2.24
As to the first point, it has already been explained that the present dispute concerns
notjust the treatment of the Pietervan Laerpaintingbut the generalposition which it
has become clear Germany now takes towards al1the Liechtenstein property, viz.,
that it falls within the scope of the SettlementConvention, i.e. that it was "seized for
the purpose of reparation or restitution" as a result of World War II. The question
whether Germany is entitled to take that position is not a matter falling within Ger-
many'sdomesticjurisdiction, even arguably -let alone solely.
2.25 As to the second point, it is not the fiction of internationalcourts(in the absence of
any special provision to the contrary) to act as courts of appeal of national courts.
This Court is not asked to rewrite the judgrnents of the German courts but to deter-
mine for itself, in the light of applicablerules of internationallaw, whether the con-
duct of Germany is or is not consistent with its obligations towards Liechtenstein,
and whether, in light of Germany'sconduct, it is obliged by international law to
compensate Liechtenstein. Again, these questions do not fa11(even arguably, let
alone solely) within Germany'sdomesticjurisdiction.
58 GPO,para.109.
59
Seeaboveparas.13-14.2.26 For al1these reasons, Germany'sreliance on the domestic jurisdiction principle, as
embodied in Article 27 (b)ofthe European Convention,must fail. CHAPTER3
GERMANY'SARGUMENT THAT THEDISPUTEFALLSOUTSIDETHE COURT'S
JURISDICTIONRATZONETEMPORIS A. Introduction
3.1 Liechtensteinnow turns to Germany'sargumentbased on Article27 (a) of the Euro-
pean Convention, i.e. concerningthe temporaljurisdiction of theCourt.
As statedin Liechtenstein's ~~~lication,~a ~ndelaboratedin its Memorial,thepresent
disputebetween Germanyand Liechtensteinarose as a result of a seriesof decisions
of the German courts,beginningin 1995and culminatingin the finaldecisionof the
Federal ConstitutionalCourt in 1998.As result of subsequent developments, includ-
ing statementsmadeby the Agent forGermanybefore theEuropean CourtofHuman
Rights (the EcHR)~' and similar statements madeby German representativesin bi-
lateral discussion^ i,becameclearthatthe disputewas not limited toa singlepaint-
ing (the Kalkofen paintingby Pieter van Laer) but that it extended to al1the Liech-
tensteinproperty.
3.3 Despitethese facts, Gerrnanyargues63that the present claim fallsoutsidethe Court's
jurisdiction ratione temporis.In supportof its temporalobjection,Germany relieson
Article27 (a)of the European Convention,whichprovidesas follows:
"Theprovisionsofthis Convention shall not applyto:
(a) disputesrelating to factsor situationsprior to the entry into force of
this Conventionas betweentheparties tothe dispute; ..."
3.4 It is agreed between the parties thatthe relevant date for the purposes of Article27
(a) is 18 February 1980.This is the dateon which the European Conventionentered
into force as between the two States. The question is whether the dispute between
Liechtensteinand Germany is one "relating tofacts or situations prier to the entry
into forceof this Convention"asbetweenLiechtensteinand Germany.
60
Application,para.15.
61 Memorial,paras.3.37-3.41.
62
See aboveparas.6 and1.6;Memorial, paras..42-3.58.
63 GPO,paras.64-1 05.3.5 Before tuming to the questionof the interpretation of Article 27 (a), it is necessaryto
stress that the purpose of the European Convention is the settlement of disputes be-
tween European States. Too extensive an interpretation of the phrase "relating to
facts or situations prior to the entry into force of this Convention" would undermine
the object and purpose of the Convention.Most internationaldisputeshave a histori-
cal origin, often extending over a considerable period, and Europe is no exception.
But, in applying or interpretingjurisdictional reservationsor exceptions ratione tem-
poris, the Court has never dwelt on the underlying or ultimate causes of disputes.
Stillless has it dwelt on the (oftendistant) origins of the legal situations in issueor of
the obligations said to have been breached.
3.6 In invoking this exception to jurisdiction, Germany purportedly relies on a series of
decisions of this Court and its predecessor, in particular Phosphates in Morocco, the
Electricity Companyof Sofia and Bulgaria case and the Right ofPassage case.64But
it gravely misreads these decisions. In effect it calls upon the Court - at the stage of
preliminary objections - to act as a kind of forensic archaeologist, to dig deeper and
deeper into the past so as to Saythat here, at some remote interval, lies the "real
source", thefons et origo, the prima1event without which there would now be no
dispute. But this is not how the Court has interpreted these jurisdictional exceptions
(B). Applying the Court'srepeatedly reaffirmed test, the present dispute falls within
jurisdiction (C).
3.7 As a preliminarypoint, it should be noted that most of the decisions dealing with the
ratione temporis objection involved the so-called "Belgian" reservation, the two-
pronged reservation limiting the Court'sjurisdiction to disputes arising after a spe-
cific date with respect to situations or facts subsequent to that date. For the Court to
have jurisdiction notwithstanding a reservation of this type, two distinct conditions
64 Phosphates inMorocco, 1938 PCIJ, Ser.AB, No. 74, p. 22; ElectriciS, Companyof So$a and Bul-
garia, 1939PCIJ, Ser.NB, No. 77,pp. 81 etseq.; Rightof Passagcase,I.C.J. Report1960, pp.6 et
seq. must be met: the dispute must have arisen after the critical date, and it must be one
relating to situations or facts subsequent to that date. In fact, Article 27 (a) of the
European Convention contains only a single limitation, for "disputesrelating to facts
or situations prior to" the critical date. In its Preliminary Objections, Germany dis-
cusses the case-law dealingwith the Belgianreservation on the basis that it is equally
applicable to Article 27 (a).65Liechtenstein agrees withthis approach. In the present
case, no dispute existed betweenthe parties as to the subject of the present proceed-
ings prior to 1995.Thusthe onlyquestionis whether the dispute which then arosere-
lates to situationsor factspior to 1980,and that questionis in substance exactly the
same as the question raisedby the secondprong of the "Belgian"reservation.
B. The Court'sapproachto rationetemporis reservations
3.8 The issue of how to interpret reservations ratione temporis first arose before the
Permanent Courtin Phosphates inMorocco.In 1931France had acceptedthe Court's
jurisdiction "in any disputeswhich may arise after the ratification of the present dec-
larationwith regard to situationsor facts subsequentto such ratifi~ation".~~ Italy,also
a party to the Optional Clause, commenced proceedings in 1936 complaining that
Italian nationals had been deprivedof their rights to prospect for phosphates. In par-
ticular it pointed to a Moroccan decree of 1920 and a decision of the Mines Depart-
ment in 1925.Italy argued that the internationalwrong was only perfected when the
French authorities in Morocco failed to overturn these decisions or to provide any
remedy for them.
3.9 The Court disagreed. In its view:
"The situation which the Italian Government denouncesas unlawful is a
legal position resulting fiom the legislation of 1920; and.. . cannot be
considered separately from the legislation of which it is the result ...If,
65 See,e.g., GPO,para. 67.
66 PhosphatesinMorocco, 1938PCIJ,Ser.AA3,No. 74,p. 22. by establishing the monopoly, Morocco and France violated the treaty
régimeof the General Act of Algeciras of April 7th,1906, and of the
Franco-German Conventionof November 4th,1911, that violation isthe
outcomeof the dahirs of 1920.In those dahirs are to be sought the essen-
tial facts constituting the alleged monopolization and, consequently,the
facts which really gave rise to the dispute regardingthis monopolization.
But these dahirs are 'facts'which,by reason of their date, fa11outside the
Court'sj~risdiction."~~
Italy argued that the breachin questionwas acontinuingwrongfulact, and it alsore-
lied on later acts, in particular anallegeddenial ofjustice in the period 1931- 1933,
to avoid the operation of France's reservation.The Court rejected both arguments.
The notion of a continuing wrongfulact was irrelevant fi-omthe point of view of its
jurisdiction: if the dispute overn allegedlywrongful act arosebefore 1931and con-
cemed situations or facts prior to that date, whetherthe wrongful act continuedafter
1931madeno difference:
"an exarnination of the justice of this complaint [as to a continuing
wrongful act] couldnot be undertaken without extending the Court'sju-
risdiction to afact [SC.,the decisionof 19251which, by reason of its date,
is not subjecttheret~".~~
3.10 As to Italy's argument basedon denial ofjustice, the Court said that it did not repre-
sent a "newfact whch could have givenrise to the present dispute":
"Inits Application the ItalianGovernmenthas representedthe decisionof
the Department of Mines as an unlawful international act ...That being
so, it is in this decision that we should look for the violation of interna-
tional law -a definitive act which would, by itself:directly involve inter-
national responsibility.This act being atîributable to the State and de-
scribed as contrary to the treaty right of another State, international re-
sponsibilitywould be established irnmediatelyas between the two States.
In these circurnstancesthe alleged denial ofjustice, resulting either fi-om
a lacuna in thejudicial organization or fi-omthe refusa1of administrative
67 Ibid., p25-26.
68 Ibid ..29. or extraordinarymethods of redress designed to supplementits deficien-
cies,merely results in allowingtheunlawful act to subsist. It exercisesno
influence either on the accomplishmentof the act or on the responsibility
ensuing fiom it.
a . .
Accordingly, whatever aspectof the question is considered, it is the deci-
sion of the Department of Mines of January 8", 1925, which is always
found,in this matter of the dispossessionofthe Italian nationals,to be the
fact with regardto which thedispute aro~e."~~
3.11 Thus the Court interpretedthe French reservationratione temporis as requiring it to
determine the "fact with regard to which the dispute arose", the specific act which
(accordingto the claim presentedin the Application)definitively gave rise to the De-
fendant'sresponsibility - or would do so if the view ofthe law and the factspresented
by the Applicant were to be upheld by the Court. By clear implication, the back-
ground situation (even if necessary to the dispute in the sense that without it the dis-
pute would not have arisen) was not a situation or fact capable of triggering the
French exception ratione temporis.Nor of course was the origin or date of the obli-
gation said to have been breached. Boththe background situation and the obligation
invoked were necessary to an eventual finding of responsibility in accordance with
the Applicant'scase,but neither individually nortogetherwere they sufficient to sus-
tain the claim.
3.12 The questionmay thus be presented as follows:which fact or situationwas both nec-
essary and sufficient, in the circumstances alleged by the Applicant, to give rise to
responsibility, assuming of course, for this purpose, that the Applicant's legalargu-
ments were to be sustained? In Phosphates in Morocco the necessary and sufficient
cause was the decision of January 1925,and the French reservation accordingly ap-
plied.
3.13 That this is the correct interpretation of Phosphates in Morocco is clear fi-omthe
treatment of that decision in subsequent cases. In the following year the Permanent
69 Ibid pp.28-29 (ernphasisadded). Court upheld itsjurisdiction under the OptionalClause notwithstandinga reservation
ratione temporis, and in doing so authoritatively explainedits earlier decision. Bel-
gium's claim in Electricity Company of Sofia and Bulgaria (Preliminaiy Objec-
tions)" arose from a decision of a Mixed ArbitralTribunalin 1923 and 1925,i.e.,be-
fore the critical date of acceptance of jurisdiction, which was in 1926. Difficulties
subsequently occurred in interpreting and giving effect to the Mixed Arbitral Tribu-
nal'sdecision and a dispute arose afterthe critical date. Bulgaria argued that the crux
of the dispute was the interpretationand application of the rate-fixing formula in the
Tribunal'sdecision, and that the case therefore concerneda situation or fact prier to
the critical date.The Court rejectedthat argument. It said:
"Itis true that it maybe saidthat the awardsof the Mixed Arbitral Tribu-
nal established between theBelgianElectricityCompany and the Bulgar-
ian authoritiesa situation which dates frombefore March 1oth,1926,and
still persists at the present time. Nevertheless, the dispute between the
Belgian Governmentdid not arise with regard to this situation or to the
awards which established it. The Court would recall in this connection
what it said in the Judgment of June 14~,1938(Phosphatesin Morocco,
Preliminary Objection). The only situations orfacts which mustbe taken
into accountfrom the standpoint of the compulsoryjurisdiction accepted
in the terms of the Belgian declaration are those which must be consid-
ered as being the source of the dispute.No such relation exists between
the present dispute and the awards of the Mixed Arbitral Tribunal. The
latterconstitutethe sourceof therights claimedby the Belgian Company,
but they did not giverise to the dispute,since the Parties agree as to their
binding character and thattheir application gave rise to no difficultyuntil
the acts cornplainedof. It is not enough to Say,as it is contended by the
Bulgarian Government, that if it had not been for these awards, the dis-
pute would not have arisen, for the simple reason that it rnight just as
well be saidthat, if it had not been forthe actscomplainedof, the dispute
would not have arisen. It is true that a disputemay presupposethe exis-
tence of some prior situation or fact, but it does not follow that the dis-
pute arises in regard to that situationor fact. A situation or fact in regard
to which a disputeis saidto have arisen mustbe the real cause of the dis-
pute. In the present caseit is the subsequent acts withwhich the Belgian
Government reproaches the Bulgarian authorities with regard to a par-
ticular application of the formula - which in itself has never been dis-
70 ElectricityCompanyof Sofiaand Bulgaria,1939PCU, Ser.NB, No. 77,pp.81 et seq. puted - which form the centre point of the argument and must be re-
garded as constitutingthe factswith regard to which the dispute ar~se."~'
The Permanent Court thus looked for the source of the dispute, not in the sense of an
ultimate or anterior cause but in the sense of the direct occasion which gave nse to
the dispute and which in fact constituted "thecentrepoint of the argument".
3.14 The present Courthas adoptedthe same approachin a number of cases.
3.15 In the Right of Passage case, India in its sixth preliminary objection invoked an Op-
tional Clause reservation in similar terms to the Belgian reservation. The Court ob-
served that the dispute had a number of aspects, conceming inter alia the very exis-
tence of a right of passage as well as the lawfulness of India'sdenial of that right in
1954.The Court had no difficulty in holding that the disputerelating to the denial of
the right of passage could not have arisen until 1954.~~ But - more relevantly for the
present case - it went on to hold that even that part of the dispute as to the existence
of the right only arose in 1954. It said:
"Even if we consider only the part of the dispute relating to the Portu-
guese claim, which India contests, to a right of passage over Indian teni-
tory, the position is the same. It is clear from the material placed before
the Court that before 1954,passage was effected in a way recognized as
acceptable to both sides. Certain incidents occurred,but they did not lead
the Parties to adopt clearly-defined legal positions as against each other
Up to 1954the situation of those territories may have given rise to a few
minor incidents,but passage had been effected without any controversy
as to the title under which it was effected ..".73
71 1939PCIJ, Ser.AB, No. 77,pp. 81-82(emphasisadded).
72
RightofPassage case,I.C.J. Reports 1960,pp. 6 et seq., p. 34.
73 Ibid., pp34-35. Thus even where there may be some lack of agreementbetween the parties, as mani-
fested by "minor incidents", it is only when the parties "adopt clearly-defined legal
positions as against each other"that the dispute arises.
3.16 Moreover the Court went on to draw implications fiom this approach for the second
question under the "Belgian"reservation, viz., whether the dispute related to factsor
situations after the critical date. As it said:
"The facts or situations to which regard must be had in this connection
are those with regard to which the disputehas arisen ...
.. It was only in 1954 that such a controversyarose and the dispute re-
lates both to the existence of a right of passage to go into the enclaved
territories and to India's failure to comply with obligations which, ac-
cordingto Portugal, were binding upon it in this connection. It was fiom
al1of this that the dispute referred to the Court arose; it is with regard to
al1of this that thedisputeexists. Thiswhole, whatever may have been the
earlier originof one of itsparts, came into existenceonly after [the criti-
cal date]. The time-condition to which acceptance of the jurisdiction of
the Court was made subject by the Declarationof India is therefore com-
plied ~ith."~~
In Right of Passage, this Court thus distinguished sharply between the situations or
facts giving rise to the obligation said to have been breached and the situations or
facts directly associated with the breach. Only the latter had to have occurred after
the critical date. In this respect the approach adopted by the Court is entirely consis-
tent with that of its predecessor, and in particular with the relatively strict interpreta-
tion of the notion of "real cause" adopted in Electricity Company of Sofia and Bul-
garia (PreliminaryObjections).
3.17 The implications of the Court's approachcanbe seen very clearly fiom its considera-
tion of the merits of Portugal'sclaim. In its judgment the Court referred to treaties
concluded by the Maratha rulers of India in the 18thcentury and by the British in the
19'~century, to Maratha sanads or decrees of 1783 and 1785 and to the practice of the authorities in question over the entire period (including the period before the
critical date of 1930). Crucial items of practice occurred in the period 1890-1891 .75
Yet none of this impaired the Court'sjurisdictionunder the Optional Clause declara-
tions ofthe parties.
3.18 The decision in Right of Passage may be contrasted with that in the NATOcases.
There, Yugoslavia had accepted the jurisdiction of the Court by an Optional Clause
declarationon 25 April 1999,with a temporal reservation alongthe lines of the "Bel-
gian" reservation. The bombing carnpaign of which it complained had already com-
menced before that date and continued thereafter. Before that date, Yugoslavia had
already complained of the attacks, for example to the Security Council, and the vari-
ous parties had already adopted "clearly-defined legal positions". In these circum-
stancesthe Court had no doubt that a legal dispute had arisen "well before 25 April
1999 concerning the legality of those bombings as such, taken as a ~hole".~~That
dispute arose between Yugoslavia and each of the States associated with the carn-
paign. The Court added:
"Whereas the fact that the bombings have continued after 25 April 1999
and that the dispute concerning them has persisted since that date is not
such as to alter the date on which the dispute arose; whereas each indi-
vidual air attack could not have given rise to a separate subsequent dis-
pute; and whereas ...Yugoslavia has not established that new disputes,
distinct from the initial one, have arisen between the Parties since 25
April 1999in respect of subsequent situationsor facts attributableto Bel-
1177
gium ...
3.19 Although this was not a final decision on the question ofjurisdiction, it gives a clear
indicationof the Court's current approach toreservations ratione temporis.Again the
74 Ibid., p. 35 (ernphasisadded).
75
Ibid.pp. 37-44.The scope of the material considered, and themateriality of the earlier practice, can
be seenfromthe dissenting opinion of Judge Spendeibid.pp. 101-108.
76 Legality of UseofForce (Yugoslavi a.Belgium) P,rovisional Measures, Order of 2 June 1999,I.C.J.
Reports 1999,pp. 124et seq., p. 134,para. 28.
77 Ibid.pp. 134 etseq., para. 29. The Court made equivalentfindingsin theparallel cases broughtunder
the OptionalClause against otherNATO MemberStates. Court adopted the same approachto the ratione temporis issue as it had in the Right
ofPassage case and as its predecessorhad in Phosphates inMorocco, and Electricity
Companyof Sofia and Bulgaria (PreliminaryObjections).
To surnmarize, in applying ratione temporis reservations or exclusions the Court
looks at the facts or situations associated with the outbreak of the dispute itself.
Theremust be a direct andproximate linkbetween the facts or situationsand the dis-
pute: it is not enough that earlier factsor situations may have in a sense predisposed
the parties in respect of the dispute. Internationaldisputes (like some industrial acci-
dents)may be eventswaiting to happen. But not everypotential dispute turns into an
actual dispute (just as not every dangerous situation causes loss or injury). Thus in
the Right ofPassage case, the Court was preparedto overlook earlier incidentswhich
it characterised as "minor".In retrospect it may be doubted whether India and Portu-
gal were truly ad idem at any stage on the existenceor extent of the right of passage,
but nonethelessno dispute arose.For its part the Court lookedat the eventswhich ac-
tually occurred and identified a dispute (and the facts and situations relating to that
dispute) only when the dispute actually arose, and notby way of speculation or an-
ticipation. Under international law, thereis no dispute until, as a matter of history,
the crucial triggering event has occuned, leading the parties to define their opposing
positions with some degreeof precision. In such a case the earlier origin of some as-
pect of the dispute -still less of the obligation alleged tohave been breached -is im-
material.
C. Applyingthe Court's approach, the present case
iswithinits jurisdiction
3.21 In the present case the dispute arose only after Germany, initially through its courts
and subsequentlythrough actsof its executive organs, asserted thatthe Liechtenstein
property was Çom a German point of view to be treated under the Settlement Con-
vention, Le., that it could properly be consideredby Germany as property seized for
the purpose of reparation. That was an act or series of acts of Germany clearly lo- cated in time, in the period from 1995onward~.~~ It is true that like many Stateacts it
has to be understood againstthe backgroundof earlier events, including somebefore
the critical date,79and that it took effect in relation to a legal regirne,that of the Set-
tlement Convention, which came into existence prior to that date. For the reasons
given, however, none of this makes any difference to the application of the ratione
temporis objection.
3.22 As this Court said in the Right of Passagecase, "[tlhe facts or situations to whichre-
gard must be had in this connection are those with regard to which the dispute has
arisen ... Thedispute arose in the 1990s,well afterthe critical date, withregardto
the conduct of organs of the German Statewhich occurred after that date. It wasonly
then that Germany actually decided to treat the Liechtensteinproperty as fallingun-
derthe Settlement Convention.
"It was from al1of this that the dispute referred to the Court arose; it is
with regard to al1of this that the dispute exists. This whole, whatever
may have been the earlier origin of one of its parts, came into existence
only after [the criticaldate]""
Germany 'stwo-foldapproach
3.23 Faced with the Court's consistent jurisprudence, Germany adopts a two-fold ap-
proach. m, it denies that the Court'sestablished test can be applied to the present
case. Secondlv,it re-characterizes,andin so doingcaricatures, Liechtenstein's case.
78
Germany cornplains that Liechtenstein is inconsiinspecifying precisely when the dispute arose,
see GPO, paras.31, 98. As so often, the dispute took some time to fully emerge, given the German
court processes and subsequent events. No questionses, however, for the purposes of the present
preliminaryobjection, whether the disputearose1995or 1998.
In this case, 18February 1980when Liechtensteinratifiedthe European Convention.
Right of Passagecase,I.C.J.Reports 1960,pp. 6 etseq.,p. 35.
Ibid. 1. Germany'sattemptto rewritethe Court'scase-law
3.24 As to the first point, as has been demonstratedthe Court'sjurisprudence has consis-
tentlydistinguishedbetween:
(1) the central or catalytic fact whichtriggers the dispute, on the one hand, and,
on the other hand, background facts whch might have been necessarypre-
conditions for a disputeto arise but whichin themselves did not produce the
dispute, and
(2) the actual and direct cause of the dispute, on the one hand, and, on the other
hand, thebases forthe right or obligationalleged to have been ignoredor in-
fkinged.
3.25 In its Preliminary Objections, Germany tries to ignore both distinctions.For exam-
ple, it asserts that "[iln the present case it is quite impossible to make a meaningful
distinction between the source of the rights allegedby Liechtenstein and the source
of the alleged dispute".82This is mere assertion. In the Right ofPassage case, the
Court had no difficultyin drawing such a distinction,even with respect to thataspect
of the dispute which concerned the scope of the rights ~laimed.'~Sirnilarly, here
there is a clear distinction in principle betweenthe legal situationin whch the parties
were placed after 1990and the eventwhich causedthe dispute, Le.,which was its ac-
tua1source.
3.26 Germany also argues that "[tlhe case brought before the Court could not be decided
without judging upon the reparations regime established in 1945 and thereafter".84
But thepresent dispute did not arisebecause of the reparationsregime as such.Itwas
the decision by Germany to apply that regime to the Liechtenstein property which
82 GPO,para. 77.
83 See abovepara. 3.16.
84 GPO,para. 96. gave rise to the dispute. Of coursein dealing with that disputethe Court will haveto
consider the reparations regime, but that does not make the regime the real sourceor
center piece of the disputein the senseof these terms adoptedin the Court'sjurispru-
dence. In the Right of Passage case the Courtclearly "judged upon" the scopeof the
regime of passage between Goa andthe Portuguese enclaves, andin doing so had re-
gard to treaties and other instruments datingback to the 1 gthcent~r~.~N ~onethelessit
did sowith respect to a disputewhich only arose in 1954,when the legal positionsof
the parties crystallized following the outright denial by India of the right claimed by
Portugal. As the Court noted, the dispute between India and Portugal did not arise
because of the right of passage; it arose because that right had been denied. It was
this latter fact or situation which was thefocus of the dispute, and which was deter-
minative for the purposes ofjurisdiction ratione temporis. Precisely the same situa-
tion applies here. The seizure of the Liechtenstein property by Czechoslovakia did
not give rise to the present dispute. Nor did the reparations regime. What triggered
the disputewas Germany's decisionto treat the Liechtensteinproperty as coveredby
the reparationsregime. That decision occurred long after the critical date for the pur-
poses of Article27 (a) of the European Convention.
In this regard Germany asserts thattheposition taken by its courts involvedno novel
doctrine, and that the Germanjurisprudence has always been clear and con~istent.~~
But the Gennan courts had never previously been faced with a case concerning
Liechtenstein property. It was not incumbent upon Liechtenstein to anticipate what
the German courts niight do, or what attitudethe German executive might adopt, in
the event that a case involving the quite separate issue of the Liechtenstein property
were to arise. When it did arise -in the 1990s - complex questions of German civil
and constitutionallaw hadto be dealt with, as the Courtwill discern fiom readingthe
decisions set out in Vol. II of Germany'sPrelirninary ~bjections.'~But the present
85
See abovepara. 3.17.
86 GPO,para. 100. See alsibid pa,as. 77, 83, 86, 90, 98.
87
Germany presentsthese issues as simple, straightforwardand routine. Perhaps fortunatelythe Courtis
not asked to judge their degree of difficultyagainst some nom for Germanjurisprudence. But it may dispute is not a dispute about the predictable or unpredictable content of German
civil or constitutional law; it is a dispute about whether Germanywas entitled as a
matter of international law to treat any item of Liechtensteinproperty as coveredby
the Settlement Convention or as seized by way of reparation. The German judicial
and executivepositions, taken in the 1990s,were the necessary and sufficient source
or cause of the international dispute which then immediately arose. In order to deal
with this preliminary objection, the Court has no need to engage in some counter-
historical speculation as to whatmight have happenedif a sirnilarquestion had arisen
beforethe Germancourtsbefore 1980.It is sufficient to Saythat it did not.
2. Germany'sattemptto rewriteLiechtenstein'sApplication
3.28 Germany's secondgeneral strategy -in response to the well-established and rather
narrow approachto temporal limitationson the Court'sjurisdiction - is to reformulate
Liechtenstein's claims, in effect to rewrite the Application. As noted already, Ger-
manyre-characterizes, and in so doingcaricatures,Liechtenstein'scase.
3.29 Germany adopts its own versionof the case,whichbears no relationshipto the actual
case. It asserts that Liechtenstein's"entire case revolves around the confiscation of
Liechtensteinproperty by Czechoslovakiain 1945 and thereafter and possible legal
consequencesof those confiscation^ Th ^s^s a simple rnisreading.For 35 yearsfol-
lowing the seizure of the Liechtensteinproperty under the Bene; decrees, there was
no dispute on that subject between Liechtenstein and Germany. It was only in the
1990s - following the amendment to the Settlement Convention which deleted any
reference to compensation - that Germany took the position that the Liechtenstein
property could properly be considered German for the purposes of that Convention,
i.e., that it was coveredby the reparations regime.It was at this point, andnot before,
spects, and that the Federal Constitutional Court grantedinterimreliefbefore its decision in the Pieter
van Laer cas- an unusual if not entirely unprecedentedstep for that Court. Appendix 1,
paras. A2-A11, for an analysis of the German case-law.
GPO, para. 77. that a dispute arose. As has already been explained,it was that decision, or seriesof
decisions,by Germany which gave rise to the dispute and which constitutesthe focal
point of the present case.
3.30 Indeed Germany itself recognizes - rather oddly in terms of its submission on this
point - that there was no dispute between Liechtenstein and Germanyin 1980. It
states that "[nlo factual or legal situation existed in 1980 on which Liechtenstein
could rely".89As againstGermany,in 1980,thatwas true - in the sensethat therewas
no issue between Germany and Liechtenstein in 1980 as to the scope of the Settle-
ment Convention, nor any confusionbetween themas to whether Liechtensteinprop-
erty was to be treated as if it were Germanproperty. Indeed, that is precisely the
point. To the extent that Liechtensteinwas "completelyinactive" vis-à-vis Germany
in the period 1980 - 1995,~'the reasonwas that the issue had not yet arisen.
3.31 Germany argues that Liechtenstein's presentationof the case focuses exclusivelyon
events prier to 1980 - in its own words, "alwaysprier to 1980".'l Again this is sim-
ply untrue. Liechtenstein's Applicationand Memorial deal with events both before
and after 1980, as appropriate. Liechtensteinhas already demonstrated by reference
to the Court'scase-lawwhy events prior to the critical date for the purposes ofjuris-
diction ratione temporis may nonetheless be relevant in deciding a dispute which
arose subsequentlyand which relatesto some catalytic event subsequently occuning.
3.32 In this context Germany asserts that it is "quite incorrect to see [the Pieter van Laer
case] as the real source of the present case".92Yet as a simple matter of history the
Pieter van Laer case was the trigger of the dispute, which was subsequently exacer-
bated when Germany applied the same principle to the Liechtenstein property in
general. That case,and subsequent developments set outin Liechtenstein's pleadings,
89
Ibid.
90 See GPO,paras.101-102.
91 GPO,para.72.
92
GPO,para.79. made it clear for the first time that Germanyregarded the Liechtenstein propertyas
coming within the scope of the reparationsregime. Whether those decisions marked
an actual change in Germany's position, or whether they applied earlier German
cases to a new situation, is irrelevant for present purposes. Oneither hypothesis, the
treatment of Liechtenstein assets as German actually occurred for the first time after
1990. It is not enough for Germany to assert that its position would have been the
same if the issue of the treatment of Liechtensteinproperty had arisenpior to 1980.
First of all, it is by no means clear thatthis is true:the matter was never tested, ashas
been shown in Chapter 1, and in fwther detail in Appendix 1. Indeed it was never
even envisaged as a possibility, eitherin the case-law or in the legal literature. But
even if it were to be accepted (for the sakeof argument)that the Pieter van Laer case
might have gonethe sameway had it arisen fordecisionby the Germancourtsbefore
1980,to assert this is to ignore the actual history of the matter. It may be that, in the
Right of Passage case, India would have blocked the transit of arms across its terri-
tory if an insurrection had broken out inthe enclaves in 1949.But that was not what
happened. For the purposes of a ratione temporis objection,the Court has to look at
the facts as they occurred, and not to speculateon alternativescenarios. Disputesbe-
tween Statesare historical events,not exercisesof the imagination.
3. Germany's attemptto avoid ameritshearing
by repeated conclusoryassertions
3.33 Finally, Germany makes a series of conclusory assertionson issues belonging prop-
erlyto themerits.
For exarnple,it assertsthat Germanynever changed itsposition after 1955.'~
Liechtenstein disagrees, has specifiedthe changes of position involved, and
has shown that they occurred afler 1980. That being so, whether there has
been such a changeofposition is a matter forthe merits.
93 GPO,para.77; sirnilarlyGPO,para85. Germany assertsthat "no ...legal situationhad ever been recognizedbe-
tween" Germanyand ~iechtenstein.~~Again, Liechtenstein disagrees.In its
view, until the 1990s the partieshad a common understanding thatLiech-
tensteinpropertywas notGermanpropertyandwas not coveredby therepa-
rations regime. If Germanycan show that Liechtensteinand Germany pro-
ceededon a different assurnptionprior to1995,that wouldbe relevantto the
merits, but the Germanargument amounts simply to a denial of Liechten-
stein'scaseandhasnothingto dowithjurisdictionrationetemporis.
Germany asserts that the issuesof the scopeof the reparationsregime and
the position of World War II neutrals "had run their full course prier to
1980".Yet again,Liechtenstein disagrees.These questions are still entirely
live ones, capable of affecting legal and other developmentsto this very
day.
3.34 For al1these reasons, Liechtensteinsubmits that the Court has jurisdiction to deal
with the disputewhich arose between Liechtenstein and Germany in the 1990s,and
that there is norelevant temporal limitationor exclusionon theCourt'sjurisdiction.
94
GPO,para.8 1. PARTTHREE
THE ADMISSIBILITYOFLIECHTENSTEIN'S CLAIMS AGAGERMANY CHAPTER4
GERMANY'SARGUMENT BASED ON LACK OF SUBSTANTIATION A. Introduction
Gennany devotes 25 pages of its Preliminary Objectionsto an attempt to demon-
strate that "Liechtenstein's claimsare not sufficiently s~bstantiated"~~I.n Liechten-
stein's views,this FourthPreliminary Objectionis manifestlymisconceivedanddoes
not deserve such a lengthy answer,al1the more so as the main part of this "objec-
tion"is devotedin fact to discussingthesubstanceofthe case.
Germany alleges that Liechtensteinhas not presented sufficientevidence as to the
object and scope of the disputeand that, therefore,it is not in a position to properly
argue its case. In substance, Germanycontends that Liechtensteinhas not demon-
strated any interference by Germany with Liechtensteinproperty96,that it has dis-
torted the German case-law concerningthe Settlement Conventionof 1952,~'that it
has improperlysubstantiatedits claims as far as it invokes diplomaticprotection,98
and that it has not established any violationof Liechtenstein'sneutrality and sover-
eignty.99According to Germany,al1these alleged weaknessesin Liechtenstein'scase
are the results of thechoiceof thewrong Stateas~efendant."'
The sumrnaryabove - based simply on the titles of the sub-sections of Chapter II,
Section 1,of Germany's Preliminary Objections - is sufficient to concludethat this
so-called "objection"is by no meanspreliminaryin essence:it shows that Germany
disputes the merito sf Liechtenstein'scase. At the sametime it does confm beyond
anydoubt thatthere existsadispute betweenLiechtensteinand ~erman~.'"
GPO, paras.115-150.
GPO,paras. 121-124.
GPO,paras. 125-130.
GPO,paras. 131-142.
GPO,paras. 143-149.
GPO,paras. 118-120.
See above Chapter 1.4.4 It is apparent from the very drafting of Germany's statements thatit has perfectly
well grasped the object and scope of the dispute and is thus in a situation to present
its own case - which indeed it does throughoutthat Sectionof its Preliminary Objec-
tion devoted to the fourth so-called "Preliminary Objection" (B). In consequence,
there can be no doubt that Liechtenstein's Applicationand Memorial do meet the re-
quirements of the Court's Statute (Article 40 (1)) and Rules (Article 38 (2)) (C).
Moreover, if it were true that Liechtenstein has not given sufficient factual or legal
evidence of its case, it is certainlynot a preliminary matter and it falls on Liechten-
stein to lay outits case atthe stageof themerits (D).
B. Germanyactuallyunderstandsthe object and
scope of thepresentdispute
4.5 Germanyalleges:
"Thepresent case ...is absolutelyuniquein the history of adjudicationin
that the Applicant refrains fiom providing almost al1of the relevant fac-
tua1data. Neither can Germanyguess what is really at stake,nor will the
Court be abI102o grasp the essence of this case, in particular its factual
dimension .
4.6 With respect to the violation of Liechtenstein'ssovereignty and neutrality, Germany
has no difficultyin graspingthe object of Liechtenstein'scase and adds:
"Liechtensteincontends ...that it...suffered direct damage through the
conduct of German authorities, primarily its courts. It claims that Ger-
many violated its sovereigntyas an independent thrd State as well as its
status ofneutrality duringthe SecondWorldwar".lo3
4.7 Such statements show without the shadow of a doubt that both the Application and
the additionalclarifications and developmentsin the Memorialhave been rightly un-
102 GPO,para. 117.
103
GPO,para. 143. derstood by Germany. Definitely, the inclusionof Liechtenstein'sassets under the
reparations scheme as a result of the decisions of the German courts, subsequently
endorsedby the Gerrnanauthorities,duringthe 1990s,is the cornerstone ofthe pre-
sent disputeand constitutes the(cornplex)internationallywrongfulactthat Liechten-
stein cornplainsof. It is thus the "very essence"of the present dispute,and Germany
perfectly understoodthis. Furthermore,the German courts had not previously dealt
with Liechtensteinassets:thatis not in dispute.
4.8 Moreover, Germany complainedof the insufficientsubstantiationof Liechtenstein's
allegationsmakingimpossibleanyattemptto "organizeits defence".Once again,the
drafting of the Preliminary Objectionsand their content demonstrate the contrary.
Germanyis not at al1in the "diresituation"'04 it blames Liechtensteinfor. The entire
Forth German Prelirninary Objectionconstitutes a discussion (albeit unconvincing)
of the meritsofLiechtenstein'sclaims.
4.9 The core of this Sectionof the PreliminaryObjectionsconsists ofGermany'sallega-
tions accordingto which the factsand the legal arguments brought to theCourtby
Liechtenstein are not foundedor amount only to a "purposefulinvention". This is
apparentin respectwith:
- the attributionto Germanyof the losses sustainedby Liechtensteinand its
nationals; 'O5
-
the realityandnatureofthese10sses;'~~
- the interpretationof thejurisprudenceof the German courtswhich initiated
Germany's changeofposition;'07
104 GPO,para. 116.
105 GPO,paras. 119-120.
106
GPO,paras. 138-142.
107 GPO,paras. 123and 125. - the conclusions to be drawn fi-omGermany's endorsementof this case-
law; 108
- the violation of Liechtenstein'sneutralityand sovereignty. log
4.10 The preliminary objections phase is, by no means, the proper occasion for a rebuttal
of these ill-founded arguments and Liechtenstein does not intent to present a re-
sponse to these allegations at this stage of the proceedings. However they certainly
prefigure the German argumenton the substanceof the case and show that Germany
was effectivelyin a position to developa defenceto Liechtenstein'ssubmissions,and
that it undertook to dothis by using the facts and legal statements containedin both
the Applicationof 30 May 2001 andthe Mernorialof 28 March 2002. Consequently,
it is to be acknowledged that Germany is certainly not in the "dire situation" it
claims.
4.11 Germanyis in fact seeking to slip over tothe merits stage of the case trying to estab-
lish the absence of its "changeof position". Time and again, Germany denies that it
changedits position by anymeans whatsoever.Thus, it states
"explicitly that the alleged 'changeof position of Germany' never oc-
curred and is neither based on or supported by any demonstrable
facts''l l0
4.12 This allegation,which is the very essence of Germany's argumentin its "Preliminary
Objections", is clearly an argument on the merits of the case, not a preliminarymat-
ter. It confirms not only that, contrary to Germany's First Preliminary Objection
("There exists no dispute between Liechtensteinand Gennany"), there is a real dis-
pute between Germany and Liechtenstein concerning the meaning and the conse-
108
GPO,paras. 126-128.
109 GPO,paras. 143-149. quences of the German tribunals'decisions and the interpretationof the facts as well
as the subsequent endorsement of these decisions by the German Government.
Moreover, this allegation is not of a preliminary nature; it pertains to the merits of
the case,not to its admissibility.
4.13 As ShabtaiRosenne explained:
"it is probable that when the factsand argumentsin support of the objec-
tion are substantially the sarne as the facts and arguments on which the
merits of the case depend, or when to decidethe objection would require
a decision on what, in the concrete case, are substantive aspects of the
merits,the plea is not anobjectionbut a defenseto themerits i.111
This holds true for virtually al1the "objections" raised by Germany, not only the
fourth one: in the present case, the Court could notmake a pronouncement on any of
them without prematurely taking a position on facts and argumentspertaining to the
merits of the case.
C. The Lichtenstein'sApplicationandMemorialmeetthe
requirementsof the Court's StatuteandRules
4.14 The fact that Germany grasps perfectly well the "very essence" of the dispute eom,
Liechtenstein's Applicationand Memorial constitutes strong evidence of their con-
fonnity with the requirements of the Court'sStatute and Rules. Article 40 (1) of the
Statute ofthe Court provides:
"Cases arebroughtbefore the Court, as the casemay beyeitherby the no-
tification of the special agreementor by a written application addressed
to the Registrar. In either case the subject of the dispute and the parties
shallbe indicated".
1IO
GPO,para.32.
111 S. Rosenne, TheLaw andPractice of the InternationalCourt,1920-1996,3rded., Nijhoff, The Hague,
1997,Vol. II, p. 915. Article 38 (2) of the Rules of the Court furtherdetails these requirementswith regard
to the Application:
"The application shall specify as far as possible the legal grounds upon
which the jurisdiction of the Court is said to be based; it shall also spec-
iQ the precise nature of the claim, together with a succinct statement of
the facts and groundson which theclaimis based".
4.15 Germany has correctly explained the meaning and scope of these requirements.l12
These provisions do not require a "complete" statement of facts and grounds, but
only a "succinct" one.'13In theNorthern Cameroonscase,the Court decided
"that whilst under Article 40 of its Statute the subject of a dispute
brought before the Court shallbe indicated,Article 32 (2) of the Rules of
Court [presentlyArticle 38 (2)] requiresthe Applicant 'as faras possible'
to do certain things. These words apply not only to specifyingthe provi-
sion on which the Applicant foundsthe jurisdiction ofthe Court,but also
to stating the precise nature of the claim and giving a succinct statement
of thefacts andgrounds on whichthe claim is ba~ed"."~
4.16 This is precisely what the Application of 30 May 2001 does in the present case. It
contains "a succinct statement of the facts and grounds on which the claim is based"
and provides an overviewof the factual and legal issues of the case which is to be ar-
gued and developedin the course of the proceedings. Liechtensteinhas clearly indi-
cated the underlying grounds,i.e. the change of position of Germany by a series of
judicial decisions, subsequent conduct, and diplomatic e~chan~es,"~ including a
brief summaryof the relevant facts whichoccurredprior to the changeof position."6
Simultaneouslyit has set outthe main legal groundson which its claimsare based.
112
GPO, para. 117.
113 See Land and MaritimeBoundaly between Cameroon and Nigeria, Prelirninary Objections, 11June
1998,I.C.J. Reports 1998,p. 318,para. 98.
114
Northem Cameroonscase, PrelirninaryObjections,I.C.J.Reports 1963,p. 28 (emphasisadded).
115 Application,paras. 17-20.
116 Application, paras. 4-16.4.17 As for the Memorial of 28March 2002,it does "containa statementof the relevant
facts, a statementof law, andthe submissions"as requiredin Article 49 of theRules
of Court.It clearlymeets therequirements enunciatedby the PermanentCourt ofIn-
ternationalJustice in thePhosphates in Morocco case when it statedthat it was nec-
essary
"thatthe explanationsfurnishedin the courseof the written and oralpro-
ceedings enable it to form a sufficientlyclear idea of the nature of the
claim ....17
4.18 In its Memorial, Liechtensteinhas detailedits presentation of the decisions of the
German courts and tribunals concerningthe Pieter van Laer case,"' the statements
of the Municipalityof ~olo~ne''~and ofthe Federal~e~ub1ic.l~~ Al1these explana-
tions sustainits claims.Furthermore, very detailed legal arguments have been made
in theMemorial -a fact whichhasbeen acknowledgedby ~erman~,'~~ more specifi-
callyon theviolationsof internationallawconstitutedby the Germanconduct.
4.19 Of course, it is Germany'sright to challenge Liechtenstein'sviews both concerning
the facts and the law at the stage of the merits and, as shown above (paras. 4.11 -
4.12), ths is preciselywhat Germanydoes in its PreliminaryObjections, morepar-
ticularlyin Section 1 of Chapter IIof Part III.However,the mere fact that Gennany
is in a position todo so, sufficesto show that Liechtenstein's Application andMemo-
rial complywith therequirementsof Article 40of the Statuteand Articles 38 (2) and
49 (1) of the Rules of the Court,anddeprivesthe fourth GermanPreliminaryObjec-
tion of anyjustification.
117
Phosphates inMorocco, 1938PCIJ, Ser.AB, No. 74,p. 21.
118 Memorial,paras. 3.17-3.30.
119
Memorial,paras. 3.31-3.36.
120 Memorial,paras. 3.37-3.58.
121 GPO,para. 116.4.20 One more specificpoint mustbe dealt with. Germanyalleges that Liechtensteinfails
to indicate the identity of the victims and assets affected by its allegedly wrongful
a~ts'~~ and concludes that "Liechtenstein has failed to demonstrate thatthe right to
diplomaticprotection which it invokes does in fact e~ist".'~~ This German argument
is factuallyerroneous and legallymisleading.
4.21 It is not true that Liechtenstein failed to indicatethe name of the victims: it has pro-
vided the Court and Germany with a list of the families affected by the confiscation
measures of 1945 -this list appearsin Annex 8 to the Memorial and is commentedin
the Memorial itself, as acknowledgedby ~erman~.'~~ Moreover, as explained in the
~emorial,'~~the main victims are the Reigning Prince of Liechtenstein andhis fam-
ily and Germany itself acknowledgesthat, as far as he is concemed, it has sufficient
informationin orderto present its case:
"In any event, to date, Germany hasno clues who, apartfrom the ruling
Prince himselJ;in 1995 believed to have property claims against the
Czech Republic which, allegedly, were broughtto extinction by the ju-
risprudence of the Germancourts i.126
4.22 Liechtensteincertainly accepts thatits case is, partly, based on diplomaticprotection:
as a consequence of Germany'snew position (initially on the occasion of the case of
the Pieter vanLaer painting) al1the owners of the property confiscated in 1945are
affectedby the Germany's wrongful act. However, it must be firmly recalled that the
present case cannot be seen as exclusivelya diplomaticprotection case. As a conse-
quence of its new position, Germany has violated the rights of Liechtenstein itself
under internationallaw.
122 GPO,paras. 132-142.
123 GPO,paras. 132-142.
124
GPO, para. 133.
125 See, e.g., Memorial,paras. 1.20-1.21.
126
GPO, para. 135(emphasisadded).4.23 As is made apparent by the Submissionsin the Memorial, the Court is requested "to
adjudge and declare that: (a) by its conductwith respect to Liechtenstein (...),Ger-
many has failed to respect the sovereigntyand neutrality of Liechtenstein.. .".127The
declaration by the Court that Germany's conduct entails its responsibility vis-à-vis
Liechtenstein itself is a prerequisite to anypronouncementon its responsibilitybased
on diplomatic protection. The obligation of Germany to compensatethe losses sus-
tained by Liechtenstein's nationals stemsÇom the inclusion of the Liechtenstein as-
setsin the reparations regimeunder its breach of theneutrality and sovereigntyof the
Principality.
4.24 Moreover, what is required from the Court as to the responsibilityof Germanyin the
Memorial of Liechtenstein is,in a first stage of the proceedings, purely a declaration
that Germany hasviolatedthe rights of Liechtensteinand its nationals and that:
"(c)consequently, Germany has incurred international legal responsibil-
ity and is bound to provide appropriateassurances and guarantees of
non-repetition, and to make appropriate reparation to Liechtenstein
II128
forthe damage andprejudice suffered .
4.25 As is made very clear in paragraph 2 of Liechtenstein'sSubmissions, the issue of
compensationwill be the object ofthe secondphase of theproceedings:
"Liechtenstein further requests that the amount of compensation should,
in the absence of agreement between the parties, be assessed and deter-
mined by the Courtin a separatephase of theproceedings . i129
4.26 Such a request is far from being unusual beforeinternationalcourts and tribunals,in-
cludingthe International Court. It has been formulated, for example,in the following
cases:
127 GPO, Submission 1(a).
128 Mernorial,p. 187, Submissions,para. 1(c).
129
Mernorial,p. 187. - Military and Paramilitary Activities inand against~icaragua;'~~
- Oil~latforms;'~~
- Gabëikovo-Nagymaros~roject;'~'and
-
Land andMaritimeBoundarybetweenCameroonandNigeria.13'
In none of these cases, has the Court objected to such a request and it has expressly
granted it in al1the cases wheretheprocedure reachedthephase of the merits.
4.27 Thus, in Nicaragua, the Court, after having establishedthe legal obligation of the
United States to pay compensation134 granted the request of Nicaragua and decided
"thatthe form and arnountof such reparation, failing agreementbetween the Parties,
will be settled by the Court, and reserves for this purpose the subsequent procedure
in the case".135 Moreover,in the motives of itsJudgment,the Court considered
"appropriate the request of Nicaragua for the nature and amount of the
reparation due to it to be determined in a subsequent phase of the pro-
ceedings. ...The opportunity should be afforded Nicaragua to demon-
strate and prove exactly what injury was suffered as a result of each act
of the United States which the Court has found contrary to international
law. ...It goes without sayinghowever, that in the phase of the proceed-
ings devoted to reparation, neitherparty may cal1into question such find-
ingsin the presentjudgment ashave become resjudicata I.136
Liechtensteinaccepts that the samewill holdtrue in thepresent case.
130 SeeMerits,27 June 1986,I.C.J.Reports 1986,p. 20,para. 15.
131
SeePreliminaïy Objection,12December 1996,I.C.J. Reports1996,p. 807,para. 9 (Application)and
10 (Memorial) or Order, 10 March 1998, Counter-Claim,pp. 191-192,para. 1 (Application) and 2
(Memorial).
132 See Judgment, 25 September 1997,I.C.J.Reports 1997,pp. 15-17,para. 13 (Subrnissionsin the Me-
morials ofboth, Hungary and Slovakia),para. 14(Subrnissionin the oralpleadings of Slovakia).
133 See Preliminaïy Objections,11June 1998,I.C.J. Reports1998,p. 282,para. 16-17(Application)and
p. 284,para. 18(Memorial).
134
Operativeparagraphs 13and 14of the Judgment.
135 Operativepara. 15of the Judgment, adoptedby 14votes to one, Merits, 27 June 1986,I.C.J. Reports
1986,p. 149.
136 Ibid.,pp. 142-143,para. 284. mit Germanyto answer these argumentswhich, alone, are relevant at this stage of the
proceedings - and Germany is prematurely attempting to do so. Thus both Liechten-
stein's Application and its Memorial are sufficiently substantiated and meet the re-
quirementsof Article 40 (1) of the Statute and Articles 38 (2) and 49 (1) of the Rules
of Court.
D. Lack of sufficientevidenceis not a preliminary matter
4.32 The claims made by Germany in this respect cannot be reconciled with the usual
rules of evidencebefore international tribunals as they are embodied in the Rules of
the International Court.
4.33 Al1the writers who have discussed this matter concur in thinking that the burden of
proof falls on the party which alleges a fact. According to D.W. Sandifer in his well-
known book, EvidenceBeforeInternational Tribunals,
"The broad basic rule of burden of proof adopted, in general, by interna-
tional tribunals resembles the civil law rule and may be simply stated:
That the burden of proof rests upon him who asserts the affirmative of a
proposition whiII139 not substantiatedwill result in a decision adverse to
his contention .
Similarly,according to Witenberg:
"En d'autrestermes, le grand principe sera d'imposer à celui mêmequi a
avancélefait, la charge de lapreuve" ("In other terms, the main principle
consists in imposing the burden of proof on the one who alleges the
fact)".140
4.34 This has been the clear position of the I.C.J.in the case concerning Militay and Pa-
ramilitay Activitiesin and against Nicaragua:
139 Foundation Press, Chicago,1939,pp. 92-93.
140 J.-C.Witenberg, "Onusprobandidevantles juridictionsrbitrales",RevugénéradleDroitinter- "Ultimately ...however,it is the litigant seekingto establish a factwho
bears the burden of proving it; and in cases where evidencemay not be
forthcoming,a submissionmay in thejudgmentbe rejected as unproved,
but is not to be ruled out asinadmissiblein limineon the basis of an an-
ticipated lackofproof'.14'
4.35 In its Judgmentof 11 June 1998on the Preliminary Objectionsin the caseconcern-
ing theLand and MaritimeBoundarybetweenCameroonand Nigeria, the Courten-
dorsed this statementandrecalledthat "[ilt is the applicantwhich must bearthe con-
sequences of an application that givesan inadequate rendering of the facts and
groundson which the claim isba~ed".'~A ~gain,in its Judgmentof 10October2002,
the Court rejected the Parties claims relating tothe responsibility of, respectively
CarneroonandNigeria,based onfactsnotsufficientlyprovenby the other art^.'^^
4.36 This is in keeping withArticle53 (1) of the Statuteaccordingto which:
"Wheneverone oftheparties doesnot appearbefore the Court,orfails to
defend its case, the otherparty may cal1upon the Court to decide infa-
vourof its claim".
It goes without sayingthat by "decidingin favour" of the failing party the Court is
calleduponto pass ajudgment onthe merits,while the expression"failsto defendits
case" can be transposed, mutatis mutandis,to a situation where a State defends it
case but does not substantiateit properly.In such a case, it is upon the Court to de-
cide in favour of the other party on the points which have not been substantiatedto
its satisfaction.But this must be done at the merits stage, not as amatterof admissi-
bility.
nationalpublic, 1951,p. 323.
141 I.C.J.Reports 1984,p. 437, para. 101.
142 LandandMaritime BoundaryBetweenCameroonandNigeria,Preliminary Objections, 11June 1998,
I.C.J.Reports 1998,p. 319, para. 101.
143 Case concerningthe Landand Maritime Boundary BetweeCameroonandNigeria,paras. 321- 324.4.37 It is al1the more logicaland self-evident that"Article38, paragraph 2 [of the Rules
of Court], does ...not preclude later additions to the statement of the facts and
groundsonwhich a claimis ba~ed".'~A ~nd, similarly,Article49 imposeson theAp-
plicant the obligationto state the relevant facts and law in the Memorial (paragraph
1) and authorizesit to completeits casein the Reply (paragraph3), and, toa limited
extent(seeArticles56and 60)duringthehearings.
4.38 The onlylimiton the freedomofthe Applicant to present newfactsandlegalconsid-
erationsuntilthe end oftheprocedings
"is 'thatthe result is not to transformthe dispute broughtbefore the Court
in anotherdisputewhichis differentin character' (Militaly and Paramili-
taly Activities in and against Nicaragua (Nicaraguav. united States of
America), JurisdictionandAdmissibility,Judgrnent,1C.J.Reports 1984,
p. 427, para. 80)".'~~
But Germanydoesnot allegethat Liechtensteinhas done so in the present case.
4.39 It thereforemust be concluded that:
(0 Liechtensteinhasproperly substantiatedits claims inlawandin fact;
The substantiationof the Application and the Memorial meet the require-
(ii)
ments of Articles 38and49 of theRules of Court;
(iii) In the guiseof challenging theadmissibilityof Liechtenstein'sclaims, Ger-
many,in fact,discusses themonthe merits;
144
Land andMaritimeBoundary between Cameroon and Nigeria,PreliminaryObjections, 11June 1998,
I.C.J. Reports 1998,p. 318,para.98.
145 Land and Maritime Boundary betweenCameroonandNigeria,PreliminaryObjections,11June 1998,
I.C.J. Reports 1998, pp. 318-319, para.99; see also, e.g., Société Commerciale de Be,939ue1
PCIJ, SerPLIB,No. 78,p. 173 orInterhandelcase,21November 1959,I.C.J.Reports 1959,p.21.(iv) This discussion shows that Gerrnany has well grasped the substance of
Liechtenstein's argument,even if it does not answerit convincingly;
(v) Such a discussion belongs to the merits of the case, not to its admissibility;
(vi) It is only at the end of the proceedings that the Court will be in a position
to evaluate the evidencesubmitted by both Parties; and
(vii) Each Party takes responsibility for substantiating its own claims. CHAPTER5
GERMANY'SARGUMENT RELATINGTO THE ABSENCEOFTHE
CZECHREPUBLICFROMTHE PRESENTPROCEEDINGS A. Introduction
5.1 In its Fifth Prelirninary Objection Germanychallengesthe admissibilityof the pre-
sent proceedingsdue to the "so-called indispensablethird party In its view,
the successorStatesof Czechoslovalua,inparticularthe Czech Republic, which have
not consentedto thejurisdictionof the Court, areindispensablepartiesto thepresent
case. Allegedly,the Court couldnot decideon the responsibilityof Germanybut by
addressingthe issues of, first,the existencevel non of anyreparations claimbetween
Germanyandthe Czech Republic,andsecond,the lawhlness of theBeneSDecrees.
Germany has elaborated on the meaning of the "so-calledindispensablethird party
rule" by reference to well-known extracts of Judgments delivered by this
Court-Liechtensteindoesnot disagree withthispresentationas far as it goes;but it is
neverthelessvery partial. Thereforeit deems it necessaryto make clearer the exact
scope of the said rule (B). However, evenif Germany'sargument concerningthe
content of the indispensablethird party rule is acceptable in substance,the conse-
quencesit draws fiom these findingsare erroneous. Neither Czechoslovakianor any
of its successorStatesareanindispensablethirdparty to theseproceedings(C).
B. The "indispensablethird partyrule"
5.3 The GermanPreliminaryObjectionsdevotemuch effortto clarifying,once againbe-
forethis Court,the regimeof the "indispensablethirdpartyrule"resultingfromthe
"well-establishedprinciple of internationallaw embodied in the Court's
Statute,namely, thatthe Courtcan only exercisejurisdiction over a State
with its consent .147
146 GPO, para.151.
147
Monetav GoldRemovedfromRomein1943, 15 June1954,I.C.J.Reports1954,p.32.5.4 On the basis of the Court's judgrnents in the Monetary ~old,'~~CertainPhosphate
Lands in aur ru' a^nd East ~imor'~'cases which it cites at length, the Defendant
Statereachesthe following conclusion:
"Thejurisprudence of the Court conceming the indispensability of third
parties is crystal clear:If the legal interests of a third State constitutethe
'very subject-matter'of a disputebrought tothe Court and the third State
is absent fiom the proceedings,the Court cannot exercisejurisdiction on
the matter. Legal interestsof a third Statedo constitutethe very subject-
matter of a dispute if the Court cannot decide on the claims before it
without prior determination as to rights or obligations of the third
tat te".'^'
Liechtenstein agreeswith this conclusion which reflectsthe content of the "Monetary
Goldprinciple".
5.5 However, this principle has two different aspects,and Germany deliberatelyomits to
take into account the other aspect of the "indispensable third party rule", or of the
rule of "consensualjurisdiction". In effect,the findings of the Court in the Monetary
Gold removedfrom Romein 1943 case also imply that the Court is not barredTom
delivering ajudgrnent for the sole reason that a third and absent State might be "af-
fected" by a decision. As the Court put it in the ContinentalShelf (Libya/ Malta)
case:
"In the absence in the Court'sprocedures of any system of compulsory
intervention,whereby a thrd Statecouldbe citedby the Court to come in
as aparty, it must be opento the Court, indeedits duty, to givethe fullest
decision it may in the circumstancesof each case, unless of course, as in
the case of theMonetary GoldRemovedfiom Rome in 1943,the legal in-
terest of the third State 'wouldnot only be affected by a decision, but
148
Monetary GoldRemovedfiom Rome in 1943, 15June 1954,I.C.J. Repor1954, p.19.
149 CertainPhosphate Landsin Nauru (Nauruv. Australia),PreliminaryObjectio26,June 1992,I.C.J.
Reports1992, p.240.
150 East Timor (Portugalv. Australi30June 1995,I.C.J. Report1995,p.90.
151
GPO,para. 166. would formthe very subject-matterof a decision'(1 C.J:Reports 1954, p.
32),whichis not the case here I.52
This is also the meaning of the Court'sstatementin its Judgment concerningNicara-
gua's Application to intervenein the Case concerning the Land, IslandandMaritime
Frontier Dispute:
"Thus,the Court'sfinding [inthe Monetary GoldRemovedfrom Romein
1943case] was that, while the presence in the Statute of Article 62 might
impliedly authorize continuance of the proceedings in the absence of a
State whose 'interestsof a legal nature' mightbe 'affected',this did not
justify continuance of proceedings in the absence of a Statewhose inter-
national responsibility would be the 'very subject-matter of the deci-
'53
5.6 This doctrineis alsoreflectedin the Court's Judgmentin the Nauru case. TheAustra-
lian objection regarding the absence of the United Kingdom and New Zealand, the
two other States parties to the Trusteeship Agreement, in the proceedings was re-
jected by the Court since the interests of the United Kingdom and of New Zealand
did not form the "subject matter" of that dispute.Is4However, the Court pointed out
that those Stateswere fiee to refer to Article62 ofthe Statutein orderto intervene,if
an interest of a legal nature belongingto them might be affected by the decision of
the case. It continued:
"But the absence of such a request [tointervene] in no way precludesthe
Court fiom adjudicatingthe claimssubmittedto it, provided thatthe legal
interests of third States whichmay possibly be affected do not form the
very subject-matterof the decisionthat is applied for. Where the Court is
152 ContinentalShelf(Libyan Arab Jarnahiriyu/Malta),Italy'sApplicationto Intervene,21 March 1984,
I.C.J. Reports1984,p. 26,para.40.
153 Land, Island and Maritime Frontier Dispute (Eallvador/ Honduras),Judgmenton Nicaragua'sAp-
plication to Intervene, 13 September 1990,I.C.J. Reports 1990, pp. 115-116, para. 55 (emphasis
added).
154
CertainPhosphateLands in Nauru(Nauruv.Australia),PreliminaryObjections,26 June 1996,I.C.J.
Reports 1992,pp. 261-262,para. 55. so entitled to act,the interestsof the third Statewhich is not a pI155 to the
case areprotectedby Article 59 ofthe Statuteof the Court ... .
5.7 The underlying idea of this same principle is furthemore expressed in Article 32 of
the European Convention which constitutesthe basis for the jurisdiction of the Court
in the present case.Article 32 (1) of this Conventionexpresses clearlythis other as-
pect of the Monetary Goldmle:
"This Convention shall remain applicableas between the Parties thereto,
even though a third State, whether a Party to the Convention or not, has
an interestin the dispute".
5.8 Thisprovision simply reproducesthe text of Article 35156 of the Geneva GeneralAct
of Arbitration (Conventionon the Pacific Settlement of InternationalDisputes) of 26
September 1928'~~ and does not seem to have been the object of any discussiondur-
ing the travauxpréparatoiresof the European Convention. It seems apparent fiom
the very text of this provision that it aims at overcoming the possible objections
linked with the existence of third States interests in a given case. As acknowledged
by ProfessorJean Salmon:
"En ce qui concerne les intérêtd s'unetierce Puissance, ils sont en prin-
cipe écartéspar l'article32de la convention quiprévoitque la convention
demeure applicable entre les parties, encore qu'unÉtat tiers partie à la
convention ou non ait un intérêd tans le différend.Cependant, les intérêts
sontprotégés par lespossibilitésd'intervention I.158
5.9 However, it is Liechtenstein's submission thatit is not necessary to try to determine
whether it was the intent of the drafters of the Convention to depart from the first as-
155 Zbid.,p. 261,para.54.
156 Paragraph 1of Article 35 of the Geneva General Act reads as follows:"The present GeneralAct shall
be applicable as between the parties thereto, even though a third Power, whether a party to the Act or
not, has an interest in the dispute".
Geneva, 26 September 1928,93 Leagueof NationsTreatySeries,p. 343.
J. Salmon, "La Convention européennepour le règlement pacifiquedes différends",63 Revue général
de droitnternationalpublic 1959,p. 50;on the argumentbased on the possibilities of an intervention,
see alsobelow para..10. pect of theMonetary Goldprincipleas recalled abo~e:"~in any case, ths provision
clearlyreinforcesthis second aspectandmakesclear thatthe mere existenceof anin-
terest of a third State in a disputemight allow that State to intervenein the proceed-
ings in accordance with Article33 ofthe StrasbourgConvention,but it doesnotpre-
clude the Court from being seizedof and decidingthe case even in the absenceof a
request tointervenefromthe State whoseinterestsare or may be affectedby the de-
cisionof the Court.
5.10 This is confirrnedby the history of the predecessor of Article 33 of the Strasbourg
Conventionrelating to interventionof third Statesin a procedure before the Court,
that is Article 36 of the GenevaGeneral Act.The draft of Article35 of the Conven-
tion on the Pacific Settlementof InternationalDisputes adopted in first reading by
the Cornmitteeof Arbitration andSecurityobliged any third State being a party to
the Conventionto acceptthe invitationof the Partiestojoin the proceedings.'60 This
very unusual mechanismunderinternational law was changedfollowinganobserva-
tion by the Registrarof the Permanent Court, who pointed toits incompatibilitywith
the Rules of Court. TheDrafiArticle 35 was consequentlyamended anda new Arti-
cle 36 was introduced and aligned with Article62 of the Statute, simply givingany
third Statewhichconsiders itselfas havingan interestof a legalnature in the dispute
the option to intervene in the proceedings.161It thus clearly follows from those
travauxthat neitherArticle35 of the Geneva General Act norArticle 32 of theStras-
bourg Conventionnecessitatesthe participationof athird Statehaving an interestin
the disputeandthat they donot precludethe Court frombeing seizedof that dispute
anddecidingit, eveninthe absenceof that State.
5.11 Article 32 of theEuropean Convention,aswell as the consequencesof the Monetary
Gold rule resultingfrom the Court'scase-law - if properly analyzed - are entirelyap-
159 See aboveparas. 5.5and 5.6.
160
Journal officiel de la SodesNations,XI,No. 5,p. 618.
161 G. E. Gallus, "L'Acte général d'arbit",90Revue de droit internationalet de législation comparée
1930,pp.898-899. plicable to the present case. Indeed, it cannot be completely ruled out that the inter-
ests one of the successor States of Czechoslovakiaor both might be "affected"by a
decision of the Court in the present proceedings. However,they would certainlynot
be "affected" in the way Albania'sinterest was in the Monetary Goldproceedings or
Indonesia'sin the East Timorcase; they are by no means the "subject matter of the
dispute".Contrary to what Germanyhas suggested, it is not a necessary precondition
to determining the responsibilityof Germany for the Court to rule on any obligation
orresponsibilityor anyright owedor enjoyedby Czech Republic or Slovakia.
C. The CzechRepublic(or Slovakia)is not an indispensable
third partyin the presentcase
5.12 Germany argues that Czechoslovakia,or one of its successor States, is an indispen-
sable Party because, first, the Court would have to pass judgment on the lawfulness
of the CzechoslovakianBene8de~rees'~~a ,nd second,the Court is saidto have to de-
cide on the existence vel nonof any Czechoslovakor Czechright to reparations.'63
5.13 Concerningthe firstpoint, the Germanallegations arebasedon amost seriousdistor-
tion of Liechtenstein's caseand claim. Contrary to the German assessment, a prior
decision regarding the lawfulness or the unlawfulness of the Czechoslovakianmeas-
ures taken in 1945 is not necessary. Liechtensteindoes not seek to establish the in-
ternationalresponsibility of Germanyon the basis ofrecognitionof anintemationally
wrongful act cornmittedby a third State,i.e. Czechoslovakia.Any possible Czech or
Slovak responsibility is outside and independent of the present proceedings. Conse-
quently, it does not fonn the very "subjectmatter" of this case. The same holds true
with respect of the existence vel non of any entitlement to reparations of these two
States,the second argumentput fonvardby Germany.
162 GPO,paras. 168-173.
163 GPO,paras. 174-176. 1. The lawfulnessoftheBeneSdecreesis not at stake and
the Courtdoesnot needto decidethis point
5.14 According to the Preliminary Objections:
"The Czech Republic is an indispensable third party concemingthe ques-
tion of the lawfulness of the BeneSDecrees. The Court cannot decide on
any claims of unlawful recognition of foreign confiscationsor unjust en-
richment on the part of Germany without passing judII164t on the
Czechoslovak seizuresof Liechtensteinproperty .
This is, of course, right and Liechtenstein fully agrees, but this abstract general point
is of no relevance in the present case:the "unlawful recognitionof foreign confisca-
tions" is not at issue and Liechtenstein has not hinted at any such claim in its Appli-
cation, which relates exclusivelyto the inclusion, by Germany, of Liechtenstein'sas-
setsin the reparations regime.
5.15 Germany again distorts the Liechtenstein case, even though it is very well aware of
what is really at stake, i.e. the wrongful inclusion of the Liechtenstein property in the
reparations regime.'65
5.16 Moreover, Germany quotes some extracts of the Memorial in a very unusual manner,
disrupting the meaning of the words and the real intention of the authors. Thus, in
paragraph 170of its Preliminary Objections, Germany makes a partial quote of para-
graph 6.42166of the LiechtensteinMemorial:
"The picture changed completely when Germany contended, following
the Pieter-van-Laer case, that the Liechtenstein nationals' assets confis-
cated by Czechoslovakia had been rightly treated as German assets, as
definedby the reparations regime".16'
164 GPO, para. 167.
165 See above paras. 4.6-4.9 andpara. 1.7.
166
The Prelirninary Objectionsmistakenlyrefer to para. 6.41 of the Memorial(GPO, p. 105,Footnote2).
167 Memorial,para. 6.42. But it omits to quotethe end ofthis passage:
"In other words, Germanynow accepts that these properties were 'seized
for the purpose of reparation or restitution, or as a result of the state of
war',within the meaning of Article 3 (1) of the 1952 Settlement Conven-
tion (Annex 16)".16'
This second sentence is necessary to correctly appreciate the meaning of the first
one: Liechtenstein's claimsrelate exclusively to German international responsibility
for acts and omissions imputable to Germany alone. Indeed,as Germany has per-
fectly understood, Liechtenstein complains,not of the confiscation of its assets by
Czechoslovakia in 1945, but of the change of position of Germany conceming this
confiscation, a change of position vis-à-vis Liechtenstein, which firstoccurred with
the rulings of the German courtsin thePieter van Laer case. It is this conduct,which
resulted in the inclusion of the Liechtenstein assets in the reparations regime, which
amounts to a violation of several international obligations by which Germany was
bound towards Liechteinstein, e.g.respect of Liechtenstein'ssovereigntyand neutral-
ity and respect of Liechtenstein property as neutral property. These internationally
wrongful acts have nothing to do with the wrongfulness or rightfulness of the confis-
cationsas suchby Czechoslovakia.
5.18 Another example of Germany's distortionof Liechtenstein's case can be found in
paragraph 175ofthe PrelirninaryObjections:
"Even if, for the sake of argument, one accepted Liechtenstein'sconten-
tion that Germanyhad somehow changed its position regarding the law-
fulnessof the Bene8Decrees in the 1990s ...1.169
This is not at al1what Liechtensteinis clairning:the Applicant does not contendthat
Germany has changed its position conceming "the lawfulness of the Bene8Decrees
- --
168
Ibid.
169 GPO,para. 175. in the 1990s";it does contendthat Germany has changedits position with regard to
the inclusionof theconfiscatedassetsinto the reparations regime established particu-
larlyby the ParisAgreementof 1952.
5.19 This inclusion has nothing to dowith the lawfulness,vel non, of the Bene5Decrees:
whether they were lawful or not, the fact is that, now andin contrast withthe posi-
tion it constantlymaintained between 1945andthe 1990s,Germanytreats the Liech-
tenstein property as subject to the reparations regime.It is this German position -
which has only been adoptedin the second partof the 1990s - which constitutes the
comerstone of this case. The lawfulnessor wrongfulnessof the Bene8Decreeshas
never been an issue and has nothing to do withthe position Germany now takes.
Whether the confiscationwas lawful or not does not change the picture: the fact is
that Liechtenstein property cannot be included in the reparations regime and that
Germanynow contendsthat it is.
5.20 In consequence,a legal assessmentby the Court of the lawfulness of theBene5De-
Creesis not necessaryto the establishmentof the responsibilityof Germany. The re-
sponsibilityof Germany for itsinclusionof the Liechtensteinassetsin thereparations
regime is entirelyindependentof the lawfulnessof the Bene5Decrees, andof a prior
decisionover the possible responsibilityof Czechoslovakiaor of theCzech and Slo-
vak Republics: even supposingthe Bene5 Decrees were lawful - a fact on which
Liechtensteinhas not to take positionin the frameworkof the present proceedings.
Germany does not considerthe Liechtenstein propertyas part of the reparations re-
gime (the more so as there is no suggestion in theBene5Decrees themselvesat al1
that they are part of thereparations regime), or,if it does, it must assumethe conse-
quencesof sucha position.
5.21 Of course, the Bene5Decreeshave a factualroleto play in the present proceedings:
they constitute the factual presuppositionof the present dispute. Nevertheless, the
possible Czech responsibilityfor the damages causedby these Decrees to Liechten-
stein is not the subject of the present proceedings and does not constitutethe very "subjectmatter" of this disputebetweenGermany andLiechtenstein.Germany'sin-
ternational responsibilitydoes not arise because of any collaborationin an interna-
tionallywrongfulact byCzechoslovakiaor the CzechRepublic.Itsresponsibilityhas
to be determined accordingto the principle of "independentresponsibility"referred
to by the InternationalLaw Commissionin its Commentaryto the Articles on Re-
sponsibilityof Statesfor InternationallyWrongfulActs:
"Theprinciple that State responsibilityis specific to the State concerned
underlies the present Articles as a whole. It will be referred to as the
principle of independent responsibility.It is appropriateince each State
has its own ran eof internationalobligationsand its own correlative re-
~~onsibilities".O
5.22 Thepresentclaimis forthepresentpurposemore like the CorjuChannelcase17'than
any of the cases which Germany relieson. In that case, the United Kingdom sued
Albaniaforthe damages, includinglossesofhumanlife,causedby theminingoftwo
British destroyers in Albanian waters. The mines were laidby a third State,which
appeared later being Yugoslavia - a State which was not aparty to the dispute.Al-
though the United Kmgdomhad complainedof collusionbetween the Albanianand
the Yugoslavgovernments,the Court did nothave to decide, and didnot decide,on
the responsibilityofYugoslavia,but only onAlbanianresponsibility.TheCourt held
Albania responsible for the violation of its own obligation - to warn the United
Kingdomof thepresence of minesin its waters -,but not forits recognition of,or its
involvement in, an internationallywrongful act of a third State - the laying of the
mines.172Thus, the Albanian responsibilitywas independent, and primarily did not
derive fi-omthe wrongfulness of conduct of a third State even though, absent this
conduct,therewouldsimplyhave beenno case.
170
Report of the InternationalLawCommissionon the work of itsFifSr-thirdsession,OfJicialRecordsof
the GeneralAssembly,Fifty-sixthsession, Supplem.0(Al56/10),p. 150.
171 Co@ Channelcase,Merits,9 April 1949,I.C.J.Reports1949,p. 4.
172
Ibidp.,22.5.23 The context of the present case is very similar. Whether or not the seizure of the
Liechtenstein property by Czechoslovakia was an internationally wrongful act, the
fact is that Germany has changed its position regarding the inclusion of the confis-
cated assets in the reparations regime and this inclusion is precisely what Liechten-
stein cornplains of. By this inclusion, Germanywas in breach of its own international
obligations.Theresponsibility whose recognition by the Court Liechtenstein is seek-
ing is thus an "independent responsibility" (in the words of the ILC), and not a de-
rived one.
5.24 Contrary to the German allegations,173 the present case is not close to the Monetary
Gold removedfrom Rome in 1943 case or to the East Timor case where this Court
would have had to establish the responsibilityof an absent third State as a "necessary
prerequisite".'74It is not even comparable to the Nauru case where a problem of si-
multaneous responsibilitywas at stake which proved not to be of such a nature as to
exclude the admissibility of that case with respect of the "indispensablethird party
rule" because the responsibilityof the "affected" third States -New Zealand and the
United Kingdom - was not the very "subject matter" of the dispute.175In the present
case, the responsibility of Germany and the possible responsibility of Czechoslova-
kia, or of its successorStates, are completelydifferentissues,which are not boundby
any logical link. They are neither conditioned one by the other, nor simultaneous.
They are only different, based on different acts, committed at different times, with
differentconsequences.
5.25 Furthermore, in its Preliminary Objections, Germany alleges that the question con-
cerning the enrichment of Germany could not be decided upon without a prier de-
tennination of the lawfulness of the Czechoslovakian measures, i.e. the BeneSDe-
173 GPO,paras. 157-159.
174
East Timor (Portugalv.Australia),30 June 1995,I.C.J. Reports 1995,pp. 102and 104,paras.28 and
33; see alsoCertainPhosphate Lands inNauru(Nauru v.Australia),PrelirninaryObjections,26 June
1992,I.C.J.Reports 1992,pp. 261-262,para. 55.
175 Ibid. ~rees.'~~This argumenttoo is erroneous. The lawfulnessof the Bene2Decreesisjust
as indecisivefor the unjust enrichmentclaimas it is for any otherclaim presentedby
Liechtenstein.Indeed, as Liechtenstein has shownin its ~emorial,'~~the concept of
unjust enrichmentis independentof the existenceof a wrong cornrnittedby the en-
riched party (or by anyone else). Relief under this principle is granted as a remedy
for unfair consequencesresultingfiom an unjustifiedtransfer of property.It is thus a
generalprincipleoflaw based onequity, notonwrongfulness.
5.26 Moreover, the Bene2Decrees do not evenconstitute the act giving rise to the en-
richment and the correlative impoverishment of which Liechtenstein cornplains.
Germany,once again, misinterpretsthe LiechtensteinMemorial by allegingthat the
Czechoslovakdecreescaused the impoverishmentof Liechtenstein.As the Liechten-
stein Memorial has clearly explained, "Germany nowaccepts that these properties
were 'seizedfor the purpose of reparationor restitution, or as a result of the stateof
war',within the meaning of Article 3 (1) of the 1952 Settlement onv vent ion".'^^
Consequently, "[bly acknowledging that Liechtenstein'sassets are part of its debt
Germanyhas, therefore, enricheditself since its debt has been lessenedin the sarne
proportions".'79This would be true whether the Beneg Decrees were lawful or
unlawful: the fact is that Germany seeksto enrich itself by including Liechtenstein
property in the reparations regime. Withregard to the unjust enrichment claim,the
Bene2Decrees again constitute a mere factualbackground. The direct causationof
Germany'senrichmenthasto be foundin its own acts,i.e., the changeofpositionde-
scribedat lengthin the Memorial.As Liechtensteinhas highlighted:
"...the direct causationof Germany'senrichmentlies in its own behav-
iour and the confiscationof the assets in 1945 is a mere fact in tII180e-
spect,the qualificationofwhich aslegalornot doesnot matter .
176
GPO,para. 169.
177 Memorial,para. 6.8.
178 Memorial,para. 6.42.
179 Mernorial,para. 6.44.
180 Memorial,para. 6.47.5.27 Therefore,it appearsthat,withrespectto unjust enrichmenttoo, the circumstancesof
the present case are entirelydifferentfromthose of the Monetary Gold case. In that
case, the Court declined to admit the claims on the ground that a decision on the
rights of Italywould have requireda legal assessmentof the Albanianresponsibility
without the consent of ~lbania."' By contrat, in the present case and so far as the
unjustenrichmentclaimis concerned,the responsibilityof Czechoslovakia,orof one
of its successors, is entirelyirrelevant:the unlawfùl enrichment of Germany stems
fromits ownnew positionand hasnothing to do withthe Czechoslovak acts.
5.28 Al1these elements show thatthe Fifth GermanPreliminary Objection hasto be re-
jected as unfoundedin regardof the question of lawfulnessof the Bene8Decrees.A
legal assessmentof this questionis not a necessaryprerequisite for the decisionof
the Court in the presentcase. It is not thevery subjectmatter of the disputeand it is
not evenclearhow the Czech (or Slovak)interestscouldbe "affected"by the Court's
decisionin this respect.
2. The existenceof aCzechoslovakianrightto reparationshas
no relevancewith regardto theunjust enrichmentclaim
5.29 The secondGerman argumentputfonvardin supportof a "MonetaryGold situation"
in the present case concernsthe existencevel non of a Czechoslovak,or Czech or
Slovak,right to reparationsfiom Germany. According to Germany's allegations, the
mere existenceof thisright mustbe decidedbefore the Court couldpossiblyaddress
the unjust enrichmentclaim.Is2It is then apparentthat, accordingto the Germanar-
gumentitself, a decisionwould haveto be taken concerningtherights -not the obli-
gations as was the case in the Monetary Gold case - of an absent,third State.How-
181
Monetary GoldRemovedj-om Romein 1943, 15 June1954,I.C.JReports 1954,p.19.
182 GPO, para.167 (poin(2)). ever,Germanycontendsthat sucha situationwould equallyfa11underthe "Indispen-
sableThirdParty~ule"."~
5.30 In this respect, Liechtenstein maintainsthat there is no point in determiningwhether
the Court could, or not, pronounceon the rights of third States(even thoughit does
not clearlyseewhy it could not).In any case,the Applicantcannotsharethe view of
Germany that ..
"the Court could notdecide on any compensation due forunlawful sei-
zure of Liechtenstein propertyby Czechoslovakiawithout firstdetermin-
ing the legalrelationshipsbetween Germany anda third sovereignState,
17184
namelytheCzech Republic .
5.31 Once again, Germany deliberately misreads Liechtenstein's Application and its
elaborationin the Memorial, sothat the initial claim is interpreted as amere expro-
priation claim by Liechtenstein directed towardsthe wrong defendant. As already
sho~n,'~~ the present proceedings donot entai1the responsibility ofCzechoslovakia
or one of its successorStatesfor any wrongfulseizure of property.It concemsexclu-
sivelyGerman acts,i.e.the changeofpositionof Germanywith respect of theLiech-
tensteinproperty,now includedunderthe reparationsregimeby GermanyitselJ:
By doing so, Germanyitself assumes thatit owesreparationsto the CzechRepublic.
UndeniablyGermany applied Article3 (3) of Chapter Six of the SettlementConven-
tion to the Liechtenstein propertyin the Pieter van Laer case. This bears witness of
its convictionthat theCzechoslovakianmeasuresconcemingthe Liechtensteinassets
fell under the provisions of paragraph 1 of this same Article and were therefore
"measureswhichhave been ...carriedout with respect to Germanextemal assetsor
other property, seized for the purpose of reparation or restitution". The Cout has
nothingto decidein thisrespect.Sufficeit to take Germanyat its ownwords.
183 GPO,paras.174-175.
184
GPO,para.174.
185 See aboveparas.5.15-5.17.5.33 Any other position taken by Germanybefore the Court would be contrary to the gen-
eral pnnciple of international law known as allegans contraria non est audiend~s.'~~
As Cheng put it, this principle is
"yet another instance of the protectionwhich law accords to the faith and
confidence that aparty may reasonablyplace in another, which ...consti-
II187
tutes one ofthe most important aspectsof theprinciple of good faith. .
Decisions of international tribunals have recognized and applied this principle in a
particularlyconsistent way. In theEastern Greenland case,the Permanent Court held
that:
"Nonvay reaffirmed that she recognized the whole of Greenland as Dan-
ish; and thereby she has debarred herself f?om contestingDanish sover-
eigntyoverthe whole of ~reenland."'~~
Similarly, in the case concerning the Arbitral Award made by the King of Spain on
23December 1906between Honduras andNicaraguathis Court affirmed:
"In the judgment of the Court, Nicaragua, by express declaration and by
conduct, recognized the Award asvalid and it is nII189ger open to Nica-
ragua to challengethe validityof the Award .
Particularly close to the present proceedings is the case of the S.S. "Lisman"decided
by arbitration between the United States and the United ~in~dom.'~~The sole Arbi-
186
Bin Cheng, GeneralPrinciples of Law as applied by International Courts and Tribunals, Stevens,
London, 1953,pp. 141et seq.
187 Ibid., p. 144. See alsoR. Kolb, "Labonne foi en droit international public",31Revue belgede droit
international,1998-2,p. 685.
188 Legal StatusofEastern Greenland,5 April 1933,1933PCIJ, Ser.NB, No. 53,p. 68-9.
189
Arbitral Awardmadeby theKing of Spainon 23December1906, 18November 1960,I.C.J.Re-
ports 1960,pp. 192et seq.,p. 213.
190
UNRIAA,Vol. III,pp. 1767et.seq.,p. 1779. trator refused to consider an allegationof the Claimant which was in substance con-
trary to its previous contentionsin anotherproceeding:
"by the position he deliberately took in the British Prize Court, that the
seizureof the goods andthe detentionof the shipwere lawfùl, and that he
did not complainof them, but only of undue delay from the failure of the
Governmentto act promptly, claimant affinned what he now denies, and
thereby prevented himself fiom recovering there or here upon the claim
he now stands on, that these acts were unlawfùl, and constitute the basis
of his ~laim".'~'
The Iran-United StatesClaims Tribunal alsoconfinned this principlewhen it applied
the
"general mle of evidence that contradictory statements of an interested
party shouldbe construedagainstthat
If follows therefiom that Germany cannot reasonably defend the lawfulness of the
application of the Settlement Convention to the Liechtenstein property and, at the
same time, sustain the absence of any legal obligation of Germany to compensate
war damagesto Czechoslovakiaor its successorstates.However,the Court hasnot to
decidethatpoint either.
5.34 Whether Gennany owes reparations to the Czech Republic (and to Slovakia)has no
relevance in the present case.The fact is:
- that Germany assumesthatit owesreparations to those States;
- that it includes the Liechtensteinassetsin the reparations; and
191
Ibid., p. 1790.
192 Iran-United States Claims Tribunal,Award No. 73-67-3, 2 September 1983, Woodward-Clyde Con-
sultants v. The Governmentof theslamic Republic of Iran and the Atomic Energy Organization of
Iran, 3Iran-UnitedStateslaimsTribunal Reports239, 1983-Ilp.249. - that this inclusion has, in itself, a negative impact on Liechtenstein and its
citizens since, as shown in the ~emorial,'~~the mere fact of including the
Liechtenstein assets in thereparations regimedeprives them of any possibil-
ity to claim any compensation.
The Pieter van Laer case has been both the catalyst and a clear illustration of this
situation:the Germancourts have decided thatthe painting was subjectto the repara-
tions regime; as a consequenceof this inclusion,they deemed themselves incompe-
tent to decide on the case brought by the Prince of Liechtenstein. Whether or not
reparations aredueby Germany tothe Czech andSlovakRepublics is an entirelydif-
ferent matter which only concems the relations between them; the fact is that in its
relations with Liechtenstein Germany has appliedthis regime with al1the negative
consequences this application entails (impossibility to sue in a German court and,
now, to obtain compensation). With the endorsementof the findingsof the courtsby
the German Govemment, this now applies to al1the Liechtenstein assets confiscated
in 1945.
5.36 It followsthat Germany's allegationsconcerninga necessarydeterminationof "hypo-
thetical claims of reparations between the Czech~e~ublic"'~~ and itself are no better
established than its contention concerningthe [un]lawfùlnessof seizure of Liechten-
stein property: in both cases, the elements on which Germany bases its assertions
may have a factualincidence on the present case, but it is not for this Court to pass a
judgement onthem:
- the Liechtenstein assets were confiscatedby Czechoslovakia;this is a fact;
but, irrespective of whether this was lawfùl or not, Germany draws conclu-
sions fromthis fact andonly those consequencesarebeforethe Court;
193
Fora surnmary,see, e.g., Mernorial, para6..73.
194 GPO,para.175. - Germany has included the Liechtenstein assets in the reparations regime;
this too is a fact; but, again,whether or not Germany is liableto pay repara-
tions to Czechoslovakia or its successors is not the question before this
Court. This Court is only called upon to draw the legal consequencesof this
fact in relationsbetween Liechtensteinand Germany.
5.37 Germanyasks:
"If no reparations are due, why should Germanybe enriched by an al-
leged changeof position in 1995? ii.95
The answer is given by Germany itself itconsiders that it is liable for reparations
and, consequently, it has included the Liechtenstein assets in the reparations regime.
It is entirelyincompatible with the principle of good faith for Germany now to assert
the contrary in order to enable it to draw conclusionswhich are adverse to Liechten-
stein in this respect, and it is therefore estopped fiom doing so. This is however,
clearly an issue for the merits stage of the proceedings. The question of the use of
this property effectively to satisfythe claims of Czechoslovakiais not at issue in the
present case: whether or not Germany is liable for reparations to the Czech (or the
Slovak)Republic, Germanynow behaves as if it were so liable and the consequences
of this position (whether it is nght or not) are detrimental to Liechtenstein and its
citizens. However,this is alsoan issueof themerits only.
5.38 It follows fkomal1these arguments that no right or obligation of Czechoslovakiaor
any other third State forms the "very subject matter" of this case. Therefore, the
Monetary Gold principle is not applicable and the Court should determine the dis-
pute.'96The mere fact that a legal interest of a third State might be "affected" does
not changethe picture. In this situationthe third State is entirelyprotectedby Article
59 ofthe Statute ofthe Court:
195
Ibid.
196 Seeaboveparas. 5.6-5.9. "The decision of the Court hasno binding force except betweenthe par-
ties and in respect of that particularcase".
5.39 In conclusion,
(9 A decision on the lawfulness of the Czechoslovak BeneSDecrees is not a
prerequisite to a decision on the internationalresponsibility of Germany or
the unjust enrichment claim, and that question does not constitutethe very
subjectmatter of the dispute;
A decision on the existence vel non of the right of Czechoslovakia or the
(ii)
Czech or Slovak Republics to receivereparations from Germanyis not nec-
essary in orderto determinethe unjust enrichment claim;
Consequently, the Czech (or Slovak) Republic, as a successor State of
(iii)
Czechoslovakia,isnot an "IndispensableThirdParty";
No consent of a third State is needed forthe decision on the present dispute.
(iv)
The present dispute can be decided in the absence of consent of ths third
State.
5.40 For al1these reasons,the Principalityof Liechtensteinrequeststhe Courtto reject the
Fifth PreliminaryObjectionof Germany. CHAPTER6
GERMANY'SARGUMENT BASEDONTHELOCALREMEDIESRULE A. Introduction
6.1 In Part III, Section III of its Preliminary Objections, Germany argues thatLiechten-
stein's action is inadmissiblebecause it is pursued in the exerciseof diplomatic pro-
tection and Liechtenstein nationals have failed to exhaust localremedies. But, Ger-
many itself concedes that no exhaustion of local remedies in Germany was required
and, further, that no such local remedies were available. Forthis reason alone, Ger-
many's Sixth Preliminary Objection must be rejected. Nevertheless, for the sake of
completeness, Liechtenstein will demonstratein this section that the local remedies
rule was fùlly complied with to theextentthat it is applicable tothepresent case.
6.2 It will fùrtherbe explainedthat, insofar as the present claim is made in respect of in-
juries sufferedby the Stateof Liechtensteinitself,the rule of localremedies doesnot
~PP~Y.
B. TheLiechtenstein nationalshave,in effect,
compliedwiththe local remediesrule
6.3 In its Memorial, Germany discusses at length the problem of exhaustion of local
remedies, claimingthat Liechtensteinnationalshave failed to exhaust availablelocal
remedies, as follows fiom thewording of thetitle of Section111.l'~
6.4 Within that sectionitself, however, Germanymakes a statementwhich is entirelyin-
compatiblewith otherparts ofthe same section,namely
"that, although in principle the case must be classified as exerciseof dip-
lomatic protection, the requirement of the exhaustion of local remedies
doesnot apply.tt'98
197
GPO,paras. 181-208.
198 GPO,para. 194. This statement not only excludes any fùrther possibility of invoking the rule of
exhaustionof local remedies, but also totally obfuscates Germany'sdiscussion of the
exhaustionof local remediesin its Preliminary Objections,malung it difficult to dis-
cem whether or not Germany conceives Liechtenstein's clairnsas addressing direct
injury or asbeing one in exerciseof diplomaticprotection. In any case,this statement
that the requirement of the exhaustionof local remedies does not apply in itself pre-
cludes Germany from invoking a failureto exhaust local remedies as a means of de-
nying the adrnissibilityof Liechtenstein'sclaims.
6.5 Nevertheless, insofar as the rule on exhaustion of local remedies is applicableto the
present claim, there is no ground for denying the admissibility of the claim before
this Court. The rule of exhaustion of local remedies requires that before a State can
bring a claim against another State eitherby diplomatic means or before an intema-
tional tribunal, the individual on whose behalf the claims are brought must have re-
sorted to the national courts of the Defendant State. The idea behind this principle -
as Germany stated quite ~ightl~'~ ~is to allow the State to bnng its conduct towards
that individual into conformitywith whatisrequiredby internationallaw.
6.6 Germany quite correctly pointed out that, as far as the Pieter van Laer painting is
concerned:
"It is clear, therefore, that in the painting dispute local remedies, which
include also the application under the European Convention on Human
Rights,have indeed been exha~sted."~~~
Irrespective of whether or not the ECHR represents a form of local remedy the ex-
haustion of which is required, this statementof Germanyremoves any doubtthat this
condition has been fulfilled and that Germanyitself has recognized this fulfillment.
That there does not exist any other judicial means in Germany which could be re-
sortedto in order to appeal againstthe finaljudgrnent is confirmed also by the state-
199
GPO,para. 196.
zoo GPO,para. 190. ment in the judgrnent of the Federal Constitutional Court itself that its decision was
~na~~ealable.~~G 'ermanyitself assertedthat
"decisionsof the Federal Constitutional Court cannot be challenged any
more within the German legal stem".^'^
This legal consequence was confirmed in the proceedings before the ECHR in the
Prince Hans-AdamII of Liechtenstein case since Germany did not plead any point
concerning exhaustion of local remedies, even though Article 26 of the European
Convention makes the admissibility of any complaint dependent on this condition
having been fulfilled. The ECHR saw no need to deal with this matter when, in its
admissibility decision of 6 June 2000, it declared the complaint brought by the
Reigning Prince Hans-Adam II to be admissible.203 It can be inferred from this deci-
sion that, even in the view of the ECHR, the condition was met, so that one cannot
speak of the failure to exhaust the local remediesIn this regard, the title which Ger-
many has used for Section III is incorrectand misleading.
1. In the presentcase,the exhaustionof local remedies
is not required
6.7 To the extent that this case is one of diplomaticprotection to which the rule of the
exhaustion of local remedies applies, Germany's Mer statements conceming the
assets other than the Pieter van Laer painting are equally perplexing. On the one
hand, the title used for Section III suggest that local remedies have not been ex-
hausted by Liechtenstein nationals, which means that (in Germany's view) available
and efficient local judicial remedies still exist in Germany, of which Liechtenstein
nationals must take advantage. Germany's fiher reference to the absence of any
litigation by the other Liechtenstein nationals before German courts conceming their
201 Mernorial,Annex32.
202 GPO, para. 191.
203 ECHR,Prince Huns-Adam II of Liechtenstein against Gennany, ApplicationNo. 42527198,Decision
of 6 June 2000. assets seized under the Bene8 Decrees points in the same direction. On the other
hand, however, it clearly denies the existenceof such local legalremedies:
"Notwithstanding the inference already drawn that the requirement of
exhaustion of local remedies applies to the fats submitted to the Court
by Liechtenstein, Germanyhas great difficultiesin specifying what legal
remediesthe alleged victims shouldhave tal~en."~'~
6.8 Germany'sstatements regarding the lack of available legal remedies arethe more de-
cisive, as the burden lies upon Germany to prove the existence of legal remedies
which remain to be exhausted. In such a case, according to the arbitral award in the
Ambatielos case, the burden of proof is on the Defendant State to prove that there
still are effectiveremedies availablewhichhavenot been exhausted:
"In order to contend successfully that international proceedings are in-
admissible,the defendant State must prove the existence,in its system of
international law, of remedies which have not been used. The view ex-
pressed by writers and in judicial precedents, however, coincides in that
the existence of remedies which are obviously ineffective is held not to
be sufficient tojustify the applicationofthe nile."205
Thejudgment of this Court in the ELSI caseY2O as well as otherjudicial de ci si on^:^^
confm this view so that it is to be considered as generally accepted. In view of the
burden imposed on Germany to prove the existence of further local remedies, Ger-
many's assertionthat relevant local remedies arenon-existentbars it fiom any Mer
contention that Liechtenstein is precluded fiom presenting its claim because of lack
of exhaustion of local remedies.
6.9 In this context, it must be emphasised that, in its Preliminary Objections, Germany
contradicts itself since, on the one hand, it states that no German court would have
204 GPO,para. 191.
205
GPO,para. 197.
206 Case concemingElettronicaSiculaS.P.A.(ELSI),1C.J.Reports 1989,para.63.
207 So, for instance,Ambatielosclaim(1956), UNRUA,Vol. XII,pp. 83 etseq., p. 119. competence, while, on the other hand, it argues that no other case has been brought
before such a It is precisely because no German court would grantjurisdic-
tion and decide the case on the merits, as Germany itself asserts, that no other cases
were brought before German courts.
6.10 As there are no legal remedies available, there is no duty to exhaust local remedies
before Liechtenstein can exercise its right of diplomatic protection. This consequence
is in full conformitywith the limitations to the principle of the exhaustion of local
remedies, since there "is no need to exhaust local remedies when such remedies are
ineffectiveor the exerciseof exhaustingsuchremedies would be futile".209
6.1 1 This limitation on the principle that local remedies must be exhausted is generally
accepted, as is confirmed by a brief review of international judicial practice such as
Panevezys-Saldutiskis Railway caseY2'O the Arbitration under Article 181 of the
Treaty of ~euill~~~o ~r, before the ECHR, the case Akdivar v. ~urkey~'~ or the case
Englert v.~errnan~.~~A ~ccording to judicial decisions?l4 legal doctrine,215and well
208 GPO,para 193.
209 E. M. Borchard, The Diplomatic Protection of Citizens Abroad, 1915, p. 821; Ambatielos Claim
(Greece v. UK), 6 March 1956, 3 United Nations Reports of International ArbitralAwards 119;De
Wilde,Ooms and Versyp, 18June 1971,ECHR, 14Yearbook of the European Convention onHuman
Rights 806;HarvardDraft Articles on State Responsibility,Art. 19(2), 55American Journalof Inter-
national Law, 1961,p,. 577; 1. Brownlie, Principles of Public InternationalLaw, 5" ed., 1998,pp.
499-500.
210 1939PCIJ, Ser.AIB,No. 76,pp. 4 etseq., p. 1.
211 Arbitration under Article 181 of the Treaty of Neuilly, reported in 28 American Journal of Interna-
tionalLaw, 1934,pp. 760 etseq., p. 789.
212
Akdivar and others v. Turkey,16September1996,CaseNo. 991199516051693 p,ara. 67.
213
Englert v. Germany,25 August 1987,CaseNo. 9/1986/107/155,para. 32.
214 In his third report onDiplomaticProtection,UN Doc.AlCN.41523,p. 7, SpecialRapporteurJ. Dugard
quotes in support of this view:Robert E. Brown claim, 6 UnitedNations Reports of InternationalAr-
bitral Awards,1923,pp. 120et seq., p. 129;Finnish Ships Arbitration, 3 UnitedNations Reportsof
International Arbitral Awards,1934,pp. 1479 et seq., p. 1497,Panevezys-Saldutiskis Railwaycase,
1939PCIJ, Ser. NB, No. 76,pp. 4 et seq., p. 19;Ambatielos claim, 12 UnitedNations Reportsof In-
ternational Arbitral Awards,956,pp. 83 et seq., pp. 122-123;Interhandel case, 21 November 1959,
I.C.J. Reports 1959,pp.27-29.
Dugard in his third report (supranote 214, at p. 14)refers to E. M. Borchard, TheDiplomaticProtec-
tion of Citizens Abroad,1915,p. 823; R. Jennings and A. Watts (eds.), Oppenheim's International established State practice216there is no necessity to exhaust local remedies when
such remedies are ineffectiveor the exercise of exhausting such remedies would be
futile.
6.12 Futility in the contextof the obligationto exhaustionlocalremedies exists inparticu-
lar when, for instance, "thereis nojustice to e~haust".~'~ Germany itself admittedthe
non-existence of available local legal remediesby its assertion that it had "great dif-
ficultiesin specikng what legal remedies the alleged victims should havetaken".*18
It can be deduced from this assertion that Germanydoes not provide for any further
available judicial means to redress the unlawful situation produced by its conduct.
This statement also reveals that it is not because of ignorance or incorrect legal ad-
vice, but because of the lack of local remedies in Germany, that Liechtenstein na-
tional~cannot exhaust localremedies.
6.13 Germany alsojustifies the non-existenceof fürther availablemeasures on the lack of
cornpetence of German courts to rule on ownership of real estate situated outside
Germany. However,the Germanargument that "onlythe localjudiciary is competent
to rule on issues connected withthe ownershipof real estateW2li9 s not relevant in the
present case. The decisions of German courts, as well as subsequent statements of
German officials, in which the German conduct complainedof is manifested, did not
Law, 9" ed., 1992,p. 525;1.Brownlie,Principles of Public InternationalLaw, 5' ed., 1998,p. 500;
C. F. Amerasinghe, Local Remedies inInternationalLaw, 1990,pp. 197 et seq.; C. F.Amerasinghe,
"Whitherthe Local Remedies Rule?",1990,5 I.C.S.I.D.Review,pp. 292 etseq., p. 306;E.Jiménezde
Aréchaga, "Internationalesponsibility",in M. Sarensen (ed.), Manual of Public InternationalLaw,
1968,pp. 531 et seq., pp. 587-588; Verzijl,in 46Annuairede l'Institutde Droit International,1956,p.
266; A. Verdross and B. Simma, Universelles Volkerrecht:TheorieundPraxis, 31~ed., 1984,p. 883;
C.H.P. Law, TheLocal RemediesRule inInternationalLaw,1961,p. 69; G. Schwarzenberger,Inter-
national Law,31ded., 1957,Vol. 1,p. 608.
216 Third Restatement of the Law of the Foreign Relations Law of theUnited States, 1989,Part II, para.
713, cmt.(f) at p. 219; C. Warbrick, "Protection of NationalsAbroad: Current Legal Problems and
codifications of the local remedies rule", 37 Internat&onComparativ Law Quarterly 1988, pp.
1002 et seq., p. 1008.F.V. Garcia Arnador,Sixthreport, Yearbook of the InternationalLaw Comrnis-
sion 1961,Vol. II,p. 48, UN Doc.A/CN.4/134and Add. 1,Articles 18(2) and 3 (2).
Third report on DiplornaticProtection,supranote 214,atp. 13.
GPO, para. 191.
GPO, para. 193. deny Germanjurisdiction on the basis ofArticle 23 of the GermanCode of civilpro-
cedure, which refers to the local judiciary. This conduct denied the competence of
German courts by reference to Article 3 of Chapter Six of the Settlement Conven-
tion. It is thedenial of Germanjurisdiction on this ground that prompted Liechten-
stein to apply tothis Court. In any event,in the present case,Article 23 would not be
sufficient to deny Germanjurisdiction, sinceproperty other than imrnovableproperty
is similarlyaffectedby the Germanposition.
6.14 Even if there were any local remedies available, anyrecourse to them by Liechten-
stein nationals would be futile, since no Liechtenstein national who applied to a
German court would obtain a decision different fiom that of the Federal Constitu-
tional Court in the Pieter van Laer case. The latter decision not only excluded the
possibility of any further relief by German courts in the Pieter van Laer case itself,
but has provided a binding precedent for any otherproceedings requiring a decision
by any German court relating to Liechtensteinproperty seized under the BeneSDe-
Crees.
6.15 The rule that there is no obligation to resort todomesticremedies if a different deci-
sion could not be expected has met with ovenvhelming recognition in international
judicial practice, as well as ininternationalauth~rities.~~A ~ccordingly,
"it is not necessary again to resort to municipal courts if the results must
be a repetition of a decisionalreadygiven".22'
6.16 In its Preliminary Objections, Germanyitself appliedthis rule to this case:
"It is true that if a dispute concerningthe land owned forrnerlyownedby
Liechtensteincitizens ever camebefore a German court that courtwould
have to decline jurisdiction to rule onthe merits ofthe case."222
220 Third report on Diplornatic Protection,UN Doc. AiCN.41523,p. 16.
221 Panevezys-SaldutiskisRailway case, 1939PCIJ,Ser.AIB,No. 76,pp. 4 etseq., p. 18.
222 GPO,para. 129.6.17 This assertionconvincinglyproves that any German court wouldfollowthe decision
of the FederalConstitutional Court, withthe result that anyfûrtherattemptby Liech-
tenstein citizensto obtain redressin a German court wouldbe bound to fail. Under
such circumstances,any resort to Germancourtsmust bejudged to be futile andun-
reasonable, sothat there canbe no obligation forindividualcitizensto resort toGer-
man courtsbefore Liechtenstein couldespousethese claims on their behalf. The de-
cision of the Federal ConstitutionalCourtnot only excludedthe grantingof any fur-
ther relief by Germany, but precluded anyother conclusion in proceedings before
any Germancourt on the statusofLiechtensteinproperty seizedunderthe BeneHDe-
Crees.
6.18 For al1these reasons, a failureto exhaust localremediescan under no circumstances
be invokedby Germanyas abar to the admissibilityofLiechtenstein'sclaims.
2. Germany'sreferenceto local remediesin Czechoslovakia
6.19 Germanysurprisinglyfurthercontends
"that the Liechtenstein victimsof the Czechoslovakconfiscation policy
shouldhave contestedbefore the courtsof the formerCzechoslovakiathe
confiscationmeasures taken to their detriment.They shouldat least have
attempted to avert the losses whch Czechoslovakiainflicted upon them
by deprivingthem of their possessions. In fact, the Czechoslovakmeas-
ures were the proximate causeof the damagewhich constitutestheheart
of the present dispute. Liechtensteinitself confines itself to contending
that Germany brought into beinga second cause,a remote cause, for that
damage. 11223
223 GPO,para. 195. Although it agreesthat
"[tlhe requirement of the exhaustionof localremediesis designedto pro-
vide the alleged wrong-doingstate with an opportunityto make good any
incorrect action it mayhave taken"224
it neverthelessrequires Liechtensteincitizensto have resorted firsttojudicial devices
in former Czechoslovalua before Liechtenstein couldexercise diplomatic protection
against Germany.
6.20 The central point is a simple one. Lack of exhaustion of the Czechoslovakian or, af-
ter the demise of this State, the Czech andSlovak legalremedies can never serveas a
bar to a claim against Germany. It is Germany which is the only defendant party in
this dispute. The activities relevant for the present case are those which constitute
Germany'sposition taken in the 1990s.It must be recalled that it was Germany that
declared Liechtenstein property to be among the assets subject to reparation meas-
ures. It was Germany that declared Liechtensteinproperty to be German property
againstwhich reparation measures withinthe meaning of the Settlement Convention
could be taken. Only Germany can make good its own incorrect acts and, thereby,
achieve the objective of the rule of exhaustion of local remedies if such remedies
were available; neither former Czechoslovakia norany of its successor States could
achieve such a result.
6.21 Germany'sview is also incorrect in that it identifies the measures under the BeneS
Decrees as the centerpieceof the claims:
"The interference which matters in fact is the strategy of confiscation
pursued by Czechoslovakia in 1945-46. Even according to Liechten-
stein'spleadings, Germany is at most second in the chain of events, or
rather thethird actor, inasmuch as the stipulation in Article 3, paragraph
3, of Chapter Six of the Settlement Convention goes back to a specific
demand of the Three Western Powers which made the abolition of the
occupation regime dependent on Germany'sconsent to a clause which
-
224 GPO,para.196. would make al1the measures taken with a view to enforcingreparations
orrestitution immune fiom scrutinyby Germancourts. II225
6.22 In fact, this view confuses the historical background to the claims with the events
which are legally significantin the present case. What is significantin legal terms is
not the measures under the BeneSDecrees themselves, butthe inclusionof Liechten-
steinproperty that had been subjectto the BeneSdecrees into the reparationsregime.
6.23 Germany argues thatit is only because of the failure of the Liechtensteinnationals to
resort to local remedies in Czechoslovakia that Liechtenstein is bringing the present
action against Germany:
"In this special and absolutely extraordinaryconfiguration the last actor
in a chain of three cannot be deniedthe benefit of invoking the failureof
the Claimant's nationalsto contest the primary cause of the calamity that
befellthem,namely the Czechoslovakmeasuresof confi~cation."~~~
This argument, however, again combines two different causes of action which must
necessarily be distinguished: the first is the measures taken against Liechtenstein
property under the BeneSDecrees, which, however, is not the subject matter of the
present claim; the other is the wrongful inclusion of Liechtensteinproperty into the
reparations regime within the meaning of the Settlement Convention. The present
claim is confinedto the latter issue only and no resort to legalremedies in CzechRe-
public or SlovakRepublic (as successorof the formerCzechoslovakia) could remedy
the Germanwrongfulacts.
6.24 In the conclusionsof its PreliminaryObjections, Germanyrefers againto this issue:
"Should the Court not share the view that the non-exhaustion of local
remedies in Czechoslovakia and the Czech Republic qualifies as a pre-
liminary objection that can be raised by Germany, Germany would de-
velop the argument more fully in its written pleadings on the merits - in
225
GPO,para. 197.
226 GPO,para.197. case the dispute should ever reach that stage. In any event, that failure
would have to be taken into account ascontributorynegligence. If the
victims abstainedfrom fighting for their rights in the appropriatefora,
they cannot expect that thelossesconfirmedby their passivity will beas-
sumed by a third party which neitherhad any duty of diligencewith re-
gard to the property concerned, norhad the power to stop the unlawful
actionscomrnittedby the Czechoslovak~overnment."~~~
6.25 Theseconclusionsagainreveal a deliberatemisunderstandingof thetme causeof ac-
tion. In its claim againstGermany,Liechtensteinis not asking for a remedy in rela-
tion to the measwes taken underthe BeneSDecrees, but for a remedy forthe appro-
priationby Germanyof Liechtensteinpropertyforthe purposesof Germany'srepara-
tions as a consequenceof the World War II, irrespective of any legal assessmentof
the BeneSDecrees. ThisGermanargumentas to failureto have recourse toCzechor
Slovak legal remedies (as the case may be) has no bearingon this dispute, whichis a
disputebetween Liechtensteinand Gennany exclusivelyand in which Liechtenstein
is invokingGermany'ssole responsibility. Germany's argument arnountsmerelyto a
fùrther attempt to distort the real nature Liechtenstein'sclaim and to presentit in a
formin whichLiechtenstein hasnevercastit.
C. The local remediesruleis not applicablein thatthe claim
submittedby Liechtensteinis a claim for directinjury
6.26 It is generallyaccepted thatthe applicationof the localremediesrule is restricted to
casesof diplornaticprotection,i.e.to caseswherea Statehas inflictedinjuryto aliens
on its territory.In contrast,therule is not applicableto caseswherea Stateis violated
in its direct,Stateto Staterights. Thisprinciplewas endorsedby the Courtin theIn-
terhandeP28and ELS~'~~ cases and is unanimouslyacceptedin internationaljudicial
and arbitralpractice230aswell as indoctrine.231
227
GPO,para. 208.
228 Interhandelcase,21November 1959,IC.JR.eports 1959,p. 28.
229 CaseconcerningElettronicaSiculaS.P.A.(ELSI),I.C.J.Reports 1989,para. 52.
230 The MN "Saiga"(No.2) Case; ITLOS 1997, reprinted in 38 International Legal Materials 1999,
p. 1323, para. 98; Air Service AgreementArbitration, 1978, 18 United Nations Reports of Interna-6.27 Direct injury affects the State in its status as an independent personality and in its
quality as a sovereign entity in international law.In cases of direct injwy, it is State
prerogatives that are at stake. Examples of direct injury are violations of the territo-
rial sovereignty or, more generally,the territorial rights of a State, damage to State
property, or violations of the rules arisingfiom diplomatic and consular la^.^^^
6.28 Two forms of direct injury are ofparticularimportance for the present case. The first
are violations of the law of ne~tralit~.~~N ~eutrality defines the legal status and the
legal capacity of the (neutral) State in relation to other States in time of and
thereforedirectlyconcemsits legalpersonalityin the international legal order. Inthis
"status-related" sense, a breach of neutrality is comparable to a violation of sover-
eignty. A violation of the law of neutralitynecessarily affects the neutral State in its
status and quality as an international legal person and therefore amounts to direct in-
jury to the neutral State, even if nationals of the neutral State are also prejudiced.
When e.g. Germany violated Swissneutrality in World War 1,causing persona1in-
jury and material damage to Swiss nationals,the latter were not required to exhaust
local remedies in Gennany as a condition precedent to Switzerland being able to
bring a claim against ~erman~.~~~
tional Arbitral Awardsp.431, para.30; Case Concerningthe Heathrow Airport User Charges, 102
International LawReports 1992,p. 279.
231
T. Meron, "The Incidence of the Ruleof Exhaustion of LocalRemedies", 35 British Yearbookof
International Law, 1959,pp. 84-88;C. F. Amerasinghe,Local Remediesin International Law, 1990,
pp. 108-132;Dugard,Secondreport on diplomaticprotection, UN Doc. A/CN.4/514,paras. 21-23; S.
Wittich,"DirectInjury and the Incidence ofthe Local RemediesRule", 5 Austrian ReviewofInterna-
tional and European Law2000,p. 121.
232
See, e.g., Greig, International Law, 1970,pp. 399-402; Chappez,La règle del'epuisement desvoies
de recours internes, 1972,pp. 36-42.
233 1.Brownlie,Systemof theLawofNations.StateResponsibility,Part 1,1983,p. 238.
234
K. Hailbronner, "Der Staat und der Einzelne als Volkerrechtssubjekt",in W. Graf Vitzthum (ed.),
Volkerrecht,2nded., 2001,pp. 212-213,wherea declarationof neutralityis consideredas an exercise
of sovereignjurisdiction.
235
RépertoiresuissedeDroit international,Vol. III, 1975,pp. 1773-1775,para. 8.52.6.29 The secondformof directinjuryinvokedby Liechtensteinis the breach of Liechten-
stein'ssovereignty by Germany. It is generally acknowledged thatdirect injury is
caused whena Statetransgresses the"limitsof nationaljurisdictionunderthe general
rules of international law" tothe detrimentof another tat te.*In^the present case,
Germanytreats Liechtenstein nationalsas Gennan nationalspro tanto to their detri-
ment. By so doing, Germany has violatedthe persona1jurisdiction and authorityof
Liechtensteinover its,i.e., Liechtenstein's,ownnationals.
6.30 Many international disputescontain elementsof both diplomatic protectionand di-
rect injury, and the present case is of such a "mixed nature",which ensues fiom the
concurrenceof differentrulesofinternationallawbreachedby one andthe samecon-
duct.Liechtensteinfurtheragrees with Germanythat,in mixed cases,the variousele-
ments of a dispute haveto be scrutinisedin order to determinewhetherthe director
the indirect injury element is preponderant.237However, Liechtenstein rejects
Germany'sapplicationof this test to the present case.In particular, Germanymain-
tainsthat "thecasecontainsno single elementoutsidethe property issuewhichmight
give it a tinge that would remove it fiom the area of diplomatic protection';.23I 8n
other words, Germany arguesthat Liechtenstein'sclairn only addressesindirect in-
jury and is exclusivelyconcerned with diplomaticprotection. Yet, if there is not a
single element of directinjury,it might beasked why Germany applies the prepon-
derancetest at all.
6.31 Apart from this contradictionin Germany'sreasoning, Germany ignores Liechten-
stein's argumentswith regard to sovereignty and,in particular, neutrality. With re-
gard to the applicabilityof the local remediesrule, Germanydoes not establish that
Liechtenstein'sclaim arisingout of Germany'sbreach of its duty to respect theneu-
236
W. Riphagen, Second reporton the content,fonns and degrees of international responsibility, Year-
bookof theILC 1981,Vol. II, PartOne,p. 91.
237 This "preponderance test",initiallydeveloped byMeron, was incorporatedby ILC'sSpecial Rappor-
teur on diplomatic protectioninto his second reporton diplomaticprotection,UN Doc. AlCN.41514,
paras. 21and23 and Draft Article 11.
238
GPO,para. 188. tralityof Liechtenstein andof Liechtensteinnationalsis not adirect claimwhichren-
ders the local remediesrule inapplicable.Thereason for Germany'ssilenceinthis re-
spectis obvious:Thereis no doubtthat anyviolationof the lawsof neutralityconsti-
tutes a direct injury of the neutral State,i.e., Liechtenstein, andgivesrise to adirect
daim of LiechtensteinagainstGermany.
6.32 Germanyrefersto theELSI andtheInterhandelcases andargues thatthesetwo cases
were similar to the present one.239However, Liechtensteinsubmitsthat, contraryto
Germany's submission,the present case substantiallydiffers fiom thesetwo cases.In
the Interhandel case, Switzerland requestedthe Court to declare that the United
Stateswas under an obligationto restorethe assetsof Interhandel, aSwisscompany.
The assets in questionconsistedof 90 per centof the sharesin a United Statescom-
pany which were owned by Interhandel and which had been confiscated by the
United StatesGovemmentunderthe Trading withthe Enemy Acton the groundsthat
Interhandel belonged, or was at least controlledby, the German companyIG Far-
benindustrie. Switzerland was only requesting the restitution of assets of a Swiss
companyandthus merely securingthe interestof one of its national^ .^ve' theal-
ternative Swiss claim (as regards the obligation of the United States to submitthe
disputeto arbitrationor conciliation) was exclusivelydirectedto securingtherestora-
tion of the assets of the Swissc~m~an~.~~ T'herefore,the Court concluded that "one
interest, and one alone, that of Interhandel" wasthe basis for the Swiss~lairn.~~ In
other words,the only interest Switzerlandhad in instituting proceedings beforethe
International Courtwas the restorationof propertyrights to a Swiss company; there
was no additional element inthe Swiss claim whichpointed to directinjury suffered
by Switzerland in its statusas an internationallegal person. Although Switzerland
239 GPO,paras. 185-186.
240
Interhandelcase, 21November 1959,I.C.J. Reports1959,pp. 28-29.
241 Interhandelcase, 21 November 1959C.J. Reports 1959,p. 29. Switzerlanditself was of the opinion
that this altemative submissiondid not differtancefrom its principal submission andthus was
only concemed with the property nghts of the Swiss company, seeandel case, I.C.J. Pleadings
1959,p. 406.
242 Interhandelcase,21November 1959,I.C.J. Reports1959,p. 29. fered".246In the sectionof its PreliminaryObjectionsdealingwith the exhaustionof
local remedies, Germany doesnot mentionLiechtenstein'sprincipalclaim elaborated
extensivelyin itsMemorial.
6.35 Gennany bases its selectiveargumenton Article 40 (1) of the Statute of the Court
andon the Court's statementin theNuclear Testscases.However, Germany has mis-
read both sources.Contraryto Gemany's contention:47Article 40 (1) of the Statute
does not providethat the Application"definesthe subjectof the dispute".According
to that provision,the "subjectof the dispute ..] shallbe indicated" in the Applica-
tion (emphasis added). The Applicationonly serves as one among several tools to
identify the subject of the dispute. Thisis corroboratedby the Court's statementin
the Nuclear Tests cases. Indeed,as Germany observed,the Court declared that the
Application "mustbe the pointof reference forthe considerationby the Courtof the
nature and existenceof the disputebrought before However, the Court'srea-
soningwas quotedby Germanyin a ratherselectivemanner;whatremainsunsaidby
Germanyis that only a few paragraphs la te^ -:^ 'ourtwas more explicitin deter-
mining the method how to "ascertainthe tme object and purpose of the claim". It
added that "indoing so [...]it musttake into accountthe Applicationas a whole,the
argumentsof theApplicant beforethe Court,the diplomaticexchangesbroughtto the
Court'sattention, and public statementsmade on behalf of the applicant Govern-
ment". And indeed,in the Nuclear Tests cases, the Court heavilyrelied on the sub-
missions and arguments madeby the Applicantin the Memorialand,in particular,in
the oralproceedings.250
246
GPO,para. 188.Seealsoibidpa,as. 181-182.
247 GPO,para. 181.
248 Nuclear TestscaseI.C. Jeports 1974,p. 260, paraibidp.463, para. 24.
249 Ibid para. 30.
250 Ibid para. 27. If one takes a look at Liechtenstein's submissionsas a whole, in particular aslaid
6.36
down in the ~emorial,'~~it will readilybe seen that the direct injury inflictedby
Germany upon Liechtensteinand consistingin the violation of Liechtenstein'sneu-
trality and sovereigntyis essentialto Liechtenstein'sclaim.Therefore,contraryto the
German submission, the Interhandel and the ELSI cases cannot be taken as prece-
dents forthe present case.
6.37 With regard to direct injury, Liechtenstein's claimis similar to that of the United
StatesagainstIran in the Diplomaticand Consular~taf~case,~'~ whereUnited States
nationals (diplomatic and consular personnelas well as private individuals) were
held hostage in the premises of the United States Embassyin Tehran. In that case,
none of theUnited Statesnationals,not eventheprivateindividuals,were requiredto
exhaust localremedies,althoughtheUnited Statesin its submissionsexplicitly stated
that it exercised"itsright of diplomaticprotectionof its national^" .^e'Courtcon-
sidered the United States claim asone of direct injury, althoughprivate individuals
were (also) affectedby the violation. Likewise,in the Military and ParamilitaryAc-
tivities in and Against Nicaragua case,Nicaragua claimedreparations asparens pa-
triae for its citizensand,thus, exercised diplomaticprotection.Again,no Nicaraguan
citizen was required to exhaust local remediesbefore Nicaragua could pursue its
6.38 There are numerous other decisionsby internationalcourts and tribunals where the
factual and legal situationsbear resemblance tothe present case and which support
Liechtenstein'ssubmission.Thus, in the Air Service Agreement arbitrationbetween
the United StatesandFrance,the tribunalheld that the distinctionbetween directand
indirectinjuryin relationto the applicationof the localremediesrule isbased "onthe
juridical characterof the legal relationshipbetween States which is invokedin sup-
251 Mernorial, paras4..1-4.43.
252 I.C.J.Report1980,p. 3.
253 1C.J.Reports1980,pp. 6-7.
254 I.C.J.Report1986,pp. 19etseq. port of the ~laim".~~T ' he tribunal consideredthe right to conduct air transport ser-
vices by one air carrier as a right "granted by one government to the other govern-
ment".256 Thus, although it was the air carriers as private companies which were in-
jured by a breach of these rights, they were not requiredto exhaust local remedies
before their States of nationality could bring an international claim against the
wrongdoingState.
6.39 This line ofreasoningwas confimed by the tribunal in theHeathrow Airport arbitra-
tion between the United States and the United ~in~dorn.~~~ There, the tribunal, in
addressing the question of the applicability or othenvise of the local remedies rule,
thoroughly examined the legal relationship between the litigating States underlying
the dispute. It analysed the subjectmatter of the dispute and drew an important dis-
tinction between the direct rights of the States and the rights of designated airlines.
Although the "Bermuda Agreement" of 1977 referred to designated airlines, it did
"notthereby confer independent rightson such airlines or alter the fact that the rights
that it enshrines are those of the Contracting tat tes". ^h^^ tribunal was influenced
by the considerationthat the conductof air serviceswas by its nature a State preroga-
tive and thus prevailed overany interest of the private air companies.It concluded:
"Althoughexaminationof the nature of [the United States'] claimsand of
the airlines'potential claims reveals that they overlap to a certain extent,
at the same tinie they present significantdifferences; and taking the case
as a whole and undivided into its constituentparts, the Tribunal is of the
opinion that the predominant elementis the direct interest of the US it-
self. Thus, examinationof the subjectmatter of the dispute as awhole in-
dicates that [the United States'] claimis properly to be regarded as dis-
tinct and i~~de~endent."~~'
255 Case ConcerningtheAir ServiceAgreement of27 March 1946, 1978, 18United Nations Reportsof
International ArbitralAwards,.417etseq.,p.431,para.30 (emphasisintheoriginal).
256 Ibid.,para.1 (emphasisintheoriginal).
257
Case Concerning the HeathroAirport User Charges102 International Law Repor1992,p.216.
258 Ibid.,para6.11.
259
Ibid.,paras6.14,6.15and6.18.6.40 Finally, in the Saiga case decidedby the InternationalTribunal for the Law ofthe
Sea under the 1982lJnited Nations Conventionon the Law of the ~ea,~~t'he Tribu-
nal heldthat the breaches claimedby the applicantStatewere directviolationsof the
rights of that State,althoughthey causedseveredarnageto private individualsandal-
though Article 295 of the Conventionon the Lawof the Sea explicitlyprovidesfor
the localremedies
6.41 The similaritybetweenthese cases andthe present one is striking.In al1these cases,
direct State prerogatlveswere atstake, which prevailed overthe interestsof the pri-
vate individualsalsoaffectedand injuredby the breach.In the present case likewise,
it is the Stateprerogativeof Liechtenstein,i.e. that its interest that its neutralityand
sovereignty be respected,which forms the very subject matter of the dispute. The
fact thatproperty rights of Liechtensteinnationalswere infïinged is a necessary cor-
ollary of the direct violations inflictedupon Liechtensteinby Germany,just as was
the case with the private airline companies in the Air Service Agreement and the
HeathrowAirport arbitrationsortheprivateindividualsin the Saigacase.
6.42 Germanylays much stresson the factthat Liechtensteinrequestscompensationfiom
Germany for the losses sufferedby Liechtenstein national^ ^n^order to show that
Liechtenstein's claim preponderantlyconcerns indirectdamage to its nationals. It is
true that the remedy sought is sometimes considered toindicate whether the appli-
cant State vindicates a direct rightor whether it acts in the exercise of diplomatic
protection.263However,this reparationremedy is only one among variousothers re-
questedby Liechtenstein.Germanyfails to mention that Liechtensteinalso claims a
variety of remedies forthe directinjuryit has suffered,inparticular cessation, assur-
ances and guaranteesof non-repetition,declaratoryrelief and restitution.Further,in
260 The M/V "Saiga" (No.2) Case; ITLOS 1997, reprinted in 38 International Legal Materials1999,
p. 1323.
261 Ibid.,para. 98.
262 See GPO,paras. 182and 189.
263 SeeDugard,SecondReportondiplomaticprotection,UN Doc. MCN.41514,DraftArticle 11,p. 11. al1the cases mentioned above, the applicant States likewise requested substantial
amounts of financial compensation, but this fact did not prevent the tribunals fi-om
deciding that the applicant States were vindicating direct rights and that the local
remedies rule was not applicable.
6.43 For these reasons, Liechtenstein submitsthat the nature and subject matter of the dis-
pute and the legal relationship of the noms and obligations invoked by Liechtenstein
and breached by Germany essentially concern direct rights of Liechtenstein. There-
fore, Liechtensteinhas suffered direct injury, and the local remedies rule is not appli-
cable. SUBMISSIONS
For al1these reasons, and reserving the right of the Principality of Liechtenstein to supple-
ment them inview of any further Gerrnanarguments,it is respectfùlly submitted:
(a> that the Court has jurisdiction over the claims presented in the Application of the
principalityof Liechtenstein, andthat they areadmissible;
and correspondingly
@> that the Preliminary Objectionsof Germanybe rejected in their entirety.
Dr. AlexanderGoepfert
Agent of thePrincipality of Liechtenstein
Vaduz
15November2002 LISTOFANNEXES
Annex48: Excerpt of the report of the second round of bilateral consultationson 14
June 1999in Vaduzby the Office for Foreign Affairsof the Principalityof
Liechtenste.in
Annex49: List of the families affected by the consfiscation measures of the then
CzechoslovakianGovernmentupdatedby the Office for Foreign Affairs of
the Principalityof Liechtensteinas ofNovember 2002 LISTOFAPPENDICES
Appendix1: Germa. jurisprudenceanddoctrineconcerningthe InadmissibilityRule(Ar-
ticle 3 of ChapterSix ofthe SettlementConvention)
Observations of the Principality of Liechtenstein